Air New Zealand has signed a deal to buy nine million litres of sustainable aviation fuel (SAF) from Finnish company Neste in the airline's biggest deal yet for the green fuel.
The SAF is being produced at Neste's Singapore refinery and blended with conventional jet fuel before being supplied to Los Angeles International Airport between April 1 and November 30, the two companies announced.
Air NZ said the SAF would reduce carbon emissions by up to 80 percent over the life cycle of the fuel compared to using fossil jet fuel, including its production and transport emissions.
Kiri Hannifin, Air NZ's chief sustainability officer, said the airline has worked very hard and "punched above its weight" as a relatively small international player to secure the highly sought-after and costly SAF.
"It is very, very hard to source. It's still a very new industry and there's very few people making it," Hannifin told AM.
"It's about 1 percent of the total global aviation fuel. So it is hard to source and it's also incredibly expensive - anywhere between three and five times the price of normal jet fuel. So we're very pleased to have got it, but we've got to find a lot more of it as we work incredibly hard to decarbonise."
Asked if the higher costs of SAF would mean higher costs for airfares, Hannifin said "not yet".
"Currently we are absorbing the cost ourselves, but at some point in the future, as we need to take all of our current fossil fuel and make it into renewable fuels, that cost will become more obvious and more evident. But at the moment, because we're just buying tiny bits, we're taking on the costs ourselves."
Hannifin said the nine million litres of Neste's SAF would be blended with conventional jet fuel at a maximum of 50/50 as that was the limit imposed on airlines, although test flights without passengers have been successful using 100 percent SAF.
"If we could fly at 100 percent sustainable aviation fuel - which we can't - but if we could, [nine million litres] would be around 120 flights from LA to Auckland," she said.
