The impact of aviation on the climate continues to grow, as the developing world catches up with the West’s appetite for foreign travel. The only immediate way to reduce greenhouse gas emissions from flying is to use renewable fuel instead of fossil fuel, but that comes at a high cost and the build rate of new production facilities is not fast enough. Two new registries, which will enable producers of sustainable aviation fuel (SAF) to sell to customers in more locations, have been launched recently. So, will they make a difference?
The barriers to SAF role out are not only technological, but also political. Currently, bilateral agreements for SAF offtake are smoothing the path to market. But there is considerable uncertainty about how the realities of aviation decarbonisation will impact the shape and size of the industry after 2050. The European Union, in its RefuelEU Regulation, is insisting that SAF blends must be made available at all but the smallest airports in the EU, and that airlines will have to use these fuels. The mandate climbs quickly in steps to 70% SAF blends required in 2050. This, coupled with the extra mandate for synthetic fuels, will result in higher fuel prices or higher taxes, both of which will have consequences. Will the EU change course when people cut back on flying and workers in the sector lose their jobs or tourists avoid Europe? Then there are the growing calls to delay the attainment of net zero.
Two major players, IATA the trade association and ISCC, the largest EU and CORSIA approved sustainability scheme for certification of SAF, have announced the launch or piloting of SAF registries recently. The registries will be voluntary and allow companies to reduce their reported GHG emissions. These independent registries offer ‘credit’ or virtual transfers of SAF from producers to customers anywhere in the world, so airlines can purchase the GHG savings of SAF regardless of where it is produced. In contrast, the EU mandate will still be a physical one with airlines required to refuel with the actual SAF blend and suppliers mandated to provide it.
But if airports do not purchase all the SAF produced by nearby facilities, the producer can sell the GHG savings to someone else on the other side of the world, via the registry, whilst the physical fuel is used in the normal way. The certified greenhouse gas savings for each batch are tracked and allocated to the purchasing airline or its customer. Early users are likely to be airfreight and logistics companies plus business travellers. The design of the registry ensures that once sold, the credit is retired, so that there is no double counting. The ISCC registry also requires delivery of the SAF to an airport before the credit can be created. The system reduces the risk that the investment in the SAF plant will not be paid back. However, risk remains. If the aviation industry changes significantly, the local airport may reduce flights, with less fuel needed. An oversupply of SAF has even been suggested by insiders.
Technology so far has been focussed on converting waste oils, such as used cooking oil, to SAF, which is a process that has been tried and tested and uses existing refinery facilities. And if there is insufficient demand, then the raw materials can always be used for road transport biofuels. However, for wider decarbonisation, other feedstocks will also be needed and they require investment in new and more complicated technology. The levels of investment and risk increase still further when e-fuels are considered. They rely on supplies of green hydrogen produced from renewable electricity and biogenic carbon dioxide, none of which are currently available in sufficient quantities.
Some countries are thinking about how SAF provision could be de-risked with the UK government recently consulting on market measures similar to those used to promote renewable electricity and biofuels. This has provoked criticism from NGOs who point out that many taxpayers fly rarely or not at all, so they should not be required to contribute towards the decarbonisation of the aviation industry.
Much uncertainty remains. The European Commission should change course and significantly reduce the need for such widespread provision of physical SAF. Pioneers developing new technology would then use the registries to sell their advanced SAF more widely. If not, fuel producers are likely to play safe and pay more for proven feedstocks rather than invest in new technology. To do otherwise flies in the face of reason.
Published: 26 June 24
