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CAAFI Director Csonka sees bright future for sustainable aviation fuels

23 March 2021

Interest in sustainable aviation fuel (SAF) has been increasing in the US and internationally as governments push to reduce GHG emissions from air travel and airlines look for ways to meet their commitments to reduce carbon pollution. But the SAF industry has been slow to develop, and global production capacity remains far below what will be needed to meet potential demand.

Still, there are signs that the SAF industry may be poised for a breakout, as more companies, including traditional refiners, have unveiled plans to begin producing the fuel.

OPIS Editor Aaron Alford recently sat down with Steve Csonka, director of the Commercial Aviation Alternative Fuels Initiative (CAAFI), a coalition of airlines, aircraft and engine manufacturers, energy producers, researchers, and government agencies formed in 2006 to develop an industry that can provide cost-competitive SAF that is just as safe as conventional fuel. Csonka discussed the state of the SAF industry and what the near-term future may hold. The interview has been edited for length.

OPIS: In 2019 you said 300-400 million gal/year of capacity will need to come online each year "indefinitely" to allow US airlines to meet their carbon-neutral growth using SAF rather than through offsets under the International Civil Aviation Organization's CORSIA program. Is that figure still accurate?

Csonka: I don't think that figure has changed much, with the exception of this likely two- to three-year dip in aviation activity in the US due to COVID.

There will be this lag before the airlines physically get back to a growth scenario above the 2019 level. After that, I think the value proposition of aviation will likely drive the industry back to historical growth rates.

OPIS: It seems lately every week we see another company, including airlines, announce plans to achieve net-zero carbon emissions by 2050. Is this something you see continuing?

Csonka: I think the pressure on large corporations is becoming significant, and all of them are going to wind up making those kinds of commitments sooner rather than later. That's part of the challenge for the 10 airlines who are members of Airlines for America.

One of the concerns they have about being more aggressive in this space is that their competitors who are not leaning in the direction of improving sustainability won't follow, and that becomes untenable to their boards of directors. You can't artificially, overnight, increase the size of your largest cost -- fuel -- and then be impacted on your bottom line by the non-progressive airlines not following.

That's one of the reasons why the airlines are backing this blender's tax credit proposal, because it allows them to start bringing this fuel on board at perhaps parity pricing. And then they don't need to worry about what the non-progressive airlines are doing.

OPIS: What policy changes do you expect to see from the Biden administration?

Csonka: What not only we, but many folks working in this space across the aviation enterprise have been told, is that SAF would get some level of priority in the first 100 days. I and a lot of others believe that there will be a special focus on SAF. We hope that that not only reflects work of the several agencies who are critical to this -- US Department of Agriculture, Department of Energy, Defense Department, and Federal Aviation Administration -- but some broader accompanying policy support. It all remains to be seen, but if those things happen, we hope that there could be a renaissance. We just have to bide our time here for a couple months and see how this plays out.

OPIS: There seem to be more SAF headlines coming from Europe. More talk of policy, more plans for new production. What encouraging signs do you see from beyond US borders?

Csonka: Within the next couple months, we're going to see the release of the ReFuelEU policy roadmap. I think there's an expectation that the EU is going to adopt blending mandates. It would definitely get the industry started, even if they begin with something like what we've already seen — a 1-2% starting mandate that rises modestly in the early years, but with pretty stiff curves on their aspirations, getting to beyond 50% by 2050.

And while there has been a rash of announcements about potential production facilities in the EU, I still think they are simply on par with some of what's happening in the US. There's a whole raft of things in the US that aren't being discussed publicly. These are relatively real, tangible activities where companies have done their front-end engineering and design work, they've got their engineering procurement and construction and are working on closing their financing now and concluding offtake discussions.

OPIS: It sounds like the appetite for SAF in the US is even stronger than many understand it to be.

Csonka: I think some of the headlines from major airlines in the past couple weeks go hand in hand with an expectation that we're going to see support out of the administration. It suggests that we're in a little bit different state of play than we have been in the past. Examples include recent announcements from American and Delta, the meeting airline CEOs had with the White House team, FedEx's commitment to neutrality by 2040, as well as a couple of rather large pending announcements.

We're also seeing a bit more mature thinking by airlines and producers and a recognition that public pressure to address carbon is going to increase. It's also going to increase from shareholders, who are demanding more sustainability. All of this is starting to come together now to produce what I hope are more tangible results.

But do I think we're through the hardest part? Absolutely not.

OPIS: What's still needed?

Csonka: Physically getting facilities in the ground. And I think it goes back to that same statement that you referred to before, of the 300-400 million gal/year production capacity every year, ad infinitum. Those are serious, sizable investments, and what we have to see is the continued appetite not only from fuel buyers but also from the potential fuel sellers who step into this space.

OPIS: You've been at this for a long time. What keeps you up at night?

Csonka: What I worry about in terms of achieving scale is that the public appetite to support SAF for a long period is likely not there. We see that over and over again with any policy. The public gets tired of putting money into the system, or budgets continue to tighten and the support dissolves.

And so that leads me to ask: "How can we continue to reduce SAF production costs and increase the use of cheaper feedstocks and waste streams. Do we have the right technologies in place and are they at the level that we need them to be? How can I continue to encourage DOE and other folks to continue to really focus on those new pathways?" Those are the things about which I'm continuously thinking.

Policy can change the picture overnight. But I don't think the industry can continue to rely on policy for the next four decades to actually drive us to where we need to go. I think society will have to decide whether or not we need to have carbon pricing, and if so, that helps the overall situation because I think you will then find that petroleum won't stay at $50/bbl, or its use will be restricted through other policy mechanisms.

In the long term, I think the price of petroleum-based jet fuel is going to continue to rise through various mechanisms, and I remain hopeful that the price of SAF continues to fall through various mechanisms like learning curve and supply chain optimization.

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