Page 14 - PARIS AIRSHOW 2023 INSIGHT | GBP

Q Sustainable Aviation Fuel is significantly Royce. How essential are such collaborations with industry to
more expensive than conventional jet fuel. promote production and use of SAF?
Do you think that is keeping more airlines
away from using SAF? SAF is a drop-in fuel which means it can be used in existing
aircraft engines and fuel infrastructure. But currently, it can
In general, SAF is 3 – 5 times more expensive only be blended up to 50 percent with conventional jet fuel.
than conventional jet fuel; fuel is a major cost Collaborations with OEMs are crucial to get to 100 percent SAF
factor for airlines, which are still recovering certification and to promote the production and use of SAF.
from the pandemic so this might be a factor.
Policies like incentives in some markets could Neste is doing exactly that with partners like Airbus, Boeing, Rolls
help reduce the cost difference and stimulate Royce, Safran, Bell and others, not only researching 100 percent
SAF use. SAF usage but also showing it can be safely used 100 percent by
supporting 100 percent SAF test flights.
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 Q The International Air Transport Association (IATA) wants
rather ‘What will it cost if we don’t use SAF?’ governments to introduce incentives to increase SAF produc-
tion. Do you foresee more countries following the example set
To put it into perspective, in the coming years by countries such as the U.S. and providing incentives?
the cost impact of using SAF on a ticket will
not be more than the cost of a coffee and Governmental policy support in the form of mandates or incen-
sandwich at the airport. tives is crucial to create the demand certainty needed to attract
the investments into new production capacity, as building new
refineries is highly capital intensive.

Q How many tons of SAF does Neste hope We do see concrete developments in Europe and North America
to produce by 2030? where supporting policies are in place or under development.
Policy support in the Asia Pacific region is currently lagging
Neste is the world’s leading producer of behind although we also see positive developments in terms
sustainable aviation fuel with a current pro- of policy development and voluntary markets. New Zealand is
duction capability of 1 million tons per annum. looking to set a minimum regulatory requirement for SAF use by
After the finalization of the Rotterdam refinery 2025 while in Japan, the Government has set a target of 10 per-
expansion, our annual SAF production capa- cent SAF use by 2030. Singapore will publish its Sustainable Air
bility will grow to 2.2 million tons by 2026. No Hub Blueprint this year, spelling out its targets and initiatives for
further production capability expansion plans decarbonizing aviation. As part of that work, Singapore is explor-
have been announced, but we are looking at ing the possibility of developing a structural offtake mechanism,
possible projects beyond 2026. or a mandate, to create long-term demand for SAF.

Q Do you think the industry goal of pro-
ducing 30 billion liters of SAF by 2030 is Q In your opinion, how long would it take for SAF production
achievable? to ramp up enough for price to go down?

The 30 billion liters would roughly equate to Over time and as the industry scales up production of SAF, the
24 million tons of SAF. Given Neste will be cost of SAF could benefit from economies of scale in its produc-
able to cover around 10 percent of that target tion, and learning benefits as we get smarter at how to make it.
alone by 2026 and there are many other proj- Conversely, if the cost of carbon increases over time, the total
ects in progress or in planning, we are on a cost of fossil fuel will go up. These forces could cause the cost
good track towards that target. We should of SAF and fossil jet fuel to converge over time and as men-
do everything in our power to achieve this tioned policy support, like incentives, could help reduce the cost
intermediate goal as we simply don’t have difference.
the luxury to wait any longer.
We need to accept that decarbonisation comes at a cost. We
should not be comparing the price of SAF with the price of fossil
fuel. We need to think about the challenge we face as the cost
Q Neste has signed SAF partnerships with of adding carbon to the atmosphere and the associated climate
OEMs such as Airbus, Boeing and Rolls change impacts are huge.

14 | PARIS AIRSHOW 2023 INSIGHT ∙ JUNE 2023 WWW.GBP.COM.SG