October 4, 2023[AIN]- The amount of unblended sustainable aviation fuel (SAF) produced worldwide last year tripled the output of 2021, totaling some 80 million gallons of fuel, according to statistics from the International Air Transport Association (IATA). Yet that amount equated to just 0.1 percent of all jet fuel consumed.
Despite the fact that the petroleum-based jet fuel industry has a 70-year head start on the SAF refiners, the renewable fuel producers continue to make steady progress, and the industry expects another exponential jump in SAF volumes this year as more facilities come online and existing producers modify and expand their existing facilities.
In December last year, the Montana Renewables facility in Great Falls, Montana, began production with an initial annual output of approximately 30 million gallons of neat, unblended SAF. SAF is currently approved for use in blends of up to 50 percent SAF and 50 percent conventional jet fuel although the industry standard is a 30/70 blend. At that ratio the Montana Renewables volume equates to another 100 million gallons of blended SAF added to the system. As the plant scales up to full production this year, that volume will double to 60 million gallons of neat SAF, according to IATA estimates. An expansion starting next year would boost SAF output to 230 million gallons annually once completed.
Neste, the world’s largest SAF fuels producer, now has an annual capacity of 345 million gallons of neat SAF as its Singapore refinery accelerates production. The company expects that output to rise to half a billion gallons by mid-2024, and once it finishes modifications to its Rotterdam facility, the company will reach a capacity of 750 million gallons by the end of 2026.
World Energy in Paramount, California, is also investing $2 billion to upgrade its plant there to produce 240 million gallons of SAF a year by 2024 and announced plans for the conversion of a facility in Houston, which is expected to double that by 2025. Near San Francisco, Phillips 66 is in the process of converting a petroleum refinery to produce renewable fuels with an expected output of 800 million gallons a year of biodiesel and/or SAF.
In Georgia, LanzaJet expects its Freedom Pines refinery in Soperton to become operational by the end of the year, thus establishing the world’s first facility to use the alcohol-to-jet production pathway, as well as the first SAF plant on the East Coast.
While much of the aforementioned SAF volumes are wrapped up in offtake agreements with commercial airlines, the companies that supply business aviation have certainly had a proverbial seat at the table. Since the end of 2020, Signature Aviation—which operates the world’s largest FBO chain—has pumped 25 million gallons of SAF from 14 locations in the U.S., all west of the Mississippi and in the UK. For airports east of the Mississippi, SAF remains absent save for the occasional highly touted demonstration delivery. “It was important to prove we could use the [existing] infrastructure to push the green product into airports,” said Michael Sargent, Neste’s v-p of renewable fuels, North America. “We can do that with a product that is a drop-in alternative to fossil [jet-A] that we could fuel airports pretty much anywhere we can get access to product.”
California is the epicenter of SAF distribution due to the state’s tax incentives. “That’s where it’s the most profitable and the lowest cost to an end operator to have that fuel delivered,” said Kennedy Ricci, president of industry sustainability solutions provider 4Air. “You’ve got the U.S. renewable fuel standard program…but you get to stack that credit with the California low-carbon fuel standard which really helps to drive the cost down further.”
For renewable fuel producers such as Neste, such incentivization is vital to the continuing development of the market. “We and others like us have invested billions and will invest billions if we are going to generate the capacity that we need, but it’s critical that we continue to get certainty of demand,” said Sargent. Such tax incentives certainly help to promote the use of SAF. “Once it’s blended within California we usually see [a premium] of $1 to $2 per gallon,” said Ricci. “It’s once you get outside of California we’ve seen anything from $4 a gallon to I think $11.” He added that a handful of other states such as Washington, Oregon, and Illinois have also instituted their own low-carbon fuel incentives, and New York and New Jersey are trying to institute tax credit programs of their own. “I think that would really be the switch that would see a lot more physical supply available because the demand is certainly there, especially within business aviation flight departments at the New Jersey airports,” Ricci told AIN.
Another concern is that given the similar production processes between the two, renewable fuel producers need to decide whether to produce bio-diesel or SAF, and Ricci noted that one major concern from a demand perspective is “trying to get that capacity not go to renewable diesel but to really come to SAF. That could go to renewable diesel if we don’t have the interest from aviation,” he warned.
For business aviation customers looking to find SAF, the U.S. West Coast remains a hotbed of production and distribution with availability at some 30 locations and counting, and industry fuel suppliers say the current demand is outstripping the supply. “Certainly there is a supply deficit versus demand, but we hope in time through 2024 that deficit will be reduced closer to where the business aviation demand is,” explained Keith Sawyer, Avfuel’s manager of alternative fuels. He noted that in addition to the 15 or so FBOs that his company supplies with SAF on a continual basis, many corporate flight departments that operate their own fuel farms are also taking deliveries.
“I suggest over time there will be more and more volume arriving at fixed base operators in the mid-continent and east, but again supply has to be arrived at,” said Sawyer. “It has to find a way to a location where there is jet fuel that can be blended and then pushed to either a loading rack or rail siding or to marine tanker or it will be distributed on a neat basis and then blended in Bayonne, New Jersey, for example.”
For those operators interested in using SAF even though it might not be available in their region, the book-and-claim process offered by several providers presents another option. At certain locations, they can request and pay for SAF and receive the associated environmental attribution benefits for the fuel even though the actual molecules are dispensed someplace where there is an actual SAF supply. “Say you book-and-claimed out of Teterboro, you pay your [local] jet-A price and then you pay the delta, what we call the “green premium” for the SAF in the California market,” explained Ricci. “So if in California if the jet-A price was $4 a gallon and the SAF price was $5.50, you’re only paying that $1.50 on top of your Teterboro jet-A price.”
“SAF is more expensive than jet-A, but the question I think we have to ask is what’s the real cost of not using SAF?” concluded Sargent. “If you just try to compare the cost at the pump, you’re not considering the social costs of continuing to use fossil fuel.”
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