Neste supplies FedEx with sustainable aviation fuel, LA deployment

Finnish transportation fuel company Neste has begun supplying FedEx with sustainable aviation fuel at the Los Angeles International Airport, making Fedex's first major US SAF deployment, the company said in a May 20 statement.

"Through this agreement, FedEx has purchased blended fuel from Neste that includes a minimum of 30% neat, i.e. unblended Neste MY Sustainable Aviation Fuel. Delivery of the fuel began in May 2025 and will continue for one year," the statement said.

Neste will supply more than 3 million gallons or 8,800 mt of blended SAF to FedEx at the Los Angeles airport, which will account for about one-fifth of FedEx's Los Angeles jet fuel consumption annually.

Neste's SAF is made from 100% renewable waste, including used cooking oil and animal waste fat, and can be blended with up to 50% of conventional jet fuel.

Neste already supplies other Los Angeles carriers with SAF. Earlier in May, Air New Zealand signed its biggest SAF offtake deal with Neste for 30 million liters of SAF to be delivered to Los Angeles and San Francisco airports through February 2026.

SAF production supported as Martinez's work is completed

Currently, Neste's global SAF production capability is 515 million gallons, or around 1.5 million mt annually. Neste produces SAF at its Rotterdam and Singapore facilities as well as in California, where Neste and Marathon Petroleum are 50:50 joint venture partners in Martinez Renewables.

The facility, converted from a petroleum refinery, is located in the San Francisco Bay Area and can produce about 730 million gal/year of renewable diesel and SAF.

The facility reached full capacity at the end of 2024 when the pre-treatment unit was up and running, which allows it to optimize advantaged feedstock, improving the carbon intensity score and increasing its value.

Marathon's renewable diesel segment, which also includes the Dickinson, North Dakota, facility ran at 70% utilization in the first quarter, due in part to down time at the Martinez facility, Marathon said on its May 6 Q1 results call.

The Martinez pre-treatment unit came online in Q4 2024, allowing the partners to optimize feedstocks and benefit from California's Low Carbon Fuel Standard credits, which reward lower carbon fuel intensity.

So far in the second quarter, California's LCFS credits are averaging $57.97/mt, down from Q1's average of $66.80/mt. The LCFS is undergoing a significant change aimed at reducing carbon reduction targets and increasing the falling value of the credits, which have been declining.

The LCFS remains under review after amendments were not approved by the Office of Administrative Law on Feb. 18, 2025, giving the California Air Resources Board 120 days to amend them.

The price of SAF in California has averaged $6.74/gal so far in Q2, down from the $6.98/gal average in Q1, according to assessments from Platts, part of S&P Global Commodity Insights.