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By Alex Lennane
Uncertainty about investment has led to delays in increasing stocks of sustainable aviation fuel (SAF) – but new data shows there may be enough to meet targets.
The US could meet 100% of demand with its own SAF by 2050, as government starts to roll out tax incentives as part of its Inflation Reduction Act.
And Europe has set binding targets that will accelerate investment, while the UK is closing in on a mandate for 10% SAF in jet fuel by 2030, with five UK production plants under way by 2025.
SAF may finally have turned a corner.
Blending mandates and production goals are expected to lead to supply of 12.8 million tonnes (Mt) of SAF by 2030, according to new research from SkyNRG, with voluntary commitments adding more demand. By 2050, this should have risen to 120m Mt.
In Europe and the UK, blended mandates should see demand reach 4.2m Mt by 2030, while new supply looks set to reach 3.3 Mt. Supply and mandated demand will match 2030 requirements, but there will be a shortfall of between 0.9m Mt and 2.1m Mt before those mandates are reached – although this will depend on overall jet fuel demand.
However, warns the research, voluntary demand could absorb capacity in excess of mandates.
To reach 2050 demand, Europe will need to develop about 150 SAF refineries, at an investment cost of about €250bn.
The US should have sufficient SAF available domestically by 2050 to reach demand of 77m Mt, which would require 250 refineries, costing about $400bn.
The research however also noted that “multiple projects have experienced delays, in part due to policy uncertainty postponing final investment decisions”. This has led to a reduction in expected capacity in the near future.
At the moment, 60% of the announced capacity in Europe relies on two projects in the Netherlands, Neste Rotterdam (1.2 Mt) and Shell Pernis (0.4 Mt).
The researchers added: “We expect the UK will become an important market for advanced biofuels, which are not specifically mandated in the EU, while some member states may introduce e-SAF targets/incentives prior to 2030 to kickstart supply.”
In the US, the inflation reduction act and other incentives, such as tax credits, will push the country towards producing sufficient amounts – 8.5m Mt by 2030, they said, adding: “Based on our assessment of US SAF capacity announcements in the public domain today, approximately 5.8m Mt of SAF capacity could reach commercial operation by 2030.
“This is an increase of 3.7m Mt compared with last year’s outlook, primarily because we adopted a different approach around hydroprocessed esters and fatty acids (HEFA) feedstock constraints up to 2030.”
The news will come as some relief to airlines that are concerned their very existence is in doubt. One of the most focused is AF-KLM Cargo.
“We have to make some tough decisions on investing billions into SAF in the next years,” explained EVP Adriaan Den Heijer at Transport Logistic this month. “As an industry, are we willing to embrace it? We have good talks with customers.”
SAF, of course, is not the only technology to invest in – but it’s the only game in town right now, he said. “There is lots of willingness to make it work and pay for it. Forwarders need to talk to shippers too.
“We deal with procurement guys, but this is a strategic decision, and investment will help drive targets.”
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