How the U.S. May Eventually Overtake the EU in Sustainable Aviation Parts 1 and 2

by Philippe Marchand (Transport Energy Strategies/European Technology and Innovation Platform (ETIP)) More than a decade of solid R&D, numerous private (industry-wide) and public stakeholders’ working groups and advocacy, eventually yielded a comprehensive and long-term, hopefully stable, regulatory proposal, esoterically named ReFuel EU Aviation. It calls for the mandatory incorporation of SAF in commercial aviation fuels as from 2025, with a complete flightpath to 2050 ...

Should SAF, once qualified for international usage (anywhere, on any plane) by ASTM International, with a detailed and straightforward technical specification (ASTM D7566, the low-carbon equivalent of ASTM D1655, used for commercial aviation fuel), be left under the responsibility of the fuels industry to supply, with the proper certificate of quality and sustainability, assuming CO2 emission reduction is the key deliverable, the runway would be clear for take-off. But such a level-playing field is not fit for Europe.

Not only do you notice in the table above that there is a sub-mandate for e-fuels, produced from renewable electricity-derived hydrogen and CO2 (direct capture or industrial), thanks to Germany’s lobbying, but this clearly ignores the technology-neutrality approach.

But sustainability goes deep in terms of excluding, banning, excommunicating. Airlines’ lobbying, eagerly accepted by the European Commission, has succeeded in allowing only residual raw materials to be eligible for SAF production. Is it useful here to mention that environmental NGOs are strongly anti-biofuels in the EU?

And not any waste or residue can be eligible: there is a catalog, the Annex IX of the Renewable Energy Directive (RED), with two parts, A and B, each with different mandatory constraints and listing some exotic raw materials:

As someone rightfully said during the recent 2023 CERAWeek in Houston, TX: Europe is about sticks, and the U.S. about carrots.

In the U.S., the first carrot was awarded to industry by the California Air Resources Board, in the form of the Low-Carbon Fuel Standard (LCFS), a generous carbon credit philosophy that allows SAF to be produced reasonably competitively to fossil jet-fuel, kicking-off the market. Second is the federal Inflation Reduction Act (IRA), offering generous (again) subsidies to green and innovative industries, which should spur SAF production, especially if the U.S. government has success with its Grand Challenge to have 10% SAF in commercial aviation fuel by 2030.

As long as reducing CO2 emissions is the key demand to global airlines and aviation fuel suppliers, making production more difficult and more costly by severe regulatory demands, on feedstock nature for instance, like the ones described above for ReFuel EU Aviation, will eventually turn the EU into a SAF consuming zone, not a producing one. READ MORE

Part 2 ... On SAF demand. U.S. airlines are dominant in the world, trusting the top three positions in terms of passengers. North America was also the only region of the world where the airlines profits were positive in 2022, according to preliminary results published by IATA, the airlines trade association, in December 2022. No surprise then that most of the SAF supply agreements, as conditional they may be, have been signed in the U.S., as can be seen in this 2022 presentation by the Commercial Aviation Alternative Fuels Initiative (CAAFI), a U.S. association that has done so much for SAF development.

And U.S. airports have not been laggards to support SAF deployment, including those in Los Angeles (LAX), San Francisco (SFO) and Seattle (SEA).

On SAF production. The U.S. has strong productive and influential agricultural and forestry industries that can deliver volumes of cost-competitive raw materials for the various SAF production certified pathways, like soy oil and corn starch. By the way, pathway certification is performed by ASTM International. Brazil and India, two major countries that can produce SAF raw materials in volumes, are mostly on the U.S. side of alliances on such matters. Membership in the Global Biofuels Alliance is a good example. Meaning the insistence in the EU to manufacture SAF exclusively from waste and residues may not stay the course beyond 2030 when SAF demand is likely to soar and competitive molecules from the West or the East of the EU are offered to airlines, global companies subject to global objectives as set by IATA or ICAO.

As John Cooper, director-general of FuelsEurope, said in a recent Transport Energy Strategies podcast, Brussels-based climate regulation may soon face some push-back from EU Member States’ industrial strategies. We could well see a global alignment of sustainability criteria for SAF, eventually. In the meantime, investors do not elbow their way to propose hard cash to put steel in the ground for commercial-size SAF production plants in the EU, and the clock is ticking for higher mandates. READ MORE