SELBY, United Kingdom — Drax Group and Pathway Energy LLC reached heads of terms on a multi-year deal that could see Drax supply more than 1 million tons of biomass pellets each year to Pathway’s proposed $2 billion sustainable aviation fuel (SAF) plant in Port Arthur, Texas.

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.

Drax said the heads of terms reflect growing global demand for SAF, which the company added can usually 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 would 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 with construction of the plant commencing in early 2026. Following construction, commercial SAF production is expected to commence in 2029.

“This landmark deal has the potential to be the biggest third-party supply arrangement Drax’s pellet business has made,” said Will Gardiner, CEO of Drax. “Demand for sustainable biomass is accelerating, with international businesses seeking long-term fuel supplies for a range of projects globally – including sustainable aviation fuel and bioenergy with carbon capture and storage.”

Drax operates 18 wood pellet plants through the United States and Canada.