The deal with Velocys will see BA, Iberia and Aer Lingus use SAF produced at the Bayou Fuels project in Mississippi.

IAG has committed to 73 million gallons of SAF, which after blending, will produce 192 million gallons over 10 years from 2026, when the plant will begin production. IAG has committed to one-third of the plant’s output, with the remainder being taken by US budget carrier Southwest Airlines.

IAG said the deal would enable it to cut annual emissions by two million tonnes by 2030. “This equates to removing one million cars from Europe’s roads each year,” it added.

However, the proportion is likely to be small in comparison with IAG’s total fuel needs for its fleet of more than 530 aircraft. By comparison, United Airlines, with a fleet of 850, uses four billion gallons of conventional fuel each year.

The Bayou plant uses a combination of agricultural waste, renewable power and carbon capture and storage to produce SAF.

IAG chief executive Luis Gallego said: “IAG is investing $400 million in the development of sustainable aviation fuel in the next 20 years. This new agreement is another important step towards achieving our goal of 10% sustainable aviation fuel use by 2030.

“Sustainable aviation fuel is a critical element for the decarbonisation of the aviation industry. Clear policy support is needed to attract investment to construct the necessary plants to deliver enough supply for the airline industry.”

He called on the UK to follow the US example.

“This project has benefitted from strong policy support from the US, creating highly valued green jobs and economic growth. We would encourage the UK and the EU to follow suit in supporting the development and deployment of green technologies including carbon capture,” he said.