FEATURE: Cross-sector push towards SAF seen despite COVID-19 aviation impact

Speakers featured on the opening day of the Sustainable Aviation Fuel Symposium Nov. 12 highlighted SAF as a "key pillar" in decarbonization as the sector voiced desires to work with governments to ensure the economic viability of the energy transition as it faces supply, sustainable feedstock and pricing challenges amid the coronavirus pandemic.

The coronavirus pandemic has forced the global aviation community to face the "the largest shock in the history of air traffic," according to the International Air Transport Association, the host of the symposium.

According to the trade association, the crisis' effects are so pronounced that effects will be felt even three decades in the future, with projected traffic in 2050 down 16% from IATA's pre-pandemic forecast.

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While the fallout from the pandemic has crunched forecasts and even forced 64% of the world's aircrafts into storage, according to a speaker, it has not hampered the industry's sustainability goals in general or the adoption of SAF in particular. Despite the pandemic, another speaker claimed that 2020 has been the "busiest" year in the adoption of SAF.

"SAF is a key pillar -- if not the key pillar -- in the decarbonazation of the aviation industry," said Lloyd Pinnell, Aviation Lead of the Energy Transitions Commission.

Currently, over 300,000 commercial flights have been powered by SAF blends while producers of the fuel have secured approximately $6.5 billion in forward purchase agreements, according to IATA. While the group says that market penetration is still less than 1%, it maintains that the industry could hit 2% in 2025.

California framework cited as a paragon

Presenters at the symposium stressed that a policy framework is crucial in achieving market penetration thresholds, like the 2% suggested by the IATA.

The Carbon Offsetting and Reduction Scheme for International Aviation has outlined the pathway for halving the industry's 2005 emissions by 2050 by way of carbon neutral growth, but policy intervention on a more localized level is still needed -- similar to the framework seen in parts of the US.

SAF production costs can far exceed that of conventional jet fuel, but producers can offset those costs with environmental credits.

In the US, SAF generates D4 renewable identification numbers and qualifies for a $1/gal biomass-based diesel tax credit. Combined, those credits can generate over $2.40/gal for a producer. The real attraction for SAF in the US, however, is in California thanks to the state's Low Carbon Fuel Standard.

Under the state program, SAF generates over $1/gal in addition to the federal incentives above. That means the total value of credits attached to SAF in California can exceed the cost of production, depending on current RIN and LCFS credit prices.

California is not the only US state with an LCFS. Oregon currently has a similar program and other states and Canadian provinces are considering launching their own.

Feedstock costs hinder SAF affordability

Multiple technical pathways to develop SAF are currently available to the industry using an array of different feedstocks, the most common of which are fats, oils and greases.

Regardless of which feedstock is chosen, however, it is often considered the greatest component in the overall cost of SAF. While some feedstocks may appear to be simple, each requires a significant amount of preparation in order to be eventually used on an aircraft.

In order to establish a downward trajectory for the price of SAF, the industry first needs to bring down the cost of feedstocks, according to one panelist.

Market participants eye higher SAF blends

Depending on which feedstock and technical pathway is utilized, SAF is currently certified in blends with its traditional counterpart up to 50%. But this could soon change, according to the panelists.

On Nov. 12 aircraft engine producer Rolls Royce announced that it would be testing an engine powered by 100% SAF. According to Simon Burr, the company's director of product development and technology, Rolls Royce expects to see a reduction in emissions in the test, and plans to share its findings with the rest of the aviation community.

Rolls Royce was not immediately available for further comment via email.

"It's not about Rolls Royce, it's about moving the whole industry forward," said Burr during the symposium.