While Europe has taken an early lead in the development of e-kerosene, the most scalable sustainable aviation fuel (SAF), a series of bottlenecks could mean it loses its first-mover advantage, Transport & Environment (T&E) has said.
According to T&E, Europe has the potential to host more than half of the world’s e-kerosene production, with a production capacity of close to 3 million tonnes – or around 5% of the fuel that Europe’s aviation sector needs to operate.
While Europe’s early progress has been boosted by EU law on sustainable aviation fuels, specifically ReFuelEU, the development of production facilities is hampered by financing challenges, as well as by traditional fuel suppliers being ‘notably absent from the conversation’, T&E said.
‘E-kerosene revolution’
“The EU’s law on sustainable aviation fuels kick-started an e-kerosene revolution in Europe – but fuel suppliers are not cashing in on this potential,” commented Camile Mutrelle, aviation policy officer at T&E.
“Without more final investment decisions, the EU’s 2030 target and plans to prosper from green aviation will fail. To succeed, these projects need a stable legal framework, as provided by ReFuelEU, and funding through an array of public support mechanisms and private capital investments.”
T&E notes that only four projects are at an advanced planning stage, with financing the main barrier – each project requires between €1 billion and €2 billion in capital. Overall, the capital required to meet 2030 targets for SAF is estimated at €10 billion to €20 billion.
Europe’s lethargy is being echoed by an acceleration in SAF development in other regions, however – China has announced around 10 large-scale e-kerosene projects, accounting for approximately 20% of global planned capacity.
Funding mechanisms
Currently, EU funding mechanisms for e-kerosene are ‘not strong enough to support the level of investment needed to get these projects off the ground’, T&E noted, while traditional oil companies have made ‘negligible contributions’, continuing to invest in fossil fuels.
“Despite their huge financial capacity, major oil companies are largely absent from the e-kerosene market,” Mutrelle added. “Startups have taken the lead, but lack the internal resources to finance the capital-intensive infrastructure that is urgently needed.
“Getting oil majors on board and EU financing mechanisms up to scratch will give e-kerosene the lift-off it needs. The upcoming Sustainable Transport Investment Plan is a chance to set the right flight path by prioritising e-SAF, providing a comprehensive mechanism to address the challenges EU projects face.” Read more here.
