Microsoft invests $50m in LanzaJet’s Freedom Pines sustainable aviation fuel (SAF) plant

The partnership 'advances our work towards net zero fuels' says LanzaJet chief executive Jimmy Samartzis

Microsoft has invested $50 million in US-based LanzaJet’s planned aviation biofuel plant in Soperton, Georgia, a further sign that global tech giants are prepared to finance the sector as part of their commitments to reduce carbon emissions.

The finance, which will come from the Microsoft Climate Innovation Fund, will help cover some of the start-up costs at LanzaJet’s first US facility, which is scheduled to come online sometime in 2023, with an initial production capacity of 10 million gallons of sustainable aviation fuel (SAF) and renewable diesel a year based on ethanol feedstocks.

“The innovative structure of Microsoft’s financing will enable LanzaJet to bring lower-cost sustainable aviation fuel and renewable diesel to the global market,” the companies said in a January 13 press release, without providing detail on how the financing is being deployed.

So far, most potential aviation biofuels producers have secured private-sector financing on the basis of offtake deals with airlines, although these commitments to buy fuel are just a small fraction of what SAF producers say they can produce by 2030.

“The partnership with Microsoft is more than just financing – it advances our work towards net zero fuels, it enables lower-cost sustainable fuels into the market, and it supports the urgency to have real, proven technologies scale-up and deploy,” LanzaJet chief executive Jimmy Samartzis said in the statement.

Microsoft said it has made the investment as part of the company’s efforts to achieve its goal of becoming carbon negative by 2030 and helping to advance moves towards a net-zero economy.

The deal with LanzaJet would also enable Microsoft to access supplies of renewable diesel for its data centres, which are major users of energy and comes as other tech giants have taken interest in SAF, with Amazon signing an offtake deal in 2020 and last year agreeing to fund aviation e-fuels.

In the same statement, LanzaJet said that the construction of its project in Georgia, known as the Freedom Pines Fuels project, is progressing as planned, despite wider economic challenges in the supply chain, manufacturing, and labour shortages.

“Fabrication of the plant is well underway; some modules are already completed and final site engineering is nearing completion. The LanzaJet Freedom Pines Fuels plant is expected to achieve mechanical completion this year,” LanzaJet said.

Progress at Freedom Pines is being watched closely by the aviation biofuel sector and airlines, because the project is expected to be in the vanguard of projects based on alternative production pathways to hydrotreated biojet fuels based on wastes such as used cooking oil that currently dominate the market.

LanzaJet’s alcohol-to-jet technology will source crop-based ethanol initially and then increasingly favour the use of waste-based feedstocks, such as crop wastes, and eventually waste-gases from industrial processes.

Producers of ethanol for the road market – which since 2005 has been underpinned by the Renewable Fuels Standard – have in the past year talked up the potential of supplying the aviation biofuels market.

Key to this will be eventual approval from US lawmakers for a blender’s tax credit of $1.25-1.75 a gallon that is currently contained in the Biden Administration’s stalled $1.8 trillion Build Back Better Bill.

Investor interest in aviation biofuels is said to have picked up pace since September last year, when the White House announced a target for 3 billion gallons of SAF produced per year in the US by 2030.

LanzaJet at that time said it aimed to produce a third of that figure by 2030, a target that would involve several additional biojet plants and required additional financing and investment.

So far LanzaJet has offtake deals in place with British Airways and Japanese airline ANA, but lenders have told EnergyCensus previously that the sector in general needs to increase the volume of SAF sold forward to secure private sector finance for additional plants.

LanzaJet’s ATJ technology and reliance on crop-based ethanol in its initial buildout stage is regarded by industry observers as lower risk than the other main emergent pathway, which is Fischer Tropsch technology based on wastes.

But lenders and airlines are said to be waiting for additional visibility on how successful early- and demonstration-phase projects are in scaling up before committing vast volumes of additional funds to SAF.

If you’d like to find out more about the potential opportunities for SAF production, watch our webinar on raw materials here.

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