On November 10, 2023, Air France-KLM announced that it will be investing $4.7 million in DG Fuels, a producer of sustainable aviation fuel (SAF) based in the United States.
With this capital investment, Air France-KLM hopes to accelerate the development of a new SAF refinery in the state of Louisiana.
In addition to becoming an investor, Air France-KLM has also secured access to 25 million gallons (75,000 tons) of SAF annually from 2029. This adds to a previous uptake agreement through which Air France-KLM will source up to 600,000 tons of SAF from DG Fuels between 2027 and 2036.
The issue of access to SAF fuel supply sources is becoming paramount for many European airlines, as the European RefuelEU Aviation initiative, which was recently approved by the European Parliament, mandates minimum SAF-blending thresholds. Starting with 2% in 2025, these will increase progressively over time up to 70% by 2050.
SAF production levels are still low and there may be a mismatch between production capacity and demand. The realization of this has led many airlines to invest directly in SAF production projects, in order to guarantee access to SAF for their own purposes.
As IATA’s Director General Willie Walsh recently told AeroTime, the airline industry also sees these investments as a way of signaling to the broader financial community the need for more investment in SAF capacity.
When making this announcement, Air France-KLM reiterated that the group remains committed to using a minimum of 10% of SAF by 2030. An increased use of SAF is one of the factors that the airline group plans to use to achieve its goal of reducing carbon emissions per passenger/km by 30% by the year 2030, compared to 2019 levels. The airline also highlighted that, while the group represents barely 3% of jet fuel consumption worldwide, it currently uses 17% of global SAF supply, making it the largest SAF consumer in the world
The deal between Air France-KLM and DG Fuels also raises the notion of the development of more SAF production facilities in other locations in the US, and indeed around the world.
