The 785,000 tonnes of fuel, known as e-SAF, will be delivered to IAG’s airlines, which also include Aer Lingus, Iberia, Vueling and Level.

IAG said the deal was cumulative over 14 years. IAG has committed to 10% SAF use by 2030 and said it now had one-third of the supply needed to reach this target.

"The significant ramp up is from 2029 when it will be 80,000 additional tonnes per year, taking our 2030 total commitment from 250,000 tonnes to 330,000 tonnes – one third of our 2030 commitment," said IAG.

IAG, which claims to be the first European airline group to announce an e-SAF deal, said the new fuel will reduce greenhouse gas emissions by “up to 90%". Last year, the group used around 12% of the world’s SAF supply.

It said: “This deal brings the scale-up of e-SAF produced using power-to-liquid technology one step closer to reaching its full potential in the aviation industry.

"E-SAF does not face feedstock limitations, has a high degree of emissions reduction versus conventional jet fuel and has a relatively low land and water-use footprint.”

IAG’s partnership is with Twelve, based in California, which is building a demonstration plant in Washington State that will begin production next year. 

Luis Gallego, IAG’s chief executive, said: “The shortage of sustainable fuel globally continues to be a problem for our industry, although innovative companies like Twelve are an important part of the solution.  

“This new deal will contribute towards our 2030 SAF target. We would like to see similar projects scale in Europe, and we look forward to working with governments across our key markets to build a SAF industry to deliver jobs, economic growth and a stable supply of SAF.”