Every week, we can find a SAF supply or an offtake agreement between an airline and a producer or supplier in the news. This collaboration between airlines and producers is needed to invest in the production and decarbonization of the air transport industry.
However, other factors like feedstock availability, logistics, regulation, or incentivisation play an important role in how fast decarbonization occurs.
To discuss these topics, we have Repsol, a global multi-energy provider working to drive the evolution towards a low-emissions energy model and has several renewable fuels and SAF projects in Spain.
Alfonso: Hello and welcome to "SAF Insights." In this series, we'll discuss the forces that affect the sustainable aviation field market globally. Pretty much every week we can find in the news, SAF supply or an offtake agreement between an airline and a producer or a supplier. This collaboration between airlines and producers is obviously needed to invest on production and to decarbonize the air transport industry. But there are other factors like feedstocks availability, logistics, regulation, or incentivization, which will play an important role in how fast that decarbonization takes place. My name is Alfonso Berrocal, European Business Development Manager for oil products at Argus Media. And to discuss these topics today, we have here with us Rocio Gil, SAF product manager in the renewable fuels and circular economy direction at Repsol, a global integrated energy supplier with several biofuels and SAF projects in Spain. Ola, hi, Rocio, and welcome to this podcast.
Rocio: Hi. Hi, Alfonso. Thank you, and thanks to Argos for having Repsol in for this interesting podcast. Delighted to be here. Thank you.
Alfonso: Thanks to you, and thanks to you guys. Rocio, can you please give us an update about the projects that Repsol has online to produce sustainable aviation fuel now, and the facilities that you're planning to put in place and to start up in the coming months and years?
Rocio: Yeah. At Repsol, we have been pioneers within our sector, and combining all our efforts to become a net-zero-emission company by 2050. But, it is just as important to take the delete as it is to do so with a plain roadmap. So, in our 2021-2035 strategic plan, includes this path forward to decarbonize our asset portfolio, and we are committed to a hybrid energy model that integrates several technological options. And that in the field of mobility combines electrification with the use of carbon-neutral fuels and materials. Yeah, regarding renewable fuels, we are pioneers in the SAF productions and supply in Spain. And we have been producing sustainable aviation fuels in our refineries since 2020, and supplying at the airports to various airlines.
And in addition, at the end of 2023, this year, at what? Cartagena refinery, we will put into operation the first advanced biofuels planning in Spain with our production capacity of 250K tons per year of renewable fuels that, which will avoid around 900K tons of CO2 emissions. In addition, in 2025, we will put into operation the first synthetic fuel demo planning in Spain, and whose objective is to demonstrate the operation of PtL technology, and scale it up to an industrial production at the end of the decade. And of course, we will be prepared to comply with the e-jet submandate included in the ReFuelEU regulation. So, synthetic fuels will be an ideal complement to advance value fuels when they reach their production limits due to the lack of waste as raw material. And yeah, other projects and other technologies will come, because all of them, they will be necessary to comply with the ambitious target of supplying 70% of SAF along with the regulation, and yeah, becoming a net-zero-emission company by 2050.
Alfonso: Thank you, Rocio. You mentioned you have your plant at Cartagena coming soon, coming online pretty soon, by the end of this year. Looking at the supply-demand balance of that plant between HVO and SAF, do you see any of the two products with higher demand? And how easy is, how easy or how difficult is for Repsol to switch production from one to the other?
Rocio: Okay. HVO is consolidated as renewable fueling in road transport compared to others that have reached maximum blending. The main advantages at HVO is that there are no technical limitations. So, production of advanced HVO is the best option to comply with the legislation and grow in renewable fuels in generating value. Therefore, we see that HVO demand will increase in the coming years. But on the other hand, there is the commission proposal on light-duty vehicles that has to develop a secondary regulation on CO2-neutral fuels. And what type of renewable fuels is gonna be to be included in the definition? So this moment will be crucial for HVO production and demand.
Regarding SAF, there will be an increase in demand when the regulation, EU aviation, comes into force in 2025. But above all, we will see the significant increase from 2030 onwards in both the regulated market and the voluntary market. This is the year from which airlines have more ambitious SAF-use target than what is established by the regulation.
Regarding our advanced renewable fuels plan in Cartagena, not only has the flexibility of being able to use different type of feedstocks with high and low acidity, but also being able to quick change the mode of operation to produce SAF or HVO. And in addition, we will invest over â‚¬130 million to retrofit Puertollano refinery unit to produce 240K tons per year of HVO, bionaphtha and bioLPG, from 2025. But, I would like to highlight that the plants do not only produce one type of renewable fuel, they produce different types of renewable fuels that need to have a market. The four, the winning bet is, of course, the technological neutrality.
Since if the use of renewable fuels such as HVO in light-duty vehicles is not allowed, it will be very difficult to optimize that production processes and investment in this type of plan, which are very, very intensive in CapEx. And would not be profitable, thus threatening the production of SAF. So, you know, that to the technological neutrality is the key. So, to briefing that, not all my ideas about that, in a moment of transition with all the scenarios are open, all the variables involved, and enormous risks when proposing solution, the most efficient thing is to apply market rules and support schemes to industrial innovation without ideological bias.
Alfonso: Thank you, Rocio. You have mentioned several projects that Repsol has in place now or in the coming years to produce biofuels. Obviously, different projects may use different technologies. What technology or technologies do you think that are well positioned to take over HEFA towards the end of the decade and particularly from 2030 onwards?
Rocio: Okay. Yeah. Currently, 99% of the capacity to be installed for SAF production is based on lipid, hydrogenation effect technologies. This technology is very mature and well-known in the oil and gas sector since we have been using it for more than 40 years to eliminate sulfur from diesel. But the main bottleneck of this technology is the availability of lipid residues. So, analysts agree that there is not enough lipid waste available in Europe to cover the demand for renewable fuels in transport. So, from 2030 onwards, we'll need other technologies capable of transforming ways of different nature, such as, I don't know, agricultural waste, forestry waste, or municipal solid waste. Regarding SAF production, we see that in the medium to long-term technologies such as alcohol-to-jet or gasification with Fischer-Tropsch are two promising technologies. For some of these roots, as is the case of the production of SAF from methanol, it is necessary for the organizations in charge of the finance, defining the technical specifications to be agile in improving the use of these roots and defining the technical criteria that must be met in each case.
Alfonso: Thank you, Rocio. Super interesting. Obviously, to invest on all these different technologies and pathways, there must be, and there is a sort of, a type of regulation or incentivization in place. In the case of Europe, we have the SAF mandate, you already mentioned, starting in 2025 with 2%, and then 6% from 2030 onwards. Do you think that these blending ratios are ambitious enough, particularly when looking at the first stage of 2% starting in 2025, or do you think they are actually achievable since a point of view of feedstocks availability? You already mentioned that maybe some bottleneck towards the end of the decade.
Rocio: The SAF targets included in the regulation have been established based on an impact assessment, you know, taking into account different criteria factors such as the available of raw materials, the maturity of the available technologies, and the SAF production projects announced. Most of the SAF projects announced worldwide up to 2028, 2030, as I mentioned before, correspond to the HEFA root. So, the limitation in the availability of lipidic waste makes it necessary for the post-2030 install capacity to use innovative technologies capable of transforming other type of waste. As I mentioned before, municipal solid waste, forest or agricultural biomass, which today are not mature enough and require technological development and financial support. But at Repsol, we are in a privileged position to cover not only the national demand for SAF in accordance with the objective establishing the regulation, but also having volume available for the voluntary market and the possibility of exporting product and growing in other markets.
Alfonso: Okay. Clear, Rocio. Thank you so much for sharing your knowledge, your insights today with us. And thank you...
Rocio: You're welcome. And thank you, Alfonso. Thank you.
Alfonso: Thanks. Thanks, Rocio. And thank you all for tuning into this podcast. And for more information on Argus global refined products coverage, please visit argusmedia.com/oil-products. And stay safe. And see you next time.
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