Why sustainable aviation fuel is carrying the weight of aviation decarbonisation

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Nexus, Publish By GHD.

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Where ideas connect.

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Carlos, thank you so much for joining us
today.

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Aviation is a passion of mine.

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I've got my recreational pilot's license,
and I'm really looking forward

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to this discussion about all things SAF.

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Let's start with the big picture.

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Why is SAF
such a dominating topic at the moment?

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Thanks for having me here.

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Air travel is a key sector for emissions
globally

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and after Covid, the fast pace, 
growth has returned.

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So it is becoming more and more important.

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Secondly, SAF itself represents
about 65% of emissions reductions

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for the sector, with other efficiencies
like at the airport

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or lighter materials for aircraft,
or swapping fuels towards batteries

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or hydrogen expected to play a minor role,

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especially on big planes and long haul.

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And hence, SAF is the key decarbonization
lever for the sector.

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We've spoken about there's a key driver
for SAF at the moment.

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Can you talk us through
a couple of leading projects

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that are currently underway?

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Carlos in Australia, which is similar to
to what's happening globally.

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There's a lot of projects with the Hef, 
pathway.

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Hef is, a way of producing

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SAF that uses, used cooking oil,

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animal fats and vegetable oils
and turns them into SAF.

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Those projects,
I would say consolidating globally.

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There's, 
a lot of installed capacity globally

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because it is a consolidated technology

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and the cost of production
is, the lowest, on the different pathways.

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And in Australia, there are no plants yet,
but there is, several projects

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on that pathway on top of that.

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In Australia and globally,
you have other projects

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using other parts,
like gasification, nifty

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and HD2 that are newer

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technologies
that allow feedstock flexibility.

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So you can use all sorts of agriculture,

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forestry and organic waste.

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We, as GHD have been close to several
of these projects that I just mentioned

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because we have, advise parties

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like Quantas, LightSail, jet zero

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in several of their developments
from concepts.

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Pre-Feasibility is due diligence.

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For example, with Quantas,
we have, advised them

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in assessing several of the projects
that they have.

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Consider for investment with diligence.

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That's a really interesting point
you make.

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So it's
you've got the agricultural industry

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dovetailing into the aviation industry
within SAF as well.

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Are there examples that you could talk
about how the different sectors

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have started or potentially

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could work
better together in this industry?

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Carlos.

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Yes, I think there's plenty of examples

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globally where agriculture companies
that produce oilseeds

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or biomass that they have,

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embraced
not only SAF, but biofuels in general

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as a new business because they know

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how to produce the feedstock
that is required to produce SAF.

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And that has been happening
in, in particular in the US,

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I mean, in Europe
and Australia has a big capacity

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for that as well, because Australia is
a big agricultural producer.

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Just speaking to Australia,
being a big agricultural producer,

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are there any reasons why in Australia

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this is still an opportunity
for that industry to grow

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and why we're not leveraging
the opportunity in the SAF sector?

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Carlos, at the moment, yes, as I say,
I think Australia has a great potential.

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And that's why, local
and international parties

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are developing projects despite, 
the lack of regulation.

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But there is definitely good
fits of potential

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with existing production
of, of agricultural waste.

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But also there is a lot of land,
to produce new feedstocks.

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Rio Tinto, for example, announced,
that they are assessing

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a project to produce their own feedstock
to, to produce renewable diesel,

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which is, similar to South in many ways,
with the same HIV path.

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So, yeah, I think those two factors
make Australia quite, desirable globally.

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And you've touched on

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regulation, Carlos,
I just want to come back to that.

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So how do you see the landscape evolving

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without existing regulation
within Australia at the moment?

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Is the action being taken at the moment
or are the key focus areas for us?

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I think that most of the action
is coming from the private sector

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that is developing projects,
all sorts of different companies from oil

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and gas technology companies, project
developers, investors and everybody

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is expecting us to what the government
is going to do in terms of regulation.

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So that is the key.

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Next big milestone for the sector is
what's going to happen

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with that regulation that can really help

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create demand in Australia
and create this industry.

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So, Carlos, we've spoken about regulation.

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We've spoken about projects
that are underway globally.

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If you had $10 billion to invest
in the SAF sector, what are those key

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initiatives?

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Maybe say a top three
that you'd add to your priority list?

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The first one is regulation.

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Clearly, the sector in Australia
needs regulation to catch up to

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what is going on or what has been enacted
in the US and the EU.

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The EU and the UK are mostly demand

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driven mandates,
so about 2% today of SAF sell

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at airports in in those locations
have has to be safe.

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The US has an approach
like a more supply driven approach,

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and Australia has to catch up to those
either demand and supply.

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So that's the first one.

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The second one, I would say,
is to somehow solve

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one of the key challenges of the sectors,
which is the economics of the projects.

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As I mentioned before, have,
they have a pathway,

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has, a relatively competitive
cost of production

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or their pathways have, green premium
that is very high currently

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and that is mostly driven by the cost of,
these plants.

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And that green premium is, is multiples.

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It could be five,
six, seven times and hence

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if I had $10 billion
that could be used to subsidize

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some of those, 
cost of of installing the, those plants

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and hence
they're reducing the green premium.

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And lastly, I would say,

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long term

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optics, that's
something that is difficult to materialize

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because they are not as long
as required by banks.

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And also they have usually

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some type of price and quantity risk.

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And hence, reaching financial close
with that type of of takes is difficult.

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Brought to you by Nexus, Publish By GHD.

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Where ideas connect