Top-line Takeaways from Sustainable Aviation Futures EU Congress 2024
This year, the Sustainable Aviation Futures EU Congress was all about developing a SAF scale-up action plan. Numerous SAF production projects have been announced so far but only a handful of them worldwide are in operation today.
Though there were some disagreements about the details, panellists and speakers throughout the Congress generally agreed that the European SAF policy approach is insufficient to attract large scale project financing. As Amy Herbert from Arcadia eFuels underscored, investors are primarily looking for offtake agreements or any other securities that directly address the SAF green premium. Mandates, however, don’t offer such (financial) security.
The key to SAF upscaling is bringing the aspiring SAF project to the Final Investment Decision (FID), argued Rebecca Ross from Johnson Matthey. The UK SAF policy seems to be more sensible to this reality today when compared to the EU SAF policy. In particular, the revenue certainty mechanism – still under consultation at the time of writing – attempts to address the many unique risks that make an FID for SAF plants especially difficult to achieve.
The current EU policy (“ReFuelEU Aviation”) lacks such financing incentives, argued Jonathan Counsel of the IAG. On the other hand, the EU mandate likely creates a stronger SAF demand signal than the UK mandate, points out Jesper van Mannen from the Transport Ministry of the Netherlands. That’s because under the ReFuelEU, in case of non-compliance, fuel suppliers still have to fulfil their yearly obligations. However, under the UK mandate, suppliers are freed from this responsibility after they pay the penalty (called “the buyout price” under the UK Jet Zero Strategy).
It is no secret in the aviation world that the most powerful SAF production support system is found in the United States. Graham Noyes of the California Low Carbon Fuel Coalition presented the audience with a bucketload of metaphorical carrots, or numerous tax credits, grants, loan guarantees and other financial instruments that are made available to SAF blenders and producers in the US.
It seems that the US policy approach to support SAF through subsidies is superior to the European policies, when it comes to incentivising SAF production. However, as Leigh Abrams from Honeywell shared, the US policy does not have a long-term perspective. For example, it is not clear to anyone for how long the US tax credits will be available for blenders and producers of SAF. The US policy could learn from the European one about planning long term.
The European / US SAF policy divide is not as clear cut as it may seem. Different speakers have pointed out that each region has elements of the other approach. For example, under the EU Emissions Trading Scheme, 20 million free allowances are available to aircraft operators that use SAF. The total value of these allowances under current carbon prices are around 2 billion euros – enough to cover the entire SAF green premium for some though certainly not all SAF flights. However, the allowances don’t benefit SAF producers in Europe.
On the other hand, in the US, some policies incentivizing SAF consumption have started to pick up on the state rather than federal level. Nevertheless, many would agree that demand side SAF policies are not the main priority for the US right now. Are we heading to a world then, where US farmers will get rich by cultivating SAF crops destined for consumption in Europe? A rhetorical question from Jonathan Counsel.
This might be an efficient global production consumption model, leading to another important topic of this Congress – book and claim. There is more and more consensus that digital trade of SAF is essential to overcoming some of the extant SAF supply bottlenecks the world is facing right now.
However, it still remains a challenge to make sure that book and claim is credible and transparent for policymakers and the public. It is up to organisations such as RMI, SABA, RSB, Shell, DHL, and others to collaborate and coordinate their initiatives in setting up a workable book and claim system on regional and global levels.
Lukas Ambraziejus
Sustainability Graduate / Project Manager
-
Utrecht University / MC Mobility Consultants GmbH
It is impossible to adequately cover all the fascinating presentations and discussions that have taken place during and between the sessions over these two days.
From novel AI-powered tools for avoiding contrail formation, over to the controversial role of nuclear energy in power-to-liquids (PtL), to the infamous aviation’s greenwashing practices of recent past and more, the Sustainable Aviation Futures EU Congress spanned the whole spectrum of topics in such depth and detail that one is left struck with awe – equally about the number of new opportunities as about the magnitude of challenges facing aviation, as it strives to define the role of aerial mobility in the net-zero world.