Can Europe meet its own SAF quota?

opinion

by Fayaz Hussain

June 24, 2024

The pace of sustainable aviation fuel (SAF) production will not meet the EU’s mandatory quotas which start in 2025, according to Stefan Schulte, the CEO of Frankfurt Airport operator Fraport. “Production is not ramping up fast enough,” he warned.

The European Commission says that some 0.24m tonnes of yearly production has been announced. This is 10% of the amount needed to meet the proposed 2030 mandate – a significant gap between current capabilities and future requirements.

Almost all of this capacity relies on the HEFA pathway. The key feedstock for this pathway, used cooking oil, is already scarce. A report by the clean transport and energy advocacy group Transport & Environment said that Europe already burns through 130,000 barrels of used cooking oil a day to make renewable fuels – this is eight times more than it collects.

“As a result of limited collection potential, even in China, today’s biggest producer, combined current UCO biofuels consumption and projected SAF demand will fall short of supply if they were to bet only on this feedstock. For instance, Ryanair will alone require all of the European UCO collection potential to meet its own voluntary 12.5% SAF target by 2030,” said T&E, painting a bleak outlook for HEFA pathway.

The race for feedstocks has already begun to shrink margins of HEFA-based SAF producers in Europe. Neste’s first quarter 2024 results showed the company’s margin on sales of renewable products (which includes SAF and renewable diesel) shrunk to $562 per tonne compared with $945 per tonne in the same period last year.

Demand is set to rise as announced plants come online. Furthermore, used cooking oil accounted for one third of conventional biodiesel feedstocks and a quarter of hydrotreated vegetable oil biofuels volumes in 2023. The increased competition for cooking oil across all fuel markets points to further challenges for producers.

The EU is not the only region looking to secure feedstocks. The United States has committed to a three times bigger SAF target for 2030 and China is set to announce a 2%-5% blending target soon.

Against this backdrop, CO2 emissions caused by flights in 2023 across the EU increased 12% from 2022 levels, whereas the flights responsible for these emissions were 8% higher than 2022, according to annual data published by Eurocontrol.

Other regions are relying on the alcohol-to-jet (AtJ) pathway. But the EU’s has not included alcohol on its eligible list of feedstocks under the Renewable Energy Directive. ePure, which represents European ethanol producers, is challenging this.

The onus lies on e-fuels – the power-to-liquid (PtL) pathway. But achieving scale for this pathway has its own sets of challenges. So far, nearly 45 e-kerosene projects have been announced across Europe. However, only a few have reached final investment decision. The key feedstocks of clean electricity and hydrogen required to scale eSAF production need to be increased well before the sub-mandate kicks in from 2030 onwards.

If Schulte is right it means that Europe is set to be a significant cooking oil and SAF importer to meet EU quotas.