SAF Investor: Pathways, regulations towards SAF adoption


The recent EURefuel Initiative was discussed at length during the Sustainable Aviation Fuel (SAF) day at the Argus Biofuels Europe Conference in London last week.

The new rules require EU airports and fuel suppliers to ensure that at least 2% of aviation fuels are sustainable by 2025, increasing to 70% by 2050. Meanwhile, the requirement for synthetic fuels is set at 1% in 2030, reaching 35% in 2050.

“It is a welcome development for the aviation industry as the binding nature of the regulations will help increase SAF offtake and provide some degree of certainty to the fuel producers with regards to the offtake,” said Michael Nau, director of sustainability, Lufthansa.

However, some speakers worried that SAF regulations are becoming increasingly complex, with Europe, the UK and the US each having their own respective visions.

“It’s a question of philosophy. The approach is very different in Europe compared with the US. On one side [US], strong subsidies plus tax credits whereas on the other side [Europe], blending mandates and obligations on the sector,” Benoît Decourt, partner in charge of products, sustainability and public affairs, Elyse Energy, told SAF Investor.

“The only thing we are vigilant about is the fact that it does not entail too much of distortion or competitiveness of potential clients. The ability of airlines to be strong enough to take and commit to these contracts and preferably buy from projects that will produce in Europe might be a challenge,” he added.

Although there was a lot of talk about new pathways, SAF made from HEFA dominated the conference.

“At this stage, investors are much more comfortable in investing in the HEFA pathway as they have already proven to be a successful investment,” said Vincent Caufourier, head of aviation advisory at Societe-Generale. “Although other pathways are attractive, questions about their technological readiness and ability to scale are yet to be answered.”

Theye Veen, chief commercial officer and co-founder of SkyNRG, said that “we will see SAF production move away from HEFA towards Gasification (Fischer-Tropsch) and e-SAF, as technological readiness for the latter two pathways reach their tipping point.” 

Low-cost new technological pathways will most likely attain scale and regulations will evolve to meet the industry halfway. However, in the meantime a lot of the aviation sector’s decarbonisation goals hinge upon the final consumers’ ability to pay higher ticket prices. According to estimates, SAF prices will remain stubbornly high, at two times the long-run historical kerosene price for decades to come.

In addition to mobilising the SAF fuel producers and purchasers, all stakeholders have the tough task of convincing consumers to pay more for a greener future while maintaining flight growth.

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