TotalEnergies signs 10-year SAF deal with Air France-KLM

TotalEnergies has agreed to supply airline group Air France-KLM with more than 800,000 mt of sustainable aviation fuel, or SAF, over a 10-year period starting from 2023.

The companies signed a memorandum of understanding Dec. 5 for it is one of the larger long term SAF supply deals seen in this nascent market.

SAF is a renewable alternative to traditional jet fuel, made by converting sustainable feedstocks into fuel. It is mostly manufactured from bio-waste, namely agricultural waste fats and/or oils, or residue raw materials.

More and more airlines are chalking up an increasing number of long-term SAF supply deals as part of their efforts to reduce carbon footprints.

The SAF will be produced at TotalEnergies' biorefineries, and will be used by Air France-KLM Group's airlines, mainly for flights departing from France and the Netherlands.

TotalEnergies aims to produce 1.5 million mt of SAF by 2030. TotalEnergies claims that the SAF it produces reduces "CO2 emissions by at least 80% on average over the entire lifecycle, compared with their fossil equivalent."

"Air France-KLM is fully committed to advancing SAF production in Europe and around the world. This MoU... is another building block in the development of French production that can meet the airlines' needs, marking a milestone in the successful decarbonization of our business," said Air France-KLM CEO Benjamin Smith.

In late-October, Air France-KLM also signed a deal with Finnish refiner and clean fuels producer Neste for the delivery of more than 1 million mt of SAF, over a period of eight years starting in 2023.

The French energy major has already been supplying some SAF for a number of Air France-KLM Group commercial flights for the past two years.

SAF infrastructure

France is building more infrastructure to boost imports of sustainable aviation fuel, with notably the construction by Compagnie Industrielle Maritime of four dedicated tanks to blend SAF with jet fuel at the Le Havre terminal.

Only three countries in the world are currently applying a mandate for a minimum amount of SAF to be blended with fossil jet fuel: Sweden, Norway and France, with a minimum 1% of SAF in aviation fuel since Jan. 1, 2022.

The EU's blending mandate will kick in in 2025, with a minimum 2% SAF, to be increased to 5% in 2030 and 63% in 2050. In the summer of 2021, SAF accounted for only 0.01% of total aviation fuel demand in Europe.

Air France-KLM hopes to reduce its CO2 emissions per passenger/km by 30% by 2030 compared to 2019, by using 10% SAF in its fuel needs by 2030.

Aircraft can currently only operate using a maximum 50% blend of SAF and conventional jet fuel known as Jet A1. But the amount of SAF that can be blended into Jet A1 depends on the purity of the initial petroleum-based product.

The SAF market remains tiny in comparison with the amount of jet fuel traded globally, and accounts for only 0.02% of global jet fuel use, according to estimates by S&P Global Commodity Insights.

But the SAF market is poised to grow steadily in the coming decades as the aviation and energy sectors collaborate more to reduce greenhouse gas and carbon emissions.

SAF prices are currently around two times higher than fossil fuel-derived jet fuel compared to two years ago when they were four times the price.

Platts assessed Northwest Europe SAF price at $2,166.819/mt on Dec. 2, S&P Global data showed. Platts assessed a conventional jet fuel cargo at $983/mt on Dec. 2, on an FOB Amsterdam-Rotterdam-Antwerp basis.