NEW YORK (TheStreet) -- United Airlines (UAL) is buying a $30 million stake in biofuel company Fulcrum Bioenergy to help the carrier hedge against oil-price volatility, in a deal that has been called the largest ever by a U.S. airline.
The biofuel investment is a 10-year deal that could provide United with around 180 million gallons of fuel per year. That's only a small percentage of the 3.9 billion gallons of fossil fuel the carrier used last year. But it's an active step by United to reduce its carbon footprint as pressure builds on corporations to limit harmful emissions.
United's agreement with Fulcrum Bioenergy will provide the first time the biofuel has been used for regularly scheduled domestic passenger flights. Flights from Los Angeles International Airport will run on the alternative fuel starting this summer.
United is not the first airline to take a stake in an energy company. Delta (DAL) spent $180 million on a refinery in 2012.
Fulcrum's biofuel produces 50% less carbon dioxide than fossil fuel, and the technology used by the company breaks down household trash that is currently disposed of in landfills into renewable fuel for jets. Cathay Pacific also made an investment in Fulcrum last year, with a deal to provide 375 million gallons of fuel over ten years.
"We know alternative fuels is an emerging industry that is vital to the future of aviation, and this is just one of our initiatives to help make these fuels saleable and scalable," United Airlines Executive Vice President Brett Hart told investors.
Other countries such as Sweden are also investing in jet biofuel and ramping up efforts to make air travel less environmentally damaging. The Obama administration is currently proposing talks to regulate aviation emissions. The United Nations is also working on carbon-fuel negotiations to come up with a plan by February 2016.