Drax Group, the UK-based renewable energy leader, has agreed heads of terms with Pathway Energy LLC, a carbon-negative energy company, for a multi-year deal to supply over one million tonnes of sustainable biomass pellets annually. The agreement supports Pathway Energy’s proposed $2 billion sustainable aviation fuel (SAF) plant on the US Gulf Coast, which aims to produce 30 million gallons of carbon-negative jet fuel each year—equivalent to over 150 million gallons of carbon-neutral blended SAF.
Under the terms, Drax may also become a strategic partner in the Port Arthur project in Texas through a potential investment of up to $10 million via a convertible loan note. While no final investment decision has been made, the collaboration positions Drax as a key player in the energy transition and the decarbonisation of the aviation sector. The plant, expected to begin construction in 2026 and commence commercial SAF production in 2029, will have the capacity to power approximately 5,000 long-haul flights annually.
The agreement reflects the growing global demand for SAF, a critical component in reducing aviation’s carbon emissions. SAF can lower emissions by up to 80% compared to traditional jet fuels, and modelling by the International Air Transport Association indicates SAF could deliver 65% of the emissions reductions needed for the sector to achieve net zero by 2050. The partnership also aligns with both companies’ interests in bioenergy with carbon capture and storage (BECCS), a technology capable of removing significant amounts of carbon dioxide from the atmosphere.
Pathway plans to incorporate a BECCS system at the Port Arthur facility, potentially removing 1.9 million tonnes of carbon dioxide annually while powering the plant. Drax could also expand its involvement by supplying sustainable biomass to two additional Pathway projects, delivering an extra two million tonnes of biomass pellets annually through the 2030s.
Will Gardiner, CEO of Drax Group, described the agreement as a landmark deal and the largest third-party supply arrangement for Drax’s pellet business to date. “This is an important step in the energy transition and in decarbonising the aviation sector through sustainable aviation fuel production,” he said, adding that the partnership underscores the need for bioenergy and carbon removals in tackling climate change.
Steve Roberts, CEO and Founder of Pathway Energy, emphasised the agreement’s potential to transform the aviation industry. “This innovative deal aligns our shared commitment to deploy proven biomass conversion technologies and carbon capture systems, addressing one of the hardest-to-abate sectors through the production of carbon-negative SAF,” he said.
