Austrian refiner OMV and Air France-KLM announced Sept. 18 an offtake agreement for 2,000 mt of sustainable aviation fuel supply in 2023.
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Register NowThis agreement is the first step in an existing memorandum of understanding between the companies for over 300,000 mt of SAF supply by 2030.
OMV produces SAF through co-processing at their Schwechat refinery in Austria. Co-processing uses bio-feedstocks, such as used cooking oil, alongside typical fossil feedstocks to produce SAF using existing refinery infrastructure. The resulting fuel is a blended product with up to 5% renewable feedstocks, according to current ASTM standards.
Sustainable aviation fuel trades at a significant premium to conventional jet fuel. Platts, part of S&P Global Commodity Insights, assessed SAF CIF ARA at $2,999.50/mt on Sept. 15. However, co-processed SAF may trade at a lower level than 100% neat SAF, given the lower investment costs needed for co-processing facilities.
"By 2030, we aim to incorporate at least 10% of SAF in all our flights, which goes beyond the mandates set by the European Union. We have already secured three out of those 10%, and we are actively building a worldwide network of SAF providers," Vice President of Sustainability for Air France-KLM, Fatima Da Gloria De Sousa, said.
This announcement came just days after the European Parliament adopted proposals for binding targets to boost the uptake of sustainable aviation fuels in a major boost for supplies of SAF in the region on Sept. 13.
Under the RefuelEU aviation rules, fuel suppliers will need to blend SAF into aviation fuel in increasing amounts, from 2% of overall fuel supplied at EU airports by 2025 to 6% by 2030 and 70% by 2050. In addition, a specific proportion of the fuel mix (1.2% in 2030 rising to 35% in 2050) must comprise synthetic fuels like e-kerosene.
European jet fuel demand is set to grow by more than 20% over the next five years, according to the International Energy Agency, driven mostly by EU targets. IATA estimates that global renewable fuel capacity, which includes SAF, will surge to 69 million liters or 55 million mt by 2028, up from 5 million mt in 2022.
The MoU between OMV and Air France-KLM is one of several for the refinery. OMV has similar agreements through 2030 with Wizz Air, Ryanair, Lufthansa Group, and Austrian Airlines.