Major Airlines Launch $150 Million Fund to Accelerate Sustainable Aviation Fuel Development

The aviation industry has reached a pivotal moment in its decarbonization journey with the announcement of a groundbreaking $150 million investment fund aimed at advancing sustainable aviation fuel (SAF) technologies. The oneworld alliance, in partnership with Breakthrough Energy Ventures (BEV), has launched the oneworld BEV Fund to address the critical challenges of limited availability and high costs that have hindered widespread adoption of SAF. This initiative represents one of the largest coordinated investments by major airlines in next-generation fuel technologies, signaling a significant shift toward collaborative approaches in tackling aviation’s environmental impact.

The fund brings together cornerstone investors Alaska Airlines and American Airlines, along with International Airlines Group, Cathay Pacific, Japan Airlines, and Singapore Airlines, demonstrating unprecedented industry unity in pursuing sustainable solutions. With aviation currently accounting for approximately 2-3% of global carbon dioxide emissions and facing rapid growth projections, this investment fund emerges as a crucial mechanism for scaling breakthrough technologies that could transform the sector’s environmental footprint while maintaining the economic viability essential for continued global connectivity.

The Urgent Need for Aviation Decarbonization

The aviation industry faces one of the most challenging decarbonization tasks among all transportation sectors, with emissions continuing to rise as global air travel demand recovers and expands beyond pre-pandemic levels. Commercial aviation concluded its post-COVID recovery in 2024, with passenger traffic reaching approximately 4% above 2019 levels and freight traffic 7% higher than the baseline year. This recovery has brought both opportunities and environmental challenges, as the annual data reveals that 2024 gross emissions were 1% higher than in the CORSIA baseline year of 2019.

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The scale of the challenge becomes evident when examining global aviation emissions data, which shows monthly carbon dioxide emissions from domestic and international commercial passenger flights reaching 68.56 million metric tons in December 2024. International flights accounted for over 60% of this total, highlighting the global nature of aviation’s carbon footprint. These emissions have been on an upward trend since April 2020, reflecting the industry’s recovery from the COVID-19 pandemic, and commercial passenger flight emissions have now returned to pre-pandemic levels.

Looking ahead, the aviation sector is projected to face even greater environmental challenges as demand continues to grow. Current projections estimate that demand for air passenger journeys in 2050 could exceed 10 billion, with expected 2021-2050 carbon emissions on a ‘business as usual’ trajectory reaching approximately 21.2 gigatons of CO2. This trajectory presents a stark contrast to the industry’s commitment to achieve net-zero carbon emissions by 2050, a goal that was adopted by the International Civil Aviation Organization (ICAO) in 2022 and by the International Air Transport Association (IATA) member airlines in 2021.

“While aviation accounts for 2-3% of global CO2 emissions today, its share could rise to 6-9% by 2050 if decarbonization does not keep pace with sector growth.”

The oneworld BEV Fund: A Collaborative Investment Approach

The announcement of the oneworld BEV Fund on September 17, 2025, represents a significant milestone in aviation industry collaboration toward sustainable fuel development. The fund, with an initial close of $150 million, brings together some of the world’s largest airlines under a unified investment strategy managed by Breakthrough Energy Ventures, the climate technology investment fund founded by Bill Gates. This partnership structure leverages the complementary strengths of airline industry expertise and venture capital experience in climate technology development.

The fund’s cornerstone investors, Alaska Airlines and American Airlines, provide substantial backing and strategic direction for the initiative. American Airlines CEO Robert Isom, who also serves as chairman of oneworld, emphasized the business rationale behind the investment: “By investing in the SAF technologies of the future, American and our oneworld partners are making a business decision to accelerate the development of novel technologies with the potential to reach larger scale at lower prices than current technologies can achieve.”

Singapore Airlines, despite not being a oneworld alliance member, joined the initiative as part of the initial fund close, reflecting the recognition that sustainable aviation fuel development benefits from the broadest possible industry participation. This inclusive approach signals a shift from competitive dynamics to collaborative problem-solving in addressing shared environmental challenges.

“The oneworld BEV Fund is built to identify and scale breakthrough SAF technologies that can deliver real emissions reductions for jet fuel, compete with fossil-based fuels on cost, and integrate seamlessly with today’s aviation infrastructure.” — Eric Toone, CTO at Breakthrough Energy Ventures

Market Dynamics and Growth Projections

The global SAF market was estimated at $1.43 billion in 2024 and is projected to reach approximately $134.57 billion by 2034, with a compound annual growth rate of 57.53%. The United States leads the regional market, valued at $450.41 million in 2024 and expected to reach $43.16 billion by 2034. North America‘s dominance is attributed to increased air traffic and supportive government initiatives, while the Asia-Pacific region is predicted to grow at over 60% annually during the forecast period.

Despite these growth projections, current SAF production remains limited. Global consumption is expected to reach about 500 million gallons in 2024, with the U.S. recording 24.5 million gallons consumed in 2023. Production capacity constraints, with only two U.S. plants producing SAF at the start of 2024, highlight the need for substantial infrastructure investment. Announced projects like Phillips 66’s Rodeo Renewed and Diamond Green Diesel’s Port Arthur SAF project could increase U.S. capacity to nearly 30,000 barrels per day if completed as planned.

The International Air Transport Association reported that global SAF production reached 1 million metric tons in 2024, nearly double 2023 levels but short of earlier projections. For 2025, production is expected to rise to 2.1 million metric tons, still covering less than 1% of global jet fuel supply.

Cost Challenges and Economic Barriers

The economic viability of SAF remains a significant barrier. In 2025, SAF is forecast to cost 4.2 times more than conventional jet fuel, up from 3.1 times in 2024. Compliance fees imposed by European suppliers, intended to hedge regulatory risks under the EU’s SAF mandate, have exacerbated the price gap, resulting in an estimated $1.6 billion in additional SAF expenses in 2024.

SAF prices range between $3.11 and $6.14 per gallon, compared to conventional jet fuel at about $86 per barrel. With airlines operating on average net profit margins of just 3.6%, these cost disparities make SAF integration a long-term strategic consideration rather than a near-term operational shift.

Nevertheless, some analyses suggest that as production scales and technology advances, SAF will not be substantially more expensive than conventional jet fuel in the long term, supporting the sector’s net-zero emissions target by 2050. The initial high costs are expected to decrease, making SAF more accessible to airlines and passengers over time.

“The cost of achieving net-zero carbon emissions by 2050 is already estimated at a staggering $4.7 trillion. Fuel suppliers must stop profiteering on the limited SAF supplies available and ramp up production to meet the legitimate needs of their customers.” — Willie Walsh, IATA Director General

Regulatory Framework and Policy Drivers

Regulatory requirements and policy incentives are increasingly shaping SAF adoption. The European Union’s ReFuelEU Aviation regulation mandates SAF use at 155 major Union airports starting in 2025, with quotas rising to 35% for synthetic fuels by 2050. This regulation uses a penalty system to ensure compliance, making fulfilling SAF mandates economically preferable to non-compliance.

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is another significant framework. Airlines must surrender credits or purchase CORSIA-eligible fuels to offset emissions above a set baseline. The cost of complying with CORSIA is expected to reach $1 billion in 2025, increasing the attractiveness of SAF as a compliance mechanism.

In the United States, the Renewable Fuel Standard (RFS), federal tax credits, and state programs provide policy support. The White House aims to meet 100% of U.S. aviation fuel demand with SAF by 2050, with intermediate targets of 3 billion gallons by 2030 and 35 billion gallons by 2050. These policies create both demand certainty and financial incentives for SAF investment and production.

Industry Initiatives and Collaborative Efforts

The oneworld BEV Fund is part of a broader trend toward industry collaboration. United Airlines Ventures launched a $100 million SAF fund in 2023, joined by partners such as Air Canada, Boeing, and GE Aerospace. The oneworld alliance itself aspires to use SAF for 10% of its combined fuel volumes by 2030, supporting its collective net zero goal by 2050.

Breakthrough Energy Ventures, founded by Bill Gates, has invested in companies like LanzaJet to support commercial-scale SAF production. The International Air Transport Association coordinates industry sustainability efforts through its Fly Net Zero commitment and detailed roadmaps for achieving net-zero CO2 emissions by 2050, with SAF expected to provide about 65% of the mitigation needed.

These collaborative efforts, which include partnerships with technology firms and energy companies, are crucial for developing the diverse technology pathways and supply chains needed for SAF to achieve meaningful market penetration.

Technology Development and Production Pathways

SAF production relies on multiple technology pathways, including hydro-processed esters and fatty acids (HEFA), Fischer-Tropsch synthesis, and alcohol-to-jet processes. Biofuels currently account for over 71% of the SAF market, with HEFA-based fuels offering 50-65% emission reductions compared to traditional jet fuel.

Emerging pathways, such as power-to-liquid synthetic fuels made from hydrogen and captured CO2, offer the potential for even deeper decarbonization. The EU’s ReFuelEU regulation specifically mandates synthetic fuel use, recognizing their potential for truly carbon-neutral aviation.

Scaling these technologies will require significant investment, with over 140 renewable fuel projects announced for production by 2030. However, not all projects will reach final investment decisions, underscoring the need for continued financial and policy support.

Conclusion

The launch of the oneworld BEV Fund marks a pivotal moment in aviation’s journey toward sustainable fuel adoption. With $150 million in initial funding and management by Breakthrough Energy Ventures, the fund combines airline industry expertise with climate technology investment to accelerate next-generation SAF development. This collaborative approach, involving both alliance and non-alliance members, reflects broad industry recognition that overcoming the scale and cost challenges of SAF requires collective action.

Despite explosive market growth projections, current SAF production and adoption remain limited by high costs, supply shortages, and infrastructure constraints. Regulatory frameworks like ReFuelEU and CORSIA are creating strong compliance incentives, while voluntary industry commitments and collaborative investment models are driving innovation. The success of the oneworld BEV Fund and similar initiatives will be critical in achieving aviation’s net-zero emissions goals by 2050 while maintaining global connectivity.

FAQ

What is the oneworld BEV Fund?
The oneworld BEV Fund is a $150 million investment fund launched by the oneworld airline alliance and Breakthrough Energy Ventures to advance and commercialize next-generation sustainable aviation fuel technologies.

Which airlines are participating in the fund?
Cornerstone investors include Alaska Airlines and American Airlines, with International Airlines Group, Cathay Pacific, Japan Airlines, and Singapore Airlines also participating.

Why is sustainable aviation fuel important?
SAF is critical for reducing aviation’s carbon emissions, which currently account for 2-3% of global CO2 emissions and are expected to rise as air travel demand grows.

What are the main barriers to SAF adoption?
The primary barriers are high costs (SAF is 4.2 times more expensive than conventional jet fuel in 2025), limited production capacity, and supply chain constraints.

What role do regulations play in SAF development?
Regulations like the EU’s ReFuelEU Aviation and the global CORSIA scheme create mandatory SAF usage and carbon offset requirements, incentivizing investment and scaling of SAF technologies.

Sources: oneworld Press Release