Jiaze New Energy unit to build green hydrogen-based alcohol-to-jet SAF plant

China-listed Jiaze New Energy announced that its subsidiary plans to invest approximately RMB 3.56 billion ($490 million) in a 300,000 metric tons per year green hydrogen alcohol aviation fuel chemical co-production project in northeast China.

The project will be developed in Jidong County, Jixi City, Heilongjiang province by Heilongjiang Jiayi Rongyuan Green Chemical, a wholly owned subsidiary of Jiaze's holding unit Shanghai Jiayi Rongyuan Energy Chemical, the company said in a Dec. 14 announcement.

Construction will be funded through a combination of internal capital and external financing, with investments deployed in stages based on project progress, Jiaze said. The board approved the proposal on Dec. 12, with shareholder approval still required.

The project is designed to co-produce green hydrogen-based alcohol fuels for aviation use, reflecting growing interest in alcohol-to-jet pathways as China expands its sustainable aviation fuel supply chain.

Jiaze cautioned that the investment carries multiple risks, including technology integration and operational challenges, as this is the company's first entry into the sector. It also flagged market and price risks, noting that green alcohol fuels currently face higher production costs than conventional fuels and rely heavily on policy support and the development of the carbon market.

The company also cited risks to biomass feedstock supply, potential shifts in domestic and international green fuel certification standards, and broader policy uncertainty that could impact project returns. Safety risks associated with chemical production and the project's substantial capital requirements were also highlighted.

The announcement comes as China accelerates domestic SAF and alternative aviation fuel development, alongside tightening feedstock availability across Asia. China canceled export tax rebates for used cooking oil in late 2024 and has increasingly signaled a preference for domestic processing, while launching a controlled SAF export pilot in 2025.

Spot sustainable aviation fuel prices in Europe continued to decline in the week to Dec. 10, flattening the backwardated curve, as mandated volumes look to be well covered.

Platts, part of S&P Global Energy, assessed the SAF (HEFA-SPK) FOB FARAG premium to jet barges down $225/mt, or 12%, in the week to Dec. 10, closing at $1,645/mt.