Southwest Airlines Sells Renewable Fuels Unit to Conestoga Energy - Report

August 15, 2025

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(Investing.com/AI) Southwest Airlines Co. sold its renewable fuels unit to Conestoga Energy as the carrier reduces its climate initiatives after years of limited industry progress, Bloomberg News reported on Thursday.

Conestoga Energy, a major low-carbon intensity biofuel provider, said it purchased Saffire Renewables LLC from Southwest Airlines Renewable Ventures, according to the report.

The financial terms of the deal were not disclosed.

The acquisition includes all intellectual property, related technologies, key leadership team members, and a proposed pilot facility in Kansas that would produce sustainable aviation fuel (SAF), it added.

This article was generated with the support of AI and reviewed by an editor. READ MORE

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Cancelled? Southwest Airlines Offloads SAF Subsidiary (Simple Flying)
Southwest Airlines Sells Renewable Unit in Retreat From Climate Goals (Bloomberg/Energy Connects)
Liberal, Kansas and the fight conservatives are waging for energy freedom (Biofuels Digest)
Conestoga Energy Announces Acquisition of SAFFiRE Renewables, LLC to Advance Production of SAF and Low Carbon Intensity Biofuels (Conestoga Energy/Business Wire)

Excerpt from Simple Flying: According to the report, Southwest Airlines laid off seven of its ten employees who were working on sustainability projects at the company.

Nevertheless, Southwest Airlines continues to pursue several climate-focused efforts to reduce its environmental impact and improve operational efficiency, according to its website. In 2025, the airline aims to cut single-use plastics in in-flight service by 50% by weight. By 2030, it plans to reduce carbon emissions intensity by 25% and replace 10% of its total jet fuel consumption with SAF.

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Whether the SAF goal can still be achieved following the sale of its renewable fuel unit remains uncertain. According to its website, Southwest continues to explore opportunities to procure and support the scaled production of SAF, but supply is subject to legal, regulatory, financial, technical, and commercial risks, and while the airline may enter into agreements for offtake or investment, it cannot guarantee that third parties will deliver sufficient SAF on commercially reasonable terms.

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In May 2025, Air New Zealand decided to change its goals from targeted achievements to a tracking process. According to a LinkedIn post by Kiri Hannifin, Chief Sustainability and Corporate Affairs Officer for Air New Zealand, and an airline statement, the decision to go from targets to guidance was due to the technological challenges and "uncertainty" in meeting the original targets.

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SAF has been at the forefront of efforts to reduce CO2 emissions from air travel. According to IATA, achieving net-zero CO2 emissions by 2050 will require a combination of eliminating emissions at the source, offsetting, and carbon capture technologies. Of this, 65% would come from replacing conventional jet fuel with SAF, 19% from offsets and carbon capture, 13% from new technologies such as hydrogen or electric aircraft, and 3% from infrastructure and operational efficiencies.

However, the adoption of SAF in global commercial operations has been extremely slow. SAF faces significant hurdles, including high production costs, limited scalability, and concerns about its true environmental impact. In the UK, for instance, SAF is primarily produced from used cooking oil, some of which is imported from Asia. This long-distance shipping contributes to carbon emissions, with maritime transport accounting for about 2% of global CO2 output. READ MORE

Excerpt from Bloomberg/Energy Connects: Southwest’s pivot also comes after the Trump administration trimmed a credit for producers of greener jet fuel. That adjustment means it will be more difficult for producers to cover the costs of making SAF, according to Bloomberg Intelligence.

Tom Willis, chief executive officer of Conestoga, said Saffire technology can be used to make ethanol for purposes beyond just jet fuel.

Based in Liberal, Kansas, in the southwestern part of the state, Conestoga produces more than 200 million gallons of ethanol per year along with other feed products. It’s also been capturing carbon for over 15 years, which helps it sell to markets such as California that favor low-carbon-intensity fuels.

“I don’t think it’s going away,” Willis said of the demand.

Saffire’s proprietary ethanol production process converts corn husks, cobs and stalks that are typically left to decompose in the field into an abundant low-carbon feedstock for SAF production, Conestoga said. Eventually, Conestoga can add the technology as “bolt-on” additions to its existing plants already making fuel from corn kernels.

“The future has never been brighter in my opinion for biofuels,” Willis said. “We can go anywhere where there’s a demand for a very low-carbon fuel.” READ MORE

Excerpt from Biofuels Digest: ... one of the most “liberal”-sounding energy projects in America — turning corn stover into carbon-negative jet fuel — is about to take root right here in Liberal, Kansas. And you’ll know it’s not because folks here have gone soft. It’s because they’ve spotted an opening for freedom — energy freedom — and they mean to take it.

From Airline to Ethanol

In April 2024, Southwest Airlines bought SAFFiRE Renewables to secure its own pipeline of Sustainable Aviation Fuel (SAF). By summer 2025, Southwest was out, and Kansas-based Conestoga Energy was in — taking the entire technology package, pilot plant, and team.

For an airline so publicly committed to SAF, that’s a turnaround fast enough to cause G-forces. Did Southwest have a sudden shift in strategy? Did Conestoga make an offer too good to refuse? Or was there something in the technology they’d rather pass along?

Whatever the backstory, Conestoga now holds the keys to one of the most promising cellulosic biofuel processes in the country — and they’re planting it right in the middle of the High Plains.

Conestoga’s Roots

Headquartered in Liberal, Kansas, Conestoga Energy Partners is a renewable energy company that’s been producing low-carbon biofuel and related products for nearly two decades. Founded with a goal of strong local ownership and community involvement, Conestoga operates two ethanol facilities in Southwest Kansas and manages over 200 million gallons per year of production across Kansas and Texas.

They’re not outsiders parachuting in with a grant — they’re 400 members deep, with roots in farm country, and they’ve been moving grain, distillers, and CO₂ long before it was trendy.

The Facilities

Bonanza BioEnergy (BBE) — Garden City, Kansas.

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Arkalon Energy — Nine miles east of Liberal, Kansas.

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The Carbon Play

Conestoga has been capturing CO₂ for over 15 years, mainly for EOR — injecting it into mature oil fields to restore pressure and boost output, while storing carbon underground. Their Class II wells have sent 100% of captured CO₂ to productive use.

Now they’re stepping beyond EOR into permanent storage. In May 2025, Conestoga completed drilling its first Class VI well near BBE, aiming to store 150,000+ metric tons of CO₂ annually more than a mile underground. With EPA approval, that would slash the carbon intensity (CI) of their ethanol, open the door for third-party storage, and generate valuable carbon credits.

Nearby, CapturePoint runs a CO₂ capture plant at Arkalon, pulling in 250,000 metric tons annually from regional bio-ethanol sources and sending it through a 170-mile pipeline network to 75 active CO₂ injection wells in Oklahoma and Texas — with permanent storage after EOR operations wrap. Section 45Q tax credits sweeten the deal.

SAFFiRE’s Edge

SAFFiRE’s crown jewel is its exclusive license to Deacetylation and Mechanical Refining (DMR) technology, developed at the U.S. Department of Energy’s National Renewable Energy Lab (NREL).

The DMR process takes corn stover — an abundant ag byproduct usually left to decay in the field — and treats it with a mild alkaline bath and a mechanical shredder. The result: a high-sugar yield ready for fermentation, with reduced enzyme use, no high-heat or high-pressure headaches, and none of the scaling nightmares that have haunted cellulosic ethanol projects in the past.

The pilot plant at Arkalon, slated to be operational in 2026, will run 10 tons of stover per day through the process. Conestoga plans to use that ethanol as feedstock for LanzaJet’s alcohol-to-jet SAF conversion, producing fuel with at least an 83% lower carbon footprint than conventional jet fuel.

Market Stakes

SAF is one of the few drop-in solutions for cutting aviation’s 9–12% share of U.S. transportation greenhouse gas emissions. Demand is measured in billions of gallons, but supply is still measured in wishful thinking. If Conestoga can scale this process, it could give Kansas a direct hand in closing that gap — and turn a “liberal” idea into a High Plains profit engine.

And it’s not just about SAF. READ MORE

Excerpt from Conestoga Energy/Business Wire: Acquisition positions Conestoga at the leading edge of carbon-negative cellulosic biofuel production technology that can solve energy needs across multiple industries, including Sustainable Aviation Fuel -- Conestoga Energy ("Conestoga" or the "Company"), the leading provider of low carbon intensity biofuel, today announced the acquisition of SAFFiRE Renewables, LLC ("SAFFiRE"), a process technology company that enables production of ultra-low carbon intensity ethanol and intermediates, from Southwest Airlines Renewable Ventures LLC. The acquisition includes all intellectual property, certain related technologies, the proposed pilot production facility, as well as key leadership team members, enabling Conestoga to further capitalize on the growing demand for reliable renewable fuels, including but not limited to sustainable aviation fuel (SAF). Terms of the transaction were not disclosed.

With this acquisition, Conestoga will leverage SAFFiRE’s exclusive license to Deacetylation and Mechanical Refining (DMR) pretreatment technology developed at the U.S. Department of Energy’s National Renewable Energy Lab (NREL) to convert corn stover, a widely available agricultural by-product in the U.S., into ethanol with a carbon intensity (CI) score less than negative 100. SAFFiRE's pilot production facility will be co-located at Conestoga's Arkalon Energy plant in Liberal, Kansas, and is expected to be operational in 2026. Conestoga will advance plans for commercial-scale production facilities based on efficiencies gained at the pilot facility.

SAFFiRE’s proprietary production process converts a variety of abundant agricultural feedstocks into low-carbon intermediates for multiple end products, including low carbon ethanol used for SAF production. The company’s DMR technology operates at low temperatures and atmospheric pressure using standard industry equipment, delivering high sugar yields with reduced enzyme requirements while avoiding the operational challenges of traditional cellulosic biofuel production methods. Notably, the acquisition of SAFFiRE will unlock attractive improvements to the economics of a wide range of existing Conestoga technologies and processes.

"Sustainable aviation fuel represents a multi-billion-dollar market opportunity, and this acquisition positions Conestoga at the leading edge of efforts to bridge the critical supply-demand gap facing the aviation industry while creating transformative opportunities for American agriculture," said Tom Willis, CEO of Conestoga Energy. "The IP acquired in this transaction will provide us with tremendous optionality not only as it relates to SAF feedstock production, but across our operations. The momentum behind low CI fuels is undeniable, driven by regulatory requirements, corporate commitments, and environmental necessity, and this acquisition is reflective of our commitment to delivering the lowest carbon biofuel solutions while creating new value streams for rural communities across America."

In addition to all IP and existing technologies, key employees will be transitioning to Conestoga as part of the acquisition, including Chief Technology Officer Marykate O’Brien and Nitin Kolhapure, Director of Engineering.

Today’s announcement comes on the heels of Conestoga’s recent completion of drilling operations for its first Class VI well, a major milestone in the Company’s carbon capture, utilization, and sequestration (CCUS) strategy. Located near the Bonanza BioEnergy ethanol plant in Garden City, Kansas, will serve as the cornerstone of Conestoga’s initiative to permanently store carbon dioxide emissions generated during the ethanol production process. The addition of a Class VI disposal well not only advances the Company’s long-term decarbonization objectives but also strategically complements its existing Class II enhanced oil recovery (EOR) operations—broadening the range of carbon management solutions while enhancing operational flexibility across its portfolio.

About Conestoga Energy
Headquartered in Liberal, Kansas, Conestoga is a renewable energy company focused on providing the lowest carbon, sustainable biofuel, and related bio-alcohol and ingredient solutions. Conestoga owns two ethanol plants and manages over 200 million gallons per year along with related co-products across Kansas and Texas. Conestoga has been capturing CO₂ for over 15 years primarily for Enhanced Oilfield Recovery (EOR), and generates both Corn-Based Ethanol (D6) and Cellulosic Biofuel (D3) RINs. Conestoga is one of the largest traders in obligated carbon markets, including RINs, LCFS, RGGI and CCA. For additional information about Conestoga, visit www.conestogaenergy.com. READ MORE

Tags

White House Treasury Department Transportation Fuels Policy tax credits Sustainability Regulations-Federal precursors/biointermediates pilot scale New Zealand markets/sales Kansas Jetfuel (Sustainable Aviation Fuel (SAF)) Investing ethanol/bioethanol environmental policy enhanced oil recovery (EOR) corn stover corn stalks Corn cobs cellulosic feedstock Cellulosic ethanol Cellulosic biomass cellulosic biofuel carbon/CO2 sequestration carbon negative Carbon Dioxide (CO2) carbon capture and storage (CCS) bolt-on BioRefineries/Renewable Fuel Production Biocrude/Green Crude/SynCrude Aviation Fuel/Sustainable Aviation Fuel (SAF) aviation fuel (SAF) production 45Z Clean Fuel Production Tax Credit 40B Sustainable Aviation Fuel Tax Credit National Laboratory Colorado Department of Energy (DOE)

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