Aviation industry‘s Sustainable Aviation Fuel (SAF) problem

With demand for SAF ever-growing, can suppliers provide enough of the fuel in order for the aviation industry to meet its emissions obligations?

The aviation industry continues to face relentless pressure to reduce its emissions, and rightly so. As the whole world, including the industry’s road transportation counterpart, is moving towards sustainable methods of moving people and goods, stakeholders in aviation are still looking at potential options. Questions are being asked about whether battery-powered or hydrogen aircraft will enable aircraft to become environmentally friendly, as Airbus, Boeing, ATR, De Havilland Canada, Embraer, and zero-emission manufacturers such as Universal Hydrogen or ZeroAvia are exploring alternatives to jet fuel. 

Sustainable Aviation Fuel (SAF) seemed like the silver bullet that would ensure that aviation’s emissions went down in the immediate term, acting as a bridging gap between the present and the future, when electric or hydrogen power plants would not emit any pollutants. 

But SAF has its own set of issues, including cost, feedstock, and regulatory approvals to operate flights with a 100% blend of the alternative fuel. The biggest problem, however, will be solving how to scale production in order to have sufficient SAF for airlines to place in the fuel tanks on the wings. 

Expanding SAF partnerships 

Airlines seem to have taken a proactive approach to making sure they have enough SAF to cover their needs in the coming years. Partnering with various refiners, fuel manufacturers and start-ups, carriers are expanding the potential amount of the fuel they would have. 

United Airlines, for example, recently launched a special fund to invest in SAF, called the ‘United Airlines Ventures Sustainable Flight Fund’. The goal of the fund, which started with more than $100 million of capital, is to make strides in producing and distributing the alternative fuel. Furthermore, the fund, also supported by Air Canada, Boeing, J.P. Morgan, Chase, Honeywell, and General Electric (GE) Aerospace, has already invested ‘invested in the future creation of over 3 billion gallons of SAF’. 

In January 2023, the same United States (US)-based carrier partnered with two other US-based companies, Tallgrass and Green Plains, to invest $50 million into a new joint venture (JV), called Blue Blade Energy. The JV aims to develop the technology to use ethanol as a feedstock for SAF, aiming to have a pilot facility in 2024, and scale up to full capacity by 2028. As such, United Airlines could have enough of the emission-reducing fuel to fly more than 50,000 flights with SAF from Chicago O’Hare International Airport (ORD) and Denver International Airport (DEN) hubs annually. The number of flights was calculated based on the assumption that “current regulations requiring SAF to be blended with conventional jet fuel are removed to allow for the use of unblended SAF”. 

But United Airlines is not the only airline in the world to do this. Ryanair shook hands with Neste’s renewable aviation business unit based in Amsterdam, the Netherlands, to ”power approx. a third of its flights at Amsterdam Airport Schiphol (AMS) with a 40% SAF blend”. Neste, whose customer is also United Airlines, is a Finnish oil company.

Emirates recently operated a test flight on 100% SAF with one of its Boeing 777-300ER aircraft, while in July 2022, Singapore Airlines began operating the first flights with SAF from its Singapore Changi Airport (SIN) hub. Carriers across market segments and the globe are investing cash into becoming more sustainable in the immediate term, a goal, barring investment into new aircraft, is achievable with SAF. 

Cost to decarbonize 

Overall, though, the costs involved in decarbonizing aviation will be immense. 

“The purchase of aircraft with new technologies is expected to lead to additional costs (compared to aircraft with current technology) of EUR 378 billion [$398.7 billion – ed. note] between 2020 and 2050,” noted a study called ‘Investment scenario and roadmap for achieving aviation Green Deal objectives by 2050’, requested by the European Parliament’s (EP) Committee on Transport and Tourism (TRAN). Out of the €378 billion, €50 billion ($52.7 billion) would be dedicated to Research & Development (R&D), yet “the increased efficiency of new aircraft is expected to give fuel cost savings of EUR 395 billion [$416.7 billion – ed. note] (2020-2050),” the study continued. 

Even if the cost is immense, airlines and other stakeholders in the industry will have no choice, at least in the European Union (EU). In June 2022, the European transport ministers adopted their position regarding the three proposals related to transport in the Fit For 55 package. The position on the package, which aims to reduce the EU’s emissions by at least 55% by 2030, includes SAF provisions. It will oblige fuel suppliers at the bloc’s airports to gradually increase SAF usage between 2025 and 2050. 

It will start with 2% of SAF being used to fuel aircraft in 2025, growing to 6% in 2030, 20% in 2035, 32% in 2040, 28% in 2045, and 63% in 2050. 

In the US, the Sustainable Aviation Fuel Grand Challenge is a strategy to scale new technologies to produce SAF in commercial quantities. By 2030, the strategy has a goal of 3 billion gallons (11.3 billion liters) of SAF produced per year and 35 billion gallons (132.4 billion liters) by 2050. The strategy and the ever-growing production of SAF “will play a critical role in a broader set of actions by the United States government and the private sector to reduce the aviation sector’s emissions in a manner consistent with the goal of net-zero emissions for the U.S. economy,” according to the challenge’s description. The end goal of the strategy is to fully decarbonize the aviation industry by 2050. 

According to the International Air Transport Association’s (IATA) estimates, for the industry to reach net zero by 2050, airlines will require over 449 billion liters of SAF. In 2025, the total will be 8 billion liters. IATA has pointed out that 300 million liters of SAF were produced in 2022, and that airlines put forward around $17 billion in forward purchase agreements for the alternative fuel during the year. By 2025, that sum will rise to around $30 billion. 

But even if airlines continued to pour investments into the area, SAF is still a drop in the ocean of jet fuel. The International Energy Agency’s (IEA) report pointed out that SAF usage was less than 0.1% of all aviation fuels in 2021. The agency expects that number to rise to 10% by 2030. The European Union Aviation Safety Agency (EASA), meanwhile, indicated that SAF usage remains “low at less than 0.05% of total EU aviation fuel use”. 

Carefully picked feedstock 

Unlike traditional jet fuel, though, SAF does not come from the ground. The process of production of the alternative fuel requires feedstock, which can vary from used cooking oil to dedicated energy crops, and various residues, that provide different levels of CO2 savings. 

For example, according to EASA’s data, life-cycle assessment (LCA) emission reductions while using a feedstock like corn grain are up to around 30%, if using the ethanol alcohol-to-jet (ATJ) pathway. The same feedstock, when using the Iso-butanol ATJ pathway reduces LCA emissions by up to around 40%, while the Hydro-processed esters and fatty acids (HEFA) pathway, using corn oil, reduces LCA emissions by a bit more than 80%. Overall, the most climate-friendly pathway is Fischer-Tropsch (FT), using Municipal Solid Waste (MSW) with 0% non-biogenic carbon as a feedstock. 

The EU agency expects that four pathways will play a major part in reducing aviation emissions, including HEFA, ATJ, Biomass Gasification + FT (Gas+FT), and Power-to-Liquid (PtL). “Work is ongoing to approve GHG emissions reductions for Power-to-Liquid fuels, but with a fully decarbonized supply chain, emission reductions of up to 100% can be achieved compared to a fossil fuel reference,” noted EASA. 

However, not every feedstock is considered sustainable, per the Renewable Energy Directive (RED II, published in 2018 in the EU) and the International Civil Aviation Organization’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). RED II went into effect in December 2018, increasing the EU’s overall target of renewable energy sources consumption by 2030 to 32%. CORSIA is “the first global market-based measure for any sector and represents a cooperative approach that moves away from a ‘patchwork’ of national or regional regulatory initiatives,” harmonizing the way to reduce emissions for the sector by also minimizing market distortion, according to the ICAO’s description. 

RED II has outlined two sustainability criteria. The first one is GHG reductions, which are required to be “at least 50% lower for installations older than October 5, 2015, 60% lower after that date, and 65% lower for biofuels produced in installations starting operation after 2021”. For SAF of non-biological origin, the minimum savings must be at least 70% compared to the fossil fuel to be replaced. The second criterion is land use change, namely that “raw materials for biofuels production cannot be sourced from land with high biodiversity or high carbon stock”. 

The ReFuelEU Aviation, which is part of the aforementioned Fit for 55 package, is an initiative by the EC to “promote the take-up of production and use of such fuels [SAF – ed. note] in aviation”, according to a briefing, which also limits the feedstock for SAF. The allowed alternative fuel feedstock includes, but is not limited to, the biomass of various waste, including industrial waste, animal manure, palm oil mill effluent and empty palm fruit branches, cobs cleaned of kernels of corn, non-food cellulosic material, used cooking oil, and animal fats of a certain category. 

Then, the ICAO’s measure will apply additional criteria that would ensure that the SAF used for flying across regions and borders is sustainable. These include but are not limited to water, soil, air, biodiversity conservation, human and labor rights, waste and chemicals, land and water use rights, local and social development, and food security, as outlined on EASA’s page about SAF. 

Concerns about the ability to deliver enough feedstock for SAF have already been raised. A report, prepared by the Royal Society, a United Kingdom (UK)-based learned group, stated that if the UK wants to replace the 12.3 tons of jet fuel consumed in the country annually with a biofuel-based alternative, “the amount of land needed to produce the required 12.3 million tonnes is 68% of the total agricultural land in the UK”. 

Land use and food security are not the only concerns about SAF production. For example, Chevron, a US-based energy company, received the Environmental Protection Agency’s (EPA) approval to begin using discarded plastic to create a biofuel, the production of which is so toxic that “one out of four people exposed to it over a lifetime could get cancer,” according to a report by The Guardian and ProPublica. Under the Toxic Substances Control Act (TSCA), the EPA’s effort is to streamline the review of new chemicals to replace highly polluting fuels, such as “petroleum-based transportation fuel, heat oil, or jet fuel,” according to the agency’s announcement in January 2022. 

Pricy environment 

With limited supply and demand rising continuously, SAF remains expensive. 

EASA has estimated that “current SAF prices can range from 1.5 to 6 times higher” compared to traditional jet fuel. The wide range is because of “different levels of SAF industrial and technological maturity and a low level of certainty on the production costs of certain SAF pathways”. The agency remains optimistic, as even if it is difficult “to accurately predict how SAF prices will evolve”, in the long-term future, it is likely that there would be a “reduction in SAF production costs enabled by economies of scale and technological advancements”. Economic incentives, such as the EU’s Emissions Trading System (ETS), CORSIA, and tax credits should help in bridging the price gap between SAF and conventional jet fuel. 

The move towards decarbonization comes at a time when the aviation industry is on shaky ground. IATA estimated that airlines lost a collective $140 billion in 2020, $40 billion in 2021, and $7 billion the following year. “In 2023, we expect the industry to post a net profit, albeit only just at $4.7 billion,” concluded the association, uniting some 300 airlines or 83% of total air traffic. Some airlines began to allow passengers to pay for SAF and decarbonization efforts. For example, Lufthansa Group introduced ‘Green Fares’, a type of ticket that includes “offsetting of flight-related CO2 emissions” by using 20% SAF and 80% of contributions “to high-quality climate protection projects”. 

In the UK, the Advertising Standards Authority (ASA) ruled that the group’s poster, which had the following copy of “LUFTHANSA GROUP. CONNECTING THE WORLD. PROTECTING ITS FUTURE. #MakeChangeFly”, breached the authority’s code that requires that “absolute environmental claims must be supported by a high level of substantiation”. Other airlines, such as JetBlue, KLM, SAS, and even airports such as London Heathrow (LHR), have also allowed passengers to purchase SAF to offset their flight emissions. United Airlines offers the option to “contribute to supplement United’s investment in the UAV Sustainable Flight Fund,” a measure announced on March 2, 2023, when the US carrier introduced its newest executive, namely Chief Trash Officer, Oscar the Grouch. 

Competing for feedstock 

But aviation is not the only sector that is being pressured to reduce its emissions.  

The road freight transportation industry, for example, like aviation, is part of the Fit for 55 package in the EU. And akin to SAF, that industry has its own drop-in solution called Hydrotreated Vegetable Oil (HVO). According to Neste, which produces sustainable fuel, HVO100, the purest form of HVO, reduces emissions by up to 90%. HVO can be used in a variety of different blends and made from different feedstock, including vegetable oil and fats. “HVO can also be upgraded to sustainable aviation fuel (SAF),” noted European Technology and Innovation Platform Bioenergy (ETIP Bioenergy) in its fact sheet about HVO. 

In a statement to AeroTime, a spokesperson for Neste explained that the technology it uses to produce HVO and SAF is similar, but the aviation fuel has “additional processing steps to bring it to the specifications needed to be certified as an aviation fuel”. 

The company’s “renewables’ refineries producing our renewable fuels have the flexibility to switch between products,” the spokesperson continued. 

A representative for Girteka, the largest asset-based road freight transport company in Europe, with over 10,000 trucks in its fleet, issued a statement to AeroTime, saying: “We definitely see the growing potential of HVO fuel, and our usage of the alternative fuel is an outcome of what our customers are looking for. If they continue focusing on sustainable solutions and ways to reduce their carbon footprint in logistics and supply chains, which is what we anticipate, then we will continue providing them with the HVO option.” 

The company representative indicated that it consumed around 250,000 liters of HVO in the past few years and that “the demand for the alternative fuel is constantly growing”. The road freight carrier said that emission-reducing fuels, like HVO, are integral to its sustainability strategy that “aims to reduce the CO2 emissions for every kilometer driven by our trucks”. 

“Although sustainable biofuels, such as HVO or HEFA, are a great steppingstone, since they provide immediate emissions savings, they do have a limited scope to make a substantive contribution in terms of the rapid phase out of diesel fuel, as their quick ramp-up is simply not practicable,” the Girteka spokesperson added. As such, logistics companies in general are looking towards a wide variety of solutions, including the integration of electric and, potentially in the future, hydrogen trucks. Girteka plans to add 600 electric trucks over the next four years. 

Limited feedstock, competition from both sectors, as well as maritime shipping, will continue to limit the supply of SAF, HVO, and other biofuels. A report by the IEA warned that if current trends continue, “biodiesel, renewable diesel, and biojet fuel producers are headed for a feedstock supply crunch during 2022-2027”. The agency added that the continuing trends could result in global decarbonization efforts being undermined, as biofuels can be used in aviation, maritime, and trucking, industries where “few other decarbonization options exist”. 

Still, the representative of Neste noted that climate change is a global challenge and that “greenhouse gas emissions do not stop at borders or sectors, so we need to take a holistic approach and look at all solutions available while working on the solutions of tomorrow, including EV, hydrogen, and PtL”. The spokesperson for the Finnish oil company said that while HVO and SAF are made from similar renewable raw materials, the “specific raw materials used can differ per product type”. 

“Independent reports confirm that there are sufficient feedstocks to support a significant ramp up in SAF production alongside renewable diesel,” they continued, noting that more than 40 million tons of feedstock material is available annually, “with potential to increase to up to circa 200 million tons per annum”. 

Going forward, “there will be a need to unlock additional feedstock to increase renewable fuels production”, the Neste spokesperson added, which is why the oil company is continuing to innovate “to bring new SAF production pathways to life which will increase the availability and we are focusing on the following promising new feedstocks: lignocellulosic raw materials, municipal solid waste, algae, and PtL fuels”. 

However, the IEA noted that “attaining a net zero trajectory would require a more than three times production increase in our main case.” 

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