Australian biofuels company Algae.Tec said on Wednesday it had signed a collaboration agreement with German airline Lufthansa for construction of a large-scale plant to produce aviation biofuels from algae.

The plant will be sited in an unnamed country in Europe near to an industrial CO2 source, said Algae.Tec, which specialises in the production of biofuels from algae.

“Lufthansa will arrange 100 percent funding for the project,” Algae.Tec said in a statement, without giving a cost estimate. “Algae.Tec will receive licence fees and profits from the project, which will be managed by Algae.Tec.”

As part of the agreement, Lufthansa commits to a long-term offtake agreement of at least 50 percent of the fuel produced at an agreed price, Algae.Tec said.

European airlines, biofuel producers and the EU Commission last year signed a pact aiming to produce 2 million tonnes of biofuel for aviation by 2020.

However, the EU on Monday announced plans to scale back its previous targets for biofuels produced from food, seeking output from non-food raw materials.

In January, Lufthansa said it was ending the trial use of a biofuel mix for its planes because it had used up stocks of biofuels certified as using materials from sustainable farming and no other reliable supplies were available.

Original Article : Reuters

(Reporting by Michael Hogan; editing by James Jukwey)