Brazil nets SAF World Cup glory
This week saw some surprise results in the FIFA World Cup. Paraguay beat Germany on penalties. It is the first time the Germans have lost a world cup match from the spot. Morocco also beat The Netherlands on penalties. Meanwhile, all the host nations (United States, Canada and Mexico) progressed to the round of 16.
Last Thursday, SAF Investor hosted its own World Cup webinar for sustainable aviation fuel (SAF), to find the most promising SAF-producing nation. Experts from the US, France, Brazil, England and Sweden competed in a knockout tournament decided by audience votes.
One of the critical aspects that confirmed a competitive SAF nation is access to feedstock, as highlighted by Philippe Haffner, CEO, Haffner Energy, representing France.
“France has one of the largest sustainable biomass resources in the world and the largest country in EU. It is also a leading agricultural producer, producing 20% of the total EU agricultural resources,” says Haffner. “We produce in France 300m tons of agricultural biomass, out of which we have approximately 40m tons of residues which have no conflicting use and which could be mobilised every year.”
This biomass availability is not unique to France. Trevor Best, CEO and founder, Syzygy Plasmonics highlighted biomass availability from sources such as sugar cane residues which gives Brazil a decisive advantage.
“Brazil has more biomass reserves than any other country on Earth. We are finding this as we are looking at sugar cane plantations. And the biomass that comes off the average sugar cane processing plant can create 50,000 to 100,000 tons of SAF per year,” Best tells us.
The challenge lies in finding available feedstock at a competitive price as this is the fundamental challenge around scaling demand interest at a competitive price.
Izabela Santos, founder & MD, StratX Group, believes this gives Sweden a decisive advantage for eSAF production as the country has access to some of the cheapest renewable energy in Europe.
The costs of feedstock as well as construction and the cost of capital are crucial components to the final price of SAF.
Jim Stonecipher, MD, EdyMac highlights this as a central differentiator for the US in its SAF strategy. A series of state and federal level tax incentives aim to keep the price low enough to enhance offtake demand.
Ensuring competitiveness and pricing stability was something Andrew Symes, CEO, OXCCU suggested is unique to the UK through the Revenue Certainty Mechanism (RCM). The system whereby a fixed strike price per litre of SAF guarantees revenues producers. This will be supported by a fund raised by a levy on fuel suppliers to top up producers should the market price fall beneath the strike price. Producers pay the difference into the fund should market prices go over the strike price. The RCM aims to support second and third generation SAF pathways.
“The most important thing the UK has though that nowhere else has is the revenue certainty mechanism,” says Symes. “This will enable not just imported SAF, but SAF produced on UK soil. And this is really important because essentially it can guarantee the offtake pricing and ultimately lead to bankability.”
One thing that became clear from the discussions is that capital is international and will find the right opportunities, no matter the country, provided the projects are bankable. Bankability comes from the feedstock availability and how revenue generation is guaranteed across the maturity of the project’s debt. Countries that were deemed able to achieve this went further in the competition.
Best and Brazil went up against Symes and England in the final. A match-up of feedstock availability against revenue certainty.
In the end, through a series of discussions Best and Brazil came away champions. There are many approaches to building a SAF strategy but the World Cup discussions proved certain fundamentals must be in place for success. There has to be affordable and abundant feedstock, there needs to be guaranteed revenue levels and there has to be a stable policy environment across the lifecycle of a project.
Hopefully, this result will not be repeated in the football World Cup. If it were, it would mean Brazil beat England en route to the final.
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