Neste could have excess sustainable jet fuel by 2028 - executive
20/11/2023 20:04
By Padraic Halpin
DUBLIN, Nov 20 (Reuters) - Neste NESTE.HE could have
excess sustainable aviation fuel (SAF) production capacity by
2028 and requires more certainty about long-term demand to
justify investment after that point, a senior executive at the
refiner said on Monday.
Neste aims to ramp up its production of renewable fuels to
over 6 million tonnes by 2026 from 4.5 million this year, 33% of
which will be SAF, vice president of renewable aviation Jonathan
Wood told an aviation sustainability conference in Dublin.
He said that meant Neste alone would have enough capacity to
meet the initial amount of SAF mandated by the European Union
from 2025 to 2029, but it was crucial suppliers see "a pathway
to demand growing beyond that", including from passengers.
The EU has adopted rules requiring flights departing from EU
airports to carry a progressively increasing amount of SAF,
which has net-zero or lower CO2 emissions than fossil fuel
kerosene, starting with 2% of total fuel from 2025.
"To make any further investments, we need to have demand
certainty... We have to find other mechanisms to help stimulate
demand further because only then will it be possible to justify
the internal investments," Wood said
"Right now we could be even in five years time actually
having more SAF production capacity than we actually have
demand" and end up producing renewable diesel instead of
aviation fuel.
The EU proposal aims to increase both demand for and supply
of SAF, which is currently produced in tiny quantities and is
far more expensive than conventional aviation fuels.
Executives from Norwegian Air NAS.OL , British
Airways-owner IAG ICAG.L and Icelandair ICEAIR.IC said the
EU needed to adopt measures beyond mandates, including helping
fund the scaling of SAF beyond 2030 and contributing towards
lowering the price gap between conventional and alternative
fuels.
Norwegian Airlines' vice president for sustainability said
without this, the financial penalties the EU is introducing for
airlines that fail to meet the SAF target of 6% in 2030 and 20%
in 2035 could threaten their survival.
"If we're not able to secure these resources and long term
offtake agreements with a pricing model today that we can live
with, I think we're probably going to be out of business,"
Anders Fagernaes told the conference.
(Reporting by Padraic Halpin; Editing by Cynthia Osterman)
((padraic.halpin@thomsonreuters.com; +353 1 500 1504; Reuters
Messaging: padraic.halpin.thomsonreuters.com@reuters.net))