(Bloomberg) -- Oil producer Cepsa SA and IAG SA’s Spanish unit are forming a partnership to develop clean fuel for airlines.

Cepsa will develop sustainable aviation biofuels made from waste and recycled oils, among other products, to supply Iberia, according to a statement Monday. The deal also includes the development of other energy sources such as hydrogen and electricity to operate aircrafts and ground fleets. 

Cepsa, the Spanish oil producer controlled by Abu Dhabi’s sovereign wealth fund and the Carlyle Group, is scrambling to develop its clean-energy business and catch up with larger rivals across Europe. As part of its green push, it restructured its management late last year with the appointment of Maarten Wetselaar, who was hired from Royal Dutch Shell PLC.

Last week, Cepsa tapped former BP Plc executive Carlos Barrasa as director of the new commercial and clean energies business.

Iberia Express, a low-cost carrier, will also benefit from the agreement with Cepsa. The two carriers have committed to achieving net zero emissions by 2050 and to operate a minimum of 10% of their flights with so-called clean fuels by 2030. 

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