Report
Industry perspectives on advanced sustainable aviation fuel: What barriers remain for these technologies to scale?
In this study, we define advanced SAF pathways as those relying on emerging technologies and scalable, non-food feedstocks, namely:
- Second-generation bio-SAFs relying on solid waste or cellulosic feedstocks
- Waste gas fermentation
- Electrolysis using renewable electricity
To better understand the barriers to commercialization of these technologies, we surveyed industry officials from technology providers and advanced SAF project developers on challenges related to technology readiness, feedstock availability, fuel demand, finance, and policy. Based on their responses we found that three key themes underly the challenge of advanced SAF facility deployment:
High capital costs
First of a kind technology deployment
Offtake and price uncertainty
A framework for progress
Based on this feedback, a 2-stage policy solution could be useful to policymakers who are seeking to increase deployment of SAF. During the initial “runway” phase of advanced SAF deployment, a government-backed revenue certainty mechanism could guarantee an offtake price for qualifying advanced fuel producers. This would eliminate the need for long-term purchase commitments from fuel users and provide assurance to investors that project returns are secure so long as fuel production is realized.
The revenue certainty mechanism functions in concert with a longer-term “takeoff” phase of advanced SAF deployment where a mandate or comparable demand side policies could ensure a growing market for fuel. This is based on the premise that, once sufficient revenue-certainty backed advanced SAF deployment has been achieved, a better understanding of technology costs and market dynamics could enable investment in advanced SAF production, provided that demand-side policies are viewed as reliable.
Figure 1. Goals of proposed advanced SAF policy framework
Region-specific considerations
Based on the proposed SAF policy framework, the region-specific responses we received from industry officials, and the ICCT’s prior work on aviation decarbonization, we have compiled recommendations for policymakers to consider in each region to facilitate achieving SAF deployment targets.
Among the three regions, the combination of a revenue certainty mechanism and SAF mandate adopted by UK policymakers is most aligned with the “runway” and “takeoff” policy framework outlined above.
Based on the feedback from our survey, our primary recommendations for UK policymakers to consider are:
- Implement a revenue certainty mechanism as soon as feasible.
- Ensure that the final revenue certainty mechanism will enable debt finance of SAF facility constructions.
- To enable domestic power-to-liquid SAF production, improve access to low-cost renewable electricity to enable domestic power-to-liquid SAF production.
Based on the responses in our survey, the ReFuelEU SAF mandate has served as an effective signal that a regulated market for advanced fuels will exist within the EU. Nevertheless, the feedback we received indicates that current EU measures do not fully address challenges faced by “first mover” facilities, which will necessarily produce fuels at a high cost for a market that does not yet exist. Specifically, it appears that ReFuelEU SAF mandate levels are not sufficient to establish the bankability of advanced SAF projects.
Our primary recommendations for EU policymakers to consider are:
- Establish revenue certainty for an initial wave of advanced fuel projects, with a particular focus on projects contributing to ReFuelEU synthetic fuel sub-mandate.
- Consider leveraging the Emissions Trading Sysem as an ongoing source of funds to support a revenue certainty mechanism.
- Ensure that the risk-reward proposition for stakeholders is aligned in favor of advanced fuel deployment.
- Re-affirm the synthetic fuel sub-mandate and disclose details of penalty administration.
Based on the responses we received, while the combination of incentives and programs offered may be sufficient to enable a limited buildout of advanced fuel facilities, the absence of a policies ensuring future demand for low-carbon SAF is a barrier to achieving consistent growth in production. Instead, current SAF policies are most applicable to production using more established, but supply-limited, HEFA technology, which requires significantly less upfront investment. To remedy this situation, a long-term aviation fuel policy along the lines of ReFuelEU or the UK SAF mandate will likely be required.
Our primary recommendations for U.S. policymakers to consider are:
- To achieve SAF Grand Challenge targets, establish a national SAF policy which ensures growing demand for low-carbon intensive advanced SAF.
- Include HEFA caps and/or synthetic fuel sub-mandates.
- Establish a revenue certainty mechanism funded through the aggregation of fossil jet generated obligations.
- Prioritize moderate-scale commercial facilities employing technologies with the possibility of future cost reductions.
For media support, please contact Sophie Ehmsen, Communication Specialist, communications@theicct.org