Shell Invests in SAF Producer

 - April 13, 2021, 3:23 PM
Shell's Rheinland refinery in Germany is one that the global fuel provider is looking to possibly convert from petroleum to sustainable fuel production, in this case using the power-to-liquid (PtL) pathway. (Photo: Shell)

Shell has joined the group of investors in LanzaJet, a sustainable aviation fuel (SAF) producer that has just awarded a construction contract for its first commercial production facility in Soperton, Georgia. When operational in 2022, the Freedom Pines Fuels plant, which will utilize the alcohol-to-jet (AtJ) production pathway, will have a capacity to create 10 million gallons of fuel a year, up to 90 percent of which could be SAF with the remainder biodiesel.

The LanzaJet fuel is approved at blends of up to 50 percent with conventional jet fuel as a drop-in, fully miscible replacement. The SAF portion of the blend delivers more than a 70 percent reduction in lifecycle greenhouse gas emissions in comparison with standard petroleum-based jet fuel.

Shell joins founding investors that include LanzaJet’s parent company, LanzaTech, as well as Suncor Energy and Mitsui & Co. British Airways and All Nippon Airways have invested more recently.

“LanzaJet’s technology opens up a new and exciting pathway to produce SAF using the AtJ process and will help address the aviation sector’s urgent need for SAF,” said Shell Aviation president Anna Mascolo.

For Shell, which celebrates its centennial anniversary in the aviation fuel business this year, the move is in line with its recently announced goal of becoming a net-zero emissions company by 2050, both in its own operations and, and by transitioning to lower-carbon fuels, on the production and sales side. The company has committed to producing eight times more low-carbon fuels by 2030 than it does now, through third-party deals with major sustainable fuel producers such as Neste, World Energy, Red Rock Biofuels, and ECB Group, as well as by modifying its own refineries to produce sustainable fuels.

As part of the overall jet fuel market, the flow of SAF is currently minimal. Mascolo estimates that of the 270 million tonnes of jet fuel that was sold in 2019, less than .01 percent consisted of SAF, and while 2020 numbers are not yet available, she doubted they would be much different.

“We are at a very, very early stage of SAF development, and my hope, and I think the industry’s hope, is that as we start to see mandates coming through, government support with clear guidelines, we are starting to see additional manufacturing of production facilities, and we are starting to de-risk some of the technologies,” she told AIN.

While production capacity is certainly a limiting factor at present, the cost of sustainable fuel also merits consideration. “The reality is we do know that SAF is a more expensive option for a number of reasons,” Mascolo explained. “The fact that the feedstock is completely different and requires a very different supply chain to get the products to the production facility, the process of producing the SAF is different, with different technology. So the whole system is just not the same as for traditional jet fuel, and the range of price versus jet fuel really depends on all these elements.”       

Yet, as more production facilities come online and more production pathways are tested, approved, and commercialized, the volume of SAF will increase. “At that point, we hope with the economies of scale we have, the product will become more affordable for everybody, from producers to buyers,” Mascolo said.

As for the near term, she believes the next several years will largely be spent developing a consensus among SAF producers, users, governments, and investors about how to spur the demand for and development of sustainable fuels. “You have a global industry that needs to move in the same direction, and many players needing to play different parts in the value chain,” said Mascolo. “This is a market that needs longer-term certainty, and that’s why mandates are so important, to be able to scale and produce more sustainable aviation fuels.”

Norway last year introduced a 0.5 percent SAF mandate for all jet fuel sold in the country, and Sweden has also instituted a carbon-reduction mandate. Other European countries are discussing mandates calling for up to 2 percent of the aviation fuel sold to be SAF. “I would think that a few percent of SAF in the system by 2025 is actually an ambitious target and will require a lot of investment along the way,” Mascolo stated.

Between 2025 and 2035, depending on production capacity development projections and potential mandates, she sees SAF possibly representing between 5 and 10 percent of all fuel being sold or produced.

As for 2050, “the only thing I would say is SAF will have a big role to play,” Mascolo noted, “and that many things need to happen or align, where all the different players—the airlines, the airports, the governments, the fuel producers—need to work towards a common roadmap, and that is the challenge of the industry.”