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"Sustainable Aviation Fuel (SAF) is expected to contribute approximately 65% of the emission reductions needed for airlines to achieve net-zero carbon emissions by 2050. Therefore, the projection that SAF production will triple by 2024 compared to 2023 is encouraging."

At the recently concluded Annual General Meeting (AGM) of the International Air Transport Association (IATA, hereinafter referred to as "the International Aviation Association"), Willie Walsh, the Director General of IATA, made predictions about the production of SAF in 2024 and detailed the current issues and challenges faced by the aviation industry in carbon emission reduction.

In the carbon peak and reduction targets set by various countries, carbon reduction in the high-energy-consuming aviation industry is of utmost importance. Replacing current aviation fuel with SAF is key to the decarbonization of aviation.

Although SAF production has seen significant growth in recent years, its production cost is still higher than that of traditional aviation kerosene, which will have a direct economic impact on airlines and consumers using SAF.

At this year's International Aviation Association AGM, how to reduce the production cost of SAF and increase its output was a key topic of discussion among participating airlines from various countries.

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The substitution of aviation kerosene by SAF is an inevitable trend.

"Achieving net-zero carbon emissions in the aviation industry by 2050 is a global industry consensus, but the specific national conditions vary, and the pace of emission reduction will also differ, especially on the most important issue of carbon reduction in the aviation industry, Sustainable Aviation Fuel (SAF). There are still some differences in the use of SAF, implementation time, certification standards, and other aspects," said Dr. Jie Xingquan, the Regional Vice President of IATA (North Asia), in an exclusive interview with First Financial Daily.

SAF refers to fuel that meets sustainability standards, derived from biomass, catering waste oil, and other synthetic hydrocarbon-containing raw materials processed to meet the standards of civil aviation jet fuel. Compared to traditional fossil fuels, SAF can reduce carbon emissions throughout its life cycle by up to 85%.

According to the reporter's understanding, the requirements for carbon reduction in the aviation industry do indeed vary greatly among countries, with Europe being relatively more stringent.

In July 2021, the European Commission released a package of "green" new policy drafts, some of which were officially passed and took effect in June 2022. These include mandatory regulations for airlines to use SAF at European airports to increase the production and use of SAF in Europe: from 2022, all flights departing from airports within the European Economic Area must mix a certain proportion of SAF. The current mandated mixing ratio is 1%, which will be increased to 2% by 2025, 5% by 2030, and over 63% by 2050, with at least 28% being synthetic fuels.In China's civil aviation "14th Five-Year Plan" for green development, it is also clearly stated that domestically, "striving for a sustainable aviation fuel (SAF) consumption of over 20,000 tons in 2025, and a cumulative consumption of 50,000 tons by 2025 (accounting for about 0.2% of the annual consumption of domestic aviation kerosene)," thus, the commercial use and promotion of SAF in China is also a trend.

In recent years, several domestic airlines such as Air China, China Eastern, China Southern, and Hainan Airlines have successively completed test flights using sustainable aviation fuel. The Chinese aircraft manufacturer COMAC's ARJ21 regional jet and C919 large passenger aircraft also completed their first demonstration flights with SAF just a few days ago. The SAF used in the demonstration flights was produced using Sinopec's independently developed bio-aviation kerosene production technology, with raw materials sourced from waste cooking oil commonly referred to as "gutter oil."

"Our production capacity is in place, what we need to do now is to introduce policies and obtain the necessary certifications to form a sustainable market," Xie Xingquan pointed out to the reporter, "The biggest challenge for airlines in using SAF is that its price is still three to five times higher than traditional aviation kerosene. Governments of various countries must introduce corresponding incentive policies to ensure a virtuous and effective market for using SAF. Only by achieving larger-scale mass production can the costs be reduced."

The latest profit forecast report from the International Air Transport Association (IATA) also mentioned that the total cost for airlines to use SAF in 2024 is $3.75 billion, an increase of $2.4 billion compared to the cost of purchasing the same amount of jet fuel.

And to achieve the industry's future emission reduction targets and SAF usage targets, if the procurement cost of SAF remains unchanged, the emission reduction costs for airlines are expected to increase year by year, and the industry is also concerned that the increase in these variable costs will be passed on to consumers who purchase tickets.

How to reduce the price of sustainable aviation fuel?

Further scaling up and increasing the production of SAF is an important way to reduce the procurement cost of SAF. According to the latest forecast from IATA, the global production of SAF in 2024 will triple, reaching 1.9 billion liters (1.5 million tons), but it will still only account for 0.53% of the aviation fuel demand in 2024.

"Before 2030, about 140 renewable fuel projects producing SAF will be put into production. If all projects can be launched as announced, the total production of renewable fuels in 2030 will reach 51 million tons, with production capacity spread across almost all regions of the world," Willie Walsh revealed, "Although interest in SAF is growing and the potential is huge, the specific plans we see now are still far from enough, resulting in the cost of using SAF remaining high."

Xie Xingquan believes that to achieve further expansion of SAF production, diversification of raw materials is needed. It is estimated that about 80% of the SAF produced in the next five years may come from HEFA (hydroprocessed esters and fatty acids), including waste cooking oil, animal fats, etc. Accelerating the use of other certified methods and raw materials (including agricultural and forestry residues as well as urban waste) will greatly expand the production potential of SAF.

At this year's IATA annual meeting, both domestic and international airlines participating in the conference believe that governments should provide specific policy support for carbon emission reduction in aviation operations and the use of SAF.The International Air Transport Association (IATA) has pointed out that current renewable fuel facilities are designed to maximize diesel production. As road transport transitions to electrification, governments should formulate policies to shift production towards the long-term demand for Sustainable Aviation Fuel (SAF) in air transport. With only minimal modifications to existing standalone renewable fuel facilities, the conversion of renewable diesel to SAF can be facilitated.

Xie Xingquan has also repeatedly called on the government to introduce corresponding laws and regulations to provide policy support and guidance for the large-scale production of SAF. "For example, the United States has established relevant policies, investing $3 billion in new technology research and development to expand the large-scale production of SAF. In addition, stable long-term tax credits can also further increase the SAF production capacity of existing and new facilities."

Civil aviation industry insider Lin Zhijie also pointed out to reporters that the key to whether the civil aviation industry can achieve carbon peak and carbon neutrality lies in whether the industry can provide sustainable fuel in large quantities and at favorable prices. The current slow progress in SAF is due to limited production capacity on one hand, and high prices on the other. It is necessary to support the industry through policy, just as the state supports wind and solar energy, to significantly reduce the cost of wind and solar power generation. Now the costs are already lower than those of thermal power, thereby significantly promoting green electricity to reduce carbon emissions.

As part of the global effort to increase SAF production, IATA also announced during this year's annual meeting that it will create a SAF registry. By authoritatively accounting and reporting the emission reductions of SAF, it will accelerate the use of sustainable aviation fuel. The registry is expected to be released in the first quarter of 2025.