How important are sustainable aviation fuels (SAF)?

At Shell, we believe the clearest pathway to achieving net-zero emissions flying is investing in SAF and scaling it up. The faster the aviation sector can deploy SAF, the likelier it is to achieve net-zero emissions by 2050.

Let’s put the scale of the task in perspective. In 2019, fewer than 200,000 metric tonnes of SAF were produced globally, amounting to less than 0.1% of the roughly 300 million tonnes of jet fuel used by commercial airlines. Even if all SAF projects that have been publicly announced are completed, capacity will scale to just 4 million metric tonnes in the next few years, reaching volumes just over 1% of expected global jet fuel demand in 2030.

To achieve greater supply and demand of SAF, Shell will collaborate with businesses, industry organisations, and governments to advance a sectoral policy framework that incentivises customer demand and provides fiscal support for infrastructure development, new technologies, and SAF production plants.

Why has SAF take-up been slow so far?

The SAF supply chain currently faces a “chicken and egg” problem with supply and demand. The price of SAF is high but costs will come down if production scales up—thanks to learning curve effects and economies of scale—yet demand is affected by the high price premium. 

SAF is between two and eight times more expensive than conventional jet fuel. It’s essential to close this cost gap so that demand for SAF can drive increases in production volumes. Though new capacity is set to come online over the next five years, considerably more is required to achieve significant reductions in emissions.

What can energy companies do to encourage SAF supply and use?

Energy companies like Shell have an important role to play. We recognise the challenges of both the cost and scalability of SAF and are committed to working with the wider industry and governments to address them.

We announced last year an ambition to produce around 2 million tonnes of SAF a year by 2025

I am proud that as well as facilitating collaboration across the ecosystem, we are also taking a leading role in helping the industry increase flying on SAF. We announced last year an ambition to produce around 2 million tonnes of SAF a year by 2025, and that we also aim to have at least 10% of global aviation fuel sales as SAF by 2030.

To deliver on this, we are working with partners as well as investing to create a step change in the volume of SAF available. This includes transforming our refinery assets into biofuel facilities, accelerating a range of technology pathways, and collaborating with customers and partners across the aviation ecosystem to increase demand.

We’re already taking action, committing to build an 820,000 tonnes-a-year biofuels facility at the Shell Energy and Chemicals Park Rotterdam. With production expected to start in 2024, the SAF facility is set to be among the biggest in Europe. Shell is also bringing SAF to new markets, supplying SAF for the first time ever to Singapore and Hong Kong airports.

Recently, we also became the first energy company and fuel supplier to sign the Global SAF Declaration, which calls on industry partners from the aviation value chain to jointly work toward the uptake of SAF.

How can governments help? What would be the right policies?

The adoption of SAF will be supported initially by voluntary demand, but ultimately will have to be policy-led, meaning that governments have a key role to play. What the last few years have shown clearly is that to develop SAF you need long-term, consistent policies.

We also know single policy measures, such as mandates, on their own are not effective to drive investments, and so you need a sectoral approach that looks to synchronise supply and demand, develop the appropriate infrastructure, put a price on carbon, and share the costs across all parts of the value chain and governments. 

Can airlines do more to help the situation?

The pandemic may have caused some changes to the future of air travel, as people find new ways to meet virtually and work remotely. And we must consider that airlines emerged from the pandemic burdened by significant operating losses and large debts. But we do not have time for the pandemic to hold us back; as an industry we must act now.

Long-term forecasts suggest COVID-19 is unlikely to have a lasting impact on aviation volumes. So, it is encouraging that there has been consistent desire from across the value chain to tackle decarbonisation, as shown by IATA recently committing to reach net-zero emissions by 2050.

Business travel has been positioned as a sector with potential for increasing demand for SAF. How true is this?

Across all industries, we are seeing businesses committing to ambitious emissions reductions targets from their operations. For many corporations that rely on aviation to do business, emissions from corporate travel and particularly aviation are likely to make up a significant part of their carbon footprint. So, there is a huge opportunity to work with the aviation sector—with companies such as Shell—to help reduce those emissions.

“We recognise the challenges of both the cost and scalability of SAF and are committed to working with the wider industry and governments to address them.”

Corporates can play a key role to stimulate demand for flights using SAF, and for large-scale offtake agreements with SAF producers. They also form a more concentrated segment than leisure passengers. Such concentration creates an opportunity to focus decarbonisation efforts on a relatively small number of customers who could form a critical mass.

This was the main driver behind our alliance with AMEX Global Business Travel (GBT), announced last year. Together we are developing a platform that will aggregate SAF demand for corporate travel. This collaboration combines the buying power of airlines and AMEX GBT’s corporate business travel customers to drive a step change in production and usage of SAF.

This, in turn, will help airlines and corporations to progress towards long-term emissions targets.

For more information, visit Shell Aviation at the Shell Global website: https://go.shell.com/37E9AWj

Jan Toschka, President, Shell Aviation

Image credit | Shadow Professional Photography | Steve Eastell 

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