Ethiopian Airlines Turns to Homegrown Biofuel in Bold Push to Green the Skies

Oct 26 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Ethiopian Airlines has set its sights on a bold new chapter. Africa’s largest carrier is moving to replace five percent of its fuel with domestically sourced Sustainable Aviation Fuel (SAF). The plan, forged with the Ethiopian Minerals Corporation and Sunbird Bioenergy Africa, could see the country produce 60 million litres of bioethanol and 40 million litres of SAF annually, a development that industry executives hope will save Ethiopia up to 100 million dollars in fuel imports.

Ethiopian Airlines is embarking on a potentially transformative shift in its fuel supply chain, targeting a five percent replacement of imported fossil-based aviation fuel with domestically sourced Sustainable Aviation Fuel (SAF).

Experts say this bold initiative, if realised, could place Ethiopia in the vanguard of a small group of African countries building indigenous biofuel capacities. Yet, the move, while environmentally commendable, is fraught with commercial, logistical, and structural uncertainties that could determine its viability.

The core of the SAF push rests on a tripartite collaboration between Ethiopian Airlines, the Ethiopian Minerals Corporation (EMC), and Sunbird Bioenergy Africa, a London-based renewable energy developer with experience in large-scale bioethanol production in Sierra Leone and Zambia. Their partnership lays out plans for a biorefinery to produce 40 million litres of SAF and 60 million litres of bioethanol annually. The primary feedstock will be cassava, complemented by molasses from sugar factories such as Metehara, Fincha, and Kessem.

The project is touted as part of a broader energy transition strategy in which biofuels will serve multiple sectors, including clean cooking, transport fuel, and aviation. Its success would not only substitute 100 million dollars in annual fuel imports but also create 10,000 jobs across a 10,000hct farming zone. With further scaling, Sunbird envisions Ethiopia hosting up to 20 bio-refineries.

Globally, SAF is expected to contribute 65pc of the emission reductions needed for the aviation industry to reach net-zero emissions by 2050, according to the International Air Transport Authority (IATA). Yet, production remains nascent, with Africa accounting for a negligible share. Only five active projects and 0.6 million tonnes projected by 2030. Ethiopian Airlines has already dipped its toes into SAF, using a 30pc SAF blend for an Airbus A350 delivery flight in 2023, but scaling up remains constrained by several issues.

According to Tewodros Getachew, CEO of the Corporation, the new partnership intends to blend cassava with sugar molasses for fuel production.

“Since they're working more extensively now, it is a good opportunity,” he told Fortune.

A critical obstacle remains cost. SAF is two to three times more expensive than conventional jet fuel. In Africa, jet fuel already costs 17pc more than in other regions due to logistical, financing, and tax inefficiencies. Analysts like Yonatan Menkir warn that without tax exemptions, subsidies, or carbon credits, the price differential will be passed on to passengers. That could make flying less accessible, undermining Ethiopian Airlines' goal of expanding its routes to promote economic inclusion.

Sunbird Bioenergy, under its CEO, Richard Bennett, brings a tested model of integrated biorefineries, out-grower farming, and export-linked fuel production. Its success in Sierra Leone, where it operates a 23,000hct sugarcane estate, offers a reference point. The company's projected revenue of 15.2 million dollars and employment of 120 staff show its scale.

“Our business is essentially an investment platform,” he said. “We attract capital to build bioenergy projects in host countries, and each project comprises three core components of agriculture, refining, and fuel distribution.”

Yet, Ethiopia presents a different set of challenges. Notably, it lacks industrial-scale cassava cultivation. Establishing large-scale cassava farming, securing supply chains, and training 10,000 farmers are herculean tasks in a country where past biofuel ambitions, like molasses-based ethanol, have faltered due to misaligned incentives, poor infrastructure, and underperformance. Land disputes, particularly in regions targeted for expansion, could derail the project if not managed transparently and with local buy-in.

On paper, Ethiopia’s policy infrastructure appears robust. The Ministry of Water & Energy’s new biofuel strategy prioritises industrial-scale SAF and biodiesel production using HEFA/HVO processing and alternative feedstocks, including municipal waste. Federal authorities want to integrate these fuels into their decarbonisation pathway and reduce reliance on imported energy.

According to Kaleb Tadese, an energy researcher at the Ministry, the government intends to use cassava, molasses waste, and even municipal waste for fuel generation. He pointed to the Qoshe waste-to-energy plant in Addis Abeba, which generates about 25Mw a year, half of its capacity.

“In the new strategy, we're planning to work on the import substitution of biofuel, energy mix, decarbonisation and human capital resource use,” he said.

Kaleb disclosed that the Ministry is trying to expand the use of clean cookstoves, now below 10pc, across regional states and cities.

But implementation remains patchy. A&H Engineering Plc, a domestic producer of ethanol stoves, has nearly ceased operations due to ethanol scarcity and high input costs. Ethanol now sells at 320 Br a litre, roughly double the price of traditional fuel, despite temporary excise tax exemptions. According to Hilawe Lakew, the company’s managing director, without stable ethanol supply and price controls, the clean fuel transition is more aspiration than action.

“Who buys biofuel for double the price of fuel itself?” asked Hilawe.

Operating near the Qilinto Industrial Park with an initial capital of 10 million Br, Hilawe’s company has faced ethanol shortages and volatile prices, making biofuel unattractive to buyers.

“When the excise tax on alcohol was set, the price went up,” he said. “With the directive from the Ministry of Finance, we're able to be exempted, but the industry has turned its face again, as the price for alcohol was better than fuel, as many sugar manufacturers dropped their production. We need a policy intervention.”

The World Bank’s 2024 SAF report places Ethiopia among the most promising African countries for SAF production via the Alcohol-to-Jet (ATJ) pathway. An ATJ plant, with a projected cost of 376 million dollars, could meet six percent of national jet fuel needs. Yet, the report also unveiled the need for policy harmonisation, financial incentives, and technology-neutral regulation to spur market entry.

These elements are largely missing in Ethiopia's fiscal reality. The estimated 200 million dollars in refinery costs will require either concessional financing, private equity, or a robust public-private partnership model. Without these, Ethiopia may lack the financial scaffolding needed to realise its SAF vision.

According to experts, Ethiopia’s pursuit of SAF aligns well with global environmental goals and national economic aspirations. The synergy between local biofuel production, import substitution, employment generation, and reduced carbon emissions makes compelling strategic sense.

“Economy, ecology, aviation, and national interest are coming into play on one project,” said Temesgen Getaye, the Airline’s group treasurer. “This kind of partnership will streamline three major issues: the supply chain, environmental relations, and cost decrease for us.”

But the distance from plan to practice is considerable. Ethiopia will need to cultivate cassava at scale, revive its sugar sector, provide incentives for SAF blending, and ensure price competitiveness, all while navigating bureaucratic inertia and investor scepticism. The partnership with Sunbird Bioenergy could become a defining test case for Ethiopia’s green industrialisation path.

“Translating political vision into technical and commercial delivery requires a rare mix of realism, discipline, and institutional strength,” said Yonatan.

PUBLISHED ON Oct 26,2025 [ VOL 26 , NO 1330]