40+ CEOs call on governments to fund eSAF tender

More than 40 chief executive officers from the sustainable aviation fuel (SAF) value chain in Europe have called on the national governments to commit funding to a pilot e-SAF tender.

This tender would use a double-sided auction mechanism to help scale e-SAF across Europe.

Despite EU’s commitment for SAF, the senior SAF executives lamented that none of the planned e-SAF projects in Europe have reached final investment decision (FID) – even though Europe hosts around 60% of the world’s planned e-SAF capacity.

The challenges facing the e-SAF producers in the Europe are two pronged: producers need long-term offtake agreements to secure financing and de-risk investment and buyers require short-term flexibility to avoid locking into high initial prices as the market matures.

Project SkyPower says that a market intermediary using a double-sided auction could resolve both challenges. This intermediary would operate as a government-backed commodity trader – contracting long-term with producers to provide revenue certainty, while selling short-term to buyers to maintain flexibility.

Compared to traditional flat subsidies, this model ensures greater efficiency of public funding by minimising the cost gap through competitive pricing on both sides of the market.

Read more about Project Skpower’s proposals here.