The recent opening of the expansion of its Singapore refinery saw sustainable aviation fuel (SAF) producer Neste’s SAF production capability increase ten-fold from 100,000 tons per annum in 2022 to 1 million tons per annum.

With ongoing investments to its Rotterdam, The Netherlands refinery, the world’s leading producer of SAF will increase its production capability to 1.5 million tons per annum in the beginning of 2024 and 2.2 million tons by 2026, says Jonathan Wood, Vice President Commercial and Technical Management at Neste’s Renewable Aviation business unit.

In 2019, SAF accounted for just 0.1% of all jet fuel used worldwide. How much have things changed since then?

IATA estimates that in 2022, about 300 million liters of SAF was produced. This includes Neste’s SAF production capacity of 125 million liters (100,000 tons) per annum. This is an increase in production, but the reality is that we still have a long way to go, and we need the whole industry, including airlines, airports, OEMs, fuel producers and governments, to accelerate SAF production.

What is Neste doing to popularize the use of SAF among airlines?

Neste has been supplying SAF to more than 50 airlines and is continuing to increase awareness and availability of SAF and its potential to reduce carbon emissions. It is a positive development that more and more airlines are starting to use SAF or even integrate SAF into their sustainability commitments, for example committing to 10% SAF usage by 2030. Neste is supporting this by ramping-up our SAF production capability.

Also, corporates can play a role in accelerating SAF use by purchasing SAF to reduce the emissions from their business travel. Neste is, for example, raising awareness in that segment through advertising campaigns at major international airports, like Los Angeles, Singapore Changi and Amsterdam Schiphol.

How does the Asia Pacific region compare with other regions in terms of SAF use by airlines? What are some of the notable partnerships that Neste has signed with carriers in the region?

The demand for SAF is accelerating globally as well as in the Asia Pacific region. We see increasing demand for SAF from both Asia Pacific based and global airlines, as well as corporates who are looking for opportunities to reduce the emissions of their business travel or air freight by using SAF.

Our SAF has been used in the Asia Pacific region since October 2020. Examples include: The first delivery of SAF was to ANA of Japan in collaboration with ITOCHU Corporation in October 2020. In February 2022, Neste expanded the collaboration with ITOCHU and we delivered Neste’s SAF at the Haneda and Narita airports to both domestic and visiting carriers, such as Japan Airlines and Etihad.

Other examples are customers such as Singapore Airlines at the Singapore Changi airport, Nippon Cargo (supplied at Amsterdam Schiphol airport), Air New Zealand at the Auckland Airport, and Malaysia Airlines at the Kuala Lumpur International Airport.

There was a 200% increase in SAF production in 2022, compared to the production of 100 million liters in 2021. But it still wasn’t enough to meet demand. When do you see supply meeting demand?

As mentioned above, this is an increase in production, but the reality is that we still have a long way to go and we need the whole industry, including airlines, airports, OEMs, fuel producers and governments, to accelerate SAF production. It is difficult to look into the future, but we see encouraging developments across the globe with production ramp-up, policy support and airlines and corporates using SAF to reduce their emissions.

Sustainable Aviation Fuel is significantly more expensive than conventional jet fuel. Do you think that is keeping more airlines away from using it?

In general, SAF is 3 – 5 times more expensive than conventional jet fuel; fuel is a major cost factor for airlines, which are still recovering from the pandemic so this might be a factor. Policies like incentives in some markets could help reduce the cost difference and stimulate SAF use.

However, there is a big difference as the cost of carbon and climate impact is not included in the price of fossil jet fuel. So, the question should not be ‘What does SAF cost?’ but rather ‘What will it cost if we don’t use SAF?’ To put it into perspective, in the coming years the cost impact of using SAF on a ticket will not be more than the cost of a coffee and sandwich at the airport.

How many tons of SAF does Neste hope to produce by 2030?

Neste is the world’s leading producer of sustainable aviation fuel with a current production capability of 1 million tons per annum. After the finalization of the Rotterdam refinery expansion, our annual SAF production capability will grow to 2.2 million tons by 2026. No further production capability expansion plans have been announced, but we are looking at possible projects beyond 2026.

Do you think the industry goal of producing 30 billion liters of SAF by 2030 is achievable?

The 30 billion liters would roughly equate to 24 million tons of SAF. Given Neste will be able to cover around 10% of that target alone by 2026 and there are many other projects in progress or in planning, we are on a good track towards that target. We should do everything in our power to achieve this intermediate goal as we simply don’t have the luxury to wait any longer.

Neste has signed SAF partnerships with companies such as Airbus and Rolls Royce. How essential are such collaborations with industry to promote production and use of SAF?

SAF is a drop-in fuel which means it can be used in existing aircraft engines and fuel infrastructure. But currently, it can only be blended up to 50% with conventional jet fuel. Collaborations with OEMs are crucial to get to 100% SAF certification and to promote the production and use of SAF.

Neste is doing exactly that with partners like Airbus, Boeing, Rolls Royce, Safran, Bell and others, not only researching 100% SAF usage but also showing it can be safely used 100% by supporting 100% SAF test flights.

The International Air Transport Association (IATA) wants governments to introduce incentives to increase SAF production. Do you foresee more countries following the example set by countries such as the U.S. and providing incentives?

Governmental policy support in the form of mandates or incentives is crucial to create the demand certainty needed to attract the investments into new production capacity, as building new refineries is highly capital intensive.

We do see concrete developments in Europe and North America where supporting policies are in place or under development. Policy support in the Asia Pacific region is currently lagging behind although we also see positive developments in terms of policy development and voluntary markets. New Zealand is looking to set a minimum regulatory requirement for SAF use by 2025 while in Japan, the Government has set a target of 10% SAF use by 2030.

Singapore will publish its Sustainable Air Hub Blueprint this year, spelling out its targets and initiatives for decarbonizing aviation. As part of that work, Singapore is exploring the possibility of developing a structural offtake mechanism, or a mandate, to create long-term demand for SAF.

In your opinion, how long would it take for SAF production to ramp up enough for price to go down?

Over time and as the industry scales up production of SAF, the cost of SAF could benefit from economies of scale in its production, and learning benefits as we get smarter at how to make it. Conversely, if the cost of carbon increases over time, the total cost of fossil fuel will go up. These forces could cause the cost of SAF and fossil jet fuel to converge over time and as mentioned policy support, like incentives, could help reduce the cost difference.

We need to accept that decarbonisation comes at a cost. Comparing the price of SAF with the price of fossil fuel is not right. We need to think about the challenge we face as the cost of adding carbon to the atmosphere and the associated climate change impacts are huge.