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LanzaJet gets financing from Microsoft for Georgia SAF and RD plant

Highlights

Microsoft joins LanzaJet investor pool

Freedom Pines Fuels plant to produce 10 million gal/yr

LanzaJet on Jan. 13 said it has received $50 million in financing from the Microsoft Climate Innovation fund toward the construction of its alcohol-to-jet sustainable fuel production plant in the state of Georgia as it seeks to meet growing demand for cleaner fuel for the hard-to-decarbonize air travel sector.

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"The innovative structure of Microsoft's financing will enable LanzaJet to bring lower-cost sustainable aviation fuel and renewable diesel to the global market," LanzaJet's statement said.

Construction of the Freedom Pines Fuels plant in Soperton, Georgia, is progressing, and the plant is expected to be producing 10 million gallons of SAF and renewable diesel annually in 2023. It will use sustainable waste-based ethanol feedstock as well as other waste-based feedstocks.

The investment helps LanzaJet realize its goal of producing 1 billion gallons of SAF in the US by 2030, in line with the Biden administration target set in September 2021 to produce 3 billion gallons of SAF per year.

It also helps Microsoft meet its climate goals.

"The investment was made as part of Microsoft's efforts to achieve its 2030 goal of becoming carbon negative and advancing a net-zero economy," the statement said. "It also allows Microsoft to access sustainable, renewable diesel for its data centers to enable Microsoft to further achieve its net-zero goals."

Microsoft is the latest investor in LanzaJet, joining Suncor, Mitsui, British Airways, Shell and All Nippon Airways. Suncor Energy and Mitsui & Co. invested $15 million and $10 million, respectively, to establish LanzaJet. The funding will be used to build a demonstration plant that will produce 10 million gallons per year of SAF and renewable diesel starting from sustainable ethanol sources.

Layering in federal credits and California's Low Carbon Fuel Standard credits, the price of SAF averaged $6.80/gal in Q4 2021. This has weakened so far in Q1 2022 to $6.48/gal.

But the price gap between SAF without credits and regular San Francisco jet fuel narrowed in Q4 2021, to 9.22 cents/gal premium, compared with 9.93 cents/gal discount in Q3 2021. In Q1 2022, the gap has widened out to 45 cents/gal discount.