British Airways has announced plans to build the world’s first biofuel plant for aviation fuel by 2014.The factory, expected to be in East London, will annually convert 500,000 tonnes of waste into green jet biofuel. Willie Walsh, the company’s chief executive, said: “This unique partnership with Solena will pave the way for realising our ambitious goal of reducing net carbon emissions by 50 percent by 2050.

“We believe it will lead to the production of a real sustainable alternative to jet kerosene. We are absolutely determined to reduce our impact on climate change and are proud to lead the way on aviation’s environmental initiatives.”

According to the company, the plant can produce more than double the amount needed to make all of its flights at London City Airport carbon neutral. Local authorities currently pay £40 tax for each tonne of landfill a price which is expected to rise to £72 per tonne within three years. Based on the target of converting 500,000 tonnes for aviation fuel, local authorities could save up to £36 million in landfill costs.

The biojet fuel British Airways is planning to produce in its new plant in London has not yet been certified for use by the UK authorities, the airline has admitted to the Guardian.

BA said today that it would build what is believed to be Europe’s first plant to manufacture “biojet fuel” using food scraps and other waste in an attempt to cut greenhouse gas emissions from aircraft.

But the airline admitted that the Ministry of Defence body, DStan, which regulates aviation fuel in Britain, has yet to grant approval. Officials want further tests to make sure aircraft safety and performance are not compromised by engines running on biojet fuel, rather than conventional 100% crude oil-based kerosene.

BA said it was confident that the new fuel would be certified in Britain by the time the plant is built in 2014. Even if this does not happen, airlines in the UK would still be able to use it because US safety authorities last year gave the fuel the green light, the airline insisted.

Some experts believe that planes will only be able to use limited amounts of biofuels compared to cars. Most biofuels have a lower energy content than conventional fossil fuels, making them less suitable for aircraft which require a high operational performance at all times and because of the extremely cold temperatures in which airline engines must operate. The airline trade body, Iata, has a target for 10% of jet fuel to come from sources other than crude by 2017, but this includes coal as well as biomass materials.

Howard Wheeldon at brokerage BGC Partners, said: “As we see it now, the potential in aviation is more limited. Clearly there is a long way to go but biofuels could well be one of the future ways that airlines cut emissions. This announcement is one further step forward.”

Airlines have to date only carried out a few test flights using biofuels. In the US, there is only one plant producing jet fuel from biomass similar to the one planned by BA. Safety authorities there allow planes to run on a maximum 50% blend of the green fuel mixed with kerosene. A BA spokesman said he was confident that the US – with the UK following soon afterwards – would move to allow aircraft to operate on 100% biojet fuel, but could not say when this would happen.

BA will build the plant, creating up to 1,200 jobs, in a joint venture with biofuel producer Solena and is looking at four sites in east London. The airline said the plant, when operating at full capacity, would convert 500,000 tonnes of waste a year into 16m gallons of green jet fuel. It claimed this would be more than twice the amount required to make all of its flights at London City Airport carbon neutral.

The waste would come from food scraps and other household material like grass and tree cuttings, agricultural and industrial waste. The airline said it would not buy palm oil – a core ingredient for much of the biofuel used in cars, the cultivation of which has accelerated deforestation.

The airline also took into account the greenhouse gas emissions saved by not sending material to landfill, which produces harmful methane. It said it was still talking to biomass suppliers.

But Friends of the Earth said more land would be taken up to grow crops and trees for biofuels in planes, pushing out food production. Kenneth Richter said: “What happens in five years if this kind of feedstock becomes too expensive or scarce?

“Many things colloquially called ‘waste’ are often valuable resources for other processes. There are far better ways to use the limited amounts of waste wood available, for example in biomass plants, than in jet fuel. There is already a lot of competition for arable land for food production and to make biofuels for road transport.”

Sir Richard Branson has pledged to invest $3bn over a decade into a new company, Virgin Fuels, to develop biofuels.

Yesterday, BA shares closed up more than 5% after it gained tentative approval from US regulatory authorities for its tie-up with American Airlines.