Current energy shock should add more urgency for developing SAF, other renewables: IATA chief

The current energy shock should add even more urgency to the development of renewables, including SAF, and the sustainable aviation fuel production is projected to touch around 2.4 million tonnes this year, accounting for just 0.8 per cent of the global jet fuel use, according to airlines’ grouping IATA.

Jet fuel prices have soared in recent times due to the West Asia crisis, and the operational costs of airlines have gone up.

To increase SAF (sustainable aviation fuel) production, the International Air Transport Association (IATA), which represents around 370 airlines worldwide, has suggested expanding renewable energy supply, strengthening policy support, ensuring open access to fuel infrastructure and other measures.

“The current energy shock should add even more urgency to the development of renewables, including SAF.

“But we have yet to see either the energy shock, the need to develop energy independence and jobs, or the urgency to mitigate climate change materialise in the incentives needed to create a viable SAF market,” IATA Director General Willie Walsh said in a release.

Preeti Jain, Head of Net Zero Research and Programs at IATA, said the SAF production is projected at 2.4 million tonnes, while the production capacity is projected at nearly 9 million tonnes.

The capacity is being underutilised due to the current framework of policies, which is structured in such a way that it favours production for renewable diesel, she said at a briefing on Saturday on the sidelines of the IATA AGM here.

Walsh said it looks to be another disappointing year for SAF production.

“Five years after committing to achieve net zero by 2050, SAF production will only account for 0.8 per cent of airline fuel use this year.

“The path to meeting 65 per cent of our needs in 2050 is growing more difficult with each year of ineffectively sequenced government policies and oil companies’ manifest lack of interest,” he said in the release on Saturday.

IATA said SAF production is expected to reach around 2.4 million tonnes in 2026, representing just 0.8 per cent of aviation fuel use, at a cost to airlines of USD 4.3 billion.

One of the suggestions from IATA for scaling up SAF is to strengthen the policy support through effective sequencing of production incentives and investment frameworks that provide certainty and reduce risk before any mandates are imposed.

Also, it has called for enabling a global SAF market with sufficient volumes at commercially viable prices critical for the airlines’ financial and economic sustainability.

Along with SAF, which is produced from biofuel sources, electro-SAF or e-SAF is another option for decarbonisation.

The conversion of renewable electricity using a power-to-liquid (PtL) process can produce e-SAF. It requires large amounts of renewable electricity, green hydrogen, water, and CO2.

The European Union and the United Kingdom mandated e-SAF production of around 0.6 million tonnes by 2030, but global production capacity currently operating and under construction stands at around 0.02 million tonnes, IATA noted.

The airlines’ grouping also pointed out that it would take approximately 20 commercial-scale refineries to achieve the mandated volume.

Against this backdrop, Marie Owens Thomsen, who is IATA’s Senior Vice President, Sustainability and Chief Economist, said if there is a mandate in a market where the product does not exist, the price would go up, and that is exactly what has happened in Europe and the UK.

One of the problems with mandates is that they tend to limit production to the mandated amount, as nobody would have an incentive to do more, she said.

“Use the right policy for the right thing for the right order, and if there is a role for mandate, probably then it is later in the process where we have achieved some degree of liquidity in the market. You also need supporting policies,” she said at the briefing.