United Airlines


UAL

and its corporate venture firm, United Airlines Ventures (“UAV”), which focuses on developing sustainable solutions and emerging technologies for the aerospace industry, announced an investment in and commercial agreement with Dimensional Energy. The move advances the company’s goal of reaching 100% green net-zero emission by 2050 without using any carbon offset mechanism.

Dimensional Energy will be using the Fischer-Tropsch process, a 100-year-old technology used to produce fuel from coal or methane, to make sustainable aviation fuels (“SAF”).

As part of the commercial agreement, United Airlines will purchase at least 300 million gallons of SAF over 20 years from Dimensional.

Dimensional’s technology can run on all sources of renewable energy. It can also utilize carbon dioxide from various sources, such as industrial sites (like cement plants), Direct Air Capture (a technology that can capture carbon dioxide from anywhere in the world), as well as biological processes like fermentation and biomass gasification.

United Airlines, carrying a Zacks Rank #3 (Hold), has lately been focused on its sustainability initiatives. In May, the company signed an agreement with Finnish renewable fuel provider, Neste, to purchase SAF over the next three years. Per the agreement, UAL can buy up to 52.5 million gallons of SAF for its flights at Amsterdam’s Schiphol Airport and potentially at other airports as well. You can see


the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here


.

SAF deals have lately become commonplace in the airline industry as companies aim to reduce carbon emissions in order to meet the Biden administration’s broader goal of of achieving a net-zero economy by 2050.

In March,

Delta Air Lines


DAL

signed a “take-or-pay” agreement with

Gevo, Inc

.

GEVO

for 75 million gallons of SAF per year for a seven-year term.

The agreement replaces Delta’s existing deal with Gevo, which was signed in 2019, to purchase 10 million gallons of SAF per year. It advances DAL’s goal of net-zero aviation. The company aims to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030. Delta carries a Zacks Rank #3.

DAL said it is “working to develop the market and a broader understanding of the effectiveness of SAF, which can reduce lifecycle emissions up to 80 percent when used in pure form compared to fossil jet fuels.”

Gevo, carrying a Zacks Rank #3, expects the agreement to generate approximately $2.8 billion in revenues over the seven-year period. The company expects to begin production from its first net-zero plant in 2025. In response to the higher demand, GEVO intends to build more than one Net-Zero plant.

Gevo has been committed to sustainability initiatives. The company has developed two alcohol-to-jet pathways that can utilize low-carbon feedstocks, which, in turn, can be converted to SAF.

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