
DALLAS – October 17, 2024 – Southwest Airlines Co. (NYSE: LUV) has announced its largest sustainable aviation fuel (SAF) supply agreement in Illinois, bringing SAF to Chicago Midway International Airport (MDW) through a partnership with Valero Marketing and Supply Company (Valero), a subsidiary of Valero Energy Corporation (NYSE: VLO). This two-year agreement, set to begin in Q4 2024, will supply Southwest with a minimum of 3.6 million gallons of neat SAF, with the potential to scale up to 25 million gallons, equivalent to approximately 84 million gallons of blended SAF.
“Today’s announcement marks a milestone in our efforts to utilize more SAF in our operation,”
— Michael AuBuchon, Managing Director of Fuel Strategy and Management, Southwest Airlines
The SAF supplied under this agreement is expected to account for up to 35% of Southwest’s total jet fuel use at MDW, based on 2023 data, making it the state’s largest SAF supply deal. This achievement aligns with Southwest’s Nonstop to Net Zero plan to reach net-zero carbon emissions by 2050.
A Statewide Push for Sustainability
Governor JB Pritzker applauded the collaboration, emphasizing Illinois’ commitment to sustainability and the role this agreement plays in achieving the state’s clean energy goals. “Since day one as Governor, I’ve committed to making Illinois a national leader in sustainability and clean energy.,” Pritzker said, pointing out how the state’s nation-leading SAF tax credit has already begun influencing SAF adoption across Illinois.
Under Illinois’ SAF tax credit law, passed last year, airlines serving Illinois benefit from a credit of *$1.50 per gallon of SAF, supporting the scaling of sustainable fuel use at key airports like Midway.
Scaling SAF with Public and Private Collaboration
Southwest’s SAF will be produced from waste-based feedstocks like used cooking oil, animal tallow, and distiller’s corn oil, with a lifecycle emissions reduction of 74% to 84% compared to conventional jet fuel. This SAF will be supplied by Diamond Green Diesel, a joint venture between Valero and Darling Ingredients Inc., and will be blended with traditional jet fuel through existing pipelines to Midway.
“SAF is a critical tool for reducing aviation’s carbon footprint, and this agreement is a significant move towards using sustainable fuels in our operations,” said Michael AuBuchon, Managing Director of Fuel Strategy and Management at Southwest Airlines. “This wouldn’t have been possible without Illinois’ SAF Purchase Credit and the support of our Corporate Customers, who have embraced sustainability.”
Federal and Local Support
U.S. Senator Tammy Duckworth (D-IL) also celebrated the announcement, stating, “One of the most important things we can do to make American aviation more sustainable is to dramatically increase the supply of SAF.”
Commissioner Jamie L. Rhee of the Chicago Department of Aviation highlighted how critical SAF is for aviation’s future and praised Southwest’s leadership in bringing SAF to MDW. “We are thrilled that Southwest Airlines has chosen Midway International Airport to advance its commitment to sustainability through the use of SAF” Rhee stated, emphasizing the environmental and community benefits this brings.
The Broader SAF Landscape
Valero’s SAF, certified by a CORSIA-approved Sustainability Certification Scheme, will not only help Southwest meet its sustainability targets but also contribute to broader industry goals. As part of Southwest’s long-term strategy, the SAF supply agreement highlights how public-private collaboration can accelerate SAF scaling.
Looking Forward: More SAF on the Horizon
This agreement underscores Southwest’s commitment to scaling SAF use within its operations, aligning with the carrier’s goal to reach net-zero carbon emissions by 2050. As part of the airline’s broader sustainability strategy, this SAF deal is seen as a crucial step toward reducing aviation’s environmental impact while maintaining operational efficiency.
*Correction Notice:
An earlier version of this article incorrectly stated that airlines serving Illinois benefit from a $0.75 per gallon SAF tax credit under Illinois’ SAF tax credit law. The correct figure is $1.50 per gallon. This has been updated to reflect accurate information. We apologize for any confusion this may have caused. (Corrected on October 23, 2024)