The Allplane Podcast #48 - Sustainable Aviation Fuel, with Jonathan Wood (Neste)
Sustainable aviation fuel (SAF) has emerged as one of the most readily available alternatives to decarbonize the aviation industry.
Well, or at least we should add some “ “ to “available”, because, although technically feasible on paper, there are still some major obstacles that SAF needs to overcome in order to have a meaningful impact on the energy mix.
To get an overview of what is the situation in the sustainable aviation fuel market and what can we expect in the near future in this growing and very promising segment we welcome to the podcast one of Europe’s most senior SAF industry executives.
Jonathan Wood is VP Renewable Aviation at Neste, the leading European SAF producer. Neste has leveraged its expertise in the production of biofuels to emerge as a global player in the SAF market. This Finnish company is planning. to multiply its production of SAF by a factor of 15 in the next couple of years, as two new refineries, in Rotterdam and Singapore come on stream to satisfy the sudden global thirst for SAF.
With Jonathan we talk about Neste’s plans but also about the different processes that exist to obtain SAF, their pros and their cons and how the aviation industry could benefit from using the existing infrastructure to increase their SAF intake.
Tune in for a great chat aobut the present and future of sustainable aviation fuel!
Download this episode from:
Apple Podcasts / iTunes, Spotify, Google Podcasts or Stitcher
Things we talk about in this episode:
Jonathan’s background and experience in the sustainable fuels industry
What is sustainable aviation fuel (SAF)
What processes exist to produce sustainable aviation fuel
What are the pros and cons of each of these processes
What feedstocks does each process need to produce sustainable aviation fuel and how to source them
What are synthetic fuels and how are they different from biogenic fuels
What is the current situation of the sustainable aviation fuel industry worldwide
Why is SAF more expensive than conventional fuel and can this change in the near future?
What % of the total jet fuel consumption is sustainable aviation fuel?
How do the logistics and supply chains of sustainable aviation fuel work?
What are Neste’s plans to increase SAF production
Resources:
World Economic Forum about sustainable aviation fuel (elaborated with the collaboration of McKinsey, see our previous podcast!)
The EU’s Refuel document, that sets the framework for European sustainable aviation fuels mandates (it also includes a detailed description of the different SAF production technologies available)
ATAG’s “beginners guide to sustainable aviation fuel” (2017)
To learn more about synthetic fuels, our podcast with Carmen Murer, of Synhelion
Podcast Music: Five Armies by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/3762-five-armies
License: http://creativecommons.org/licenses/by/4.0/
Interview Transcript
(please note that, although we strive to make it as close as possible to the original recording, the transcript may not be 100% accurate)
Hi, and welcome to the Allplane podcast
Where you will find inspiring stories of innovation in the commercial aviation industry.
First of all, let me remind you that you can find all the previous episodes of this podcast as well as many other aviation stories on our website: allplane.tv - allplane.tv
Today we are going to talk about a topic that is becoming increasingly popular: sustainable aviation fuel.
Sustainable aviation fuel has taken a very prominent place in the public debate
There is a pressing need to decarbonize aviation and the new propulsion technologies that are being developed are still a few years, in some cases decades, away from being available at scale.
It is in this context that sustainable aviation fuels, made from biomass, from different types of waste or through synthetic processes, has emerged as a ready alternative that can also be used with aircraft and infrastructure that are already in place.
The problem: supply is very limited at the moment and the cost is much higher, 3 to 5 times higher, than conventional jet fuel.
So, what can be done? What is the current situation in the sustainable aviation fuel industry? Which production methods exist and what are their perspectives?
We are going to try to answer all these questions with Jonathan Wood, VP for Renewable Aviation at Neste, the Finnish energy firm that is currently the global market leader in sustainable aviation fuel.
Tune in for a comprehensive overview of this very promising technology!
Hello, Jonathan, how are you?
I'm very well, thank you, Miquel. How are you?
Very well. Thank you so much for making time today for this conversation. Because we are living through very interesting times in the sustainable aviation fuel industry. It's pretty much every day that we get news about a new initiative, new project, a new airline that has launched a program to use more sustainable aviation fuel. So I thought, what better than to have a one of the you've been working in this industry for quite some time, and you are now a VP at one of the top players in the sustainable aviation fuel industry. That's a Finnish company, Neste. So why don't you tell us a little bit about yourself, about your professional background and about your current role before we move on to discussing the general situation of the industry, and particularly the very interesting projects that you are conducting at NASA?
Well, thanks for the chance to talk and they're nice to get to know you. You're absolutely right. There's a lot going on in this space. So I think if we look at a macro level, it's clear the last couple of years that greenhouse gas and carbon emissions have become more and more of a topic, whether it's Greta tunberg, whether it's set an elevated recognition of climate change risks, through this pandemic, and then a number of reports coming out as we head towards the time of change conference Cop-26. In Scotland in November, I think it's very clear that the imperative to take action is becoming clearer and clearer. But, yeah, we'll get into that and what's happening in the aviation and SAF space. But with respect to myself, yeah, I'm now VP for MY Renewable Aviation or SAF Business in Europe. But Neste obviously has a lot of experience in producing renewable fuels and recycling waste materials. Before joining at the beginning of last year, next day to take on this role I was for many years in Air BP responsible for the growth agenda responsible for business development, in new geographies and with new products and services and had indeed, had some involvement in the low carbon fuels or SAF space. And prior to that many, many years in commercial roles with BP in the fuels business around around the world,
Sustainable aviation fuel has come to the top of the agenda, let's say it's quite surprising because, as far as I can remember, there was a lot of buzz in the media about electric flight, more recently about hydrogen. But all of a sudden, it seems that sustainable aviation fuel has taken a much more prominent space. Is this because it has come to be regarded as a perhaps more pragmatic approach to fulfill the very ambitious climate emissions goals? What do you think is happening here?
I think in a nutshell, you're probably right. I mean, there were goals more than 10 years ago to reduce emissions by 50% by 2050, versus a 2005 baseline. And already in those times, we were talking about aircraft technology to improve efficiency, which has been, as we all know, I mean…the industry has a great track record in terms of continuously improving the efficiency of the aircraft, but you know, what can be done in terms of new propulsion technologies to change the game there being hydrogen, electric…then we've got operational efficiencies. And then you have liquid fuel types that reduce net emissions, and all of those were seen as being important 10 years ago. If you fast forward to the ATAG, IATA report that came out at the end of last year, I think it reconfirms that all of those strands have a role to play. But if we think about the next 10 years, I think SAF is the piece that can play the most material role, in particular in a 10 to 15 year timeframe. And then let's see whether new propulsion technologies can really emerge thereafter. But I think what's clear, what most of the industry experts talk about, is how electric may be more of a solution for shorter haul and smaller aircraft. But as soon as you get into longer haul, and larger aircraft, I think liquid liquid fuels are going to play a role. As far as we can see, right. We've got technology production technologies for saf in place now. And, as we all know, and many, many production technologies have been approved, but it had to have a based Hydrotreated esters and fatty acids process. It is the one that's most available today and has been scaled up by Neste and other players. But then we've got to really make sure that we do actually progress the other technology pathways, be it alcohol to jet, be it use of municipal solid waste, gasification and ultimately, hopefully, the use of renewable energy, and capturing of carbon to create power to liquid based SAFs, maybe from the 2030s onwards, all of them, I believe, have a role to play. And I think we really need to recognize that there's no one silver bullet here, whether it's new aircraft propulsion technologies, operational efficiencies, which make sense under all scenarios, and then in the SAF field, let's make sure we pursue and drive forward all the different production technologies, and then time will tell which ones can really drive the cost down furthest on through scale economies and so on. I mean, we've all seen what's happened in the last 20 years, with the massive growth of renewable energy with wind power and solar, we really need to take the same, I believe, attitude to aviation fuel and see which tank or traction technologies ultimately prove to be the best for the long term. But I think over the next 10 years, we need to run with what we've got. Because, you know, the IPCC report that was issued just a couple of weeks ago, in the lead up to the COP conference, made it very clear for everybody. We can't wait another 10 years. What's happening with climate change, we're already well over one degree centigrade above the levels of, of the 19th century. And we're on track to sail past the one and a half degree target that the Paris conference five years ago said. So we really need to take what we've got now and in parallel develop all of the options for the future. The challenge, of course, then, is that of course none of these options come at the same cost as the current fossil jet fuel option. And I would argue that's an issue that we need to come to terms with, because it's actually not a fair comparison, because, as I've just said, the fossil jet fuel option is not really an option for society.
At this point, I would start maybe by doing a quick recap of the different methods and technologies that are available, because, as you mentioned, there are different ways to obtain what can be labeled as sustainable aviation fuel, Hefa, then there's a fischer-tropp. I don't know if I pronounce it correctly. It is a process that was developed a very long time ago, I think about 100 years ago, but it's proven to be one of the ways, then you have alcohol to jet fuel, which is based on some organic feedstock starchy vegetables. Then you have synthetic fuels, which are basically created from non organic material. So all of these processes are currently kind of being developed in parallel by different people, different intrapreneurs, different companies. From what you said, at Neste, you are most active in the Hefa system, right?
That's correct. We developed it 10 years or more ago, with some proprietary technology production technology expertise, which has enabled us to already establish a quiet material, renewable diesel fuel business. That's just, I'd say, the most material production technology currently in use, and in particular, for renewable diesel, and now they're being applied for renewable jet fuel, but those other technology pathways that you just referred to have been approved, some years ago and you've got different companies developing pilot plants. I know that in municipal solid waste, we've got Fulcrum, we've got companies talking about developing projects in the UK, then you've got, as you said, the alcohol to jet route with companies like Lanzatech. Working in partnership with other companies to develop projects. And then as you say, the power to liquids pathway, which I think will take a little bit longer to properly develop the electrolysis of capturing hydrogen out of water with electrolysis, combining that with the capturing of carbon from either industrial emissions or from direct capture, to then create liquid fuel. We're building and we're investing significantly in technology we know today, but we are also certainly investing time and effort to understand what those future technologies could look like. And we are committed to also developing, building on-stream capacity as and when it's ready with those other future terminals as well.
So basically, to summarize…what's the feedstock for each of these processes, because when I've been reading about sustainable aviation fuel oil, on paper, it sounds like a very straightforward way to get less carbon intensive fuel. But if I understand it correctly, there's a bit of a bottleneck with raw materials, with the sourcing of raw materials apart from higher production costs. So those will be two major bottlenecks to have a bigger, sustainable aviation fuel industry. I think the intake at the moment in the aviation industry is less than 1%.
Yes, you're absolutely right, right now, the production capacity for SAF is significantly less than 1%. I'll come in a second to how we see that growing over time, certainly some independent reports, which indicated that could grow to say 10% of global demand by 2030. But to your point about feedstocks, yeah, raw materials. You're right, that's a key issue, but so long as we keep an open mind to feedstocks, whilst at the same time, obviously, maintaining the requirements that they are truly sustainable. In other words, that they aren't impacting, they aren't causing indirect land use change, they should not be impacting biodiversity and the like, there are a number of biogenic raw materials available that could certainly allow for the production to be expanded, as I say, to 10% and beyond of all aviation fuel demand. So the way we see it, we got waste and residue lipids, so waste oils and fats, which have an availability of some 35 to 40 million tons a year.
Those are the ones that you use at Neste right now. Right?
Exactly. And those are the raw materials we use in this HEFA-based production method today. Could be expanded, if we have an open mind to, I would say, agriculture forestry residues, also crops on from use of biogenic raw materials from degraded land that otherwise would not be used, or even potentially intermediate crops where the land is otherwise fallow or not being used. So there is a way by which we can significantly increase the under 14 million tonnes of waste stores and fats that are currently available to to probably, if you were include municipal solid waste as well, there would be if you take all of those sources, sufficient raw materials to actually produce enough staff to meet global aviation fuel demand. And I'm talking about pre COVID levels. So that's the view if you mean, there was a World Economic Forum clean skies for tomorrow report issued and a coalition, a combination of airlines, suppliers, airports, industry players, and the view taken in that investigation was that, indeed, yes, there is sufficient raw material, so long as we don't constrain ourselves artificially, to use biogenic raw materials, and then also municipal waste. And ultimately, that would get us to potentially 100% of global aviation demand. And then, as I say, the power to liquids approach would obviously have, in theory, unlimited resources, as long as we can get hold of the renewable power at a sensible cost.
The materials are there, but are they in the right places? Because one thing that makes me wonder is how that logistic chain for the sourcing of all these materials works. Because you might have forestry residue in Scandinavia, for example, then you might have waste oils coming from everywhere. Is there the infrastructure in place to collect all these waste materials from many different locations and bring them to the production facilities? Would a logistic chain need to be built eventually, from scratch? Because at the moment, as you mentioned, the production levels are relatively small.
Yeah. So yes, this can be managed. I agree that it's a more complex operation, it's a higher cost operation than moving fossil based crude oil in supertankers around the world. But it may result in smaller production plants more widely distributed. But, you know, we're at Neste ensuring that we are able to manage the supply sourcing of raw materials, that's almost as important as marketing it once it's made, and then bringing it to market. So, you know, we envisage having production facilities in all of the major continents and, and are investing, as we speak, in Singapore, in Asia and obviously in Europe. So, yes, it's certainly true to say that if you look at the production plants that are being projected on the drawing board, they are widely distributed because of the different materials. Certainly if you're going for municipal solid waste, you are probably going to be in a major urban centers. If you're trying to source all of these biogenic raw materials, then you need to have quite sophisticated sourcing, setup and pretreatment facilities as well.
How vertically integrated is this sustainable aviation fuel industry? For example, at Neste, do you take care of all the value chain all the way from the origination of all these feedstocks, all the way to the, let's say, when the final distribution, when the hose basically feeds into the tank.
I would say that the next day we are quite vertically integrated. It's especially in terms of feedstock sourcing. There have been a number of announcements in the last year made by Neste demonstrating our desire to ensure we have reliable sourcing of the feedstocks, their production facilities, and then the marketing of those when I think when it comes to bringing it to market. We are comfortable working with partners, because we recognize it or established distribution networks and infrastructure. And the great thing else to say about renewable fuels is it's typically a drop-in fuel so they're fungible. So you can put them in the existing infrastructure and of course in the existing aircraft or on old vehicles. It is only approved up to a 50% blend in the case of road transportation. You don't need to brand it. But the point is that, at that point, from that point, you can put in an existing infrastructure. So we have established positions at particular airports, but we're also very comfortable working with partners to ensure that the product is brought to as many users as possible. I mean, this is a business, which is still in its early stages of growth. And over the next 10 years, I'm sure that it will grow quite rapidly. And so it's essential that we make it available to the different channels to market
That will be for the HEFA system feeding on organic waste material, then there is the Fischer-Trop, what's the raw material?
Well, municipal solid waste is the feedstock which is being developed the most. I mean, there's a sorting exercise that needs to take place there before that material can then be processed into ultimately, feedstock for the production of liquid hydrocarbon fuel. So ultimately, it is still predominantly biogenic in origin.
There's an element here that I find quite interesting is with these processes, they basically feed on waste in a way that has a secondary positive effect, I guess, and that is that you are getting rid of waste and recycling waste, giving it a new use.
Yeah, exactly, what's not to like about an approach like that. And quite frankly, it is all about recycling waste materials that are already in our ecosystem, and making them useful again. So that's an underlying theme, which I think, is spreading not just in the SAF business, but more generally, across society, as we realize that we've got to change how we live and create more of a circular recycling economy.
Yeah, saving landfill space along the way. Interesting, then we have to make a point that when we talk about sustainable aviation fuel, that means that you don't want to subtract organic production from crops that feed people. I think it was about a decade ago, when biofuels became popular, there was, I think, some food inflation in parts of the world because some crops were devoted to producing a biofuel instead of food crops. So the same thing goes for just cutting trees and cutting biomass to do stuff. So those would be byproducts of already existing processes so that they're going to be used instead of going to waste.
Yeah. I think now, the standards for SAF, the SAF industry, are very clear, it has to be sustainable. That means that it can't be indirect land use change, it has to be from established sources, it has to be a waste product that would otherwise not be useful for human consumption, for example fuel versus food, we're not negatively impacting food availability.
Yeah, that's a very important point. And there's a whole certification process certification labels, basically making sure that this is the case in order to be labeled as sustainable. Then we have the alcohol to jet. What can you tell us about this, this process? That comes from starchy vegetables, right?
Yeah. you're right, I have to say, I'm probably not so familiar with that production pathway. But I know that the companies looking to develop projects, transit, tech are some of the leaders in this space in different continents. So hopefully, that will prove to be successful as well.
And then you would have the synthetic fuels, as you mentioned earlier, that basically use electrolysis and green power to to take carbon and then through a series of chemical reactions, they produce synthetic fuels, they're expected to play quite a big role in achieving the EU goal of, I think it's pretty ambitious goal, having 60 plus percent of feel being sustainable in by 2050. A very significant part would have to be synthetic fuels. So there's a special provision for synthetic fuels, I guess, because if the market has to grow that much, then you would be having some problem here sourcing all this organic feedstock, right? So we will need to get other sources or sustainable aviation fuel.
Yeah, you're right, the renewable power based power to liquids approach is going to be key and probably will represent in 2050, half or more of the total liquid sack available. But it's important to remember two things. One is that it is not available now, it's still not at the technology readiness level to be commercially scaled up yet. So let's build what we can, consume what we can by developers, by bringing to market staff using the technologies that are available today. And then the power to liquids approach can build on that. So it's not about replacing, it's about building on those technologies that can already make a significant contribution over the next 10 years, and then build on that with additional parents liquids capacity.
We've talked about the feedstocks a lot. But what about the production, I mean, sustainable aviation fuel at the moment, is more expensive than conventional jet fuel up to what point? Is this because of the production process? Up to which point this is due to scale? Basically, we're here in a chicken and egg situation where, because there's still a small scale, production costs are higher, and then in turn makes it less attractive to produce it. And we are kind of in a sort of a vicious circle. How much is due to the intrinsic difficulty of producing these fuels and how hopeful you are that the production process is going to basically evolve in a direction that would bring these costs down in the near future.
Yeah, so I would agree with you. It's definitely a chicken and egg situation where the higher cost means less demand, which means less investment, which means higher cost. So we're definitely in that situation, different production technologies have a different balance in terms of what's driving the cost. So some technology is more aligned on a larger portion of the cost driven by the feedstock or materials, compared with municipal solid waste based where you've got a much higher capital investment upfront, and a much higher investment for lower production capacity. But then your ongoing raw material costs are potentially close to zero. I think when you go to power to liquids, then actually, yes, you've got actually raw materials in the form of renewable power, which right now is more costly. And therefore, that needs to definitely also come down. So the different methodologies have a different balance between capital cost and operational cost and raw material cost. I'm sure that over time, the costs can be brought down. But now we're looking at the fossil fuel prices at any time, over the last year, we've looked at prices for SAF, which is somewhere between three and five times that of fossil jet fuel. Do I think that will come down over time? Yes, it depends a little bit on what the fossil jet fuel prices are, of course, but you know, the future technologies are higher cost, but they probably have more opportunity to reduce their costs over time. As we get more experienced, we should not assume that by pursuing these technology production technologies, we can necessarily get lower cost and not known as, and maybe there may be less volatility, it depends a bit on which production method you're employing. But I think there's certainly going to be a huge investment, a huge investment to get the production capacity ultimately, and the cost down. And this is where policy and incentives can be so important in helping drive the level of demand or stimulate the level of demand, which will help encourage the investment to be made to scale up. And whether you take the incentives approach, which is largely the approach in the US or in some European markets, or you move towards the mandated model, which some European markets have now adopted, where a certain proportion of fuel has to be renewable. And that's by the way in Europe, an approach which is successful for road fuel. So it looks like with the EU 50-55 policy package that that's the pathway that is going to be adopted in the European Union indeed, it looks like it is probably going down a similar pathway. The key is that we encourage a level of demand, which helps drive the investment to grow supply.
I wanted to ask you about this because the refill document published by the European Union sets up these percentages, these goals mentioned as well that over 100 new plants will need to be built in order to supply this market in the coming couple of decades. But there is little about who's going to build those plants where the capital is going to come from. And my question here is, there are those goals, what's gonna be the trigger for the financial and industry players to take action and go from from words to action and allocate the capital there? I guess, one thing we are seeing now in the market is large corporates, for example, that have large travel budgets, that have sustainability programs, and are committing now to paying for sustainable aviation fuel. Is that enough of an incentive for the industry to invest? Is there sort of, let's say, public commitment, or public goal setting enough to invest in more production capacity? What are normally the drivers in these types of cases where the government sets a goal, which can be rather abstract, but then yeah, there's some way to go to meet it.
Yeah, well, I think that the government has got a role to play here and setting goals as you say and in Europe, let's see where the current discussions end up, but certainly a 5% goal. So 5% of all aviation fuel, should be SAF by 2030. I know many member states have goals of 30% of all aviation fuel being SAF by 2030. If that becomes an obligation like on the renewable alike on the road transport fuel side, then the suppliers have to make it available. The cost is borne by the end user, be they a private consumer or a corporate consumer. So it does come at an extra cost. But if you do it this way, it's a level playing field. There's no competitive distortion. Certainly, if you've got a similar level across a region such as the European Union, and it helps drive a glider framework which companies can then make investment decisions. In the US, the philosophy is one of providing incentives, that the end result is the same if it becomes competitive with fossil fuel after taking into account the incentives, and it will help drive demand, even if it's as a result of a mandate. On the road transportation side. Although who knows with the Biden administration, we're seeing potentially the possibility of a mandate for SAF as well.
We have seen lots of activity in the US so far. And on the industry side, actually, yesterday, we got United Airlines as well committing to sustainable aviation fuel purchases. I don't know what the situation is in other markets: in China, in India, Brazil, what's the view in those markets?
We see emerging interest, we at Neste have supplied sustained aviation fuel in Japan. And we're hopeful we'll be supplying it into other markets in the future. You're seeing one or two countries like New Zealand and Australia talk about policy and a mandate. In the case of New Zealand there is a consultation process on the way. So we're seeing, I would say, the start of policy discussions. I think they're much more well developed in Europe and North America. And I'm sure the other regions will follow as well. But just like to also mention something you referred to earlier. It's not just about policy setting a certain mandate level or a certain level of incentive. We are now seeing voluntary additional demand for staff to reduce emissions, from corporates and to a degree from the private consumer. There are a few programs out there where consumers learn, such as ourselves when we travel for private leisure purposes, that we can effectively pay the extra. So that SAF is used for the carbon emissions for our trip. And that's something that now companies understand, the compensation program. And you know, you're now seeing that deployed at a greater scale with corporates. So whether it's BCG, Microsoft, Google or whoever, as part of their company philosophy and environmental and sustainability goals, they want to reduce the so-called scope three carbon emissions, when they're traveling and basically pay for SAF in order to ensure that they are zero or close to zero net emissions. And also on the cargo side. Once again, it's ultimately driven by the end consumer, there are companies that believe in reducing the emissions associated with the production of their offer. Shippers willing to pay for SAF to be used. So those are all voluntary additional sources of funding, the demand grows.
Just to explain to those listening that may not be familiar with this type of programs. Actually, we mentioned it in another podcast I did recently with Maria Fiskerud, a Nordic expert. We were talking about how in Sweden there are some similar initiatives. So basically, people booking a flight would have the chance to basically pay a bit extra during the booking process, just as when people do offsets, for example, but in this case, instead of an offset, it would be paying extra to cover the extra costs of sustainable aviation fuel. That means not necessarily that the fuel in that particular flight they're taking will be sustainable fuel, but that overall they are bringing sustainable aviation fuel into the system, by helping cover this price differential. So that's something that many airlines now are implementing. I think British Airways, just a few days ago announced their launch of its own sustainable aviation fuel voluntary purchase program. You mentioned Lufthansa has the same thing as well. So it's becoming more and more general.
Yeah. And I would just like to say that we've heard how cost is the challenging issue for SAF right now. And we all get that the airlines can't simply pay the extra cost, and expect to stay financially viable. But if we put it in terms of what it costs for the end customer. And there was a study done in an independent study from the Finnish government, I think it was at the end of last year, which looked at what the actual cost was. So for a European flight, if you had 10% of all the fuel being SAF, it increases the cost less than $10. So less than $1 for every percent SAF. For longer haul, it's slightly more, but it's less than 4 or $5. So on the one hand, yes, it's an extra cost for the airlines. But on the other, if you translate into what it means to the end customer, isn't I think we need to leave it to the audience, the side effects are a reasonable cost.
At the moment SAF is available at only a limited number of airports, so limited that I think I saw a map it was online the other day, I don't remember the source. I'll check it out and I will try to post a link in the show notes, but actually you can count the number of airports where stuff is available now on a normal basis, basically with your fingers, because there are not that many places where you can source it. What are the prospects for the rollout of a proper distribution network downstream? We have talked about the logistics of getting all the feedstocks to the plants…how many more plans are going to have to be built, many of them in new locations because they are going to be maybe closer to the source of feedstock or closer to the markets? What about downstream distribution? Where is this blending taking place? What is the sort of infrastructure You would need to have in place for pretty much every flight having a percentage of sustainable aviation fuel on board.
I think Eurocontrol has done some analysis on this, I think it's 30 or 40 locations that have had SAF, but maybe not on a regular ongoing basis in Europe, but either way, we need to make it available in more locations. It is now available in a number of locations and certainly, that will increase over the next year. We, at Neste are making it available to other established oil companies, aviation fuel marketers, because we recognize that not all airports are open access. So you have to own shareholding in the established infrastructure at the airports and they are willing to work with those established distributors, because our interest is about growing the market and making it available to the market. Fundamentally, you were saying, well, what level of infrastructure investments are going to be required to make this available? I would say we will need some storage and blending infrastructure. And we obviously need the production facilities, the production plants, but the distribution network doesn't need to be dramatically changed. Because once it's blended, it can go just like any other jet fuel, down the pipe, on a vessel, in a truck or on a train. It doesn't need new infrastructure. There's a lot of uncertainty and everybody's safety conscious, and rightly so. But actually, it doesn't need any new infrastructure.
One of the things I realized is when you read about new, sustainable aviation fuel being made available in some new airport Neste came up with very often. The company is actually sending a press release after another one. So I just wanted to ask you about the story of how Neste chose to become a pioneer in this field. It seems that at least in Europe, you are one of the few suppliers or one of the major suppliers of sustainable aviation fuel. I read that you also have some production facilities in the making in the Netherlands in Rotterdam. You have a plant in Singapore as well that I don’t know if it's already active or not yet, but it seems that Nestle has made a strategic choice of being a sort of the major player in this field. And I wanted to ask you specifically about your projects in this area. What can we expect in the next few years?
Yeah, Neste is a leader in Europe and is also one of the major suppliers in North America. Neste produces today about 3 million tonnes per annum of renewable fuel.
But that's not not only not only for aviation…
So that 3 million tonnes that we're producing today is predominantly renewable diesel. Our production capacity today for SAF is about 100,000 tonnes. We are investing right now as you correctly said in Singapore and in Rotterdam. So from 2023 our production capacity for SAF will increase from 100,000 tonnes to 1.5 million tons.
May I ask you, these 100,000 tonnes where do they produce them now, in Finland, or somewhere else?
100,000 tonnes that we make currently are produced, to start with, in our refinery in Finland, we then blend it and store it in the Rotterdam area and then make it available by all the logistics methods to the European market. And so those 100,000 tonnes are going to grow to 1.5 million tonnes and we project, and indeed the clean skies for tomorrow analysis also indicated, that by 2025, roughly 8 million tons worth of sustainable aviation fuel capacity could be available. So we necessarily envisage remaining a major player, 1.5 million tonnes is what we will have available in 2023. So our production capacity of renewable fuels will grow from 3 million to 4.5 million tons and then above. We're looking at additional current investments, both using this HEFA base technology, as well as also looking at the longer term at some of the other production technologies that we spoke about earlier. So, you know, the message is that we need to invest a lot, we need to grow the production capacity, we certainly envisage being a major player going forward as well.
So just making sense of all these numbers, at the moment you're producing 100,000. So that in two years is going to jump to 1.5 million. So from 1.5 million tons in 2023. You said you plan to jump to 4.5?
Sorry. What I was saying was that Neste currently has 3 million tons worth of renewable fuel capacity, and we will go into 4.5.
Okay, understood.
So what you're seeing is the growth in SAF production capacity from 100,000 to 1.5. Million, that's by 2023. And then I would say, we have announced the intention to also invest in another, I'll call it, world scale plants, which we will make a final investment decision on in the next year. So that's already demonstrating we're not stopping there. Our intention is to continue to grow the renewable fuels capacity, both for road transportation as well as for aviation.
Okay. And just, as you mentioned, to put in context, by 2025, the global production capacity of sustainable aviation fuel, it's going to be 8 million tonnes. Right?
If you look at the World Economic Forum, clean skies for tomorrow for the end of last year, that was their view. It could be less, but you know, it could be as much as 8 million tonnes in 2025. So I mean, I think that that shows, 8 million tonnes would be probably about 5% of global aviation fuel demand, assuming we recovered from COVID. Yeah, just a bit more than 5%. Probably. And I think that's probably the best case. But we, Neste, certainly are investing. And, you know, we're not the only ones. So, you know, there have been a number of enhancements in North America through other players, looking at half the capacity in Europe as well.
And quite interesting that we have seen measures by the airlines as well. Investing, in some cases in more than one project, like British Airways, for example, is invested in a couple of different projects using different processes. And with a different geographical footprint as well, because they are investing in the US and in the UK. You will also see some players investing in Europe. KLM is also a partner in a number of projects. So yeah, and synthetic fuels as well. There are some projects that have airlines and even airports, because we had here on the podcast, a Swiss company called Synhelion that has Zurich Airport as a partner as well. So it's quite interesting how all the other different aviation players are kind of getting involved in this production, this development of production capacity. Right. So then we are aiming at around 5%, something like around 5% is what we expected around 2025. 5% of the total jet fuel market, considering there are no sudden changes in market conditions, like the ones we've seen this last couple of years. And then you are opening the Rotterdam and Singapore facilities soon as well.
Right.
Do you have a date for those to come on stream?
Well, in what has been communicated publicly, Rotterdam and Singapore will be coming on stream in early 2023. And the Rotterdam investments will be completed in the latter part of 2023.
Okay. Well, I think we cover lots of ground. Lots of interesting stuff is happening in this industry. For people that want to learn more about the work you do at Neste, and overall the sustainable aviation fuel landscape. What resources would you recommend, websites, social media channels, other information resources that might be informative about this space?
Yeah, well, besides LinkedIn, and all those sources of information, there's been a number of reports generated over the last 12 months to help inform, which I think are really valuable in informing the debate. I've referred to the World Economic Forum and the reports they've produced at the end of last year and this year was analysis of what they believe is possible from a feedstock and a production point of view, and how that plays into then what policy options are our I know, that was the ATAG report at the end of last year, which looked to 2050 at what was possible. And I in my mind, that was built on work that actually was done over 10 years, and showing how staff can do different kinds of SAF and SAF is one part of the solution alongside different aircraft technologies and operational efficiencies. And then the other report is the, I think, Airlines for Europe and ACI issued a report that I forgot the name of, but that was also I think, valuable.
I will look for it and if I can find the link, I'll post it in the show notes as well
There's no silver bullet, there's not trying to fixate on one technology on onset. We need to work on this together. And I think what you were saying earlier, the industry is collaborating together, which is going to be a positive
Indeed. Well, Jonathan, it's been very, very interesting to get this great overview of this industry, this growing segment of the energy industry and of the aviation industry as well. Now, it's pretty much every week, we're seeing an announcement about sustainable aviation fuel. But if we are to get to those very ambitious goals set up by the European Union and possibly by other governments, in the near future, definitely, there's going to have to be some serious expansion of production capacity. So thank you very much, Jonathan, for your time today. And hopefully speak soon when all those new plans and new projects come on stream!
Yeah!
A pleasure. Take care.