IAG, Microsoft strengthen partnership with largest, longest scope 3 SAF agreement to date

International Airlines Group announced April 2 that it and Microsoft are strengthening their efforts to reduce lifecycle-carbon emissions across the industry by extending their 2023 cofunded purchase agreement for sustainable aviation fuel (SAF) by five years.

Under the new terms, Microsoft will cofund an additional 39,000 metric tons of SAF that will help reduce lifecycle-carbon emissions by approximately 113,000 tons.

The extension of the agreement enables Microsoft to address scope 3 lifecycle emissions and is the largest and longest scope 3 SAF agreement to date between an airline and corporate customer, according to publicly available data.

Scope 3 encompasses lifecycle-carbon emissions that are not produced by a company itself, but that it is indirectly responsible for up and down its value chain.

By partnering with its corporate customers, IAG is able to purchase more SAF and reduce its scope 1 (direct) emissions.

Corporate customers also benefit by lowering scope 3 lifecycle emissions from the industry commensurate to a proportion of their corporate flying.

Microsoft is also cofunding SAF that is used by the group’s airlines to ship data-center components globally in partnership with Microsoft’s freight forwarders.

Microsoft’s contribution to the cost of SAF production will support the airlines within IAG with the overall reduction of lifecycle emissions.

“We’re pleased to work with like-minded organizations such as Microsoft to expand efforts to reduce flying lifecycle emissions,” said Jonathon Counsell, IAG’s group sustainability officer. “Long-term agreements help encourage much-needed funding in SAF production, something that IAG is championing through our investment in global SAF projects such as LanzaJet.”

Julia Fidler, Microsoft’s environmental sustainability fuel- and materials-decarbonization lead, added, “We are taking our collaboration with IAG further, extending our SAF purchase agreement to bring Microsoft closer to our goal of being carbon negative by 2030, while ensuring a multiyear commitment to help drive greater SAF production. We are pleased to work alongside IAG on efforts to increase demand and make SAF more widely available through our shared long-term purchase agreement.”

Using alternative fuel sources rather than newly extracted fossil materials means SAF releases existing carbon instead of adding new carbon from fossil fuels to the atmosphere.

By the end of 2024, 1.9 percent of IAG’s total fuel usage for the year was SAF and total expenditure, including future commitments for SAF offtakes, exceeded $3.5 billion.

This newly extended agreement with Microsoft forms part of IAG’s work to invest in and accelerate SAF production, particularly in the U.K. and Europe, with a goal of using 10 percent SAF by 2030.

IAG has been working with the aviation industry in its campaign for further government-policy support to stimulate investment in new SAF-production technologies.

The SAF used as part of the IAG and Microsoft agreement will be produced from used cooking oil (UCO) and food waste at Phillips 66’s Humberside refinery, and from sustainably source bioethanol at Georgia-based Freedom Pines Fuels, LanzaJet’s facility in the United States.

Both fuels are certified by the International Sustainability and Carbon Certification System GmbH.

The Microsoft Climate Innovation Fund, a $1 billion initiative supporting new climate technologies through investments, has previously invested in LanzaJet.

LanzaJet’s Freedom Pines facility is the world’s first commercial-scale alcohol-to-jet production facility and will supply SAF to British Airways.