November

2022

Argus White Paper:

Argus shines a light on growing
global sustainable aviation fuel
markets

The global aviation industry is developing a thirst for sustainable aviation fuel (SAF). Through self-gov-
ernance by airlines, government mandates in Europe, incentive programs in the US, global credit offset
programs and decarbonization efforts in Asia-Pacific, SAF is quickly becoming a highly sought-after com-
modity throughout the world.

Argus, the industry benchmark in biofuels, has emerged as system or engines of transportation vehicles. The cost involved
a leader in SAF market intelligence in Europe, Asia-Pacific with transitioning the current aviation fuel system onto a fuel
and the US. Argus biofuels assessments are the industry that is not compatible with the current system would be too
standard for indexation and contract pricing in renewable onerous for the industry. Also, electrification for airplanes is
energy markets. In Europe, Argus utilizes intelligence based not a solution given the current commercial scalability. That is
on market transactions and fundamentals to produce its why SAF has become the ideal drop-in fuel for the aviation fuel
SAF outright price assessments, creating a highly verifiable industry. Its makeup and production process complies with the
and transparent pricing tool that is used by the aviation fuel fuel supply system and aircraft engines.
industry in a variety of ways. Argus also assesses SAF in
Singapore and the US, which allows companies to engage in While airlines can currently purchase carbon offsets and
the entire SAF value chain. Companies now have the ability operate more efficient planes to lower carbon output, the
to conduct internal analysis and measure profitability of primary method to reduce emissions is changing fuel sources.
their refineries or plant economics using Argus’ daily SAF A NASA study shows that air traffic pollution can be reduced
assessments. Airlines post open-market tenders or enter by 50-70pc by using a 50pc SAF mixture, and the aviation fuel
into private offtake agreements with other companies industry regularly references this study as its basis for moving
based on Argus’ pricing of SAF markets. Companies are also toward SAF to® cut emissions.
using Argus SAF assessments or the underlying feedstocks SAF production capacity
assessments in the SAF value chain process to conduct spot SAF production capacity mn t/yr
market transactions and internal risk management, including mn t/yr
hedging tools based on an indexed instrument. 25
Asia-Pacific Europe
What is driving SAF demand? 20 North America South America
A combination of volumetric and greenhouse gas (GHG) Middle East Central America
reduction mandates, government incentive programs and 15
ESG measures that will help transform and lower the carbon
footprint of the energy transportation sector are contributing 10
to SAF demand.
5
Aviation accounts for 2-3pc of global GHG emissions, and
the development of low carbon fuels is key to sustainable air 0
travel. One key benefit to adding SAF into the current aviation 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
fuel pool is that it does not require a change to the fuel supply Operational Year
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Argus White Paper: Argus shines a light on growing global sustainable aviation fuel markets

In Europe, government mandates to reduce GHG emissions EU SAF mandate in the pipeline
and increase SAF use are giving a tailwind to the burgeoning European Commission European Council European Parliament
SAF industry. In 2020, Norway enacted mandates requiring Blending mandate Increase minimum share Blending mandate start-
a 0.5pc SAF blend into the country’s total aviation fuel mix. starting at 2pc in of SAF to 6pc from 2030 ing from 2pc in 2025,
2025, rising to 32pc (5pc under Commis- rising to 54pc by 2045 and
Beginning in July 2021, Sweden’s obligation to reduce GHG by 2040 and 63pc by sion’s proposal) 85pc by 2050
emissions by 0.8pc in jet fuel used domestically went into 2050
effect. That mandate grows to 27pc by 2030. France’s 1pc Synthetic sub-man- Introduce national Synthetic sub-mandate of
SAF blend requirement went into effect this year, and it will date starting at 0.7pc flexibilities for synthetic 0.04pc by 2025, rising to
in 2030, increasing to fuels 50pc by 2050
increase to 2pc in 2025, 5pc in 2030 and 50pc by 2050. 28pc by 2050

The UK’s SAF mandate proposal is also under discussion, Annex IX A and B Scope extended to bio- First generation biofuels
feedstocks. fuels complying with the non crop-based eligible
which includes a GHG emissions reduction starting in 2025 RED sustainability and until end-2034. Crop-
and will reach at least 10pc SAF use by 2030 (1.5bn l). The emissions saving crite- based biofuels, soy and
ria, up to a maximum of palm excluded.
mandate is expected to set a cap on HEFA-SAF and sub-targets 3pc and with the excep-
for synthetic fuels. It will also allow for a buy-out mechanism tion of biofuels from
food and feed crops,
and SAF credits if adopted. Eligible fuels that would qualify which are excluded. An-
for the SAF target include waste-derived biofuels, recycled nex IX A and B exempt
carbon fuels and power to liquid fuels. The final set of policy from 3pc cap.

proposals for the UK SAF mandate will be published in a

second consultation later this year. development is also included in the Inflation Reduction Act.
The SAF blender’s tax credit generates $1.25/USG to $1.75/
EU – Fit for 55 USG (depending on feedstock) for SAF achieving a 50pc
If adopted, an EU-wide SAF mandate proposal will bring reduction compared to conventional fuel. At the state level
more SAF production to the table. Part of the EU’s “Fit for in the US, SAF generates a lucrative renewable identification
55,” legislation that aims to reduce GHG by 55pc by 2030, number (RIN) and tradeable LCFS credits in California and
the ambitious EU SAF proposal mandates a 2pc SAF blend Oregon.
into aviation fuel by 2025. That mandate grows every five
years to a 63pc blend by 2050. The mandate also includes Canada’s proposed Clean Fuel Standard sets a carbon
a minimum share of synthetic fuels, with that requirement intensity reduction of 15pc for transportation fuels by 2030.
starting at 0.7pc by 2030 and growing to 28pc by 2050. The Under the proposed Clean Fuel Standard, which begins
lion’s share of the mandate compliance falls on aviation fuel in December, SAF would be eligible for credit creation if it
suppliers. However, airports and airlines will also bear some meets the definition of a low carbon intensity fuel, which
responsibility to ensure compliance. The proposal stipulates will stimulate the production of SAF to meet targets. British
that SAF will focus on waste or advanced feedstocks, making Columbia is also exploring the possibility of adding SAF as an
it even more challenging to meet compliance. eligible credit generator in its LCFS program.

While the EU’s original commission proposal has been met Latin America is still lagging other regions in terms of
with enthusiasm from the SAF industry, the original proposal mandates. In Brazil, the government has proposed an SAF
was followed by council and parliament positions, which mandate that establishes a mandatory minimum volume of
contain important variations that are up for debate. A specific alternative fuels in fossil aviation kerosene, uplifted anywhere
version of the EU mandate has not been finalized (see table). in the national territory. The proposed mandate starts with
a 2pc blend in March 2027 and increases to a 5pc blend
In the US, the US Department of Energy (DOE) created a by March 2030. Countries in the Caribbean, including the
Sustainable Aviation Fuel Grand Challenge Roadmap, which Dominican Republic, have SAF feasibility studies to examine
seeks an aviation fuel supply of 100pc SAF by 2050. The plan, how to move forward in this space.
which was signed in 2021, aims to use 3bn USG/yr of SAF by
2030 and 35bn USG/yr of SAF by 2050. In Asia-Pacific there is growing need for transparency in
renewable fuel markets as countries in the region seek to
The recently-passed US Inflation Reduction Act, which reduce their GHG emissions. China, Japan and South Korea
allocates $369bn for climate change and energy security, have set ambitious decarbonization targets, with China
provides additional groundwork to fully implement the mandating a 50,000t total target from 2022 to 2025. Japan has
roadmap, including a two-year tax credit for blending SAF and set a non-binding 10pc SAF target by 2030. Several private-
a three-year credit for producing SAF. A grant program offering sector companies have announced they will achieve net zero
$290mn over four years for SAF transportation, blending or carbon emissions by 2050.

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 Argus White Paper: Argus shines a light on growing global sustainable aviation fuel markets

Where do we see growth in sustainable aviation fuel? sustainable aviation fuel from SkyNRG over the next 10 years.
With added mandates and incentives to lower emissions Finnish refiner ST1 is building a 200,000 t/yr biorefinery in
and increase SAF use, companies like Finnish refiner and Gothenburg that will flex between HVO, SAF and bio-naphtha
renewable diesel producer Neste are increasing SAF market production depending on demand.
share and taking advantage of growing renewable jet fuel use.
Neste produces 100,000 t/yr of SAF, and this will increase In North America, World Energy has expanded production
to 1.5mn t/yr by the end of 2023 after expansion work is plans, and Fulcrum, LanzaJet, Gevo and others plan to have
complete. Neste will expand its renewable fuel capacity to production online in the next year. Conventional refiners
6.8mn t/yr by 2026 following expansion work at its Singapore such as P66 are investing in refinery conversions to build SAF
and Rotterdam refineries. facilities over the next few years.

In Europe, Neste (Porvoo) operates 100,000 t/yr of SAF In Asia-Pacific, in addition to Neste’s main facility in
production capacity, and TotalEnergies (La Mede) continues Singapore, other companies such as Byogy Renewables have
to scale up production to also reach 100,000 t/yr production. set up a second-generation demonstration plant levelling up
TotalEnergies also recently announced it will increase SAF to a full-scale 30mn l/yr commercial plant by 2025 in Japan.
production at Grandpuits to 210,000 t/yr as part of its
biorefinery conversion. Production is expected to begin in There are a number of conventional refineries, including
2025. At least 13 other companies have plans to increase or Repsol in Spain, that have begun co-processing SAF, adding
begin SAF production in Europe, seven in the US and eight additional supply to the market.
in Asia-Pacific, including Shell’s 820,000 t/yr biorefinery in
Rotterdam, 50pc of which is expected to be SAF production. In addition to increased use of carbon efficient fuel, the
aviation industry is purchasing more fuel-efficient planes and
Dutch airline KLM has committed to buy 75,000 t/yr of using carbon offset programs to bring down GHG emissions.

gusmedia.com
Demand for SAF continues to increase
SAF capacity continues to develop
ing pressure from LanzaJet United Phillips 66 Humber, UK ST1 + SCA Gothenburg Quantafuel Eastern Norway Porsgrunn Nordic Electrofuel Norsk Mosjoen, Norway Swedish Stockholm,
t mandates and FLITE Kingdom E-Fuel Biofuels/COWI Sweden
om the global
Type HEFA-SAF Type HEFA SAF Type FT SAF Type PtL
Type AtJ-SAF Type PtL Type AtJ-SPK
dustry, global airlines Capacity TBD Capacity 70,000 t/yr Capacity 6,840 t/yr Capacity 8,000
ushed to use more Capacity 76,000 t/yr Capacity 9,500 t/yr Capacity 20,000 t/yr
uels. Like HVO and
diesel, sustainable
el (SAF) is made LanzaJet Port Talbot, St1 + SCA* Ostrand
products, such as FLITE South Wales, UK
Type HEFA
ng oil. Some airline Type AtJ-SAF
governments Neste Porvoo Zenid Rotterdam Capacity 300,000 t/yr
explicitly linked Capacity 76,000 t/yr (SkyNRG, Hague
Type HEFA SAF Airport, Climeworks)
ents to reduce Shell/SAS/ Forsmark,
PKN Plock, Poland Capacity 100,000 t/yr Type PtL
ssions, boosting Fulcrum & Stanlow, LanzaJet Sweden
r SAF despite Essar Oil UK Type HEFA Capacity 280 t/yr
demand erosion. Type AtJ-SAF
and intensifies, Type FT SAF Capacity 7,500 t/yr Capacity 50,000
ing the market Capacity 75,000 t/yr Enerkem Rotterdam
he global capacity Type PtL SAF
TotalEnergies Oudalle, KLM Vaxjo, Sweden
rtant.
LanzaJet United Normandy Capacity 60,000 t/yr
Type SAF
FLITE Kingdom Type Co-processing
Capacity 16,000 t/yr
Type AtJ-SAF Capacity TBD Synkero Amsterdam
eading the Capacity 85,000 t/yr Type PtL SAF
cing the SAF TotalEnergies BioTFuel, France TotalEnergies Normandy Capacity 50,000 t/yr
Velocys Immingham, platform
Type FT-SPK
s developed UK Type Co-processing
Capacity TBD
ob ARA, SAF Type FT SAF Capacity TBD SkyNRG Delfzijl
pore, and US
Capacity 50,000 t/yr Engie/Infinium Dunkirk Type HEFA SAF
st SAF price
nts based on Type PtL Etihad/ Abu Dhabi, Capacity 100,000 t/yr
HyNovera Gurdanne Tadweer UAE
rket input, not Greenergy* Thames Enterprise (Hy2Gen)
Park, UK Capacity TBD
ed price. Type FT-SAF Neste Rotterdam
Type PtL Synhelion Julich,
Type Co-processing Capacity 403,000 t/yr
s SAF TotalEnergies Granpuits Capacity 28,000 t/yr Germany Type HEFA SAF
nts are more Capacity 22,000 t/yr
Type HEFA-SPK Type Sun-to-Liquid Capacity 500,000 t/yr
of activity in
Capacity 210,000 t/yr TotalEnergies La Mede Capacity 8 t/yr
cal SAF market Lighthouse Thames Enterprise
d on SAF Green Fuel Park, UK Type HEFA SAF Shell Rotterdam
s. Type FT-SPK Capacity 100,000 t/yr Type HEFA SAF
Janschwalde, Hy2Gen (Green Ineratec/ Frankfurt
Capacity 137,000 t/yr Brandenburg Areal Lausitz) Safran/Engie Capacity 436,000 t/yr

P2X-Europe Figueira da Foz, Type PtL Type PtL

Repsol Puertollano Repsol Petronor, Spain
Portugal Capacity TBD Capacity 3,500 t/yr
Type Co-proc. SAF Type SAF
Type PtL
Capacity n/a Capacity n/a
Capacity 170,000 t/yr CEMEX/SASOL Rudersdorf Westkuste 100 Schleswig-Holstein Green Fuels Hamburg Hamburg
Type PtL Type PtL Type PtL
Capacity TBD Capacity TBD Capacity 10,000 t/yr
Synhelion Spain Repsol Cartagena Repsol Petronor, Bilbao
capacity
rtium led by Type Sun-to-Liquid Type HEFA SAF Type Co-processing
produce 30,000 SkyNRG/Stuttgart Heidenheim- HCS Group Speyer, Germany Shell Wesseling, Germany
Capacity 760 t/yr Capacity 50,000 t/yr Capacity TBD
tJ facility at Airport/Schwenk Mergelstetten
d European Type AtJ-SPK Type Co-processing
Zement Germany
Capacity 60,000 t/yr Capacity 100,000 t/yr
roduction of SAF BP Castellon, Spain Repsol Tarragona Type PtL
la 650,000 t/yr Type Co-processing Type Co-proc. SAF Capacity 50,000 t/yr
Atmosfair Werlte, Germany
Capacity n/a Capacity n/a
capacity number is Type PtL
ty, not just SAF. Capacity 365 t/yr
OMV Petrobrazi,
ting ENI Gela, Italy ENI Livorno, Italy ENI Taranto, Italy OMV Schwechat, Austria Petrom Ploiesti, Romania Tupras Izmir, Turkey BP Lingen, Germany
Type HEFA SAF Type HEFA-SPK Type Co-processing Type Co-processing Type Co-processing Type Co-processing Type Co-processing
ed
Capacity 150,000 t/yr Capacity 10,000 t/yr Capacity TBD Capacity TBD Capacity TBD Capacity 300,000 Capacity TBD

For a global view of SAF capacity, download Argus’ regularly updated map at www.argusmedia.com/SAF
pe, Middle East and Africa

n more about how Argus is assessing the global SAF markets, contact: support@argusmedia.com

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Argus White Paper: Argus shines a light on growing global sustainable aviation fuel markets

According to the US Energy Information Administration (EIA), will be “the only global market-based measure applying to
the industry consumes nearly 7mn b/d (300mn t/yr) of jet CO2 emissions from international aviation,” which will move
fuel and demand is expected to grow by 2-3pc/yr, which also the aviation industry out from under the EU ETS once ICAO’s
increases demand for SAF. Corsia scheme has reached full compliance.

ICAO and Corsia Currently, participation in Corsia is voluntary. By 2027,

Aside from government actions to increase SAF use and lower participation will be mandatory in all countries, with a few
aviation emissions, global airlines are implementing self- exemptions made for small or developing countries. Voluntary
imposed carbon reduction targets through groups including participation now gains airline operators carbon offset based
the International Air Transport Association (IATA) and the on the average CO2 growth of the aviation sector. By 2033,
International Civil Aviation Organization (ICAO). after mandatory compliance is reached, airline operators
offset obligations increase to 70pc based on individual
ICAO’s Carbon Offsetting and Reduction Scheme for operator growth. Corsia aims to offset air traffic CO2 growth by
International Aviation (Corsia) program aims to freeze global more than 80pc after 2020.
aviation emissions at 2019 levels by requiring airlines to cut
emissions or purchase offset credits generated by emissions SAF and technical certification
reduction projects. In October 2021, IATA voted to set a target SAF pathways like conventional jet fuel require a strict
to achieve net-zero carbon emissions by 2050, up from a technical certification. This ensures SAF can be safely
previous target to cut carbon emissions in half from 2005 mixed with conventional jet fuel, can use the same supply
levels by 2050. infrastructure and does not require adaptation of aircraft
or engines. With this framework in place, SAF is essentially
Commercial aviation has been covered by the EU’s emissions known as a “drop-in” replacement fuel, and it meets the
trading system (ETS) since 2012. The EU ETS requires airlines equivalent or higher technical specifications as conventional
to monitor, report and verify GHG emissions and ensure that jet fuel.
they have a sufficient number of carbon allowances to cover
their output for compliance deadlines. The EU ETS applies to The standard regulating the technical certification of SAF is
flights within the European Economic Area (EEA). ASTM D7566 — once SAF is produced it can be blended up
to the maximum certified blending limit — listed in the table.
The EU ETS supports the development ICAO’s Corsia. An ICAO Once blended the fuel is certified to ASTM D1655, which is
resolution reached in October 2019 indicates that Corsia regarded as conventional Jet A or Jet A1 kerosene. There are
Sustainable Fuel Supply Pathways/Technical Certifications
​Blending ratio ​Commercialization proposals /
ASTM reference ​Conversion process ​A bbreviation ​Possible Feedstocks
by volume Projects

F​ ulcrum Bioenergy, Red Rock Bio-

​F ischer-Tropsch hydroprocessed
​A STM D7566 Annex​1 FT​ Coal, natural gas, biomass​ 50%​ fuels, SG Preston, Kaidi, Sasol,
synthesized paraffinic kerosene
Shell, Syntroleum

Synthesized paraffinic kerosene

Bio-oils, animal fat, recycled World Energy, Honeywell UOP,
​A STM D7566 Annex 2 from hydroprocessed esters and ​HEFA 50%
oils​ Neste Oil, Dynamic Fuels, EERC​
fatty acids​

​ ynthesized iso-paraffins from

S
Biomass used for sugar
ASTM D7566 Annex ​3 hydroprocessed fermented SIP​ 10%​ Amyris, Total​
production​
sugars
​Synthesized kerosene with
aromatics derived by alkylation
ASTM D7566 Annex ​4 FT-SKA​ Coal, natural gas, biomass​ ​50% Sasol​
of light aromatics from non-
petroleum sources
Gevo, Cobalt, Honeywell UOP,
​ lcohol to jet synthetic paraffinic
A Biomass from ethanol or
ASTM D7566 Annex ​5 ATJ-SPK​ ​50%​ Lanzatech, Swedish Biofuels,
kerosene isobutanol production​
Byogy​

T​ riglycerides such as soybean

​ atalytic hydrothermolysis jet
C ​ pplied Research Associates
A
​A STM D7566 Annex 6 ​CHJ oil, jatropha oil, camelina oil, 50%
fuel (ARA)
carinata oil, and tung oil

​ ynthesized paraffinic kerosene

S
​A STM D7566 Annex 7​ from hydrocarbon-hydropro- HC-HEFA-SPK​ ​Algae 10%​ ​IHI Corporation
cessed esters and fatty acids

F​ ats, oils, and greases (FOG)

​A STM D1655 ​Co-processing ​ ​5% ​
from petroleum refining

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Argus White Paper: Argus shines a light on growing global sustainable aviation fuel markets
12

From UCO to HEFA SAF – “HEFA” is the first pathway to market – same
process as HVO Class II
From UCO to HEFA SAF

Hydrotreated Esters Fatty Acids (HEFA) SAF:

+ HEFA SAF
UCO Hydrodeoxygen
Isomerization
+ ASTM D7566
Cleaning Hydrogenation
$1,160/t ation + 13.9 gCO2/MJ
Upgrading Decarboxylation Hydrocracking
+ $2,900/t
Animal fats
waste feedstocks H2
POME Green Diesel
(HVO class II)

Fossil Jet Fuel:

Kerosene Hydrotreating + Fossil Jet fuel
Crude Atmospheric + ASTM D7566
$76/bbl Furnace
distillation Gasoil + 89 gCO2/MJ
Cracking + $679/t

seven technical production pathways have been certified transactions and fundamental analysis. Argus also publishes
Copyright © 2021Argus Media group. All rights reserved.

under this standard. The more pathways that exist the more a SAF fob Singapore price as a netback to its European price.
SAF that can be produced (see graph), and the current SAF
industry standard is based on hydrotreated ester fatty acids In the US, Argus publishes west coast SAF prices based on
(HEFA) production. information gathered through a daily market survey and
build-up of achievable environmental credits and prices as
Argus provides SAF price assessments a multiplier to Los Angeles jet fuel. Argus also publishes D4
Argus currently publishes daily global assessments for SAF RINs and LCFS prices based on SAF on the west coast. These
developed in close consultation with market participants. The are published daily in Argus US Products and Argus Americas
SAF assessments represent all the major pricing regions — Asia- Biofuels.
Pacific, Europe and the US — which provides visibility across
growing demand and supply centers. Argus bases its daily Industry standards
European SAF assessments using a market survey approach. Argus has been a front-runner in renewable fuels market
As SAF mandates in Europe grow, the airline industry will be intelligence in Europe and the US. Argus publishes daily
seeking the best way to value this product. Argus publishes renewable fuel data and market analysis in a wide array
daily SAF assessments in Europe on an outright basis and as of reports, including Argus Biofuels and Argus Americas
a differential to Ice gasoil. Argus also publishes three classes Biofuels. Argus values transparency and the highly intelligent
of HVO, which are RED compliant and priced daily in the Argus assessment processes behind each of its published prices.
Biofuels report. These are useful hedging tools because of the Through a rigorous market outreach process, published deals
inherent difference in producing SAF compared to conventional tables and interactive open markets platforms, Argus offers
jet fuel in Europe, as the SAF price is more closely tied to the the industry assessments that are verifiable and based on
HVO market. Argus’ HVO Class II prices are also listed on Ice for market insight and analysis.
additional hedging opportunities .
With steep targets in place for airlines to cut emissions and
These assessments can be used to value the difference growing government mandates to increase renewable energy
between renewable diesel and for airlines to value the use, SAF is quickly solidifying its place among growing energy
difference to conventional jet fuel for hedging purposes. markets. And as jet fuel demand continues to grow, so will
In September 2020, Argus began publishing its weekly SAF use and the need for transparency to illuminate those
outright SAF fob ARA cash price in Europe based on market markets.

For more information:

contact@argusmedia.com +44 20 7780 4200 www.argusmedia.com @argusmedia

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