As new airline routes are continuously added, and more planes take to the sky, the total amount of airplane emissions has been growing, but a new collaboration between Microsoft and Alaska Airlines is taking aim at the issue with plans to advance the production and use of this energy startup’s lower-carbon jet fuel.
Airplane emissions have grown an estimated 17% since 1990 and now makeup approximately 9% of total greenhouse gas emissions in the United States.
Given the large and growing amount of emissions from the airline industry, it’s little wonder that major companies are looking for a solution to the problem. Developing a product that can reduce airplane emissions would likely prove quite lucrative for a company, especially given the recent passage of the Inflation Reduction Act and its generous subsidies for clean energy innovations.
Such a product, called sustainable aviation fuel (SAF), has been developed in the past but is prohibitively expensive to produce. SAF, which has 90% fewer emissions than conventional jet fuel, has typically been made by refining organic vegetable oils, but startup Twelve has developed a process for producing SAF using carbon dioxide (CO2).
Twelve co-founder and CEO Nicholas Flanders explained the process and the cost benefits, saying:
“Our process takes CO2, water and electricity as inputs. We use the electricity to break apart CO2 and water, and then we have catalysts that recombine the elements to make new products. And one of the things that we can make is the building blocks for jet fuel. The cost of renewable electricity has been falling over the last decade, so has the cost of CO2 capture, and so has the cost of electrolyzers, which is the technology that we use to transform CO2 and water into the building blocks for jet fuel.”
Twelve is already attracting major industry partners to its project. One of the largest airlines in the U.S. is Alaska Airlines. Alaska Airlines (NYSE: ALK), in collaboration with Microsoft (NASDAQ: MSFT), is partnering with Twelve to advance Twelve’s SAF development, with the ultimate goal of Alaska Airlines reaching net zero emissions by 2040.
Other non-airline entities are also supporting Twelve’s project via investments from various climate-focused funds, including the Microsoft Climate Innovation Fund and $130 million from Meta (NASDAQ: META) CEO’s Chan Zuckerberg Initiative. The startup has raised approximately $200 million to date. If their product is successful and garners widespread use, investors will likely see substantial returns on their investments. Only time will tell if this comes to pass, but they’re off to a great start thus far.
Shares of Microsoft last traded at $261.79 per share, down -1.3% on the day. YTD, MSFT stock is down -21.80%.
Alaska Air Group is currently trading at $44.75 per share, up +0.25% on the day. YTD, ALK stock is down -17.24%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.