By Stephanie Kelly

NEW YORK, (Reuters) – The Panama government and major energy companies including SGP BioEnergy plan to build a large, advanced biorefinery that will increase the supply of low-carbon aviation fuel. This was announced Wednesday by both companies.

As the airlines industry strives for zero net carbon emissions, this move coincides with governments all over the globe pressing businesses to make more investments in clean energy.

When it’s completed in 2026, the Panama biorefinery will be producing 180,000 barrels of biofuels (2.6 billion gallons annually) including renewable marine diesel and sustainable aviation fuel (SAF).

It joins an avalanche of announcements by other companies who have made pledges in recent years to produce SAF. Because the aviation industry is harder to decarbonize that other transport types, it will require a large increase in SAF production to achieve net zero.

The International Air Transport Association’s analysis shows that production must increase by an average of 8 billion liters (1211 million U.S. Gallons) per year through 2025 and to almost 450billion liters (121.9 billion U.S.gallons) annually until 2050.

SAF emits less than conventional petroleum-based jetfuel due to the use of feedstocks such as soybean oil or used cooking oil. However, it’s more costly to make.

Randy Letang of SGP BioEnergy said that Panama has already received a contract to purchase feedstocks. He did not provide further information.

Letang explained that the new biorefinery would repurpose the existing bunker fuel oils terminals from both the Atlantic side and Pacific sides of Colon and Balboa.

Letang told Reuters that this site is primarily focused on the help of the global community from both a aviation and a marine perspective.

“Using existing assets and adapting them to our needs, it is my only hope that we can meet the demand of global customers and reach scale. We will do this in an acceptable manner that is not disruptive.”

Panama’s export infrastructure will be used to import SAF from the world. SAF will comprise approximately half the capacity of the biorefinery.

Panama does not produce crude oil or other ores, but it serves as an energy transit port through the Panama Canal (and the Trans-Panama Pipeline).