Oil Products: ARGUS sustainable aviation fuel (SAF) fob ARA

ARGUS SAF fob ARA price assessment

With more global carbon reduction mandates coming online and airlines looking to fulfill their environmental, social and corporate governance (ESG) requirements they will look to SAF to meet their needs. SAF is the only solution for airlines to fly more sustainably, electrification is not yet a solution and we are probably decades away from that being a reality if at all.

There are 7 different approved ways for making SAF, and the most commonly used is HEFA SAF, which is hydro-processed esters and fatty acids. The HEFA process is also used to make a type of renewable diesel, hydrotreated vegetable oil (HVO), and little refinery change needs to be made to produce SAF out of HVO. Therefore, HEFA SAF shares the same type of waste feedstocks used to make certain HVOs. HEFA SAF can be blended up to 50% into fossil jet.

Learn more about Argus’s global SAF coverage

• Norway paved the way by requiring Norwegian based jet suppliers in 2020 to have 0.5% of their total yearly jet volume to be neat SAF (100%), this will increase to 30% by 2030.
• Sweden required a 0.8% GHG emission reduction in June 2021, while France required a 1% volumetric mandate starting in January 2022.
• The United Kingdom is aiming to have a GHG emissions reduction mandate starting in 2025 equivalent to at least10pc of fuel to be made from sustainable sources by 2030.
• EU has drafted a SAF mandate under their ‘fit for 55’ programme with the following timing below.

• Cap net CO2 emissions to 2019 levels, voluntary 2021-2027 and then mandatory.

The European Union’s proposal for an EU-wide blending SAF mandate

Advantages of the ARGUS SAF fob ARA assessment

The Argus SAF assessment is weekly and is based on actual market input, not a calculated price, and with a robust underlying HVO assessment from which SAF is accessed as a differential to. The Argus SAF assessment is more reflective of activity in the physical SAF market and based on SAF feedstocks.

Argus SAF fob ARA, with the option to exclude HBE tickets

Get the same robustness and transparency but with ability to use the SAF fob ARA assessment stripped of the credit prices for the Netherlands, where blending SAF can generate these tradable certificates, which are also assessed by Argus. The new index offers a relative view of prices excluding the value of the policy incentive, useful not only domestically but for comparison with international trade.