From April, Lufthansa is planning to fly an aircraft that can use biofuel in addition to jet fuel on a service between Frankfurt and Hamburg.
The A321 aircraft will fly four times a day on the domestic German route for a test period of six months.
The cost of the project is estimated to the €6.6 million, although the government is providing €2.5 million of that figure.
The biofuel, which will cost three to five times more than kerosene, will reduce emissions of carbon dioxide by 1,500 tonnes over the test period.