THE
EIGHTFOLD
CHALLENGES

EXPLAINING THE ISSUE
By the middle of the 21st century, demand for flying could increase aviation’s GHG emissions by more than 300% over 2005 levels, meaning that aviation would be one of the largest emitters of residual CO2 in 2050. While eFuels, produced without fossil involvement, have incredible long-term potential, these fuels are in short supply, with low production volumes and technology still developing. In the short and medium term – and probably the longer term of 30+ years ahead – green SAFs cannot answer market demand on their own, necessitating other decarbonization routes.

WHAT TO CONSIDER
Carbon-neutral is an endgame, not an immediate imperative. The path to zero-carbon starts with low-carbon, and many regions have an agreed timeline: the EU’s goal is 2% SAF blend by 2025 and 5% by 2030⁴², providing an ambitious but achievable guide for both suppliers and consumers of SAF.

• The EU’s blending requirement for fuel supplied to EU airports is a staged process
• The USA’s approach is to incentivize production (starting at USD 1.50/gal)
• Other regions of the world are developing their own approaches, but action is global
• This offers a path for a gradual greening of jet fuel supply, with continuous improvement

HOW TO ADDRESS IT
If you’re adopting a SAF strategy, the key is to treat it as a staged journey, with positive outcomes at every milestone, and not a one-off event. Through the 2030s, 100% green fuels will carry a high cost base. No SAF is currently available as a 100% clean drop-in replacement for JET A/A-1, but 100% SAF-driven aircraft could be a reality as early as 2030.

EXPLAINING THE ISSUE
The first wave of SAFs will be low-carbon, not carbon-neutral – using diverse hydrocarbon feedstocks, including virgin oils, waste oil and fats, and waste biomass. Some of these sources often lack infrastructure for collection, leading to low availability at high prices. The dilemma regarding the risk of diverting farmland or crops for biofuel production to the detriment of the food supply must also be acknowledged. And of course, aviation isn’t the only industry chasing feedstock. Currently, even the cheapest SAFs are more than double the price of JET A/A-1.

WHAT TO CONSIDER
Fundamental is your market position and its competitive drivers, whatever processing stage you play at. Geographical position, proximity to sources, easier collection logistics leading to steadier supplies, government incentives (such as recycling mandates), competitive pressures for supply, and ease of switching to alternatives if a chosen feedstock becomes scarce - all matter.

• There are a variety of feedstocks for SAF – but not all are equally appealing
• Producers must weigh advantages and disadvantages of different feedstocks, and the optimal mix will be different for every operator
• Contracts for supply and the conditions you can negotiate are key to stability
  
  

HOW TO ADDRESS IT
With several low-carbon SAF pathways being able to use a variety of feedstocks, it’s vital to assess which feedstocks are most available to you and what volumes are reasonably predictable – with a view to locking in supply through forward contracts, preferably contracts that match the incentive timelines on offer from governments.

EXPLAINING THE ISSUE
eJet fuel – produced using renewable electricity to crack hydrogen from water for combination with carbon dioxide from the atmosphere – suffers a different kind of resource shortage: the availability of green power. Wind, solar, waves, and tidal are environmentally friendly, but not energy-dense – and there are many more calls on their output than producing eFuels. While atmospheric concentrations of CO2 are around 421ppm⁴³, capturing source stocks also needs higher investment for realistic volumes.

WHAT TO CONSIDER
If a source of energy is grid-connected, it may severely limit availability with power for eFuel production. (Many producers plan to operate “island” plants for this reason; many renewable sources of power may never be grid-connected.) In addition, the electrolyzer market (which is essential equipment for eFuels) is suffering a supply squeeze worldwide, meaning both energy source and production infrastructure need careful planning.

• With feedstocks of water, solar and air, the issue for eJet fuel producers is power and electrolyzer capacity
• Grid-connected renewable sources may limit the energy available for SAF production
• Nuclear can be used as a zero-emission clean energy source, at the same time removing thousands of tons of harmful air pollutants
• Electricity-only requirement is leading to innovative solutions for inputs like heat
• Heat integration will be a critical factor to ensure that no energy is wasted

HOW TO ADDRESS IT

Energy management will be crucial to reduce costs and waste. We need to look into innovative strategies for placement and co-location of equipment within the plant, enabling waste heat from one process to be reused in another, and at reliable contracts for the supply of green electricity.

EXPLAINING THE ISSUE
While airlines are already competing for SAF, they’re neither the only sector pursuing supplies nor the largest. Marine transport accounts for 330m tonnes⁴⁴ of fossil fuels annually, in the same league as aviation; road transport consumes around half the global production⁴⁵. These industries and others are also in the market for sustainable fuels, with legislative mandates and incentives becoming law in the same way.

WHAT TO CONSIDER
Given the different size and shape of competing sectors, incentive mismatches may make producing fuel for another sector more attractive than for aviation – squeezing SAF availability further.

• Marine, road, and other industries are also offtakers for low-carbon fuels
• Producers of sustainable fuels in different sectors compete for the same feedstocks
• Frameworks offering decarbonization incentives in different sectors may not be aligned

HOW TO ADDRESS IT
Keep a close eye on where feedstocks are coming from, your access to them, how the legislation surrounding them is changing – and stay open to emerging alternatives. If added to waste oils, compounds, and plastics, volumes of biomass from farming and forestry would increase supply dramatically; the WEF estimates all sources combined could cover 120% of aviation demand by 2030⁴⁶.

EXPLAINING THE ISSUE
Sustainable fuel production carries a challenge unknown in many industries – the problem of essential inputs simply not being available, at any price. (Unlike, say, steel or electricity). This creates external risks for innovators because it can make workable processes uneconomic or impractical. As one of our interviewees pointed out, “Nobody wants to be first, but everyone wants to be a fast second.” But the production pathways are becoming more diverse: to date, ASTM has approved seven pathways for SAF production, and this may rise to 15⁴⁷.

WHAT TO CONSIDER
Efficient SAF production means an integration of sectors previously unconnected, from agriculture to pipelines. When they connect, some success metrics (like purity of recyclable plastic) may become obsolete and new measures needed, while efficiency gains from reconfiguring and optimization may be unrealized. Both contain risks but also opportunities to reduce waste and increase yields at every touchpoint.

• Scarcity of feedstock complicates business viability calculations
• A fast-moving industry sector means one misstep can be serious
• A new ecosystem of connected suppliers requires new integrations

HOW TO ADDRESS IT
First-generation SAF producers are envisioning the future shape of the sector and how they can prepare now. As with any process of innovation in the market, over time processes and methods fall into standard patterns of integration and modularity, reducing risk as best practices emerge. Today’s producers are looking to discover these early.

EXPLAINING THE ISSUE
Historically, demand for air travel has increased by 4-5% per year. Many professionals see this as unviable – and the effect in the market is already obvious, with superjumbos being retired and regional routes rationalized (often with smaller carriers suffering). With future passenger demand uncertain, how can SAF consumers plan?

WHAT TO CONSIDER
In a SAF world, passengers are not the only demand metric driving business decisions. The environment is a global concern – but SAF supply is likely to be a local industry, produced and stored close to the airports that use it. This means route planners and commercial buyers will need to take SAF availability into account and use this data to rationalize their routes and connections to give the best business outcomes.

• Future passenger growth will almost certainly be below past levels
• Higher ticket prices and environmental awareness may dissuade some passengers
• The future may include fewer choices on longer routes and fewer shorter segments
• Physical availability of SAF will be a factor for carriers when planning and rationalizing routes

HOW TO ADDRESS IT
The issue involves rightsizing rather than downsizing. High-volume, low-cost airlines look efficient according to some metrics, but flights may compete on a route with hundreds of others – making the route as a whole less than viable. As SAF blend requirements go up, airline customers are likely to reduce activity at regional airports in favor of hubs – so fuel suppliers should be ready to meet this change.

EXPLAINING THE ISSUE
A typical production plant operates on an investment horizon of at least a decade, and often 25 years or more. Government incentive schemes, however, tend to be shorter and subject to political change, making a business case built on current incentives risky.

WHAT TO CONSIDER
It’s essential to think about how firm and fixed any tax break or matched funding is. Is it local or municipal, and thus risky (as with some schemes in Oregon and California)? Is it the policy of a single party in a democracy, opposed by others (as in some Australian cases)? Or is it (as in the EU and the USA at federal level) a long-term plan likely to continue on a predictable path? Stability of legislation is core.

• The lifetime of government incentives is shorter than investment horizons
• A single canceled policy framework can make a business case unviable in a certain region
• Most investors cannot base their decisions on incentives alone 

HOW TO ADDRESS IT
While the move to SAF is being driven by legal conditions – incentives and mandates – producers are not relying 100% on government policies. Many are building with adaptable infrastructure and contingency plans that allow them to transform their businesses if external conditions change.

EXPLAINING THE ISSUE
Opinions differ across organizations, and outcomes with them – due to the KPIs set for individual departments, leading to different priorities for managers and workers. This is normal and natural for all companies. But it is useful for SAF stakeholders to align some strategic priorities company-wide by finding incentives and metrics that give managers a reason to change processes and behaviors.

WHAT TO CONSIDER
People’s behavior at work depends on the specific success metrics set by their manager and how they are rewarded for reaching them. So while low-carbon aviation is the goal, it is vital to recognize how far apart the actual daily actions of (for example) an ESG professional and a fuel supply manager are – or more generally, a finance professional charged with eking out profit and a product engineer seeking to innovate. It’s worth finding ways to bring different roles closer together so that both contribute to the broader goal in ways that fit their job roles.

• Motivations, incentives, and ideas of success differ depending on job roles
• Environmental goals cannot be a strategic add-on or conflict with people’s KPIs – they must be fundamental and shared by all
• A broad strategic goal must be customized and tailored for individual departments
• If different job priorities can be guided by the same goal, SAF success is more likely

HOW TO ADDRESS IT
With SAF already a legal requirement in many countries, and incentives available in others⁴⁸, a SAF strategy is mandatory – so think about how the goal can be “translated” at the operational level, and redesign departmental KPIs, job descriptions, reward and bonus structures, and organizational charts accordingly.