SAF Insights: Innovating SAF Supply Chains for Global Aviation

Louise: Hello, everyone, and welcome to another episode of "SAF Insights." I'm Louise Burke, vice president, North American renewables and global aviation. And joining me today is Damian McLoughlin, chief commercial officer with FlyORO. Welcome, Damian.

Damian: Hey, Louise. Thanks for having me.

Louise: Yeah. We'd love to hear a little bit more before we get started on some key questions I wanted to ask you. Can you just explain a little bit about your company operations?

Damian: Yeah, for sure. So, you know, we're a Singaporean-based technology company. And essentially, our role in the SAF ecosystem stems from the fact that we have developed patented engineering designs for modular digital SAF blending units, which are deployable across the entire value chain. So we can deploy these modular units all the way upstream at a production facility, we can be in the midstream at intermediate terminals, or we can be all the way last mile close to or actually at airports itself. And really, what that allows is a more flexible distributed blending solution for various stakeholders in that supply chain.

Louise: That sounds really interesting. And in fact, I'm going to start with a key comment that we actually hear from SAF producers, and that is that one of the biggest challenges is that producing SAF doesn't automatically mean you can deliver it, which it sounds like your system is going to help in that. But where actually does the supply chain break down?

Damian: Yeah, I mean, that's a great question. I think, you know, what we've seen is that the break point is almost always downstream of the production facility itself, right? So most SAF supply chains were never really designed for, you know, low-volume, high-variability volumes. And I think this is particularly true for the emerging power-to-liquid or eSAF space, you know. So basically, volumes need to be delivered to multiple airports. And FlyORO, for our kind of role in the value chain, focuses on solving that gap by enabling lower-cost modular blending and distribution close to demand sources.

So ultimately, SAF can then reach aircraft without forcing producers or airlines into rigid, expensive, capital-intensive logistics models, which ultimately only reserve those vertically integrated supply chains for fuel suppliers and fuel distributors. So really, it's about kind of democratizing that supply chain to de-bottleneck and overcome those breakdowns.

Louise: That sounds really interesting and certainly helpful from the SAF producer side. But if we move over to the demand side, we know that airlines and corporates are really increasingly talking about SAF certificates and Scope 3 flexibility. How does that change the way SAF needs to move through the system?

Damian: Yeah. I mean, really, here, we're talking about kind of a systemic change, right? It's shifting the system from point-to-point physical delivery to a more portfolio-based optimization, right? So ultimately, airlines and corporate buyers want as much flexibility around the SAF credit or that SAFc market without being constrained by where the molecules physically land or are delivered, right? So that only really works if the physical supply chain is efficient and trusted. And again, that's a key part of what we're trying to enable or deliver as FlyORO in that localized blending and transparent custody, ensuring that physical SAF flows support credible SAF credit markets rather than becoming a bottleneck.

And if I may provide a bit of an example for that, you know, today, in kind of the SAF ecosystem, we have two kind of worlds, right? We have the regulated market, and we have the voluntary market. Here, SAF certificates and Scope 3, we're talking more about the voluntary market side. But in Europe, in the European Union today, which is a regulated market, those two worlds need to somehow coexist, right? So today it's quite challenging to create that flexibility in the regulated market because of the way the supply chains are designed and built. That will pose a challenge later on in kind of the early kind of 2030s when there will be a requirement for physical SAF to be made available at every airport in the European Union.

So, how do we achieve that in an efficient way that ensures that regional airports and regional airlines can also have access to SAF to support meeting mandates in the regions, but also being able to offer voluntary market solutions to large corporates or even small to medium-sized corporates who want to mitigate their own carbon footprint through the use of SAF credits or Scope 3? I think that's really a...you know, 2035 seems like a long way away, but really, we need to start designing and building in optionality to deliver that scenario already today.

Louise: And I think that's where perhaps the issue is that airports are competing for SAF molecules, especially those with better logistics connectivity. So that risk, I mean, you just talked about briefly, but what additional risk does that create for the wider markets? Is it the have and have-nots, or how is your technology going to help with that?

Damian: Yeah, again, a great question. I mean, I think, really, what we're staring into here is a scenario where you're grouping, you know, haves and have-nots, right? The haves being those larger airport hubs, better connected, extra finery logistics, moving volumes of fuel, whether it's conventional jet or SAF at large volumes into those airport hubs. So essentially kind of absorbing or concentrating all of the supply into those bigger hubs. The have-nots then being the smaller regional airports who don't have, you know, as robust logistics to be able to support and draw in some of those volumes. So, you know, in that scenario of haves and have-nots, where you have some participants in the ecosystem not really able to participate in a meaningful way, that's not really scalable. We want to ensure that SAF molecules can reach airports where there is a demand for it.

And I think, so ultimately, the industry needs to kind of consider how we can kind of diversify the supply chain logistics that we have today, which are really those vertically integrated chains into distributed blending, storage, and distribution supply chains that allow for smaller constrained airports to access SAF without waiting for major infrastructure upgrades, which are costly, take a lot of time to put in place. And again, that's something that we at FlyORO are looking to solve for. We have technology that's ready today. It's deployed on the ground in Singapore and in Australia today. And it's designed precisely to democratize and create better access to SAF molecules across airport networks on a regional or on a global basis.

Louise: Yeah. And, you know, it's interesting because, you know, we know that airports are different in size and also market sectors are different. So, if we think about business aviation or general aviation and defense, we find that these two sectors are really increasingly vocal about fuel logistics, resilience, and of course, security. I mean, how does SAF fit into those requirements?

Damian: Yeah, thanks, Louise, yeah. I mean, I think the business aviation or general aviation and the military defense sectors are both sectors of the aviation industry that rely heavily on operational integrity and flexibility, not just sustainability, right? So sustainability is always going to be at the core, but these two sectors within the umbrella of aviation rely a bit more heavily on kind of that integrity and that operational flexibility, a bit more than the commercial aviation or the airline side of it, right? So really, what we're talking about here is being able to support those two sectors' specific operational requirements, and that really speaks to distributed, on-site, on-demand SAF availability.

Now, in order to have SAF availability, you know, on-site, you have to obviously be able to blend those two components and ensure that they're certified for use in the aircraft, right? So FlyORO enables that on-site or near-site blending through deployment of our modular technology solutions to those locations. And what that ultimately does is it reduces reliance on long supply chains, and it certainly enhances energy security. So those are two critical elements to business aviation and certainly to the military and defense side to ensure that wherever they operate, they have the assurance that they can rely on distributed supply chains that will deliver their energy and fuel requirements exactly where they need it, when they need it.

And that tends to be a challenge for the more traditional supply chains and logistics that we see for delivering fuel to large airport hubs today. So whether it's a remote airfield, an FBO or a forward operating base in a military context, FlyORO has that capability to deploy at those locations and ensure that SAF availability is there to meet those operational requirements.

Louise: Yeah. And as you say, I mean, when it's a remote airfield or a military operating base that isn't in typical regional locations, that definitely is an issue. So just a final question, because I know we're starting to run out of time here, but I'm going to switch gears a little bit and move over to book-and-claim and scaling SAF demand. From your perspective, how does book-and-claim really fit into the SAF supply chain?

Damian: Yeah. I mean, I think everybody in the industry recognizes that book-and-claim is and will be a critical element, right, for growing and enabling SAF demand and adoption globally, right? It's working quite well now in a number of markets around the world. But I think we would certainly view it as a helpful demand acceleration mechanism, right, rather than an outright substitute for physical infrastructure. So it only really works right if there's confidence that neat SAF molecules are actually being blended and consumed somewhere in the system. So it's an acceleration mechanism, but it also needs to be underpinned by a really robust traceability and credibility aspect, right?

So, again, our role, as we see it, in trying to kind of enable that distributed blending and making SAF more available on a broader basis, is to introduce physical flows to a book-and-claim model where you have highly auditable, flexible, and scalable molecules at a point of no return. And that point of no return, I think, the industry is beginning to kind of coalesce around making sense in and around that last mile of the logistics piece, right, so relatively close to the airport. And why is that? I mean, ultimately, you want to provide that high integrity, high assurance to participants in a book-and-claim system that the molecules, the physical molecules, are actually entering a demand source for the physical molecules, i.e., an airport, right? So once those molecules are blended, they're not going anywhere else.

So you can be absolutely sure if you're a corporate customer purchasing SAF credits or SAF certificates or Scope 3 through a book-and-claim model that the physical molecules have definitely been delivered, so an emissions reduction has been achieved somewhere in the system, which underpins your purchase of Scope 3 to mitigate your position. So I think it's foundational for real SAF deployment, and I think it's got a critical role to play in the industry. And we at FlyORO believe that we have a role to play in further driving the adoption and the development of that book-and-claim system.

Louise: Yeah. And it sounds...actually, that's a great point that they grow together and, as you said, that the book-and-claim can grow on that foundation of real SAF deployment rather than just becoming purely a financial instrument. So, great insights. Thank you, Damian. I'm sure we'll be talking at another point in the near future. Sounds like some really interesting opportunities to really ensure that SAF is deployed effectively and efficiently on a global basis. So thank you again for your insights. And for our listeners, if you enjoyed this podcast, please be sure to tune in for the other episodes in our series called "SAF Insights." Thank you all.