Sustainable aviation fuel (SAF) is currently a buzzword in the global aviation industry’s decarbonisation ambitions. The biofuel, which can be blended with regular jet fuel, is expected to be the biggest contributor in the industry’s decarbonisation efforts. According to PREETI JAIN, head, Net Zero Transition Programs at Geneva-based airline industry body International Air Transport Association (IATA), India is well-positioned to emerge as an international SAF manufacturing hub, provided it capitalises on the opportunity with concerted efforts, primarily through a policy push and incentives for the segment’s value chain. In an interaction with SUKALP SHARMA, Jain delves into the global SAF ecosystem, its challenges, lessons from other regions, mandates-versus-incentives debate, and the road ahead globally as well as in India. Edited excerpts:
How critical is SAF for the global aviation industry’s decarbonisation targets? Is SAF production on track to meet multilateral requirements and regional and country-specific mandates?
There are four things which we have identified for the decarbonisation roadmap —sustainable aviation fuel (SAF), operational efficiencies, (carbon) offset, and hydrogen and electric planes. All of them are important. While all are important, SAF alone is likely to account for over 60 per cent (in decarbonisation)… On SAF, it is important to understand that even if we deploy all the solutions today, they can only bring a certain level of carbon emission reduction. We are still far away from our final goal, as well as mid-term and short-term goals, because SAF currently stands at just around 0.7 per cent of global jet fuel production. We map around 300 renewable fuel projects around the world, and we considered 160 projects for our assessment. We saw that nearly 54 per cent of the projects are just announcements; all of them want to produce SAF by 2030. Each plant would likely take at least four-five years to be built, and it doesn’t look likely that many would be ready by 2030.
Having earlier worked in this domain in India, how do you see the country’s SAF ecosystem?
I have witnessed this ecosystem for more than 10 years in India. I’d say India is headed in the right direction and should do fine in meeting the initial requirements. Interestingly, India wants to come up with its tailor-made policies which can help its own ecosystem. The country has announced its intent to have time-bound SAF blending targets. But we are yet to see a firm roadmap and the implementation plan. Various Indian energy companies are working on SAF projects. These companies have always come forward to do what is required by the government and international commitments. So, I’m positive about India. The question is would India be happy just doing the bare minimum to meet mandates and requirements? Or does it want to be ahead of the curve and start making SAF not just for Indian airlines, but also for international airlines operating to India? There is enough ethanol supply in the country, and some of it can be diverted to make SAF… India wants to export ethanol, and similarly, SAF also presents a similar opportunity. There can be a ‘make in India for the world’ opportunity in SAF. India can potentially manufacture 40 million tonnes of SAF by 2050.
What is it that India should do to meet SAF requirements as well as become an SAF manufacturing hub?
India should prioritise feedstock for the production of SAF without waiting further, leverage the existing refining capability, invest in the research and innovation and new technologies. Funding should be made available to projects as well as the feedstock aggregation supply chains. It also needs to be ensured that the SAF manufactured in India meets all sustainability certification criteria, and that needs to start now, not when the plants are ready for production.
Europe already has SAF blending mandates which have come much before CORSIA’s mandatory phase kicks in (from 2027). Is it a move in the right direction?
Mandates and incentives need to come together in the right proportion. While there is already a mandate in Europe, the fundamental question is about the ecosystem, is it ready? That ecosystem readiness was not there, and in such a scenario, mandates aren’t going to really be effective. Much of the SAF being used in Europe is coming from different continents. Does it even make sense, considering long-haul transportation of the fuel itself would have a high carbon footprint? That is why we are asking for incentives to be brought in so that the local ecosystem is prepared with enough domestic production.
Why does IATA seem to be opposed to the way Europe is going about SAF mandates?
What airlines are being charged for SAF in Europe is not on a cost-plus basis. They are being charged exorbitant compliance fees and there is no transparency in the cost structure. We don’t understand what is the rationale behind these high numbers. We estimate that this non-transparent compliance fee is adding an additional $1.7 billion to the cost of SAF for airlines in Europe on top of the cost of SAF, which itself is quite high. It was already a supply-constrained market and then you (Europe) introduced mandates, which essentially means that the airline is bound to buy SAF at any price, or be penalised…Also, our position on SAF is that it should be feedstock agnostic and technology neutral. All technologies should compete, and the market forces would lead to the best and the most efficient ones being picked up. But Europe has put a sub-mandate for the power-to-liquid (PTL) pathway for SAF production. That puts other pathways and technologies (like alcohol-to-jet, which various companies are working on) at a disadvantage.
Unlike what is happening in Europe, the US is seen as a success story on SAF use. What did they do differently?
The US provided incentives around the value chain. In one sense, Europe and the US are very similar, in that they provided a lot of funding and research for these technologies to mature. But the US went a step ahead. They provided production-linked incentives, they subsidised the feedstock, gave other incentives that led to the SAF feedstock supply chain being streamlined there, etc. Then there were tax credits for SAF production and blending. Additionally, apart from the central or federal incentives, some US states also had their own incentive plans. Many of the SAF facilities also need hydrogen, so the US also provided some incentives for green hydrogen production. Essentially, they worked on bits and pieces across the SAF value chain.
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Are US-like incentives the answer for boosting SAF production? Is it something that can easily be replicated in other parts of the world?
There is enough biorefinery capacity around the world. The question is, how can governments provide the right incentives for these biorefineries to switch their production in the favour of SAF. A biorefinery is not built specifically for renewable diesel or SAF for that matter. These capacities can swing very quickly to produce SAF. We can have sufficient production of SAF to meet the airlines’ demand—voluntary as well as the mandates. Governments should seriously look at incentives for SAF production, like facilitating offtake, providing subsidies, etc… Let’s take the example of solar and wind in India and elsewhere. Governments provided production-linked incentives, tax holidays, and subsidies. We need the same story in the SAF ecosystem.
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