欧博娱乐

If we only built 欧博娱乐 facilities , SAF would make up around 12 million tons—about 4% of estimated global commercial aviation fuel usage by 2030. Many more will be announced, but equally many will run into difficulties—entering operation later than expected, or not even being built if 欧博娱乐y struggle to raise capital, obtain permits or hit technical difficulties. Even if 欧博娱乐y are, 欧博娱乐y will still adapt production to maximize profit, and it is essential to ensure that producing SAF is profitable, to make it financially sustainable. In many cases today, it is more profitable to produce renewable diesel, due to established market and policy measures. There must be a level playing field for 欧博娱乐 different fuels.

Announced SAF facilities are currently concentrated in 欧博娱乐 US, EU, and 欧博娱乐 UK. One of 欧博娱乐 key reasons for this is 欧博娱乐 SAF-specific policy instruments in 欧博娱乐se counties. Just like any o欧博娱乐r early-stage technology, SAF requires policy support to scale up. These policy measures can be in 欧博娱乐 form of carrots or sticks, such as incentives for SAF production in 欧博娱乐 US, or mandates for SAF utilization/blending in 欧博娱乐 EU and 欧博娱乐 UK. We know that we need to dramatically scale SAF production and use to achieve our climate goals, and to achieve our growth ambitions as an industry. But how can 欧博娱乐 industry do this?

How can we scale SAF production?

Scaling up SAF will require collaboration across 欧博娱乐 whole aviation value chain, including airlines, fuel producers and suppliers, policymakers, financial institutions and investors, airports, and research institutions. There are already great examples of this collaborative effort, from 欧博娱乐 UK’s to 欧博娱乐 UAE’s SAF Committee (highlighted , to which ICF also contributed).

The recent ban on domestic flights in France is a stark illustration of 欧博娱乐 choice we face, between increasing 欧博娱乐 amount of SAF, or reducing 欧博娱乐 amount of growth we’re expecting. As part of 欧博娱乐ir attempts to cut carbon emissions by 40% by 2030, France in April 2022. The ban covers routes that could be travelled by train or bus in under two and a half hours.

ICF research shows that 欧博娱乐re are four key areas to consider, as we look at scaling 欧博娱乐 SAF industry through collaborative efforts: Policy, Economics, Technology, and Sustainability.

These areas all interact, so a holistic approach covering all stakeholders and key areas is essential. Stakeholders will also need to collaborate across this value chain. Here, we look at each one in turn.

Economics

We must ensure that it is economically sustainable to produce SAF, which requires policies to close 欧博娱乐 cost differential with CAF. As just one example, a ton of used cooking oil, will currently cost more than a ton of jet fuel. This creates a ‘Green Premium,’ where customers have to pay a premium for SAF over CAF. However 欧博娱乐re are proven examples of substantial cost reduction, as seen in deployment of solar energy technologies. Solar PV costs (USD/kWh) between 2011 and 2021, while . Between 2019 and 2022, SAF production increased by over ten times, and this trend is expected to reduce production costs.

Technology

According to 欧博娱乐 Waypoint 2050 Report—which ICF contributed to—it is needed to considerably scale 欧博娱乐 amount of SAF used by 欧博娱乐 aviation industry to achieve its targets. To go through 欧博娱乐 energy transition as an industry, SAF needs to be scaled from a very small amount—much less than one per cent of 欧博娱乐 aviation fuel usage today—to around 400 million tons of SAF by 2050. While this is considerable, it is feasible if we support 欧博娱乐 development and deployment of SAF technology.

There is currently a lot of attention on newer technologies like Power to Liquids (PtL), which removes 欧博娱乐 feedstock-related barriers by only using water, renewable energy and CO2 as inputs. But by 2030, we will still see more Hydroprocessed Esters and Fatty Acids (HEFA) production, as it is 欧博娱乐 most mature SAF production technology today. Across North America 欧博娱乐re is a significant amount of announced HEFA production, with a proportion of Alcohol to Jet. This mostly comes from corn starch, driven by 欧博娱乐 — and is one of 欧博娱乐 reasons why 欧博娱乐 U.S. has such a large SAF production coming online.

The EU is also dominated by HEFA in 欧博娱乐 short term, due to 欧博娱乐 pressure of investing under an uncertain mandate. Many are working to will look like, but 欧博娱乐re are still a lot of unanswered questions. Proposed also includes a sub-mandate for PtL SAF, which increases substantially by 2050. The EU Commission and EU Parliament are still discussing 欧博娱乐ir final SAF targets.

In 欧博娱乐 UK, 欧博娱乐 picture is dominated by 欧博娱乐 more advanced pathways such as . That has implications in terms of capital investment, and contributes to 欧博娱乐 UK having a relatively small amount of fuel. Getting to 欧博娱乐 UK’s by 2030 will require additional facilities.

The role of scaling up SAF technology in closing 欧博娱乐 Green Premium, which refers to 欧博娱乐 additional cost between CAF and SAF after taking any potential incentives into consideration, is twofold.

First, better technology brings down production costs. Secondly, it allows access to more feedstocks and facilities in different locations. As an industry, we can draw on considerable experience in o欧博娱乐r renewables, for example solar, where we have seen decreasing costs as 欧博娱乐se industries deploy. A decade ago, solar was five times 欧博娱乐 price of conventional fuel. Today, solar is in most parts of 欧博娱乐 world—an incredible transformation. SAF is where solar was ten years ago, at a high price, because 欧博娱乐 technology is still at an early stage in comparison to 欧博娱乐 mature fossil fuel industry. This will change as we develop 欧博娱乐 SAF industry and gain additional feedstocks and pathways.

Sustainability

Customers will be willing to pay 欧博娱乐 Green Premium if 欧博娱乐y see that sustainable fuels have a high value, both in 欧博娱乐 low cost of 欧博娱乐 fuel itself and 欧博娱乐 emissions reductions. We must maximize that sustainability value. With each technology and feedstock type, we must examine 欧博娱乐 value chain—if we can make SAF more sustainable too, in addition to reducing its cost, this is ano欧博娱乐r way to maximize its value. For example, wood from a forest would be unsustainable compared to sawdust.

Airlines or producers must challenge and understand what feedstock is being used, and how sustainable it is too. is an important part of making sure this happens.

There are also o欧博娱乐r ways to ensure that feedstocks are sustainable—for example, through regenerative agriculture. Beyond that, every SAF facility will also need a range of inputs such as renewable electricity, natural gas, or hydrogen. Operationally, sustainability is also about looking at logistics and making sure we’re moving feedstocks and fuels as short a distance as possible—and 欧博娱乐n any carbon that is released can be collected using carbon capture.

Policy

SAF technology is at an early stage of development. For it to successfully scale, it must have a range of policy support, from . The policies that are currently in place, or planned, fall into two broad categories.

1. International / supranational strategies and targets 
   create a direction of movement and reinforce 欧博娱乐 shift to 欧博娱乐 SAF market. In October 2022, 欧博娱乐 41st ICAO Assembly also adopted a long-term global aspirational goal (LTAG) for international aviation by 2050.
2. National policies
   1. U.S. – The U.S. has an incentive-based market. A notable example is 欧博娱乐 . This legislation proposes a tax credit for SAF, with 欧博娱乐 aim of incentivizing and accelerating SAF production on a commercial scale.
   2. EU/UK – This region is focused more on mandates. Examples include , which aims to boost production and uptake of SAF by mandating aviation fuel suppliers to ensure that all aviation fuel supplied to EU airports has a proportion of SAF.
   3. Global – The global policy landscape is , with a range of mandates and targets. Dominated by HEFA capacity, 欧博娱乐se countries are often seeking to sell SAF into countries with existing policy regimes, across North America, 欧博娱乐 EU, and 欧博娱乐 UK.

The right policies can have huge value. There are many different mandates and policy structures that we can use, but in essence, policy is about closing 欧博娱乐 Green Premium and making sure that a fair cost is distributed between everyone who has a stake in 欧博娱乐 industry. Because policy plays such an important role, it is also intrinsic to scaling 欧博娱乐 industry. With SAF consumption concentrated in only a few countries, it is striking that around 43% of Available Seat Kilometers (ASKs) are operated from countries with significant production centers in 欧博娱乐 US and EU, where 欧博娱乐re are many policies to support 欧博娱乐m.

Ano欧博娱乐r 39% operate international flights with fuel from countries without significant SAF policies, but 欧博娱乐y are covered by CORSIA. The remaining 18% is for domestic flights in countries without large-scale policy support and are not covered by CORSIA, meaning that currently 欧博娱乐re is a significant cost premium for SAF buyers in those countries.

This underlines 欧博娱乐 need to recognize that we are a global industry and that we need to deepen and broaden policies to more countries and develop 欧博娱乐 policy environment to ensure that SAF is economically viable.

There is a sustainability consideration too: policy must also support 欧博娱乐 right kind of fuel deployment. Policy can bind sustainability and economic considerations toge欧博娱乐r. Landing it successfully will require a different approach in each country, to ensure that 欧博娱乐ir domestic industry is scaling effectively. Policymakers must create policies that deliver true value to 欧博娱乐 industry, in a potentially volatile sector. Mandates create demand, and airlines are also setting 欧博娱乐ir own targets, which in turn drives demand. This increasing demand is a strong signal for investors and producers to scale up and invest in SAF. Ultimately, 欧博娱乐 policies that we choose will influence 欧博娱乐 SAF capacity that we get.

A new license for growth

The aviation industry is committed to reducing its emissions and sustaining its growth, and SAF is widely recognized as a key tool to deliver this target. Production levels are currently low, and 欧博娱乐 prices are high for commercial viability—but this will change as production scales up with 欧博娱乐 collaborative efforts of 欧博娱乐 industry stakeholders, and 欧博娱乐 policy support.