Report Examines SAF Viability in the UK

 - July 21, 2020, 5:57 PM
While SAF becomes more common at some U.S. airports, the UK consumes little sustainable fuel and produces none. (Photo: Avfuel)

Despite the UK's status as a major air transport gateway and a leading proponent of carbon reduction, the country produces no sustainable aviation fuel (SAF) and has seen very limited consumption of the product. To address the shortcoming, especially in light of the UK's declared goal of achieving net-zero emissions by 2050, PA Consulting in partnership with aerospace industry association ADS is preparing to publish a white paper to resolve what the country can do to boost adoption of SAF.

“The UK is already leading the world when it comes to enshrining sustainability targets in law and decarbonizing industry,” said Kim McCann, PA’s aviation sustainability expert. “We were the first G7 nation to set the Paris climate agreement into law and the first country where that law has been directly used to challenge the aviation industry’s right to grow," citing the recent veto of a third runway at London Heathrow Airport on sustainability objections.

In an FIA Connect webinar on July 20, she gave a preview of the forthcoming research paper, which was the result of dozens of interviews with industry stakeholders. McCann stated that the UK possesses the full supply chain required to foster an SAF industry, and the apparent will to do so, noting the establishment just last month of the Jet Zero Council by the country’s transport secretary Grant Shapps, a move government says substantiates its pledge to back decarbonization efforts in the aviation industry.

McCann explained that several key factors block the development and investment in an SAF industry in the UK, the most important being the price differential between conventional Jet A and sustainable fuel, which currently stands at three and a half times more per gallon. “Right now we are asking a nascent industry, a new technology to compete on a like-for-like basis with one of the world’s most established and optimized hydrocarbon supply chains,” she said. “This is not a fair fight.”

She explained how fuel represents more than 20 percent of an airline’s cost and is its biggest variable cost. With tight margins, any additional surcharge for SAF won't likely get passed down to the consumer. With some forecasts calling for the price per barrel of oil to stabilize at $50 to $55 for the foreseeable future in the post-Covid world, that could further hamper investment into the sustainable fuel sector.

Uncertainty regarding optimum feedstocks remains another factor. While many different substances have been used to make SAF, from specific terrestrial crops such as Camelina and Salicornia, to algae, to household waste, to spent cooking oils and grease, McCann said none of them offer a “silver bullet” in terms of yield and all suffer some constraints.

Despite the growing viability of SAF, many investors tend to look past it, considering SAF as a “stop-gap” measure, solely intended to hold the line until future technologies such as electric and hydrogen-powered propulsion are ready, further diluting the investment funding needed to scale production. Indeed, much of the early-stage investment in the industry has come from the oil companies and airlines. Of that investment, much has gone to fuel technologies and less to actual production, according to McCann.

Even in the biofuel arena, SAF competes with road fuels such as biodiesel.

Furthermore, the existence of disparate voices within the SAF industry in themselves could persuade investors that it is not yet ready for serious growth. Unfounded concerns due to a lack of subject education that SAF would require costly infrastructure replacement is another factor.

McCann explained that SAF is the only technology currently available to make a carbon emissions impact, and if and when new propulsion technologies are ready, the industry likely will still need conventional fuels for long-haul aircraft through 2050 and beyond. SAF will need to be a large part of that in order for the industry’s carbon emissions goals to be met. Based on her research, she indicated that there is a definite appetite for sustainable fuels from operators (if available at commercially viable prices) as well as companies seeking to push their sustainability goals out into the supply chain.

PA recommends a stepped strategy on the way to developing what could eventually amount to a £2 billion industry in the UK, employing more than 11,000 people.

If the newly-developing SAF industry cannot complete on today's an uneven playing field, the report calls upon the government to change the rules through various policies such as an amendment of the UK’s 2008 Renewable Transport Fuel Obligation, which mandates that a proportion of the fuel producers supply come from renewable sources. Other strategies such as the introduction of a price floor or cost differential contracts can help address the imbalance and make the business more attractive to investors who desire differing timelines for return on investment.

McCann stressed that the industry has to coalesce and speak with one voice and one opinion and establish an integrated action plan to act as a catalyst for investment in the UK industry. Next, there needs to be formalized engagement and governance to develop proposals for the Jet Zero Council on the way to developing an integrated cross-industry roadmap. The final step, implemented as early as 2021, would see the establishment of a cross-industry support network to shepherd the nascent industry through commercialization and scale-up.

The full report, exploring and describing those concepts in greater detail, will be available in August.