The biofuel community has been saddened by the fate of Fulcrum Bioenergy, a pioneer in innovative aviation fuel technology, which recently filed for chapter 11 bankruptcy. This news followed on from an announcement in July that Shell is to ‘temporarily pause’ construction of its SAF (sustainable aviation fuel) and biodiesel plant in Rotterdam. BP is also scaling back and re-evaluating plans for new SAF and renewable diesel biofuels projects. These developments seem at odds with the ambitious SAF mandates already approved in Europe and just passed unopposed by the UK House of Commons.
But mandates and regulations have run into trouble before when confronted with the realities of the market. For example, there are targets to end the production of petrol and diesel fuelled cars. But sales of electric vehicles (EVs) are stagnant or falling because of cost, technology, and infrastructure problems. Governments are now thinking about delaying or diluting EV mandates.
Perhaps it is no surprise then, that the problems affecting SAF, whilst differing from those afflicting EVs, also fall into the same three categories of cost, technical and infrastructure. Although SAF mandates are in place, customers’ willingness to pay higher ticket prices is causing uncertainty about the volumes that will be needed long term. Technical difficulties in SAF production from challenging raw materials is affecting confidence. The difficulty in providing SAF at all airports in Europe should also not be underestimated.
It is clear that airfares are going to increase in the long term, as SAF is likely to be more expensive than fossil fuel for the foreseeable future. The oil companies will have to pass on the high price of SAF to airlines, who will have to recoup the cost from customers. Such is the current price difference between SAF and fossil aviation fuel, that passengers will notice the change. People may fly less as a result. It is important that regulators learn from the EV mistakes and introduce the mandate for SAF at a rate that will allow the market to adapt to any changes in demand.
There are also technical challenges to be overcome. Fulcrum Bioenergy’s process focussed on converting mixed waste, a commonly available raw material using the Fischer-Tropsch process. Corrosion was reported to be the cause of their problems. For now, most companies are playing safe with raw materials, such as used vegetable oils, which require less processing. But this approach cannot provide the volumes of SAF needed in the long run.
Governments could smooth the path to commercialisation of new technologies by funding the first demonstration plants or agreeing to subsidise the sale of the product from the first plant. A modern economy needs an efficient aviation infrastructure with frequent flights to service the needs of business travellers and airfreight, as well as providing an affordable service to its citizens. It is therefore a benefit to all of society, not just frequent flyers, that the aviation sector decarbonises in a controlled and predictable manner. This is a good argument for a time limited taxpayer subsidy to get new technologies off the ground. The UK is consulting on this and other options.
The EU could also reduce the infrastructure related barriers to implementation. The requirement to supply SAF to all airports, could be waived, providing that the price of fuel at all airports remains the same, regardless of the SAF content. As an alternative, companies could purchase the GHG savings of SAF without purchasing the physical fuel. Such a scheme could be administered by an existing registry provided by ISCC, the most important biofuels sustainability scheme, or the one under development by IATA the trade association for the sector. These registries are a way of partially de-risking the early SAF plants, as the GHG savings can be sold all over the world.
Europe and the UK are pushing the take-up of SAF with mandates and regulation. There is going to be turbulence. But lessons need to be learned from the rush to decarbonise the road transport sector, so the same problems don’t ground the aviation sector.
Published: 23 September 24
