A mandatory market for SAF closer than ever

Karlijn Arts, SkyNRG, The Netherlands

There is momentum to raise the ambitions to the decarbonize the aviation, feedstock availability and a robust policy framework are needed to scale up SAF production.

Even though the use of SAF grew the last couple of years, the global production is still far from the levels expected of it to be in 2021. Currently, SAF constitutes an estimated 0.05% of all aviation fuel used. To reach the sector’s established climate targets in 2030 and beyond, such as the carbon neutral growth trajectory set by CORSIA or pleas for reaching carbon neutrality around mid-century, there is a need for a significant scale-up of the availability and adoption of SAF as aviation’s conventional fuel. One of the challenges for the SAF sector is the need for a robust policy framework that enables the aviation industry to look beyond the price gap between fossil and sustainable aviation fuel. To provide this policy direction various Member States have already

put forward national SAF strategies, making it timely that in 2020 the European Commission initiated the ReFuelEU Aviation initiative under the flag of the EU Green Deal. This initiative is developing a policy framework aimed at the introduction of an EU-wide SAF mandate, which has the potential of kick-starting the SAF industry in Europe. In the upcoming months, a first proposal on the SAF mandate is expected to be communicated by the Commission. Some of the key design elements of a SAF blending mandate are listed below, including the following considerations.

OBLIGATED PARTY

The EU blend mandate will likely be set on the fuel suppliers. This means that fuel suppliers delivering to EU countries, will have to blend a certain percentage of SAF with fossil jet fuel. This will likely result in an overall increase in the price per unit of jet fuel tanked in Europe, as SAF is currently more expensive compared to fossil jet fuel.

TARGET TYPE

The mandate will likely be based on fuel volumes (X amount of SAF should be blended with fossil kerosene). Another option could have been to introduce CO2 targets, achieved by setting an average GHG intensity of the blended fuels, as proposed in Sweden’s national mandate. However, it is expected that a volume-based mandate will be a better fit with existing legislation such as the policy systems currently in place for the road sector. It is also expected that GHG

thresholds will be applied to SAF eligible for the mandate, following existing RED II requirements.

TRAJECTORY

The expected intermediate blend target for 2025 will be set at 2%, and at 5% in 2030. Currently, the European aviation industry and European Commission are considering a SAF blend target of around 60% for 2050. Although this latter target may seem ambitious, this means that planes will still (partially) be flying on fossil kerosene in 2050, which most likely will not be enough to stay within the planet’s 2050 carbon budget.

SCOPE

As the fuel supplier is the obligated party in the mandate, this will likely cover all the volumes fueled in the EU. Placing the mandate, for example, on the amount of kerosene fueled for intra-EU flights only, would then be more challenging in practice and less ambitious from a sustainability point of view.

SUB-TARGETS

Some SAF pathways with a lower Technology Readiness Level will likely receive a ‘sub-obligation’. It is expected that the Power-to- Liquid (also known as e-fuels or synthetic fuels) SAF will receive a sub-target. Hopefully, other SAF pathways such as the Alcohol-to- Jet pathway can count on support. The development of these technology pathways are crucial for the sustainable growth of the sector. A (higher) cost of noncompliance per SAF technology pathways, a parallel Contracts-forDifference system, and/or various sub-targets should be considered.

SUSTAINABILITY

The sustainability framework of the Renewable Energy Directive (RED) II will likely function as the basis for the SAF blend mandate. Regarding GHG thresholds, this means that fuels with GHG savings of at least 50% (for production facilities built before October 2015) or above will be eligible for use under the mandate. Regarding wider sustainability considerations, some additions may be expected. For example, the full exclusion of the use of (parts of the) crops grown exclusively for food and/or feed purposes.

R&D SUPPORT

It is crucial that SAF technology pathways that are currently unable to reach commercial scale are provided with additional R&D support. With more SAF technology pathways in place, we can unlock the potential to use different types of feedstock, eventually leading to a broad and diversified sustainable feedstock portfolio that can be used by the industry for the incremental scale-up of the industry.

The challenge is enormous but crucial if the (European) aviation sector wants to meet its climate targets. Two factors are crucial for the successful deployment of the mandate and the ambitious rampup of the industry. The first one is feedstock availability. It is expected that the aviation sector’s focus

has to be on waste and residue streams or on cover crops, direct air capture (DAC) or other sustainable alternatives. Due to this limitation, it is essential to have a thorough understanding of the economy of scale of these feedstock before determining their potential and ramp-up rate for the SAF industry.

Besides this potential limitation, it is important to realize that this industry is practically starting from zero when it comes to the SAF volumes currently produced. In this sense, existing refineries need to be retrofitted to become suitable for SAF production and new facilities need to be built in order to produce enough SAF to fulfill the demand emerging from the obligation. Therefore, the time, energy and manpower constraints to retrofit and build these facilities need to be considered. This should also be noted, as a limiting factor for the European SAF ramp-up potential.

The lower the demand for fossil kerosene, the easier we can replace all fossil kerosene with SAF (in the long term), the less challenging these two elements mentioned above will become. Additionally, flying less or developing electrical/ hydrogen planes or hyperloops to cover relative short distances, will contribute to the ability of the aviation sector to reach carbon neutrality sooner and easier.

All things considered, the momentum is already there to sharpen our ambitions and take drastic actions to achieve fossil carbon neutrality for aviation. A separate policy system for aviation, in the form of a mandate, will ensure the growth of the SAF market. Yet, to succeed we need to map and thoroughly understand the crucial conditions under which we can ensure an actual sustainable ramp-up of these alternative fuels.