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Production and Deployment of Sustainable Aviation Fuels in Europe

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The use of sustainable aviation fuels (SAFs) is generally considered to be the most realistic and effective means to reduce aviation CO2 emissions in the next decades.A recent study notably shows that up to 30% emissions savings can be achieved by 2050 thanks to such fuels. Source: Sustainable Aviation UK, 2019. See also European Aviation Environmental Report 2019, EEA, EASA, Eurocontrol. If done well, these drop-in fuels reduce the use of fossil kerosene and can reduce CO2 emissions up to 85%.

Since the first commercial flight using SAFs in 2011, many initiatives have been undertaken in Europe. The European Commission, technology companies, the energy industry, airlines and others invested significant resources in the development of conversion technologies, projects to determine the impact of sustainable fuels in the aircraft, and supply networks and scientific studies on the best ways to develop and mobilise the entire value chain in order to incentivise production and voluntary off-take.

In 2012, the European BioFuel Flightpath 2020See notably here on the launch of the biofuel flightpath: https://ec.europa.eu/energy/sites/ener/files/20110622_biofuels_flight_path_launch.pdf defined the ambition to reach two million tons of SAFs produced in Europe. Seven years later, much has been learnt on conversion, yet production is seriously lagging behind schedule.

Worldwide, the only plant which is continuously producing SAFs is located in California (USA).The Total La Mède HEFA refinery according to the company is capable of producing SAFs, and Neste is involved in similar projects in Finland, albeit on a limited basis. However, production of road fuels is more economic. The plant’s reduction in production costs increased the willingness of some carriers to accept the selling price, ensuring offtake from the aviation sector.

  1. Commitment and off-take agreements were in place prior to the modifications of the plant;
  2. A stable set of policies and incentives were made available, ensuring an acceptable return on investment (ROI) period and providing guarantees that feedstock can be used over a longer period.Measures put in place in California include: The 2007 California Low Carbon Fuel Standard (LCFS) regulated by the California Air Resources Board (CARB). Under the LCFS, producers and refiners are responsible for reducing their overall lifecycle emissions by 10% by 2020 as measured on a carbon intensity scale (g CO2/MJ). To meet these targets, the LCFS utilizes carbon offset credits and renewable fuels. As of January 1, 2019, SAFs are eligible for producing credits under the LCFS. Until CARB adopted this provision allowing biofuel to qualify as an eligible credit-generating fuel under the LCFS and the Cap-and-Trade Program, the biofuel industry had no incentive to produce fuels nor create new production capacity for additional SAFs volumes. In addition, the extension of state-level low carbon fuel standards to aviation biofuel was a positive market signal to begin to close the gap.

Exploring whether such a successful development of SAFs supply could be replicated in Europe and analysing the current European initiatives, one can identify several elements of this successful mix currently missing:

  •  The European sustainability policy framework is generally valid for 10 years. Such a timeframe is too short to stimulate new initiatives to increase production capacity because
    • there is increased financial exposure for producers who do not write off all investments before expiration of the European sustainability policy framework, and
    • there is a risk that outdated legislation and policy will lead to unacceptably high prices for the product.
  • There is insufficient focus on feedstock availability and development in Europe and worldwide, therefore limited feedstock security for long-term production.
  • Production pathways for sustainable aviation kerosene already exists and only need development, but European policymakers do not sufficiently support Research and Development programs required to expand the feedstock base to market introduction.
  • Existing fuel producers comply with the obligations of the EU’s Renewable Energy Directive (RED) in the most economic manner, one that enables the optimisation of global production capacity — i.e. producers do not sufficiently consider the development of additional renewable fuel production capacity in Europe.
  • Policymakers missed the opportunity to drive the European transition from fossil to renewable energy in the aviation sector during the 2017–2018 review of the RED. Similarly, during the transposition of the RED, national interpretations lead to national schemes which do not necessarily optimise the European potential.

Recommendations

Based on a comparison of regulatory regimes, EU policymakers need to urgently consider the following systemic improvements:

1. Develop a European regulation built on clear objectives, containing an aviation-specific robust Life Cycle Assessment (LCA)/validation methodology and that is neutral towards conversion technologyA wider set of technologies capable of converting unrecyclable solid waste into useful products, such as green fuels and renewable energy, in an environmentally beneficial way. and raw materials.

Such legislation should enable stakeholders to build new capacity and infrastructures capable of delivering on the European sustainability ambitions while reducing Europe’s dependency on fossil fuel imports or imports of sustainable raw materials. Policy makers should stimulate stakeholders in finding high impact feedstock/conversion technologies which can be produced at competitive costs levels.

Proportioned incentives are crucially needed to reduce carbon intensity. The current RED set-up (Annex IX) does not always lead to the use of the most sustainable fuels nor does it stimulate development of innovative fuels due to lack of certainty that such fuels will contribute to reaching the goals set by the EU Directives.

2. Create EU and national policies that support SAFs initiatives

Such policies should:

a. Drive the creation of additional SAFs production capacity in Europe.
Besides market incentives for SAF acquisition, an increased European production capacity would help ensure a balanced allocation of available SAFs throughout the whole transport sector and its various segments while at the same time contribute to Europe’s energy security objectives. Such an approach would also avoid commercial trade-offs for producers between production of mandated road transport fuels (with higher profit margins and less stringent sustainability demand from users) and leakage to the maritime sector (lower production costs and limited environmental benefits due to the engines used in large vessels).

Access to finance should be facilitated to allow plants to scale up at the anticipated rate. Particularly for new technologies, funders can be unwilling to take on the risks associated with the construction of a large plant operating pioneering, yet insufficiently proven technology. Grants and low-cost loans from governments or development banks can directly provide finance to projects and will also provide certainty to other investors that the EU is supportive of these new technologies. Loan guarantees and insurance packages can also be effective in facilitating access to finance for new SAFs plants.In this respect, financial support schemes from any future so-called “EU climate bank” or the EIB could be considered.

In this context, it is important to underline that a so-called “blending mandate” for SAFs, allowing airlines to gradually move their operating fleet from fossil to sustainable fuels, should only be considered once supply volumes have reached significant levels. Mandates implemented prematurely would lead to higher prices for the industry and lower sustainability standards as users seek to fulfil the obligation.

b. Stimulate the production and availability of raw materials. Studies indicate that there is an abundance of various raw materials that can be converted into (advanced) renewable fuels. Despite doubt as to whether these theoretical volumes are available, it remains unclear whether the technical conversion can be done at large scale and at competitive price levels and with high CO2 Life Cycle Assessment (LCA) results. Production and import of raw material for (advanced) renewable fuels therefore needs to be encouraged. Mechanisms that would allow for de-risking the deployment of novel technologies that can access/convert abundant (low-cost) raw materials such as wastes should also be considered.

c. Support mechanisms must also cover additional costs for products delivered into market. Many projects and initiatives receive support for the activities undertaken. In order to push stakeholders to deliver impact, a support mechanism covering a part of the additional costs for products delivered into market is needed.

3. Differentiate the approach per transport mode — each sector has specifc challenges and requirements

In the drive to reduce CO2 emissions, and in the context of redefining long-term CO2 reduction targets, all transport modes are actively developing more sustainable vehicles and optimising operations to reduce fuel consumption. Each mode of transport has different options to achieve an impact in the short, medium and long term. Whereas passenger vehicles tend to move towards electrification, availability and use of sustainable fuels are crucial for aviation in the next decades. Provided that there is political consensus that electrification of road transport will be the leading decarbonisation approach, sustainable fuels policies need to reconsider Europe’s approach towards the use of renewable energy for transport.

Significant segments of the maritime sector operating near shore and on inland waterways have the option to move towards hybrid electric propulsion, thereby bringing into question the extent to which fuel can be used in this transition towards increased electrification.The 1.2 multiplier effect for aviation and maritime foreseen during the 2018 review of REDII is resulting in producers choosing to meet their obligation set by the Directive by diverting fuel from road into marine without really increasing volumes or making the case for extra investment. In the meantime, deep sea shipping, long-distance heavy-duty road transport, together with aviation, rely indispensably on renewable sustainable fuels. Per sector tailored policies and measures should bring short term impact while avoiding unintended side effects.

A level playing field for aviation, based notably on stronger incentives for air transport, is needed. Where other modes are swiftly decarbonising through electrification, the benefit of incentivising low-carbon fuels for those sectors should be discounted by the future electrification potential of those sectors. Similarly, feedstocks should be prioritised for sectors, such as air transport, that have a difficult path to decarbonisation where carbon-based molecules are essential.

4. Support the development of a worldwide blending mandate and of international standards, e.g. sustainability criteria

Possibly coming as a next step in the implementation of CORSIA, such an international mandate would reduce the competitive distortion and unfair burden on European carriers of possible blending mandates at national or European level. The abovementioned recommendations need to be considered in a context of general guidance to Member States or legislation that would prioritise additional incentives for aviation, instead of putting in place compulsory mandates for blending irrespective of price, production volumes and competitiveness considerations.

Sustainable growth in aviation is directly linked to the air travel sector’s ability to decarbonise. Sustainable Aviation Fuels (SAFs) are a strategic priority for airlines and a central pillar in the industry’s capacity to reduce its climate impact in the medium term while maintaining connectivity and affordability. The review of RED failed to consider the strategic importance of access to SAFs. Several actions could facilitate the deployment, helping to overcome the challenges of scaling-up this nascent industry, while supporting the development of an innovative EU-based industry. Any future EU climate law applicable to aviation needs to recognise the importance of the development of SAFs, building on circular economy, waste management and fuels policies.

About A4E

Launched in 2016, Airlines for Europe (A4E) is Europe’s largest airline association, based in Brussels. The organisation advocates on behalf of its members to help shape EU aviation policy to the benefit of consumers, ensuring a continued safe and competitive air transport market. With more than 720 million passengers carried each year, A4E members account for more than 70 per cent of the continent’s journeys, operating more than 3,000 aircraft and generating more than EUR 130 billion in annual turnover. Members with air cargo and mail activities transport more than 5 million tons of goods each year to more than 360 destinations either by freighters or passenger aircraft. Current members include Aegean, airBaltic, Air France-KLM Group, Cargolux, easyJet, Finnair, Icelandair, International Airlines Group (IAG), Jet2.com, Lufthansa Group, Norwegian, Ryanair Holdings, Smartwings, TAP Air Portugal, TUI and Volotea. In 2019, A4E was named “Airline & Aviation Business Development Organisation of the Year” by International Transport News. Follow us on Twitter @A4Europe.