International Finance asked Thomas Engelmann, Head of Energy Transition at KGAL Investment Management GmbH & Co., regarding what should be the ideal implementation roadmap for “ReFuelEU Aviation.” Engelmann-led KGAL invests in energy transition-related projects and companies working in the domain. Thomas also acts as Managing Director for PtX Development Fund, the Power-to-X GmbH.

Previously, he was Global Head of Transaction and Investment Management, Infrastructure Equity, at Allianz Global Investors GmbH. Between 2008 and 2013, he worked for KGAL as Senior Director in the Renewable Energies and Infrastructure department, helping to build up the Renewable Energies portfolio. Engelmann gained his in-depth industry experience through various global senior management positions at Siemens AG and Siemens Financial Services (SFS).

He has held leadership positions in corporate M&A, as commercial director of industrial power plants, and as senior investment director, which show his significant know-how in technology-driven sustainable impact investments. He holds a Master’s in Business Administration and was a member of the Siemens Technical Graduate Programme. He is also a qualified Chartered Financial Analyst (CFA) and a Chartered Alternative Investment Analyst (CAIA).

Synthetic sustainable aviation fuel is in the spotlight as European airlines prepare to challenge the EU’s 6% usage mandate by 2030. What is your view on this?

Understandably, airlines are concerned about costs and competitiveness. But the direction of travel is clear: decarbonising aviation requires scaling sustainable fuels, and some of the cost will ultimately be reflected in ticket prices.

Against geopolitical uncertainty and accelerating climate impacts, the EU’s 2030 targets are a key part of improving both climate performance and energy resilience. ReFuelEU provides a predictable timeline — what matters now is execution across the value chain.

European carriers may face penalties by the end of 2026 for missing emission targets. With the sector already under strain from the Middle East crisis, will this EU rule add further pressure?

ReFuelEU places the formal compliance obligation primarily on fuel suppliers: if blending requirements are not met, penalties apply at that level. Airlines buy the blended fuel, so the impact is mainly through fuel prices.

The practical way to reduce pressure is to lock in supply early. Long-term offtake agreements between fuel suppliers and SAF/e-SAF producers help bring projects to financial close, scale production, and avoid penalties and volatility.

In December 2025, IATA projected just 2.4 million metric tonnes of SAF availability in 2026, about 0.8% of total aviation fuel demand. Is the 2030 target realistic given this slow growth?

For conventional, biogenic SAF, the ramp-up is feasible because the pathways are proven and projects are already delivering volumes, especially from waste-based feedstocks.

The tougher part is e-SAF (synthetic fuels). Those projects are capital-intensive and typically need long-term purchase commitments to secure financing. If the industry converts the mandate into bankable offtake contracts now, the 2030 target is achievable. If not, supply will remain constrained.

The EU began phasing out free carbon permits for airlines in 2025. Will this make the transition to SAF significantly more expensive for carriers?

Phasing out free allowances will make carbon costs more visible, and part of that will be reflected in fares. That said, the transition to lower-carbon fuels cannot be postponed if aviation wants to deliver real CO2 reductions this decade.

As a rough order of magnitude, meeting the 2030 blending targets could add around €20 to a typical return ticket, with variation by route and fare type. For very low fares, the percentage impact can look larger — but delaying action risks higher costs and a more abrupt adjustment later.

Aviation also has an important advantage: meaningful emission reductions are possible through fuel switching without waiting for a full fleet renewal. Other industries must invest in parallel into the production progress (e.g. green steel production facilities).

SAF is central to aviation’s 2050 decarbonisation goals, yet production remains limited. What key factors are holding back supply?

The bottleneck is not the mandate — it’s the speed at which long-term offtake agreements are signed. Those contracts are what unlock financing and investment in new production capacity, especially for e-SAF.

Biogenic SAF can scale where sustainable waste feedstocks are available at a competitive cost. e-SAF needs new, capital-intensive plants and typically requires 10-year purchase commitments to reach financial close.

In short: stable policy plus bankable contracts equal new supply. Without contracts, projects slip, and volumes for 2030 remain out of reach. The prices per tonne can only go down, if scale effects are kicking in.

IATA has criticised the EU’s SAF mandate as costly and constrained by limited regional availability. Should the EU reconsider its 2030 target?

In my view, the EU should keep the 2030 target stable. Changing the rules now would undermine confidence and slow investment just as the market is starting to scale.

Today’s aircraft can already use blended fuels. SAF is one of the fastest routes to near-term CO2 reductions in aviation. Europe also has strong strategic reasons to build domestic e-SAF capacity and reduce dependency.

The priority is execution: convert mandated demand into long-term purchase commitments, bring projects to financial close, and build supply.

A 2025 Boston Consulting Group report found that airlines are allocating only 1% to 3% of their budgets to SAF. How much more investment is needed to scale up effectively?

Most of the investment need is upstream — in new SAF and especially e-SAF production capacity — rather than on airline balance sheets. Airlines will mainly feel the effect through fuel prices and supply contracts.

To give an illustration, meeting the 2030 e-SAF ramp-up in Europe likely requires multi-billion-euro annual fuel purchase commitments and double-digit billions in capital investment for new plants. The exact numbers depend on technology, electricity prices, and project location.

What turns those figures from “aspirations” into steel in the ground is straightforward: long-term, bankable offtake agreements.

What about claims by airlines that fuel producers are inflating SAF prices while failing to scale supply?

In the short term, prices are being shaped by tight supply, regulatory uncertainty, and high financing costs for new projects. The real question is whether higher prices are accompanied by measurable progress in contracted volumes and delivered supply.

To reduce both costs and volatility, the market needs transparency and long-term contracts that enable producers to invest. Clear certification and reporting also help ensure that SAF premiums are linked to verified blending and emissions reductions.

Willie Walsh, the Director-General of the IATA, has argued that transporting SAF to Europe could increase its overall carbon footprint. Do you agree with this concern?

Transport emissions matter and should be reflected transparently in lifecycle accounting. But that does not automatically argue against imports — it argues for smart supply chains and robust sustainability criteria.

At the same time, Europe should scale domestic SAF and e-SAF capacity wherever feasible. Otherwise, it risks trading one dependency for another. One- third of SAF and e-SAF production in Europe should be feasible.

To meet the 2030 target, should stakeholders, including the EU, IATA, and airlines, collaborate on a revised and unified roadmap?

Stakeholders should align on implementation—but within a stable policy framework. Reopening the mandate would create uncertainty and likely slow investment in a market that still needs scale.

The most useful “roadmap” is practical: long-term contracting, clear certification and reporting, infrastructure readiness, and mechanisms that accelerate bankable e-SAF projects. If we want supply to grow, we need to turn targets into purchase commitments that projects can finance against.

Done well, this is not only a climate policy — it is also an industrial and energy resilience opportunity for Europe.

The post Clean flight needs fuel scale: Thomas Engelmann appeared first on International Finance.

Trade group Airlines for Europe (A4E) has taken an adversarial stand against the SAF norms. Calling eSAF a ’nascent technology,’ A4E said projects would only produce 0.7% of volumes needed to meet the climate targets set by EU for the industry.

The use of eSAF falls under the “ReFuelEU Aviation” initiative, that sets requirements for aviation fuel suppliers to gradually increase the share of SAF blended into the conventional aviation fuel supplied at EU airports. The rule made it mandatory for regional airports to have 2% SAF in their overall fuel mix, a ratio which must rise to ⁠6% in 2030. By 2050, every European airport should have 70% SAF in their fuel mix.

Hurdles to eSAF

As per the aviation industry, the supply of synthetic jet fuel is not abundant, and the planned production facilities won’t come online any time soon to meet the mandate.

While cooking ⁠oil and animal waste have been the preferable raw materials for the fuel, the resultant SAF costs three to five times more than traditional jet fuel, while making up a paltry 0.3% of global jet fuel supply. The synthetic version (eSAF) is made from renewable energy sources, like captured carbon dioxide or green hydrogen, which too are expensive.

Another vocal critic has been the European Regions Airline Association (ERA). In October 2025, ERA stated that the policy’s implementation would create structural disadvantages for smaller regional carriers. The association revealed that the SAF’s supply is massively concentrated at the major European aviation hubs, leaving smaller, regional airports without access, thereby exposing Europe’s most remote communities to rising costs, complex compliance burdens, and the risk of reduced connectivity.

Even the International Air Transport Association (IATA), the industry’s apex trade association, is not impressed by ’ReFuelEU Aviation’. Willie Walsh, the Director-General, publicly panned the policy, by stating, “SAF production growth fell short of expectations as poorly designed mandates stalled momentum in the fledgling SAF industry. If the objective is to increase SAF production to further the decarbonisation of aviation, then they need to learn from failure and work with the airline industry to design incentives that will work.”

“Fuel costs remains a key driver of airline profitability, accounting for roughly 30% of operating expenses. Any increase, whether linked to SAF or other factors, naturally draws close attention. The recent Iran crisis is a good illustration of how sensitive airlines are to fuel price fluctuations. A4E recently pointed out that scaling SAF successfully will require not just higher production volumes, but also lower production costs and thus lower prices. For the EU’s ambitions to materialise, attracting private investment will be essential, which in turn depends on clear and stable market conditions for project developers,” according to Catherine Galano, Executive Director at Frontier Economics, and Stefan Rohm, Senior Principal at Frontier Economics.

Free carbon permits effectively mean that using fossil fuels carries no additional cost. As these permits are phased out, the cost of inaction increases.

This changes the equation: the cost gap between fossil jet fuel and SAF narrows, which can support SAF uptake. Over time, rising carbon prices combined with more efficient SAF production could even make fossil fuels more expensive than their decarbonised alternatives.

That said, this does not fully address competitiveness concerns. Policy measures need to be designed as part of a coherent and consistent overall framework.

Dishing out the mathematics

As per the IATA’s updated estimates for Sustainable Aviation Fuel (SAF) production, in 2025, SAF output was expected to reach 1.9 million tonnes (2.4 billion litres), nearly double the 1 million tonnes produced in 2024. In 2026, production growth is projected to slow, reaching 2.4 million tonnes.

Despite this increase from the 2024 tally, SAF will account for only 0.6% of total jet fuel consumption in 2025, rising to 0.8% in 2026. At current prices, the SAF premium was estimated to add approximately $3.6 billion in fuel costs for the airline industry in 2025.

“Mandates in the EU and UK have failed to accelerate SAF production and adoption. In Europe, ReFuelEU Aviation has sharply increased costs amid limited SAF capacity and oligopolistic supply chains. Fuel suppliers have raised profit margins so that airlines pay up to five times the price of conventional jet fuel and double the market price of SAF, without guaranteeing supply or consistent documentation. In the UK, SAF mandates have also triggered price spikes, forcing airlines to absorb significant costs. In total, airlines paid a premium of $2.9 billion for the limited 1.9 million tonnes of SAF available in 2025,” according to the report.

“Competitiveness is a legitimate concern for European carriers, especially when compared with airlines based outside Europe. This is at the core of arguments that SAF rules risk creating an uneven playing field. That said, it is important to consider what alternative Net Zero policies may be and wider implications for the sector. We find that alternative narrative oftentimes rely on the reduction of demand as a decarbonisation lever, which would ultimately harm the entire sector, including passengers. From an economic perspective, incentives matter. Penalties can encourage faster investment in SAF, fleet renewal, or innovative business models. In that sense, they can also create an opportunity for European carriers to be trailblazers, as suggested in the Draghi report. This does not mean regulatory distortions disappear. There is still a strong case for funding mechanisms to support the SAF value chain and for continued R&D in aeronautics. These tools can help share risks and sustain competitiveness over the medium to long term,” according to Catherine Galano and Stefan Rohm of Frontier Economics.

“In the EU, a lack of financial support, specifically for more nascent technologies like those used to produce cellulosic SAF and e-fuels is limiting SAF supply. We call these nascent technology fuel pathways ’advanced SAF’. In a 2025 study, we find that lack of revenue certainty is the primary barrier for advanced SAF production coming online in the EU. High upfront capital costs and market uncertainties continue to delay final investment decisions,” Chelsea Baldino, Fuels Program Lead at The International Council on Clean Transportation, told while speaking with International Finance.

Airlines also have a role to play. In that respect, it is encouraging that A4E has not ultimately challenged the 6% mandate as strongly as initially feared. Walsh sees a SAF supply shortfall, and that, in his opinion, will force airlines to review their 2030 SAF commitments.

“Regrettably, many airlines that have committed to use 10% SAF by 2030 will be forced to re-evaluate these commitments. SAF is not being produced in sufficient amounts to enable these airlines to achieve their ambition. These commitments were made in good faith, but simply cannot be delivered,” he observed.

Walsh also said that transporting SAF to Europe could increase its overall carbon footprint.

On this, Catherine and Stefan told International Finance, “From an economic perspective, SAF should be produced where it is most cost-effective and abundant, considering the footprint of logistics as well as the decarbonisation performance of various fuel types. For instance, importing competitively priced eSAF with higher emissions reduction potential could, in some cases, deliver greater overall benefits than relying on alternatives such as HEFA produced locally.”

“That said, the carbon footprint of imports does support the case for developing a European SAF value chain. More broadly, energy sovereignty and security, highlighted by the Ukraine and Iran conflicts, also strengthen the argument for domestic production,” they remarked.

Also, EU is reportedly mulling over completely phasing out free carbon emissions allowances for the aviation sector, moving to full auctioning by 2026 to align with climate goals.

SAF production: A Bumpy Ride

A study from the International Council of Clean Transportation (ICCT), published in October 2025, found SAF costing between two to five times more than fossil jet fuel, with mechanisms like public and private investment and cost sharing being crucial for building a deep ecosystem, that will in turn make airlines’ green transition a budget-friendly one.

“Although SAF can be made from many different materials and conversion processes, all of them are currently costlier than fossil jet fuel. The European Union Aviation Safety Agency estimated that the average production cost of SAF in 2024 ranged from €1,461 per tonne (for biofuels) to €7,695 per tonne (for e-fuels). We calculate that this is a cost premium of 2.1–10.6x compared with fossil jet fuel by converting fossil jet production costs from the International Energy Agency, reported in US dollars per litre, into equivalent units,” according to the report.

“Meeting EU targets will require what could be described as an ‘investment shock’ to scale production capacity. Today’s SAF output, despite exceeding the EU’s 2% mandate in 2025, is largely based on biofuels such as HEFA, which face feedstock limitations and are unlikely to cover more than about 10% of global demand even under optimistic assumptions. Given the scale of investment needed, attracting private capital is critical. But investors need long-term visibility on demand and revenues. This is precisely what mandates and penalties are designed to provide. The current slow growth could mean that the signal from mandates is still too weak. But it may also reflect uncertainty about how firmly these policies will be enforced. This highlights the importance of regulatory stability, alongside targeted support mechanisms to improve project financeability,” Catherine and Stefan told the International Finance.

Investigating the reason behind SAF’s high price, ICCT found a correlation with high value of feedstocks that power the production. Virgin vegetable oil is more expensive than kerosene. Making waste-based SAF, on the other hand, with high cellulosic content is expensive due to inefficient supply chains for sourcing raw material and the enzymes needed to break down feedstocks into “’drop-in’” fuel.

eSAF requires high quantities of renewable electricity to produce renewable hydrogen (i.e., hydrogen produced via electrolysis using 100% renewable electricity) and extract diluted carbon dioxide from the atmosphere.

Then add the project mismanagement. As per ICCT, SAF projects take minimum five years to reach final investment decision (a critical stage during project development that indicates whether projects are ready to move forward to construction), and many projects fail before reaching this stage. The ratio of SAF projects reaching final investment decision, as per consulting group BCG, was at dismal 30% in 2025.

Noting that helping advanced SAF producers reach financial investment decision in the EU is an urgent priority for the bloc’s policymakers, Baldino remarked, “The EU’s Sustainable Transport Investment Plan (STIP) announced several measures the EU is taking to address economic issues. The Commission will launch pilot projects, including one that sets up a double-sided auction for e-SAF. This double-sided auction will establish a “’market intermediary’” that connects SAF suppliers and consumers, offering long-term contracts to provide revenue certainty to fuel producers as well as short-term contracts on the offtake side. The Commission also commits to assessing the feasibility of an EU-wide double auction to support both aviation and marine sustainable fuels. If designed and implemented quickly, such measures could provide the certainty needed to get today’s advanced SAF projects off the ground and accelerate progress toward fulfilling ReFuelEU SAF targets.”

While the ICCT study validated IAF’s apprehensions about SAF shortfall, Boston Consulting Group’s March 2026 estimates couldn’t promise a better future either.

The report, prepared after interviewing more than 500 executives at about 200 aviation-related companies, found that airlines and airports are investing only 1% to 3% of revenue or budget allocation to SAF, with high production costs and fuel prices remaining the major challenges to adoption.

“While SAF supply increased 1,150% worldwide over the last three years, announcements for new production facilities fell by 50% to 70% from 2022 to 2023, largely due to economic uncertainty, and higher energy and operating costs,” BCG stated, while projecting the fuel’s supply to fall 30% to 45% short of commercial aviation’s 2030 targets.

Giving their take on the BCG report, Catherine and Stefan said, “Airlines are only one part of the investment landscape. Aircraft and engine manufacturers, airport operators, and private investors are also contributing. Public funding – through EU instruments like the Hydrogen Bank or national programmes – already plays a role as well. Beyond reducing uncertainty, the key challenge is how to allocate risk efficiently across all these stakeholders. Incentives and risk-bearing capacities differ along the value chain. Airlines are central because they ultimately drive demand, but they are not the only actors that matter.”

All the studies had one thing common: they pointed out the massive cost of E-kerosene and other SAF raw materials.

Baldino answered, “There are several options for the EU to address these economic concerns. First, the ETS includes a mechanism where 20 million allowances from the ETS go towards reimbursing airlines to cover a percentage of the price gap between SAF and fossil fuels between 2024 and 2030. Assuming an EU-ETS price of 80 €/tCO2e, the total subsidy fund would come to €1.6 billion. However, given that the vast majority of SAF on the market is commercial Hydro processed Esthers and Fatty Acid (HEFA), and the programme only runs until 2030, it is likely that most, if not all, of this ETS funding will not help close the cost gap for advanced SAF. The ETS is currently under review, though, so the Commission has an opportunity to expand the SAF allowances programme and earmark some of the SAF allowances for advanced SAF pathways.”

EU presses ahead

Despite industry concerns, it seems that EU is in mood to slow down on its SAF game. It has already launched the “’eSAF Early Movers Coalition’,” bringing together member states that have committed to scaling up the fuel’s production. Austria, Finland, France, Germany, Luxembourg, Netherlands, Portugal and Spain have so far announced their participation, with the goal of mobilising at least €500 million ($580 million) for large-scale eSAF projects.

In December 2025, one of Europe’s leading SAF innovators, Metafuels, awarded construction firm McDermott a contract for its eSAF plant in Rotterdam. Metafuels will construct the plant at the Evos terminal in the Port of Rotterdam. It will utilise Metafuels’ high-yield methanol-to-jet technology, “’aerobrew’,” and serve as a blueprint for large-scale eSAF production across Europe.

Finnish venture Liquid Sun too launched what it claims is Europe’s eSAF pilot plant in Espoo. The unit will convert biogenic carbon dioxide and hydrogen produced with renewable electricity into synthetic crude oil, which will be then refined into eSAF.

Yes, the continent is scaling up its eSAF efforts. But, two questions remain: Will enough eSAF be available to each and every European airport by 2030? Will the green journey be budget-friendly for both airlines and the passengers?

The immediate priority for the EU will be to take the aviation sector stakeholders into confidence, and make sure that the journey to a carbon-free future remains on track.

The post SAF is new flashpoint between EU and airlines appeared first on International Finance.

Instead of cutting passenger journeys, the mentioned efficiency measures would be far more effective in ensuring an immediate 11% reduction in carbon footprint by using the most efficient aircraft that airlines already have more strategically on routes they already fly, rather than providing lip service to terms like sustainable fuels or carbon offsets.

The researchers analysed over 27 million commercial flights in 2023, covering 26,000 city pairs and nearly 3.5 billion passengers. The methodology revealed enormous variability in emissions efficiency, with some routes producing nearly 900 grams of CO₂ per kilometre for each paying passenger, almost 30 times higher than the most efficient, at around 30 grams of CO₂ per kilometre. Published in Nature Communications Earth & Environment, the study claims to be the first to assess the variation in flights’ operational efficiency around the world.

As aircraft become increasingly fuel-efficient, the amount of carbon dioxide per kilometre flown has been decreasing, but the increase in the number of flights has far outpaced this, leading to higher emissions that are contributing to the climate crisis. Aviation experts predict that by 2050, carbon dioxide emissions from aviation could double or even triple. The new analysis also revealed that more polluting flights were common from smaller airports in the United States and Australia, as well as in parts of Africa and the Middle East. In contrast, airports in India, Brazil, and Southeast Asia were dominated by less polluting flights.

Flights out of airports like Atlanta and New York were among the least efficient, nearly 50% worse than those at the most efficient airports, such as Abu Dhabi and Madrid. The UN aviation body, the International Civil Aviation Organisation (ICAO), is pinning its hopes on an “unambitious and problematic” offsetting scheme, known as CORSIA, to reduce emissions, but has not yet made any airline purchase a carbon credit.

In fact, Khaled Diab, the communications director at Carbon Market Watch, remarked, “No airline has yet been obliged to use a single carbon credit under the UN’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). And when they are, CMW research reveals the European Union’s Emissions Trading System (EU ETS) imposes a carbon price on aviation emissions that is 25 times higher. This clearly demonstrates that cap-and-trade systems are better for the climate and should be expanded.”

Prof Stefan Gössling at Linnaeus University in Sweden, who led the research, said, “We are currently stuck with a global situation where there is no hope that aviation will reduce its emissions.”

According to him, all-economy-seat planes, 95% flight occupancy, and using today’s most efficient aircraft could cut fuel use and therefore emissions by 50%-75%. It would also mean far less sustainable fuel would be needed to make flying nearly emissions-free in the future.

“I always thought air transport was already very efficient, and that is also what airlines like to tell people. But, in reality, it’s very inefficient because of three factors: using old aircraft, transporting people [in premium seats] with lots of space, and often having aircraft that are not fully loaded. In 2023, the average ‘load factor’, seat occupancy, was almost 80%,” Gössling added.

Crunching the details

The study also analysed the efficiency of 26,000 pairs of cities based on the amount of CO₂ emitted per kilometre per passenger, using data from 3.5 billion passengers who flew a total distance of 6.8 trillion km (145 trips to the sun, 577 million tonnes of CO₂ emissions, equivalent to the annual emissions of Germany).

The study found that US flights were 14% more polluting than the global average, China had efficiencies slightly above average, and the UK, the third-largest aviation polluter in the world, had efficiencies slightly below the 84.4g of CO₂ per passenger kilometre average.

The most efficient route was Milan, Italy, to Incheon Airport near Seoul, South Korea (31.6g CO₂/pkm). The least efficient route was in Papua New Guinea, with the second-worst from Ironwood Airport to Minneapolis/St Paul in the US (805g CO₂/pkm).

“While airlines often claim that fuel savings are in their own economic interest, the reality is that many airlines continue to fly with old aircraft, low load factors, or growing shares of premium-class seating,” the researchers noted.

“The most important factor was replacing premium seats with denser economy seating: First- and business-class passengers are responsible for more than three times the emissions of economy passengers, and up to 13 times more in the biggest premium cabins. Other policies that might encourage greater efficiency include softer policies like requiring airlines to disclose an efficiency rating for each route. You wouldn’t want to fly with an airline that is rated F. Market-based policies might include airports charging higher landing fees for more polluting aircraft, which also makes local communities’ air dirtier,” Gössling claimed.

While the efficiency gains that the study identified, such as replacing older, more polluting planes, would bring improvements, they would also confront the reality of an industry operating on low margins. However, Gössling argued that the sector was stuck in a business model that maximised passenger numbers to boost profit and that it could operate fewer, fuller flights with higher ticket prices.

He said that many flights are taken because they are so cheap, commenting, “We know that a lot of air transport demand is induced. If you increase the cost, people will just choose a different type of holiday.”

Facing the reality

The senior vice-president of sustainability at the International Air Transport Association, the trade association for the world’s airlines, Marie Owens Thomsen, told Reuters, “Airlines have a vested interest in reducing fuel burn and maximising load factors, but the order backlog for aircraft exceeds 5,000 planes due to supply-chain failures.”

She further added that real progress in reducing aviation emissions would come from the use of SAF, CORSIA, and the modernisation of air routes.

Aviation accounts for 3% of global greenhouse gas emissions. Still, flying is concentrated among wealthy passengers, with 1% of the world’s population responsible for 50% of aviation emissions, while only 10% of people fly at all in any one year, and 4% fly abroad.

An ICAO spokesperson said its analysis showed that operational improvements could account for 4%-11% of the carbon emission reductions required to achieve net zero, while factors such as cleaner fuel and innovative technologies will do the remainder.

Meanwhile, with the aviation sector racing to decarbonise, how much might the cost of a passenger ticket increase by 2050? Naomi Allen, Head of Research at RAeS (Royal Aeronautical Society), crunched the numbers to find out the reality.

Decarbonising aviation will make the sector more expensive and, therefore, ticket prices will rise, making flights less accessible to passengers. Assuming that 25% of the ticket cost is for fuel, by 2050, the industry will face another dilemma, like fuel cost, including the real value (CAF or SAF), along with the penalties due to non-compliance with the mandate and the cost of GGR (Greenhouse Gas Removal) for any remaining carbon emissions.

On the other hand, the University of Oxford report assumes that fuel (kerosene and SAF) costs and GGR costs are evenly distributed across tickets and are agnostic as to which flights use SAF or not. While the United Kingdom’s SAF mandate does not yet specify requirements for 2050, according to Allen, the industry has assumed that the requirement will be 70% of fuel being SAF, the same as the ReFuelEU mandate requirement.

“The average ERF of the SAF used is assumed to be 70%; this may be an underestimate for PtL SAF by 2050, but it is higher than the ERF typically seen for many other types of SAF at the current time. Assuming Net Zero for the sector in 2050, all net carbon emissions resulting from the fuel outside the mandate and the ERF of the SAF will have to be offset by GGR,” Allen told The Guardian.

The study also ignores inflation between now and 2050, assuming that the price of fossil-fuel-derived kerosene in 2050 will be $700/ton, although the actual price will depend on the pace of decarbonisation in other sectors. The report assumes that the supply of SAF is sufficient to meet demand up to the level of the SAF mandate and that the supply of GGR is unlimited. In reality, SAF and GGR may not be available to the aviation sector in the necessary quantities, as there will be competition for resources between other sectors and scaling constraints.

Greenhouse gas removals by 2050 are expected to be permanent. However, the estimated costs for these removals vary significantly. The World Economic Forum has stated that achieving a Direct Air Capture (DAC) cost of $150 per ton of CO₂ by 2050 is both necessary and feasible. In contrast, the recently published Independent Review of Greenhouse Gas Removals for the British government predicts that the costs for permanent removals in 2050 will be much higher. For the study, GGR prices of $100/ton and $600/ton are used; a midpoint of $350/ton CO₂ is used to capture the probable range due to alternative GGR methods and processes, and significant uncertainty. A midpoint of $350/ton CO₂ is used for some calculations.

It is anticipated that all decarbonisation will come from SAF and GGR, and that other decarbonisation options, such as electrification and hydrogen, will not have a significant impact on aviation emissions (either due to scalability or technology/infrastructure maturity) by 2050. Costs will be affected differently by other decarbonisation strategies. Moreover, the research found that, provided the price of SAF is about as expected or lower, and the cost of GGR is high, then meeting the SAF mandate will, on average, result in lower ticket prices than if Net Zero is achieved entirely through GGR.

On the other hand, if lower GGR costs are achieved, then meeting the SAF mandate is likely to raise ticket prices by 10%-15%. Note that this assumes that enough SAF will be available to meet the mandate, but it was also calculated that if the SAF mandate is not met, then non-compliance penalties could raise ticket prices by as much as 15% more, depending on the extent of the excess demand. The scenario is plausible, given doubts about the ability to scale up the supply of SAF.

The post Is cleaner aviation within reach? appeared first on International Finance.

Commercial aviation, shipping and automobile sectors emit over 9,100 million tonnes of CO2 on an annual basis. CAPHENIA’s operational principle is simple here: to play an active hand in reducing CO2 emissions from the concerned industries by offering renewable synthetic fuels at competitive prices.

“CAPHENIA follows nature’s example by making CO2 usable. Using a globally patented power and biogas to liquid (PBtL) process, CAPHENIA converts CO2 and biogas into renewable synthetic fuels. These fuels can power existing engines and engines, so no complex conversions or new infrastructure are required. The electricity required for the conversion process is generated from renewable energies, to whose fluctuating availability the CAPHENIA process can react flexibly,” the venture remarked.

What’s The Vision?

Achieving mobility and environmental protection through the usage of climate-neutral fuels. As per the company, the key lies in the CO2 cycle. If the CO2 required to produce synthetic fuels comes from CO2 recycling, the combustion of the fuels in aircraft and ships will become climate-neutral.

To fulfil its vision of “Climate-Neutral Mobility,” CAPHENIA’s game-changing tool is synthetic fuels that are particularly suitable for aviation and shipping. Since they have an extremely high energy density, they can be used to cover long distances. The fuels also play an important role in agriculture, transport and construction.

“Every year, over 3,900 billion litres of fossil fuels are used for global mobility. This results in emissions of over 9,100 million tons of CO2. In a world focused on sustainability, fossil fuels are being replaced by synthetic fuels, hydrogen and electricity from renewable energies,” the venture remarked further.

CAPHENIA’s synthetic fuels follow the ‘SAS’ formula: sustainable, affordable and scalable. We will talk about it in detail.

Knowing The Technology

At the core of CAPHENIA’s operational ecosystem, we have “Maximum Input Material Utilisation,” a technology where various process stages related to synthetic fuel production are carried out in a unique and patented three-in-one zone reactor. The reactor does not require any catalysts and achieves a selectivity of 100% thanks to the intelligent process design. And since no by-products are produced, there are no material or energy losses.

“The energy efficiency for producing the synthesis gas is 86%. If the synthesis gas is reused in Fischer-Tropsch fuel synthesis, an efficiency of 72% sets a new industry benchmark. In comparison, the classic power-to-liquid process achieves an efficiency of 40%. CAPHENIA’s Power and Biogas to Liquid process enables a CO2 reduction of 92%, an industrial record, using wind power,” the venture stated further.

Talking about the “CAPHENIA 3-in-1 Zone Reactor,” the mechanism has four working stages (or zones). Let’s start with the “Plasma Zone,” where at temperatures of around 2000°C, methane (CH4) is broken down into a carbon aerosol (C) and hydrogen (H2). Then comes the “Boudouard Zone,” where the carbon aerosol (C) gets combined with carbon dioxide (CO2) and converted to carbon monoxide (CO). The conversion is based on the well-known Boudouard reaction, which takes place at temperatures of around 1000°C. In this reaction, the high thermal energy of the gas from the plasma zone is used to the maximum and converted into chemical binding energy.

Next is the “HetWGS Zone” or the “Heterogeneous Water Gas Shift Zone,” where the remaining carbon aerosols (C) react with added water vapour (H2O) to form carbon monoxide (CO) and hydrogen (H2). The composition of the synthesis gas (CO + H2) can be flexibly controlled. The final stage is a process named “Synthesis Gas Converter,” which is also the starting material for a variety of CAPHENIA’s products.

“Synthetic fuels are not only climate-friendly, but also have a much higher degree of purity than fossil fuels. This means that their combustion produces significantly less sulphur dioxide and particulate matter,” the start-up continued further.

Conventional processes require many reactors and many units to produce synthesis gas. CAPHENIA zone reactor simplifies the whole process and makes it faster and more cost-effective, by using significantly less electricity. CAPHENIA can produce synthetic fuels quickly in large quantities thanks to its scalable reactor design. CAPHENIA uses biogas, CO2, water and electricity to produce synthesis gas, which serves as an intermediate product from which synthetic fuels or other chemical products can be manufactured.

In synthesis gas production, the CAPHENIA process achieves a record efficiency of 86%. The Synthetic fuels produced from the CAPHENIA’s operational ecosystem have a CO2 reduction of up to 92% compared to fossil fuels. This means that the CAPHENIA process comes closer to CO2 neutrality than any other fuel production route.

Solutions For Transportation Sector

Due to its energy efficiency, the railway has emerged as the climate-friendly mode of transport par excellence. However, CAPHENIA sees the sector to be even more environmentally friendly and attractive, by saying goodbye to fossil diesel.

While battery and hydrogen trains are merging as possible climate-friendly alternatives, purchasing them may not always be economical or sustainable for the operators. In freight and heavy goods transport, the performance of classic combustion engines cannot be dispensed with at all for the time being.

Therefore, climate-friendly alternatives to diesel operation are necessary. One of these alternatives is the renewable fuel HVO diesel (hydro-treated vegetable oil). Operating with HVO significantly reduces CO2 emissions and enables combustion engines to be operated in a climate-friendly manner without having to make extensive conversions. HVO has already established itself as one of the important bridging technologies in rail transport (Climate Diesel). Since its use, it has led to a saving of around 90% in CO2 emissions compared to fossil fuels and is therefore an important step towards sustainable mobility.

However, since HVO is made exclusively from used cooking oils and high-quality organic oils, it becomes difficult to obtain sufficient quantities of raw materials. CAPHENIA is offering a sustainable complement to HVO diesel by relying on CO2 recycling and biogas as raw materials, making the production volume of the start-up’s products like Sustainable Aviation Fuel (SAF) infinitely scalable. This solution is also coming in handy for the aviation industry, a sector which is currently facing the steep challenge of replacing large quantities of fossil fuels in a record quick time.

“The inevitable byproduct of SAF production is renewable diesel, which can be used as a climate-friendly alternative in rail transport, thus enabling maximum and immediate CO2 savings by using existing infrastructure,” the venture stated further.

Remaining committed to innovation and sustainability, CAPHENIA will build a pilot plant for the production of renewable fuels using the power and biogas-to-liquid process (PBtL) in Germany’s Höchst industrial park in the coming days. The chemical park offers an excellent infrastructure and supply of biogas and green electricity.

CAPHENIA’s PBtL technology has already impressed in research and achieved a record efficiency of 86% in synthesis gas production. The pilot plant will show that the PBtL process is also efficient and economically viable in practice.

“Due to its proximity to Frankfurt Airport and the local demand for SAF (Sustainable Aviation Fuel), our pilot plant will also play an important role in meeting this demand and thus make a valuable contribution to CO2 neutrality in air transport,” the start-up observed.

CAPHENIA In News

On June 28, 2024, CAPHENIA and German airline Condor reached an agreement on the future purchase of Sustainable Aviation Fuel (SAF). As a partner, Condor will support the further development of the process to market maturity and at the same time, has secured access to agreed purchase quantities as soon as production begins on an industrial scale, which will likely happen in 2027.

Continuing the momentum, CAPHENIA signed a letter of intent with the USA-based Emerging Fuels Technology, to integrate each other’s technologies for the production of SAF and renewable diesel. This collaboration combines CAPHENIA’s leading Plasma Boudouard Reactor (PBR) technology with EFT’s Fischer-Tropsch Technology Platform to significantly improve the efficiency and scalability of SAF production. The letter of intent also provides for CAPHENIA to acquire license rights to combine its syngas technology with EFT’s Technology Platform for multiple projects.

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As part of the initiative, the manufacturer will work with the Federal Aviation Administration and the United States Department of Transportation to sponsor a Small and Framework Grant (SAF) project by the APEC Transportation Working Group. The project will address various issues related to the industry’s development in the 21 APEC member economies.

According to Boeing, the programme will tackle the following issues: finding sustainable feedstocks for low-emission fuel; creating SAF policies and accounting procedures; and finding new routes, such as utilising current infrastructure and industries to speed up SAF manufacturing.

Chris Raymond, chief sustainability officer of Boeing, cited research demonstrating the critical role SAF plays in the sector’s net zero efforts: “To advance SAF, this programme strengthens the connections we have had for years with various nations.”

“With the goal of creating a safer and more sustainable aviation future, we will encourage cooperation and knowledge sharing among APEC economies,” the official stated further.

By participating in the programme, Boeing furthers its efforts to promote the global development of SAF, building upon research conducted with the Roundtable on Sustainable Biomaterials regarding the technology’s scaling in Southeast Asia, Ethiopia, South Africa, and Brazil.

In keeping with its pledge to guarantee that every aircraft it owns can handle 100% SAF by 2030, the airline has also joined the Aviation Initiative for Renewable Energy in Germany and collaborated with the APEC Secretariat to host regional webinars on SAF.

The effort, which was agreed by the various parties during the APEC annual meeting in San Francisco, aims to increase the industry’s usage of SAF, which is at 0.1% of the world’s jet fuel demand, by collaborating with some of the largest economies on the planet.

Others Chip In Too

Apart from Boeing, United Kingdom-based aviation giant Rolls-Royce has now achieved a milestone in the SAF front, as its ‘UltraFan’ technology demonstrator saw a successful run to its maximum power at the aerospace venture’s Derby facility.

“The milestone test saw the prototype utilising 100% SAF. The UltraFan programme, with its 10% efficiency gain over the Trent XWB, promises improved efficiency for current and future aero-engines,” Rolls-Royce stated further.

This latest accomplishment comes after the initial successful test earlier in 2023. Both the superhit tests now show that the technology can be scaled, as per the engine’s efficiency needs.

“The UltraFan’s scalable technology, ranging from approximately 25,000 to 110,000 pounds thrust (111,205 to 489,026 Newtons), holds the potential to power the anticipated narrowbody and widebody aircraft in the 2030s,” Rolls-Royce noted.

Another American aviation venture Gulfstream Aerospace has now announced the successful completion of the world’s first trans-Atlantic flight using 100% sustainable aviation fuel (SAF).

The feat, which was accomplished on November 19, took place on a Gulfstream G600 aircraft, which departed the company’s headquarters in Savannah and landed 6 hours, 56 minutes later at the United Kingdom’s Farnborough Airport.

“Powered by Pratt&Whitney PW815GA engines, which used 100% SAF, the flight showcased the potential for aviation’s future use of renewable fuels, which feature lower carbon, sulphur and aromatics. The data collected from this endurance flight will help Gulfstream and its key suppliers gauge aircraft compatibility with future low-aromatic renewable fuels, particularly under cold temperatures for extended flight durations,” the venture, which was the first business jet original equipment manufacturer to fly on 100% SAF, informed the media.

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