Qantas and Airbus agree to invest up to $200m in Australian biofuels industry

The joint investment partnership is formed initially for five years, with options to extend the agreement

An Airbus A350-1000 aircraft inside a hangar at Sydney Airport. AFP

Sydney-based Qantas Airways and Airbus will jointly invest up to $200 million to kick-start Australia's sustainable aviation fuels (SAF) industry, as the airline works towards meeting its goal of reducing carbon emissions.

The agreement, signed at the International Air Transport Association's annual general meeting on Sunday in Doha, will help Qantas to meet its commitment to use 10 per cent SAF in its overall fuel mix by 2030, the companies said at a joint media briefing.

Qantas currently uses 1 per cent SAF in its network and intends to grow this to 60 per cent by 2050.

Airbus and Qantas are already partners in the sustainability initiative as part of the airline's multi-billion dollar orders for the A350-1000 widebodies and A220 and A321XLR narrowbodies last month.

“With this investment, Qantas and Airbus are putting our money where our mouth is and betting on the innovation and ingenuity of the Australian industry,” Alan Joyce, group chief executive of Qantas, said.

“This investment will help kick-start a local biofuels industry in Australia and hopefully encourage additional investment from governments and other business and build more momentum for the industry as a whole.”

Airbus wants to “act as a catalyst for profound changes” and ensuring a sustainable future of the industry is a priority for the plane maker, particularly after the coronavirus pandemic, Airbus chief executive Guillaume Faury said.

Qantas is preparing to launch the world’s longest commercial flights, at nearly 20 hours, by 2025. This week, the Australian carrier placed an order for 12 Airbus A350-1000 aircraft that can fly non-stop from Down Under to any city in the world. It is the latest step to revive Project Sunrise, which Qantas has been working on since 2017 as a way to operate direct commercial flights from Sydney to London and New York.

The funding for the sustainability initiative will be split between Qantas and Airbus with some contribution from engine maker Pratt & Whitney, Mr Joyce said. Qantas has selected Pratt & Whitney engines for its new Airbus narrowbody order.

Asked if Airbus will work with airline customers in other regions globally on similar SAF partnerships, Mr Faury said that the deal with Qantas is “unique” as Australia has large quantities of untapped feedstock and that the other parts of the world have different dynamics.

“We want to enable, support and contribute to the growth of the SAF supply around the world and we're looking to other forms of co-operation and partnership because we believe that's the next big thing in aviation and we want to accelerate it,” he said.

The Qantas-Airbus SAF partnership is initially scheduled for five years with options to extend the duration, the companies said.

Qantas is currently sourcing SAF from overseas. It includes 15 per cent of its fuel use out of London and 20 million litres each year for flights from Los Angeles and San Francisco to Australia from 2025.

The Qantas-Airbus partnership will invest in locally developed and produced SAF and feedstock initiatives, the companies said. Projects will have to be commercially viable and meet strict environmental sustainability criteria.