British Airways is to assist in establishing a biofuel plant from which it has tentatively agreed to acquire all the fuel the project produces.
The carrier has reached the deal with Washington-based energy company Solena Group.
Under the agreement the new plant - which will probably be located in east London - will use waste biomass, otherwise dumped for landfill, to develop the fuel.
It will produce some 73 million litres of aviation fuel per year by converting waste into gas under high temperatures, and then into liquid hydrocarbons through the Fischer-Tropsch process. The conversion will also create raw naphtha components.
BA has signed a letter of intent to purchase all of the plant's fuel, and says it plans to use the fuel on part of its fleet from 2014.
"We believe it will lead to the production of a real sustainable alternative to jet kerosene," says BA chief Willie Walsh. The carrier has previously vowed to halve its carbon emissions by 2050.
Four locations in east London are among the candidate sites for the plant.
Solena Group chief Robert Do says the project will convert biomass into "clean, renewable fuels" and adds that the process is "completely carbon neutral".