Delta Air Lines (DAL Quick QuoteDAL - Free Report) has signed an offtake agreement with renewable fuels company Aemetis (AMTX Quick QuoteAMTX - Free Report) for 250 million gallons of blended fuel containing sustainable aviation fuel (“SAF”), to be delivered over a period of 10 years. The estimated value of the agreement is more than $1 billion. Both Delta and Aemetis currently carry a Zacks Rank #3 (Hold).

Airlines have long been under pressure to reduce carbon emissions. Last month, President Joe Biden reached an agreement with U.S. airlines to reduce aircraft greenhouse-gas emissions 20% by the decade’s end. The Biden administration also set up a goal to replace kerosene-based jet fuel with “sustainable” fuel by 2050.

The SAF agreement advances Delta’s goal of net zero aviation. The company has a target to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030. Beginning in 2024, Aemetis’ blended SAF is expected to be made available to Delta for use.

Delta Air Lines, Inc. Price

Delta Air Lines, Inc. price | Delta Air Lines, Inc. Quote

Delta’s agreement with Aemetis comes close on the heels of a similar deal between JetBlue Airways (JBLU Quick QuoteJBLU - Free Report) , which presently carries a Zacks Rank #4 (Sell), and SG Preston. Under this deal, SG Preston will deliver at least 670 million gallons of blended SAF to JetBlue for its flight operations at John F. Kennedy International Airport, LaGuardia Airport and Newark Liberty International Airport, starting in 2023, through a 10-year period. JetBlue will invest more than $1 billion in purchasing SAF over the said time frame.

A Key Pick

A better-ranked stock in the airline space is Copa Holdings (CPA Quick QuoteCPA - Free Report) , currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Copa Holdings have rallied more than 63% in a year’s time.