By Bruce Crumley
Southwest Airlines' launch of a renewable fuels venture arm and concurrent $30 million investment in a production partner indicates opportunities for other sector businesses as its scales capacity.
Owners of renewable fuel development businesses seeking to help transportation companies fulfill carbon reduction goals, get your pitch decks ready. Budget carrier Southwest Airlines has just launched a venture capital arm tasked with building a network of partners in sustainable aviation fuel (SAF) production, and has already signed a $30 million investment deal straight off the bat.
Entrepreneurs in sustainable fuel research, tech, and production who've been shut out of earlier investments that airlines like United and Delta initiated in 2022 now have the chance to make up for lost time with Southwest's SAF fund. The Dallas-based carrier announced Wednesday it had launched Southwest Airlines Renewable Ventures (SARV), which will assemble, invest in, or acquire partners allowing it to attain scalable SAF production. That will require a fairly ambitious, possibly very large network of companies, since Southwest's objective is to use renewables for at least 10 percent of fuels its planes use by 2030.
That deadline may sound like a long way off, but that's not how time works in the aviation sector, where timelines are often characterized by the rejoinder, "it's only been 10 years." Still, Southwest clearly already hears the renewables clock ticking. That explains the concurrent announcements of SARV's creation and its $30 million investment in SAF technology company LanzaJet Inc.
Based in Deerfield, Illinois, LanzaJet specializes in ethanol-to-SAF transformation, and operates what it claims is the world's first large-scale commercial plant to scale that activity. SARV's investment in the company follows Southwest's previous funding of SAFFiRE Renewables, which takes its name from the Sustainable Aviation Fuel From Renewable Ethanol process.
Here's how the trio will work together--and how other small companies in sustainable fuel development may be able to find a way be part of the economic ecosystem.
SAFFiRE technology converts corn stover--stalk, leaves, husks, and tassels--into cellulosic ethanol, an activity it has a semi-lock on through its license with the U.S. Department of Energy's National Renewable Energy Laboratory. LanzaJet will initially use its current transformation facilities in Georgia to assist that process. It will then rely on Southwest funding and direction to construct a new production site to increase volumes well above the one billion gallons of SAF it already planned to generate by 2023.
SAF is poised to be big business, and Southwest and other airlines will need lot of help from small and medium-sized partners to realize its potential--and fulfill their needs.
According to SAFFiRE, the U.S. aviation sector alone will require 3 billion gallons of SAF by 2030. That will increase to 12 billion by 3035, the company says, with airlines forecast to use 35 billion gallons of renewable fuels each year by 2050. That U.S. consumption will lift what Global Market Insights estimates will be a $32.9 billion international SAF market by 2032 to far higher levels toward mid-century.
Southwest clearly intends to be in the thick of that action. Its one-two punch of unveiling SARV and its $30 million funding of LanzaJet suggests the airline may move with similar speed in forming new partnerships to create a production network capable of satisfying its spiking SAF requirements.
"Our launch of SARV and our investment in LanzaJet demonstrate that we are not sitting on the sidelines," said Southwest CEO Bob Jordan. "Rather, we're in the game by taking proactive, disciplined steps toward securing affordable SAF for Southwest, as we continue to march toward our goal of net zero by 2050. We look forward to working with companies and organizations developing important technology, like LanzaJet, which could help us meet our SAF goals."
Are those pitch decks ready yet?