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DG Fuels' SAF plant in Louisiana sells full production capacity four years before open

Highlights

Final offtake agreement claims plant's remaining capacity

Follows Delta Airlines, Air France-KLM deals

  • Author
  • Brandon Mulder
  • Editor
  • Derek Sands
  • Commodity
  • Agriculture Energy Transition Oil

DG Fuels' sustainable aviation fuel plant in Louisiana, which is slated to begin production in about four years, has sold all of its initial production capacity after inking a final offtake agreement with an undisclosed buyer, the company said Nov. 14.

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The $2.5 billion SAF plant has already secured offtake agreements with four other buyers, including Delta Airlines, which has agreed to buy 55 million gallons/year for a seven-year period beginning in 2027, and Air France-KLM, which agreed to buy 21 million gallons/year for a 10-year period beginning in 2026.

Identities of the previous two buyers, in addition to the latest one, remain undisclosed. In total, the Louisiana plant will have an initial production capacity of 120 million gallons/year with plans for future expansion.

Once completed, it will be DG Fuels' first SAF plant, although the company has said additional SAF plants are planned for elsewhere in the US. DG Fuels' SAF production process uses cellulosic waste products, like timber trimmings from the logging industry, and renewable energy as feedstocks.

The plant will have an alkaline electrolyzer capacity of 839 MW, which will be supplied by the Norwegian electrolyzer manufacturer HydrogenPro.

Platts, part of S&P Global Commodity Insights, assessed the price of green hydrogen produced in the US Gulf Coast using alkaline electrolysis at $2.69/kg (including capex) on Nov. 11, while the assessed price of green hydrogen produced in the same region using PEM electrolysis was $3.63/kg.

"DG Fuels securing an annual offtake of 120 million gallons is of great importance for HydrogenPro," the company's CEO and founder said in a statement. "We are the chosen supplier of electrolysis equipment to this enormous project, and we look forward to continuing playing an active role globally in decarbonizing the future."

The company has said that the use of SAF can reduce emissions by 80% on average compared to conventional jet fuel. And because of its higher energy content per unit, SAF could give airlines operational advantages in addition to decarbonization benefits.

Scaling SAF

Scaling US supply of SAF was given a boost upon the passage of the Inflation Reduction Act, which created a standalone blending credit for SAF between $1.25-$1.75/gal, making SAF credits more valuable than that of other renewable fuels.

Replacing conventional jet fuel with SAF is projected to be the primary lever airlines will use for reaching net-zero industrywide by 2050. According to the International Air Transport Association, SAF will contribute to 65% of the industry's decarbonization pathway, while new technologies will account for 13% of emissions reductions and increased operational efficiencies will account for 3%.

However, current SAF supply in the US is nowhere near the amount needed to decarbonize the aviation sector. IATA estimates that 26.4 million gallons of SAF were produced globally in 2021. However, that figure is expected to rise sharply beginning in 2025, when many new SAF production plants in the US are due to come online, according to S&P Global estimates.