In this first part of a two-part blog series, we look at the growing sustainable aviation fuel market.
With increased government policy to support SAF use as well as self-regulation by airlines, we asked industry experts at the recent Argus Biofuels Carbon Markets Summit what needs to be done to grow the sustainable aviation fuel market. Is it more education for airlines, more infrastructure at airports, more government incentives or something else entirely?
The global aviation industry is developing a thirst for sustainable aviation fuel. Through self-governance by airlines, incentive programs on the US west coast, pending mandates in Europe and growing credit offset programs in North America, sustainable aviation fuel is quickly becoming a highly sought-after commodity worldwide.
At the recent Argus biofuels Carbon Markets Summit in California we asked industry experts what needs to be done to grow the sustainable aviation fuel market? Is it more education for airlines, more infrastructure at airports, more government incentives or something else entirely?
Bryan Sherbacow, Chief Commercial Officer, World Energy: World Energy has been producing sustainable aviation fuel now for about three and a half years out of our Paramount, California facility. We've got significant demand, whether it's from the commercial aviation industry with our customers like United Airlines or KLM or now, most recently, the business aviation community has come fully on board with the availability of low-carbon sustainable aviation fuels with customers like Gulfstream and Bombardier, and now, we have corporate fleets also demanding from that sector. So it's not a demand issue, it's definitely a supply issue. When we look at it from the commercial perspective in terms of adding incremental supply, you have to look at investment and you have to look at security of the horizon into the future, being able to recover your investment and a return on that investment. So for me, the most important element in terms of bringing more supply on is going to be policy and even policy that has the horizon into the future for those investment purposes I just mentioned.
Erin Cooke, Sustainability and Environmental Policy Director, San Francisco International Airport: We've been working for about three years in trying to build a network of producer suppliers, NGOs and others, to really engage the market, and be able to scale delivery to our airport. We've created what we think is a model for other airports. And, we've done that through engaging directly with that network, figuring out where the gaps are, in terms of what we've learned, infrastructure, as well as trying to create new incentives that can help get sustainable aviation fuel closer to price parity with conventional jet. We think that we can do that through airport investment. We just commissioned a financial feasibility study that looks at how airports can engage in funding those co-benefits. And then, also figuring out how we can really work with the state of California to grow and scale beyond the Low Carbon Fuel Standard. It was a great first step, but we know we need to go far beyond that in order to really raise up those volumes and bring them into our state, because California is really the model for the rest of the world.
Steve Csonka, Executive Director, Commercial Aviation Alternative Fuels Initiative (CAAFI): I think the most important thing really is two issues that I would highlight. One is having a long term, stable, consistent policy. That's key. It's very hard when these manufacturers go to the street to capitalize their projects and they don't have that consistent policy behind them. It's very tough. And they also need an offtake agreement. Those are hard to come by also, but, you know, we've been consistently working on those. Second issue is, we've got a real hole right now. So we have technologies that are at hand that are being built. Some are operating, some are being built, but I'm concerned about the long run and being able to use feedstock from any source, actually around the world, because aviation is a worldwide phenomenon. And for that, we need additional technologies.
We hope this provided insight into the sustainable aviation fuel market. Be sure to look out for part two where we revisit these experts to get their thoughts on what the next 10 years looks like for the sustainable aviation fuel market.
For more information and an overview on the global sustainable aviation fuel market check out the Argus white paper, Argus shines a light on the growing sustainable aviation fuel market.