Sustainability is currently a key aviation industry topic. Airlines play an important role in driving change related to innovations in sustainable aviation fuel (SAF), alternative propulsion mechanisms, and development of innovative aircraft. Governments are inciting change by increasing the pace of SAF regulation adoption in several jurisdictions, including in the U.S., EU, and Singapore. In the U.S., the Biden Administration is providing a path for aviation fuel feedstocks such as corn-based ethanol to qualify for SAF credits, further incentivizing the industry to use SAF.
Sidley works closely with clients to keep them one step ahead of the many uncertainties and risks affecting the journey to a sustainable air transportation future. We assist clients to anticipate issues arising from some of the fundamental premises underpinning sustainable aviation developments, including:
- Current battery technology and the laws of physics limit widely available sources of propulsion for a widebody aircraft on long-range flights to one: hydrocarbons.
- If aviation fuel must remain primarily hydrocarbon-based for the near future, then the only way to make it sustainable is to remove carbon emissions from the equation.
- The list of sustainable aviation propulsion solutions for short-range flights is a bit longer – including battery, hydrogen, and hybrid technologies.
- The production of SAF at the scale needed for the industry to meet the most optimistic carbon-emissions goals will require enormous amounts of feedstock.
- Whether feedstock availability, technology and infrastructure development, financing, and governmental support will combine to facilitate the development of SAF production at the scale necessary in the time allotted to meet industry goals remains to be seen.
Ranked Band 1 in Transportation: Aviation: Transactional
— CHAMBERS USA 2024: NATIONWIDE
How We Add Value
Sidley is one of the leading law firms in this burgeoning space and helps airlines, other operators, private equity and corporate venture funds, strategic investors, energy companies, and their respective management teams and boards of directors navigate this rapidly evolving interdisciplinary area, as well as the opportunities and challenges that can arise.
Our lawyers bring extensive experience in the sustainable fuels and biofuels sector across the full supply chain.
We assist clients with:
- SAF project development, offtake, and purchase agreements
- The development of strategic alliances for the purpose of fostering transformative technologies
- Investment in early- and mid-stage technology development companies for various types of SAF
- Purchases of sustainable aviation equipment including hydrogen propulsion engines and aircraft, electric vertical and takeoff aircraft, SAF powered supersonic aircraft, battery powered short-range aircraft, and light weight components
We demonstrate thought leadership on regulatory developments in the sustainable aviation space, and bring our insights to bear for our global clients as they drive innovation, strategy and scale in this important industry.
Ranked Band 1 in Energy Transition
— CHAMBERS USA 2024: NATIONWIDE
Related Matters
Some of our recent experience in the space includes representing:
- An international airline in a 1.5 billion gallon SAF purchase agreement — the largest in aviation history — and related joint multimillion-dollar investment in a pioneering producer of sustainable aviation fuel
- Multiple international airlines in purchases of sustainable aviation equipment including hydrogen propulsion engines and aircraft, electric vertical and takeoff aircraft, SAF powered supersonic aircraft, battery powered short-range aircraft and light weigh components
- An international airline in various offtake agreements involving the transfer of SAF Scope 3 emissions reduction rights to third parties
- An international airline in the launch of a first-of-its-kind investment vehicle designed to support start-ups focused on decarbonizing air travel by accelerating the research, production, and technologies associated with SAF
- A corporate venture fund in a joint venture with several energy countries to develop and commercialize a novel SAF technology that uses ethanol as its feedstock
- An international airline in its investment in a U.S.-based company that processes municipal solid waste into low-carbon jet fuel projects, as well as related fuel arrangements
- Two international airlines on requirements and risks under the revision of EU ETS for aviation and draft regulation on SAF
- An international airline in an agreement to develop and purchase at least 300 million gallons of SAF over 20 years from a CO2 utilization company
- Investors in early stage companies developing air transportation vehicles utilizing sustainable propulsion, including SAF-powered supersonic aircraft and electric vertical takeoff and landing aircraft
In addition, we are published thought leaders in the sustainable travel space:
Sustainable Aviation Fuel: Reality or Mirage?, August 2023, Kevin Lewis and Paul McBride, The Texas Lawbook.
Biden Administration Proposals: Sustainable Fuels, Greenhouse Gas Reductions in the Aviation Industry, Sidley Environmental Energy Brief, September 10, 2021.
Airline Due Diligence for Investments in Unproven Technology, April 7, 2022, Atman Shukla, Kevin Lewis, Bart Biggers, Texas Lawyer.
A Tale of Two Carbon Pricing Schemes for Aviation: The Interplay Between the EU/UK ETS and CORSIA, June 2022, Katherine Connolly, Nicolas Lockhart, Stella Perantakou, Oxford Energy Forum.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.
Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.
