(Bloomberg) -- DHL Group, Sasol Ltd. and HH2E AG agreed to collaborate on producing sustainable, hydrogen-based aviation fuels in Germany to help reduce carbon emissions, with Airbus SE intending to join the project at a later date.
The partners signed an agreement to create green hydrogen production capacity by 2030 involving “investments in the billions,” according to a statement published Monday on the sidelines of an aerospace conference in Hamburg. While the exact location has yet to be decided, the plan is to locate the facility in eastern Germany, where it can help supply Leipzig/Halle airport.
Aviation is one of the biggest emitters of harmful carbon and as much as $5 trillion of capital investment may be needed to deliver on a goal of reaching net neutrality by 2050.
The project announced Monday aims to produce at least 200,000 tons of hydrogen-based fuel per year, potentially rising to 500,000 tons. The total reduction in CO2 emissions could be about 1.58 million tons when the project reaches full capacity, according to the statement.
Deutsche Lufthansa AG alone used 7.6 million tons of fuel in 2022, meaning that if the site ever reached full capacity, it would be equivalent to around 7% of the carrier’s fuel needs.
Read More: How Aviation Is Trying to Clean Up Its Dirty Image: QuickTake
DHL is expected to be a major consumer of the fuel produced at the new facility, contributing to the company’s goal of achieving net zero emissions by 2050, according to Monday’s statement.
Airbus — which is also a potential customer — has said it aims to increase the share of clean fuels used for internal operational purposes to 10% this year and to 30% by 2030.
Germany’s ruling coalition wants to take a leading role in the transition to cleaner fuels. Chancellor Olaf Scholz said at Monday’s conference that the government is aware of the challenge for companies to meet blending quotas for sustainable fuels or synthetic fuels.
“But we can show here that it can be done,” Scholz said, adding that he was “delighted” about the initiative to set up the facility in eastern Germany.
--With assistance from William Wilkes and Michael Nienaber.
©2023 Bloomberg L.P.
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