Top 5: The SAF Juggernaut

09.27.21 | Blog | By:

Hello friends! Here’s my monthly take on five most interesting developments in transport energy trends. What I try to do each month is select stories, studies and other interesting items that you may not have seen elsewhere but that really represents an important issue or trend that I think you would want to know about. Or I try to poke behind the hype to provide a deeper understanding of what’s happening. Items I selected this month include:

  • The SAF Juggernaut: Last week more than 50 companies pledged to replace 10% of global jet fuel with sustainable aviation fuel (SAF) by 2030.
  • Zero Emissions Shipping: Also last week, 150 organizations called for zero emissions shipping, and supportive policies to make that happen, by 2050
  • Hydrogen ICEV?: Yes. Several companies are testing it for light- and heavy-duty trucks.
  • EVs Deplete Fuel Tax Revenue: It’s no surprise to anyone reading this, but the pinch is certainly being felt in major markets such as Norway.
  • The EU’s Carbon Border Adjustment: A new study finds that the proposed carbon border adjustment under the EU’s Fit for 55 package may have disproportionate impacts on regions, especially Africa.

1. CNN Business: The Climate Can’t Wait for Electric Planes. Sustainable Fuel May Be the Answer. – This article recounts the news that many of us have seen: More than 50 airlines, oil companies and other companies, including Delta Airlines, BP, Boeing, Airbus, American Airlines, British Airways, Cathay Pacific, Japan Airlines and Shell pledged last week to replace 10% of global jet fuel supply with sustainable aviation fuel (SAF) by 2030. For perspective, the figure below presents jet fuel projections through 2050 from the World Economic Forum-McKinsey lead Clean Skies Initiative (of which all the foregoing parties are members).

In 2019, fewer than 200,000 metric tons were produced globally — less than 0.1% of the roughly 300 million metric tons of jet fuel used by commercial airlines. If all publicly announced SAF projects are completed, volumes will reach just over 1% of expected global jet fuel demand in 2030, according to the Clear Skies Initiative. But I think this is going to change, and quickly. Consider as an example the Shell announcement from last week that it would begin producing 2 million tons of SAF by 2025.

In addition, the International Air Transport Association (IATA) estimates forward purchase agreements for SAF will total $13 billion this year, up from just $2.5 billion in 2016. That number could reach $30 billion by 2025, which would still amount to less than a fifth of the global airline industry’s jet fuel bill in 2019, according to IATA.

SAF currently costs between two and eight times more than its fossil fuel-based alternative. There are hills to climb and gaps to close. To encourage more business travelers to cover the higher costs of SAF, the article notes the coalition has developed a SAF certification system that enables companies to buy SAF to offset their emissions from travel. This is important for companies that have already set net zero emissions targets. Moreover, governments are also adopting policies to promote and mandate the use of SAF. Norway and Sweden, for example, require that a minimum amount of aviation fuel sold in the countries must be SAF.

SAF mandates have also been proposed in the United Kingdom and European Union, while the Biden Administration is contemplating incentives to support SAF production. The Administration and the airline industry agreed to replace all jet fuel with sustainable alternatives by 2050 and as early as 2030, the U.S. will aim to produce 3 billion gallons (about 102 million tons) of sustainable fuel – about 10 percent of current jet fuel use.

2. Reuters: Top Global Companies Call for Zero Emissions Shipping By 2050 – More than 150 leading companies and organizations including oil majors and port authorities last week called for the global shipping industry to be fully decarbonized by 2050, urging governments to step up action warning time was limited. The Call to Action initiative, developed by the World Economic Forum, the non-profit Global Maritime Forum and other partners, said decarbonization of shipping could “only happen with the urgency and scale needed” if governments and regulators established proper policy frameworks. In addition to the 2050 decarbonization target and supportive policies, the call to action also advocates for commercially viable zero emission vessels by 2030.

3. Carscoops: Toyota’s Next-Gen Prius Could Get a Hydrogen Internal Combustion Engine – Have you been hearing a lot about hydrogen internal combustion engine vehicles (ICEVs) recently? I certainly have, and in fact, I plan to dig into recent developments for clients of the Transport Energy Outlook service (members, stay tuned!).  This article, which details Toyota’s deliberations over the possibility of offering a hydrogen ICEV in its next-gen Prius, is just the latest on the topic. The company may offer the vehicle as early as 2023 or 2025, and the technology was tested this summer in a modified Corolla in a 24-hour race, according to the article. The prototype motor was based on the turbocharged 1.6-liter three-cylinder engine found on the Toyota GR Yaris with a series of modifications allowing it to use compressed hydrogen as fuel, and the addition of four carbon-fiber hydrogen tanks located at the rear.

It’s not just Toyota considering the hydrogen ICEV. Kawasaki Heavy Industries noted the potential of the technology earlier this month. Dr. Motohiko Nishimura, Executive Officer of Kawasaki Heavy Industries noted, “In terms of durability and reliability, it [hydrogen ICE] is superior to fuel cells, making it suitable for heavy-duty use on ships, heavy machinery and long-distance buses and trucks. Naturally, they are the most cost-competitive power source.” He projected that shipping would be the first sector where hydrogen ICE would be used.

Anders Johansson, Vice-President of Heavy-duty OEM at Westport Fuel Systems “The advantages of the usage of hydrogen in ICE applications is that it is based on cost-effective, mature and reliable technology. Minimal investments are needed in manufacturing, development, testing and time to market is short compared to other technologies.” Cummins recently noted it had begun testing of a new hydrogen ICEV concept using green hydrogen in July. Amy Davis, Vice-President and President of New Power at Cummins said, “Hydrogen engines will be able to use familiar mechanical drivelines. This enables an easy and low-cost OEM installation and a zero-carbon solution.”

How a hydrogen ICEV would fit within the frameworks some countries have proposed to ban or phase out the ICEV remains in question. But a development like this does argue for restraint in making these announcements and developing these kinds of policies. The ICEV could be a real tool to help reduce GHG emissions. Would most of us have contemplated such a possibility a few years ago? No. There is a tendency to think fuels and vehicle technologies are static when they are not. They can be improved, and they can evolve and that’s what policy should be fostering. Hydrogen ICEVs could be a real alternative for hard-to-decarbonize sectors such as heavy-trucking trucking and maritime.

4. The Wall Street Journal: Electric-Car Shift Drains Fuel Taxes in Some Countries – The Journal notes that in places where more EVs are hitting the road, income from fuel tax, which often accounts for a significant chunk of public revenue, is falling. For example, in Norway, home to the world’s highest EV uptake rate, lawmakers have scrapped tax breaks on electric cars as they try to plug a hole in tax revenue. But a 40% drop in Norway’s revenue from car-related taxes between 2013 and 2021 prompted lawmakers in March to suspend exemptions from the country’s annual motor-vehicle tax for EV owners, according to the Journal. The government has also started work on a new, technology-agnostic system of car taxation it wants in place by 2025—the year Oslo aims to end the sale of internal combustion engine vehicles.

The country is looking at taxing the purchase of emissions-free vehicles over the value of $70,000 and the introduction of GPS-enabled road pricing. Road pricing, under which drivers pay for the distance they drive depending on the time of day they are behind the wheel, is also being explored as a solution to lower fuel taxes in the U.K. and Australia. It already exists in several forms, like toll roads, self-declared payments and congestion-charge zones that use cameras to read license plates and charge drivers in cities including London and Stockholm. Singapore recently switched to a satellite-based road-pricing system. Congestion charging has been highly controversial in some countries such as the U.S., though some cities such as Seattle, Washington, DC, San Francisco and Los Angeles have considered or are considering such schemes. New York City does have congestion charging in place. As the U.S. Congress considers a suite of policies, primarily incentives, to encourage consumer EV uptake, and as uptake continues to increase, it would do well to consider how best to replace lost fuel tax revenue. Those discussions are not happening right now.

5. Eurasia Review: European Green Deal: Carbon Border Adjustment Mechanism Could Hit Some Trade Partners Hard – This article reviews the EU’s plans to use a carbon adjustment mechanism under its Fit for 55 legislative package as a means to create a level playing field for EU companies subject to that regime as well as offer economic incentives that will promote decarbonization in particularly emissions-intensive sectors. A recent study noted in this article found that countries in Africa and non-EU states in Eastern Europe are at particularly high economic risk as a result of the proposed carbon border adjustment (CBA) mechanism.

The researchers more closely examined three countries that would be particularly affected for different reasons: Bosnia and Herzegovina, Morocco, and Mozambique. Bosnia would be affected because the economy is so dependent on steel and aluminum exports. Morocco is representative of many African and other developing country exporters: its economy is fast growing as is its energy demand, but the country is nearly entirely dependent on fossil fuels. Finally, countries such as Mozambique lack the financial ability and capacity to track, monitor and report the carbon content of exports. Frankly, I’m surprised the issue of “geopolitical equity” has not already been raised with respect to the CBA to the European Commission. And consider, according to Eurostat, the EU is Africa’s largest trading partner


Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transport energy to the auto and oil industries, alternative fuels industries, governments and NGOs. She writes and advises on petroleum fuels, biofuels and other alternative fuels, and fuels policy, market and technology issues.

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