Fuelling the Future and Carbon-Conscious Skies
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In the context of aviation emissions, Sustainable Aviation Fuel (SAF) is a pivotal lever offering both the immediate and long-term resolve. Considering limited operational efficiency gains, the nascent stage of alternative propulsion technologies, and escalating competition for offsets, airlines are looking to sustainable aviation fuel to meet carbon targets. Demand signals are being sent to local and international production markets, encouraging mass production of cleaner fuels.
Yet, the debate around mandatory targets has gained momentum, with critics arguing that they impose unwarranted costs on the industry. The existing pricing differential between SAF and conventional fuel (with SAF costing between three and five times more than traditional jet fuel) is a strong point of scepticism.
Stakeholders advocating for increased local SAF production present an alternative route—the strategic deployment of government procurement policy targets. The influence of the Defence sector, as the nation’s largest direct consumer of aviation fuels, combined with the substantial purchasing power wielded by the government in travel acquisitions, would empower the growth of local SAF production. This multifaceted approach aligns economic interests with environmental imperatives, providing the foundation for a sustainable and financially viable aviation future.
The incentive to adopt SAF lies in commercially ready technologies seamlessly integrating with existing and new turbine-powered aircraft. SAF offers the option to travel greater distances compared to alternative propulsion technologies like hydrogen, with hydrogen engines expected to become available only in the mid-2030s and powering only shorter-distance flights. With the added uncertainty of airline fleet renewal schedules, SAF is poised to play a pivotal role in achieving carbon emissions reduction targets.
Beyond its direct impact on net carbon emissions, the adoption and production of SAF has additional advantages over conventional fossil fuel-derived jet fuel. The combustion of jet fuel produces particulate matter emissions and soot, leading to the formation of ice crystals and contrails with potential warming effects on the atmosphere. SAF, with reduced proportions of particulates and soot, potentially mitigates the overall warming effect of combustion.
SAF production also generates renewable co-products such as renewable diesel, lubricants, and lighter hydrocarbons. This enables other industries to access low-carbon alternatives.
As of June-2022, nearly 30 major global airlines have set an SAF adoption target, such as 10% of fuel consumption by 2030, according to Bloomberg New Energy Finance (NEF).[1] An increasing number of airports are ensuring that carriers have access to SAF. At the beginning of 2022, 53 airports around the world had ongoing deliveries of the biofuel. That’s more than triple the number in 2020.
Despite the positive trajectory, challenges persist in the SAF market. In 2022, global SAF production is estimated to range between 300 and 450 million litres, marking a substantial increase from the 100 million litres produced in 2021. However, SAF still accounts for only 0.1 to 0.15 percent of total aviation fuel demand, and Australia is yet to incorporate SAF into its jet fuel supply.
Internationally, SAF costs remain higher than conventional fuel, primarily due to limited economies of scale and feedstock costs. Although forecasts do not project immediate price parity, minimal infrastructure investment and the absence of extensive aircraft redesign mitigate the overall cost impact on the aviation industry.
While global supplies are projected to increase significantly in the coming years, strategic considerations must be given to the geographic distribution of SAF production. While the US and Europe have robust policies supporting SAF development, the Asia-Pacific region, a key driver of international economic growth, requires attention to prevent constraints on aviation sector expansion.
The future of SAF holds promise with ongoing research and development, including the exploration of new forms of Power to Liquid generation and the use of feedstocks such to create synthetic SAF. Although nascent, these endeavours signal encouraging developments in the industry.
In Australia, the potential of SAF is constrained by refining capacity limitations. While there is ample feedstock to support approximately 5 billion litres of SAF production, realising Australia as a sovereign SAF producer requires investments in new refining capacity.
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