An airline with a significant Houston presence is continuing its efforts to get sustainable aviation fuels out of the hangar.
Chicago-based United Airlines (Nasdaq: UAL) launched a $100 million investment vehicle targeting SAF technology and startups. The fund, named the United Airlines Ventures Sustainable Flight Fund, also sees investments from Air Canada and The Boeing Co. (NYSE: BA) as well as JPMorgan Chase & Co. (NYSE: JPM) and Honeywell International Inc. (Nasdaq: HON).
SAF is an alternative to conventional jet fuel that, on a lifecycle basis, reduces greenhouse gas emissions associated with air travel compared to conventional jet fuel alone. SAF, which currently must be blended with conventional jet fuel to meet regulatory requirements for use within the aircraft, is being made from used cooking oil and agricultural waste. In the future, it could be made from other feedstocks, including household trash or forest waste.
According to United’s announcement, fund partners will have access to environmental attributes or incentives derived from United’s SAF supply. United has already made investments in efforts that aim to produce more than 3 billion gallons of the fuel.
The fund is a beneficiary of the federal Inflation Reduction Act signed into law in August, which includes a tax credit designed for SAF and decreases costs for the fuel’s consumers. According to S&P Global Platts, sustainable fuels are about three times the cost of jet fuel, which currently cost around $146 a barrel.
Researchers have noted airlines’ difficulties in acquiring SAF due to competition with other users of the biomass that serves as a key ingredient. The same plants used to make SAF are also used for ethanol, other forms of biodiesel and food for livestock.
The Sustainable Flight Fund is United’s second SAF venture in February, following a $50 million joint venture with Kansas-based Tallwood Energy to create up to 2.7 billion gallons of ethanol-based biofuels, with production starting in 2024.
The airline has also tapped Houston partners to advance production, such as Next Renewable Fuels. United Airlines Ventures — a venture fund United launched in 2021 — said it could invest up to $37.5 million in Next, which is developing a biofuels refinery in Oregon. Next plans to go public through a SPAC merger announced in November.
Houston startup Cemvita Factory also received a $5 million equity investment from United in 2022. Cemvita, which is developing processes using microbes to convert carbon dioxide into SAF, created a subsidiary in October to scale its production methods.
With about 400 flights per day, United is the busiest airline at George Bush Intercontinental Airport. In the 12-month span from December 2021 to November 2022, the airline carried 53.16% of all passengers at the airport, according to the most recent federal data.
United has a stated goal of reducing its greenhouse gas emissions by 100% by 2050.
Houston and Texas have been identified as ripe markets for biofuel production by renewable fuels companies. An affiliate of Sacramento, California-based renewable fuels technology company Infinium is building a plant in Corpus Christi to supply electrofuels to Amazon.com Inc. (Nasdaq: AMZN).
Meanwhile, Chilean company HIF Global is slated to build a $6 billion renewable fuels plant south of Houston using its hydrogen-to-fuels process. The company is also considering another plant, with potential sites southwest of Fort Worth.
