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Microsoft, Alaska Airlines ink sustainable aviation fuel agreement

Highlights

Microsoft to buy physical fuel in first-of-its kind agreement

SAF supply to offset Microsoft business travel

SkyNRG to supply physical SAF to Alaska Airlines

Microsoft plans to purchase sustainable aviation fuel to offset the carbon emissions of its employees on three common flight routes, supplying the fuel to Alaska Airlines through an agreement with SkyNRG, according to an Oct. 22 statement from the companies.

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"We hope this sustainable aviation fuel model will be used by other companies as a way to reduce the environmental impact of their business travel," Judson Althoff, executive vice president of Microsoft's Worldwide Commercial Business, said in the statement.

While many companies have eyed ways to offset carbon emissions, the agreement will see Microsoft buying the physical fuel rather than associated credits.

As part of the agreement, Alaska Airlines will calculate the fuel consumption associated with a given Microsoft employee flying on one of the three covered routes. Microsoft, through SkyNRG, would then supply the SAF to cover the fuel consumption of its travelers, according to someone familiar with the deal who declined to be named.

The source said there are no firm dates for when the SAF will be supplied but expects a progress report in early 2021.

"With their joint participation in a pilot project of the World Economic Forum Clean Skies for Tomorrow Initiative on scope 3 emission reductions, Microsoft and SkyNRG intend to support the development of a global accounting standard for voluntary SAF purchases to stimulate uptake by other corporations," said Martin Struijker Boudier, spokesman for SkyNRG, in an emailed statement.

Scope 3 emissions refer to indirect emissions that are a result of a company's activity, but not directly caused by the company's assets.

SAF can be produced from various fats and oils, but the agreement specifically looks to supply SAF made from waste oils, such as used cooking oil.

S&P Global Platts recently launched California SAF prices that reflect the cost of production. Platts published the price of California SAF at $3.7264/gal Oct. 21, nearly 3.33 times the price of conventional jet fuel in the same region.