The production of SAF is well underway, but will the industry and its customers accept the financial cost of more environmentally friendly fuel?
The Neste refinery at Rotterdam isn’t a beautiful place, even between rain showers. The current expansion of the site at Maasvlakte means it has a half-built look about it, and with a coal power station pumping smoke into the sky close by, Cosco and Evergreen tankers moored on the far side of the Yangtze Canal, and the constant noise of construction traffic penetrating even the mandatory ear plugs, it’s hard to see it as the future of anything, let alone carbon-free flight. Yet when the refinery completes its €1.9 billion expansion in 2026, it will be one of the largest Sustainable Aviation Fuel (SAF) production facilities in the world.
If you enjoy international travel, but find the subject of SAF boring, the next few years may be challenging. Airline websites will encourage you to pay a supplement on your ticket so that a proportion of the fuel used for your flight is SAF, a SAF mandate will be added to increasing numbers of flights from certain airports and countries (the Netherlands and France already do so) and there will be articles like this one examining the subject. To understand why SAF is so important, and also to dig a bit deeper around some of the more problematic elements, I visited the Neste refinery in Rotterdam to learn more. And to be absolutely transparent, I went on a private jet arranged by Victor, the on-demand jet charter platform.
First, the background. Aviation makes up around two per cent of global emissions worldwide, and even with technological efficiencies with engines, aircraft and air traffic control, this percentage will rise along with passenger numbers, which may double in coming decades. Hydrogen-powered flight and battery-powered flights are possible, but are many years away from being commercially viable, and the aircraft entering service today have lifetimes of up to 30 years, taking us way past the net zero targets of 2050. Meanwhile, the world gets warmer and climate-related disasters more common. We need to reduce emissions by 7.6 per cent every year from 2020-2030 to limit global warming to 1.5C. Something has to give.
SAF is what aviation is pinning its hopes on. Instead of digging up carbon and burning it for propulsion, SAF uses resources as diverse as used cooking oil, animal fat wastes and algae to create a fuel which reduces the lifecycle emissions by up to 80 per cent. It is a drop-in fuel, meaning no modifications are necessary to the engines currently being used by the world’s airlines. At present they could run on 50 per cent SAF and in future will probably be certified to run on 100 per cent SAF. Inside the industry, if you look at the ‘path to net zero’ of most airlines you’ll find SAF taking up the heavy lifting to get airlines to net zero, with IATA seeing it as up to 65 per cent of the reduction in emissions by 2050. Yet opinions on SAF outside the industry range from disinterest to scepticism.
The reasons range from the cost to worries about whether ramping up production will inevitably lead to farmland being diverted from feeding people to producing fuel for the wealthy to fly around the world. All are valid concerns, yet without SAF, aviation’s emissions will continue to rise, and as we move towards 2030, it will become increasingly unsustainable for airlines to rely on carbon offsets such as planting forests or sponsoring cookstoves.
Privilege should pay
If this applies to commercial airlines, imagine working in private aviation. Victor says that: “The privilege of flying privately comes with an urgent and important responsibility to the planet.” While most of us would agree that anyone who is flying in a private jet can – and perhaps should – pay for SAF, does that same argument apply to us? It’s true that whichever cabin we are flying in, whether for business or leisure, we are privileged compared to the vast majority of the world’s population, a substantial proportion of whom are in countries threatened by climate change and without the funds to adapt. So should we pay, and if so, how much?
Starting with the extremely rich and including the rest of us, websites now give us plenty of options beyond the familiar carbon offsets. What could be simpler than a sliding ruler which allows us to decide how much SAF we would like to pay for to offset our emissions, ranging from nothing to 100 per cent. As already mentioned, at the moment, you aren’t allowed to have more than 50 per cent on a commercial flight, but that doesn’t matter since the SAF won’t be on that particular flight but instead is loaded, in much smaller amounts, onto aircraft at other airports, flying other routes, and at different times.
It is a more efficient system than trying to supply SAF to every airport, and so long as the documentation is certified, it ‘proves’ the emissions reduction which is the important thing for the environment and possibly your conscience. This is called by Neste and Victor, ‘Pay here, use there’ and the certification you receive will count towards your Scope 3 emissions statement (see below).
One in five
Victor has been offering this since the summer of 2022 and says that at present around one in five bookings choose to buy some SAF, with the average per booking working out as 32 per cent SAF. The company says that if this were replicated globally for all commercial flights (private and with scheduled airlines) it would equate to 21 million metric tonnes, around 6 per cent of global fuel burn (320m mt in 2019). Of course, this ignores the fact that Victor’s clients are extremely wealthy, but if you (or your company) believe that committing to net zero is worth doing, then the prices are not astronomical, though they are certainly inconsistent (see below).
Using the slider from British Airways, for instance, you can see that buying 100 per cent SAF for a return flight from London Heathrow to New York JFK would cost an additional £389.73, while the price in economy is £132.75. Not cheap, but when set against the price of a semi-flexible business class ticket to New York, probably averaging around an additional 10 per cent. Not every business could afford that, but plenty could.
British Airways is clear that it believes SAF “can be a game-changer”, and Carrie Harris, the airline’s Head of Sustainability says that: “SAF availability remains low and we need to scale up its production as quickly as possible.” Harris adds that the airline hopes that “engaging our customers and giving them the opportunity to purchase SAF… will raise awareness and interest, which in turn will encourage further investment in the advancement, production and commercial rollout of SAF to help reduce aviation’s reliance on fossil fuels.”
Jonathan Wood, VP Europe, Renewable Aviation for Neste says that SAF is now being employed at scale by commercial airlines. Air France and KLM recently signed a deal with Neste to buy 1 mt (approximately 1.26 billion litres) over a period of eight years starting in 2023, and some European airlines are being pushed along by various government regulations.
Air France for instance, has added a levy to its ticket prices since it has been mandated to fly with one per cent SAF, and as a result KLM has made the ‘voluntary’ decision to also impose the levy. The challenge with that, of course, is that once prices get to a certain point, flyers may choose to use transit airports outside those countries, or even the EU. Why transit Amsterdam Schiphol or Paris Charles de Gaulle to get to a long haul destination when you can fly via Istanbul, for instance, and not pay those charges?
It’s a significant challenge to the idea of mandates, yet the fuel industry thinks mandates are essential because since there is no tax on kerosene, alternatives such as SAF are more expensive. If the ‘full cost’ of using fossil fuels were included however – including the damage to the environment (the carbon cost) then of course that differential would
“The carbon cost [of flying] is not being adequately reflected today,” says Wood, “Externalities are not being costed into the use of that fossil fuel energy, so we firmly support the proposal to have mandates – to require a set proportion of all fuel to be renewable, both in road and aviation transport.”
There’s certainly no shortage of demand from airlines, powered by initiatives like Jet Zero, a partnership between industry and government with the aim of delivering at least 10 per cet SAF in the UK fuel mix by 2030 pledge. From Neste’s point of view they are solving the other end of the problem. “The biggest step is we’ve broken the cycle of “it’s not available, it can’t be used” says Bart Leenders, VP Production, Renewables Platform. “We’ve proven it can be done. In order to get the next investments, the best thing that policymakers can do is create some sort of market security, but leave it to industry, because then you get competitiveness and innovation. That’s why we believe a mandate is a perfect instrument where you create some sort of market certainty but leave it to competition and innovation.”
At the moment, Neste has an annual SAF production capacity of 100,000 tons (approximately 34 million gallons) at its refinery in Porvoo, Finland. The expansion of its Singapore refinery and modification of the Rotterdam refinery will see the company increase capacity to produce some 1.5 million tons (515 million gallons) of SAF annually by the end of this year, with further expansions coming through until 2026.
We have dealt previously with concerns about where the feedstock for SAF is going to come from [see ‘Sustainable aviation fuels: Ready for take-off?’ (September 2021) and ‘Refuelling sustainability’ (September 2022)]. It’s a real challenge for the industry, since no one wants to see valuable farmland being taken over by the fuel industry. It also relies heavily on certification to make sure that waste oils aren’t, in fact, relabelled palm oil from Asia.
What Victor has done is try and perfect the ‘book and claim’ system used elsewhere, though they prefer the term ‘pay here, use there’. The difference comes in the fact that Neste has what it calls “line of sight on the SAF and onto the aircraft and it’s all certified.”
The fear is that: “Other organisations might start selling this and trading it, and very quickly people don’t know what’s going on.” This is the nature of any market. Jonathan Wood says: “In the Netherlands there are incentives to buy SAF, and once they have the documentation for having bought the SAF they can sell it to someone who has an obligation to buy SAF in the road transport sector, for instance, and suddenly they’ve got it at a lower net price. We don’t do that because that is riding off the back of someone who is obligated. So when corporates say: “You are too expensive”, our reply is: “Ask your supplier why they are able to sell it to you for such a low price? It might be coming from us, and you better find out where and what incentives have been involved in that price.”
It is the dreaded word for anyone either making claims about what they are doing in environmental terms or, if viewed another way, overstating what they are doing, and there are strict rules over claims made in adverts. Toby Edwards, Co-CEO, Victor believes that: “It takes bravery for clients to do this. There will always be accusations of greenwashing. If you say ‘We are going to fly and we’re going to use SAF’ then critics will start questioning it.”
Private jets are never going to have a great press when it comes to the environment, but as Edwards says: “People are not going to stop flying, and who is anyone to say ‘You shouldn’t fly’? So if people are going to keep flying and the sector is going to keep growing, then we need to really quickly figure out what are the best ways of doing it. So we all need to help.”
The strange case of SAF prices
The number of airlines offering SAF is increasing, and many airlines offer the opportunity to use a slider scale to decide how much SAF you would like to buy, but the pricing remains… confusing.
So if you fly with British Airways from London Heathrow to New York return in business class, buying 100 per cent SAF will cost around £389. This is on a platform provided by a company called Chooose and which British Airways calls CO2llaborate. Offset the same flight using the Chooose platform on the London Heathrow website, and you will pay 582 (£517). Go to the Chooose website, and it is 746 (£663), all for the same route. Italian airline ITA has recently signed up with Chooose, but if you offset a return business flight from Rome to New York, the price is 2,500.
Chooose says there are several reasons for this. Each airline platform uses unique emission calculation methodologies for that airline, including its fleet, its fuel burn data and the airline’s preferences on calculation methodologies where there isn’t an industry consensus (i.e. whether or not to take into account such things as radiative forcing – see note below for an explanation of that). In summary, Chooose says “emission estimations for the same or similar route may differ across Chooose’s partner programs.”
In addition, Chooose says that “since SAF is a relatively small industry and SAF products have not been ‘commoditized’, pricing for specific SAF products varies considerably across SAF producers (i.e. based on feedstock and associated SAF to CO2e conversion factors, supply chains, etc.).” It means that these variances are reflected in the differences in prices for different SAF products being offered. In short, airlines have made deals with SAF producers and the cost of SAF is different for nearly every deal.
British Airways’ carbon calculator uses average historical airline data from the most recent full year and a radiative forcing index of one (so that the price isn’t altered) since the science on that is still uncertain. It also sells SAF to customers effectively at cost price because: “By keeping the costs to our customers to a minimum, we hope this will encourage more customers to address the carbon emissions from their flights.” chooose.today
What is radiative forcing?
In addition to greenhouse gas emissions including CO2, aircraft also cause non-CO2 climate effects such as condensation trails. Radiative forcing is a metric or measurement basis that aims to combine the CO2 and non-CO2 climate effects. In the example above, ITA Airways uses a radiative forcing of 1.9, which nearly doubles the emissions and therefore the amount of SAF to offset those emissions.
Scope of emissions
The GHG Protocol Corporate Standard classifies greenhouse gas (GHG) emissions into three ‘scopes’.
- Scope 1 emissions are direct emissions from owned or controlled sources.
- Scope 2 emissions are indirect emissions from the generation of purchased energy.
- Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
The travel-related emissions for most companies are Scope 3 emissions.