United’s $100M fund to invest in startups making sustainable jet fuel

The aviation industry’s best near-term solution for reducing greenhouse gas emissions is in extremely short supply. Today, ​“sustainable aviation fuel,” or SAF, accounts for well below 1 percent of global jet fuel demand — and most of it comes from burger grease, chicken fat and hot-pot oil collected from restaurants around the world.

On Tuesday, United Airlines launched a fund with more than $100 million in investments that it says will support startups working to solve the SAF supply problem. The fund’s initial partners include Air Canada, Boeing, GE Aerospace, JP Morgan Chase and Honeywell, and investments will support both proven producers and fledgling developers of alternative jet-fuel technology.

“We don’t have the solutions we need, which is SAF, at scales commercially available to make any difference in our carbon footprint in the near term,” Lauren Riley, United’s chief sustainability officer, told Canary Media.

“We’re creating a marketplace and sending all these demand signals so that we can pull down the emissions from flying,” she said of the airline’s Sustainable Flight Fund.

Commercial aircraft and business jets contribute roughly 3 percent of total U.S. greenhouse gas emissions every year. Globally, passenger aircraft emissions are poised to triple by 2050 if jets continue burning fossil fuels — and if business and leisure travelers continue flying at ever-growing rates.

Passengers who book United flights within or from the United States will also be able to contribute to the new fund by adding $1, $3.50 or $7 to their final ticket price. The gesture is likely meant to soften the ​“flight shame” that travelers might be feeling, albeit without directly reducing the planet-warming emissions generated by a particular flight.

Chicago-based United is one of 38 major airlines worldwide that have committed to achieving net-zero emissions by 2050 or earlier. For all of them, SAF is expected to play a central role in cleaning up air travel in the coming years. While not entirely emissions-free, sustainable fuels made from waste materials — including used cooking oil, forest residues and municipal solid waste — have the potential to start curbing carbon dioxide pollution using the aircraft and fuel infrastructure that the industry has in place today.

In order for airlines to meet those goals, though, they’ll need to get their hands on far more SAF. Last year, fuel producers churned out an estimated 80 million gallons of SAF, or roughly 0.1 percent of total global jet fuel demand, according to the International Air Transport Association.

Still, that’s roughly 200 percent more than producers delivered in 2021. Europe’s ReFuelEU initiative and the United States’ Inflation Reduction Act, plus recently enacted policies in Canada, China and Japan, are further helping to boost production. By 2030, demand for SAF could reach 10.6 billion gallons, or 7.5 percent of global jet fuel use, BloombergNEF projected in its 2022 SAF outlook report.

With a flurry of investments, the nascent SAF industry is ​“falling into place” 

Other major climate-focused investment funds are also pouring millions of dollars into emerging alternative fuel companies.

Amazon’s $2 billion Climate Pledge Fund is backing Infinium, a startup that’s using captured carbon dioxide and hydrogen to make renewable electrofuels. Microsoft’s $1 billion Climate Innovation Fund is supporting the startup Twelve, which is making ​“E-Jet” fuel using carbon dioxide captured from places like pulp and paper mills and ethanol refineries.

Both Microsoft and the Breakthrough Energy Catalyst platform are investing in LanzaJet, a spinoff of LanzaTech that makes ethanol from microbes that feed on carbon-rich waste gases. In December, LanzaJet began construction on what it says is the world’s first ​“ethanol-based, alcohol-to-jet” SAF production plant. At full capacity, the Freedom Pines Fuels facility in Georgia is expected to produce 10 million gallons of SAF and renewable diesel per year.

“For any of us who are doing new technologies and scaling technologies for the first time, you’re always up against lots of obstacles,” Jimmy Samartzis, LanzaJet’s CEO, told Canary Media last October, shortly after the startup received a $50 million grant from Breakthrough Energy Catalyst.

Until recently, finding ​“financing and capital was one of those obstacles for us,” he added. ​“It feels very different today, in terms of where the industry is headed. I think all the different requirements to build an industry are falling into place.”

United’s Sustainable Flight Fund differs from the tech giants’ funds in that United actually operates the planes and uses the fuel that these startups will produce, Riley said. It’s also the only fund that is narrowly focused on supporting SAF development.

The airline itself gets about 0.1 percent of its annual fuel supply from alternative jet fuels, a ​“depressing” amount, she said. But United has invested in the future production of more than 3 billion gallons of SAF. That includes support for Finnish oil refiner Neste, whose U.S. subsidiary Mahoney Environmental collects oil and fat from 55,000 kitchens, as well as Fulcrum Bioenergy, which is turning landfill waste into synthetic oil at a new facility outside Reno, Nevada.

United’s new fund will absorb the airline’s existing SAF investments while allowing other companies to contribute, with the goal of pumping even more money into SAF development and production.

“We really want to accelerate the pace of those technologies coming into the market at scale,” Riley said. ​“What we found is that we cannot do this alone.”