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INVESTING IN
INNOVATION

LONG-TERM POLICY SUPPORT IS VITAL

“This is a business of innovation – and I expect an explosion of new processes, players, and products in the pursuit of Net Zero. The biggest change, however, will occur in people’s mindset.”

Nick Macilveen, Sustainable Fuels and Project Development Consultant

Nick Macilveen 260x260-1

Key Take-Aways

  1. Blended SAF can use existing infrastructure – but capacity is squeezed
  2. There’s a funding gap at the critical USD 5m-50m pre-development stage for greenfield facilities as well as R&D for new technologies
  3. Streamlined and predictable renewables facility permits will help make SAF infrastructure a reality
  4. Innovation will solve problems – and highly motivated people are working on them
  5. The timelines of incentives, investment, and offtake agreements need to match
  6. Direct pay would increase the efficiency of IRA tax credit monetization for developers of SAF production facilities
  7. Distributed ledger technology is one solution for efficiently managing value chains
  8. Establishing efficient carbon mitigating markets and incentives such as widespread LCFS programs will fuel SAF growth

Nick’s understanding of how financing and policymaking interact is unusually deep and illustrates how dependent industry innovation is on the actions of government agencies and the incentives available to investors. Solutions from finance and software – such as integrating disparate data onto a distributed ledger to track carbon, feedstock, SAF production, environmental attributes, and ultimately redemption of incentives – may prove vital to account for it all.

Read the Full Interview

With a background spanning fintech to climate tech, San Francisco-based Nick is passionate about the ways public policymaking and private enterprise can come together to solve challenges over the course of decades – but synchronization of timelines matters. Working in business development, he sees how economic, regulatory and legal drivers interact – but sometimes don’t align.

To help the industry fight climate change, he sees a need for streamlined renewables facility permitting processes that offer greater certainty to investors, enabling them to commit and move forward.

In the USA, a new facility needs federal, state, and various local permits, in addition to environmental and feasibility studies; getting these permits can take years prior to breaking ground. And with biorefinery lifespans of 30+ years, some incentive programs – including the recent Inflation Reduction Act (IRA) production tax credit – end just a few years after a new facility begins operation. There’s also a gap in private ‘pre-development’ financing in the USD 5m-50m range, used to advance independent projects to Final Investment Decision (FID) - a point when institutional financing typically becomes available to developers. Increased public and private investment in SAF will make a tremendous difference in our carbon neutral future.

One area he doesn’t find wanting is people. With climate change an existential concern, he sees SAF as an industry of hope – with people bringing their “best selves” to work and applying both talent and enthusiasm to a global problem.

SAF is an industry of hope with people bringing their "best selves"
SAF Study interview breaker 2

OPPORTUNITIES FOR INNOVATION ARE BROAD AND DEEP
While a global industry, SAF “on the ground” is a local business. Most airports will need new receiving and blending facilities nearby; getting fuel where it’s needed at the right blend requirement is a logistical challenge at each airport. While ASTM-certified blended SAF can use existing infrastructure, the reality in most aviation markets is that pipelines and fuel storage tanks are mostly full. Meeting new carbon neutral fuel demand from airlines – and accommodating future growth – will require resilient new supply chains linking producers, infrastructure, blending facilities, logistics firms, and off-takers.

Answering this is innovation. The initial production pathways for SAF being well established and technologies like HEFA production are protected by patents, the opportunities for innovation and intellectual property in the 10–30-year timescale are broad and deep – as is investor interest. And the jumpstart effect of the IRA is positive. The real question is long-term: will government support and multiple market forces converge adequately to help the industry reach its Net Zero goals? If so, new feedstocks, new infrastructure, new fuel pathways and new technologies will help scale SAF supply to meet the industry’s needs.

CONGRUENCY OF INCENTIVES, INVESTMENTS, AND OFFTAKE
The IRA boosted incentives that catalyze private-sector investment in the United States. Allowing SAF production facility developers (that don't yet have tax liabilities) to monetize IRA tax credits through direct-pay would further accelerate growth; Nick expects US projects to move faster than Europe’s before 2030 but for the global industry to equalize afterward. Along the way, he expects now-developing supply webs to stabilize and flourish in situations where policy incentives, offtake agreements, and investment horizons match.

Nick Macilveen; “We’re compressing what was a 150-year industrial evolution into an intensive 20-year transformation. The need for new infrastructure is significant – but the application and approval process for a fossil-fuels refinery switching to renewables-based production is significant, too. We can bring sustainable fuels and new eco-friendly technologies to market in balance with the environment, all while working together with community stakeholders to achieve Net Zero.”

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ACCURATE CARBON ACCOUNTING AND EFFICIENT CARBON MARKETS
Nick is clear about what he wants to see: accurate, standardized carbon accounting worldwide, without double-counting or guesswork. The industry needs efficient carbon markets similar to California’s Low Carbon Fuel Standard (LCFS) program. An innovation to watch: private blockchains, and the way distributed ledgers can provide efficient transparency and traceability of both SAF supply chains and the resulting environmental attributes. (SAF emission reduction insets are superior to legacy offsets.) Trust and transparency, standardization, interoperability, and scalability remain key to long-term success.

On a ten-year timescale, as older aircraft “age out”with market demand for superjumbos like the A380 and B777 fading, the scene is set for higher blends of SAF (to 50% and beyond) and fewer but more efficient route segments, with higher ticket prices leading to lower passenger growth – likely under 2%. The air transport market of the 2030s will perhaps involve fewer aircraft, flying fewer routes – and thankfully fewer CO2eqs from aviation worldwide.

On a ten-year timescale, as older aircraft “age out”with market demand for superjumbos like the A380 and B777 fading, the scene is set for higher blends of SAF (to 50% and beyond) and fewer but more efficient route segments, with higher ticket prices leading to lower passenger growth – likely under 2%. The air transport market of the 2030s will perhaps involve fewer aircraft, flying fewer routes – and thankfully fewer CO2eqs from aviation worldwide.

On a ten-year timescale, as older aircraft “age out”with market demand for superjumbos like the A380 and B777 fading, the scene is set for higher blends of SAF (to 50% and beyond) and fewer but more efficient route segments, with higher ticket prices leading to lower passenger growth – likely under 2%. The air transport market of the 2030s will perhaps involve fewer aircraft, flying fewer routes – and thankfully fewer CO2eqs from aviation worldwide.

SAF IS HERE NOW, MAKING A DIFFERENCE
Climate change is an existential threat – but the right mix of people, technology, policy, and finance is coming together fast. Motivation is high. It’s likely many solutions on the way to Net Zero don’t exist yet, but SAF is here now, and already making a difference. The time to create the future is now.

The time to create
the future
is NOW