Drax Partners With Pathway Energy to Supply Biomass Pellets for New Gulf Coast SAF Plant

On Wednesday, UK-based renewable energy leader Drax Group and Pathway Energy, a carbon negative energy company, announced that they have reached heads of terms on a multi-year deal that could see Drax supply over 1 million tons of sustainable biomass pellets each year to Pathway’s proposed sustainable aviation fuel (SAF) plant on the US Gulf Coast.

Under a separate agreement, Drax could also become a strategic partner in the project, with a potential investment in the form of a convertible loan note of up to $10 million. No investment decision has been taken by Drax at this stage.

The heads of terms reflect growing global demand for SAF, which usually can reduce carbon emissions by up to 80% when compared to traditional jet fuels. Modelling by the International Air Transport Association expects the global use of SAF to deliver 65% of the emissions reductions required for the aviation sector to reach net zero by 2050.

Once fully operational, the plant will be capable of producing 30 million gallons of carbon-negative SAF annually, the equivalent of enough fuel to power 5,000 carbon-neutral long-haul (10+ hour) flights per year.

Pathway will shortly begin front end engineering design and anticipates that it will begin construction on the $2 billion plant in early 2026. Following construction, commercial SAF production is expected to commence in 2029.

Both companies also have a strategic interest in bioenergy with carbon capture and storage (BECCS), a carbon removal and renewable power technology. Pathway intends to develop a BECCS system on the Port Arthur site which could remove 1.9 million tons of carbon dioxide from the atmosphere each year while powering the SAF facility and ensuring the jet fuel is carbon negative.

In the future, Drax could also potentially supply biomass to two additional Pathway projects, delivering a further 2 million tons of sustainable pellets per year to the business’ sites through the 2030s.