Lufthansa is to purchase biofuel from a new plant to be established at Schwedt, close to the Polish border, which will deliver the product to locations including Berlin's new Brandenburg airport.
The German flag carrier is to assist US firm Solena Fuels to develop the facility, the energy company's first biofuel plant in the country, under a memorandum of understanding disclosed at the ILA show in Berlin.
Lufthansa vice-president for aviation biofuels Joachim Buse says the site will generate bio-synthetic paraffinic kerosene, a drop-in fuel intended for use by commercial aircraft.
Schwedt's facility will convert 520,000t of waste biomass into jet fuel, diesel and electricity.
Lufthansa says Brandenburg airport, which opens in October 2013, will be a delivery point for the fuel.
"We believe that Solena's capabilities to process multiple types of waste feedstock represents a good opportunity in our endeavour to meet our emission-reduction commitments," says Buse.
Solena Fuels chief Robert Do says Lufthansa has been a "pioneer" in the biofuels sector.
Germany Trade and Invest helped identify the prospective location, at Schwedt's PCK Industry Park, pointing out that it provides close proximity to biomass waste and offers jet fuel logistics to Brandenburg airport.