"Eurasian SAF Alliance" to develop sustainable fuel in Russia (Update)
Picture: Gazpromneft-Aero
Russia’s economy has, so far, been very reliant on hydrocarbons production and export…but I guess when the a big part of the world is moving towards decarbonization it is not a good idea to fall behind. Hence, several major players in the Russian aviation industry and Airbus have joined forces in the “Eurasian SAF Alliance”.
This partnership is an eclectic mix: Airbus, Gazpromneft-Aero (the aviation fuel subsidiary of the major government-owned gas and oil group*) Russia’s two main passenger airlines, Aeroflot and S7, cargo operator Volga-Dnepr Group (well known the world because of its huge An-124 freighters) as well as two aviation research organizations (the Zhukovsky research center and the national center for scientific research in civilian aviation).
The goal is to have SAF-powered commercial flights in Russia by 2024. From the announcement it is not clear what % blend they are aiming for (although there is a reference to the current mandated 50% limit and long term goal of getting to 100%) and how and where is the fuel going to be produced.
2024 seems a rather long term horizon at a time when many airlines are already starting to experiment with SAF, however, wouldn’t be the first time that Russia manages to bridge a technology gap fast despite a slow start (after all, and while some countries such as Norway or Sweden may get ahead, EU-wide mandates won’t really quick in at levels of around 2 to 5% blend until the 2025-30 period).
*Gazpromneft-Aero has been quite active when it comes to technology adoption, not just in SAF: in this podcast we discussed initiatives for digitalization of the aviation fuel supply chain and in this other piece for AirInsight, I explain their blockchain initiative
UPDATE (23/12/21): finally been able to look at some figures regarding the potential of SAF in Russia.
What do these plans of the Eurasian SAF Alliance imply when it comes to new SAF production coming in stream in Russia in the next three years? Let’s do some back-of-the-envelope calculations.
Production of aviation fuel in Russia is currently around 12 million tons per year, for a domestic commercial aviation market of 7.5 million tons (including the 20% approximately that is sold to foreign carriers).
If Russia’s commercial aviation industry was to align its SAF consumption with the 2025 European mandate of 2% blend, it would require 150,000 tons per year (that is, in the rather implausible scenario where there is no growth in jet fuel consumption). How much is that? Well, to put this figure in context, as of 2021 the SAF global production capacity is about 5 million tons. It is also 50% more than Neste’s current SAF production of Neste, one of the market leaders in this segment, although the Finnish firm will be increasing its SAF production to up to 1.5 million tons in the next couple of years, with the opening of new facilities in Rotterdam (500,000 tons) and Singapore (1M tons)
I am not an expert in the economics of SAF refining, so I don’t know if there is a minimum production threshold those plants need to operate at scale and what would be the implications for any investments in new SAF capacity in Russia. Getting
In a reply to our questions, sources at Gazpromneft-Aero stated the following:
Currently, Gazprom Neft is considering possible scenarios for the realization of a project (in terms of volume, location, technology) which implies the construction of the company’s own facilities for the production of SAF fuel in Russia. The results of the assessment will be largely related to the decisions of the Russian State regulators in the field of decarbonization of the aviation market and, as a result, a forecast for the potential demand for SAF in the Russian market.
Similarly, when asked about the choice of technology:
“Gazprom Neft is considering the possibility of organizing the SAF production using all 8 licensed existing technologies, analyzing available raw materials in Russia. The company will also conduct its own R & D to develop the unique production technology tailored for the geographical and technological characteristics of the Russian market.”
So, still many open points, but it looks like things are moving…