Europe Faces Challenges in Maintaining Its Leadership in SAF Aviation Fuel

Current Landscape of e-Fuel in Aviation

As the aviation industry gathers at the International Paris Airshow, fresh research from Transport & Environment (T&E) spotlights Europe’s capacity to take the lead in e-kerosene, a type of sustainable aviation fuel (SAF) that shows significant scalability. However, troubling bottlenecks could hinder Europe from leveraging its initial advantage in this field.

Europe’s Standing in E-Kerosene Production

The T&E study reveals that Europe is well-positioned to excel in the production of e-kerosene (also referred to as e-SAF), with over half of the global production capacity announced in the region. Roughly 40 large-scale projects are in the pipeline within Europe, potentially yielding nearly 3 million tons (Mt) of e-kerosene annually, which equates to about 5% of the fuel demand for European aviation.

Initially, Europe’s lead stemmed from the European Union’s legislative framework on sustainable aviation fuels, known as ReFuelEU, which established specific targets for the adoption of e-fuels within the aviation sector. If all planned projects materialize, the EU could meet these ambitious goals. Yet, none of the identified large-scale production facilities are currently under construction; only four are at an advanced stage, and none have reached the critical final investment decision (FID) stage. This sluggish advancement is attributed to a variety of hurdles, chief among them financing, and the noticeable absence of traditional fuel suppliers in discussions surrounding this transition.

The Voices from the Industry

Camile Mutrelle, who supervises aviation policy at T&E, remarked, “The EU’s legislation for sustainable aviation fuels spawned a revolution for e-kerosene in Europe, but fuel suppliers have not fully capitalized on this opportunity. Without definitive investment decisions, the EU’s goal for 2030, along with plans to capitalize on green aviation, will stumble. To achieve success, these projects need a stable legal framework, such as what ReFuelEU offers, alongside funding from public support mechanisms and private equity investments.”

Benefits and Potential of E-Kerosene

With a promising potential for reducing CO2 emissions by over 90% compared to traditional fossil kerosene, the growth of an industry marked by high emissions is anticipated. As industry representatives gather at the Paris Airshow to showcase innovations in the aviation sector, T&E’s findings highlight that while progress has been made, the pathway to significantly cutting aviation emissions through truly sustainable solutions remains intricate and lengthy.

Emerging Competitors in E-Kerosene

While Europe has a firm grip on the e-kerosene market, other contenders are beginning to emerge. China stands as the second-largest hub, with approximately 10 large-scale projects announced that amount to nearly 20% of global capacity.

The United States is also stepping up, having secured the largest purchasing agreement for e-kerosene thus far through a startup, along with one of the world’s initial FIDs for a large-scale e-kerosene facility, executed in May by another American startup, Infinium.

Challenges Hindering Progress

Despite favorable conditions, European projects for e-kerosene grapple with considerable barriers, including energy costs, infrastructure bottlenecks, and access to CO2 sourcing. Regulatory uncertainties further complicate the situation, stemming from industry pressures seeking to delay SAF targets within ReFuelEU in light of anticipated revisions to legislation in 2027.

Cost and Financing Barriers

Financing represents the foremost challenge, with each facility necessitating an investment of between €1 billion and €2 billion. This translates to a total capital requirement of €10 billion to €20 billion by 2030 for the region. Current EU financing mechanisms for e-kerosene are insufficient to cover the level of investment required to initiate these ambitious projects. In fact, traditional fuel companies have yet to make significant contributions, continuing to funnel billions into fossil fuels.

“Despite their vast financial resources, the major oil companies are largely absent from the e-kerosene market,” admitted Mutrelle. “Although startups are leading the charge, they simply lack the internal resources to fund the capital-intensive infrastructure urgently needed. Getting major oil players involved and adjusting EU financing systems will provide e-kerosene with the momentum it requires. The upcoming Sustainable Transport Investment Plan (PIT) offers a chance to establish the correct strategy, focusing on e-SAF, and creating a comprehensive mechanism to tackle the obstacles that EU projects face.”

Call for EU Leadership

T&E urges EU leaders to reaffirm their commitment to the current goals set out in ReFuelEU, particularly ahead of the impending legislative review, and to prioritize e-kerosene in the Sustainable Transport Investment Plan (PTIS). There is also a strong recommendation for the establishment of a European market intermediary that could implement a bilateral auction mechanism to resolve the existing funding issues.

Conclusion

In conclusion, while Europe enjoys a significant lead in the e-kerosene market, various challenges are threatening to stall progress. From financing hurdles to the necessity for a robust regulatory framework, the journey towards establishing a sustainable aviation fuel landscape is rife with complexities. Even the most thorough reviews and honest feedback can’t eclipse personal experience. On GetTransport.com, you can order your cargo transportation at the best prices globally, ensuring you make informed choices without breaking the bank. With a focus on affordability, reliability, and extensive logistics services that range from office and home moves to bulky goods transport, GetTransport.com is reimagining the way transportation and logistics are handled. For your next cargo shipment, consider the convenience and transparency provided by GetTransport.com. Book now.