Sustainable Aviation Fuel: Challenges of Scale

September 19, 2023

Print This Article Share it With Friends

by Tony Cartolano (Lee Enterprises Consulting/Biofuels Digest) ... In January 2022, Valero Energy Corp said that tax incentives for sustainable aviation fuel (SAF) in U.S. President Biden’s stalled Build Back Better legislation were not enough for the oil refiner to consider producing it instead of renewable diesel. “The incentive level proposed in that bill was not sufficient to attract additional investment to make SAF versus the base case of producing renewable diesel with an existing unit,” said Martin Parrish, senior vice president of alternative fuels at Valero, on the company’s fourth-quarter earnings call.

In November 2022, Paul Abbott, CEO of American Express Global Business Travel, said that 300 SAF plants would need to be built if the industry wanted to get to (as a practical example) 10 percent sustainable fuel by 2030. He argued there weren’t enough financial incentives to scale up the production of that fuel fast enough. In June 2023, the group noted that SAF makes up less than 0.1% of available aviation fuel today and is two- to eight times more expensive than conventional fossil-based jet fuel, as reported by IATA.

In May 2023, Boeing CEO, Dave Calhoun, told the Financial Times that SAF would “never achieve the price of jet fuel”. Opining on the aviation industry’s solutions for reaching net zero by 2050, Calhoun noted that while SAF was a more environmentally positive fuel, its cost would never be competitive with petroleum-based jet fuels.

Can SAF Compete With Petroleum-Based Jet Fuels?

Can SAF compete? Possibly. Certainly, SAF can have environmental benefits.

...

Many airlines and aviation companies are currently making voluntary commitments to reduce their carbon emissions and achieve carbon-neutral growth. Most are increasing their investment in SAF and collaborating with producers to scale up its production. Governments and international bodies are implementing policies and regulations to support the use of SAF. This demand from the aviation industry will drive competition and work to reduce the cost of SAF, while industry and government support will continue to create a favorable market for SAF and incentives for its adoption.

SAF Technologies

To transform biomass into hydrocarbon fuels, oxygen must be removed and the long-chain molecules like cellulose and hemicellulose, need to be reduced to smaller molecules for ease of handling and combustion.

...

On average, biomass contains about 44% oxygen by weight. Typically, this oxygen is removed by either combining with the contained carbon to create CO₂ or by combining with hydrogen to create water. As Forsberg and Dale discussed in a recent article, to reduce the carbon footprint of biomass conversion processes, it would be beneficial to use hydrogen to remove oxygen from biomass to produce hydrocarbon fuels.

The industry started producing SAF through a low “cost of entry” process – hydrogenation of fats and oils, or hydro-processed esters and fatty acids (HEFA). This involves a relatively easy conversion of refinery assets to start producing SAF.

...

Other promising technologies appear to be scalable to the required volumes. These include Fischer-Tropsch (FT) and alcohol-to-jet (ATJ). FT requires the gasification of municipal solid waste (MSW) or agricultural material (including forestry materials) to produce syngas, which is then converted to SAF. ATJ can use syngas as well to produce alcohols, or the alcohols can be produced by fermentation of various sources of biomass. To reduce the CO₂ footprint of these technologies, large quantities of sustainable hydrogen will be needed, which presents another issue: how to get sustainable or green hydrogen cost-effectively. Forsberg and Dale suggest using nuclear energy, which presents additional development and capital investment hurdles.[2]

Most of the technologies in development have the potential to produce SAF that meets the current ASTM standards.[3] However, they are currently approved only as blendstocks up to 50% in concentration. One of the reasons for this is that they produce “linear” or paraffinic hydrocarbons. While acceptable as fuels, they do not provide the protection of jet engine seals. The aviation fuel requirements call for a certain percentage of “aromatic” compounds to prevent fuel leaks in the engines. Therefore, additional technology will be needed to produce renewable aromatic compounds suitable for use in jet fuel, if SAF is to move beyond the 50% blend limits.

Continuous research and development efforts are constantly improving the production processes and cost-efficiency of SAF. As these large investments in technologies are made, our knowledge of how to reduce the production costs of SAF should increase, as it has done for petroleum refining. It will take this large investment in development and production capabilities to determine whether SAF will present a viable alternative to fossil-based jet fuel. READ MORE

[1] https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/09/fact-sheet-biden-administration-advances-the-future-of-sustainable-fuels-in-american-aviation/

[2] W. Forsberg and B. Dale, “Can large integrated refineries replace all crude oil with cellulosic feedstocks for drop-in hydrocarbon biofuels?”, Hydrocarbon Processing, January 2023.

[3] As a bit of background, ASTM D7566 is the “Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons.” The process to be approved as SAF under this standard is covered in ASTM D4054, “Standard Practice for Evaluation of New Aviation Turbine Fuels and Fuel Additives.” SAF certified under D7566 is blended with conventional jet fuel up to its maximum allowed blend ratio. As of April 2023, nine conversion processes for SAF production have been approved and eight other conversion processes are currently under evaluation (ICAO). READ MORE

IATA head says price of sustainable fuel likely to remain high (Reuters)

Report highlights ‘significant’ hurdles associated with sustainable aviation fuel (Flight Global)

European airlines say sustainable fuel targets may mean higher fares, consolidation (Reuters)

Excerpt from Reuters: Sustainable aviation fuel (SAF) is likely to stay more expensive than kerosene even when large-scale production kicks in and the cost won't deter airlines from their carbon emission targets, International Air Transport Association (IATA) head Willie Walsh said.

...

"I truly believe SAF will always be priced at a premium to kerosene," Walsh told a conference in Lisbon.

"I believe the industry is ready to embrace that. The industry recognises the problem, is doing everything it can to address it and we will achieve the targets because...there isn't an option here."

He expected the price of SAF to come down when deliveries reach a large scale, compared to "tiny volumes" now, though it will remain at a premium to kerosene.

The CEO of British Airways and Iberia owner IAG, Luis Gallego, said travel would become more expensive as a result of the decarbonisation effort, but the sector was hopeful it could maintain affordable ticket prices.

"That's the challenge, but we don't have any alternative but to meet the targets," he told Bloomberg TV on the sidelines of the event. "What we need is production of SAF. It doesn't make sense to bring SAF from the United States and put it in our planes in Europe." READ MORE

Excerpt from Flight Global: A new report lays out significant challenges facing the global airline industry’s plan to expand its use of sustainable aviation fuel (SAF), while predicting wider SAF use will inflate airfares.

The 10 October report from financial research firm Morningstar comes as the airline industry leans heavily on SAF as a prime means of reducing carbon emissions.

“The price of SAF is currently 2x to 9x more expensive than conventional jet fuel,” Morningstar says. “While the tax credits for SAF may help lower the cost of SAF in the future, the significant price premium of SAF remains a significant hurdle for the industry.”

The report says airlines cannot meet their SAF-usage goals by depending on the cheapest form of SAF – biofuel. Due to limited biofuel availability, airlines will need to turn to significantly more expensive types of SAF, including fuel made through novel in-development methods.

Still, Morningstar notes, as have others, that airlines have few means other than use of SAF to reduce carbon emissions. The report says SAF remains “the most-feasible solution”.

...

Biofuel, made from biomass like plant oil, is only one type of SAF. The aerospace industry has also promoted SAF produced using municipal waste or forest residue, or through “power to liquid”, a process involving combining hydrogen with carbon, such as carbon collected through extraction from air.

...

“There are less than eight years left to meet the 2030 goal… For these regions, the required SAF to achieve the 2030 targets represent nearly 60 times the estimated global SAF production in 2022,” Morningstar says.

...

Morningstar says SAF availability is challenged by competition for renewable fuels from other industries. It says “renewable diesel” costs about the same as traditional diesel, making it more economically practical than SAF to produce.

Of SAF types, biofuel is cheapest but also the “least scalable” due to limited feedstock, Morningstar says.

...

Power-to-liquid fuel has no such feedstock limitations, but the technology remains in “nascent stages” and “cost of production is very high”, Morningstar says.

That means airlines will likely need to rely on other SAF types, which will still cost 3-4.5 times more than traditional jet fuel.

Higher airfares may result.

“We believe the fuel cost for airlines is likely to increase gradually over the coming years as the industry transitions towards SAF, and the cost of air travel is likely to increase as the industry passes on higher costs,” Morningstar says.

In a September report, LEK Consulting estimated that the cost of airlines meeting their SAF targets would drive up airfares 18% by 2050. READ MORE

Excerpt from Reuters: European airline chiefs said on Thursday the industry needs to make more money and may consolidate further to pay for sustainability targets, a trend likely to lead to higher fares for passengers on top of rising demand for air travel.

...

The head of British Airways parent IAG told reporters at a CEO roundtable that there was a more than a 90% risk that the industry would not meet a European Union mandate for the availability of sustainable aviation fuel (SAF) in 2025.

...

Speaking to Reuters on the sidelines of the Brussels event, Ryanair Chief Executive Michael O’Leary forecast more consolidation with IAG best placed to buy Portugal’s TAP ahead of rivals Air France-KLM and Lufthansa.

He expressed surprise that Air France-KLM had bought a stake in Scandinavian SAS.

He also reiterated predictions that low-cost rivals Wizz Air and easyJet would fall to consolidation, with easyJet snapped up by IAG or Air France-KLM, or both, and Wizz Air getting bought by Lufthansa or a Middle Eastern buyer. READ MORE