The Future of Flying — Sustainable Aviation Fuel?

The aviation sector needs to decarbonise — do SAFs represent a compelling investment opportunity?

12 min readMay 3, 2023

Glossary of terms used:
SAF = Sustainable aviation fuel
CAF = Conventional aviation fuel
FT = Fischer-Tropsch
HEFA = Hydroprocessed Esters and Fatty Acids
BtL = Biomass-to-Liquid
PtL = Power-to-Liquid
AtJ = Alcohol-to-Jet
HFS-SIP = Hydroprocessed Fermented Sugars to Synthetic Isoparaffins
MSW = Municipal solid waste
GHG = Greenhouse gases

Why do we need SAFs?

In 2050, aviation will account for 22% of transport’s renewable energy demand. Aviation currently contributes around 2% of all global GHG emissions, and the industry is growing over 4% annually. According to ATAG, over 70% of aviation’s emissions come from long and medium haul flights. We need a solution to quickly and effectively decarbonise aircraft to meet global emissions reduction targets — lithium-ion batteries and hydrogen have both been put forward as solutions, but they have some big drawbacks:

Batteries aren’t practical for long haul flights due to the following paradox: more range = more batteries = more weight = shorter range;
Hydrogen requires an upheaval of infrastructure and a large rollout of novel storage solutions (will take many years / decades);
Both technologies would require a complete redesign and rebuild of the world’s aircraft fleet.

To impact the near-term, any climate-friendly solution must be able to “drop in” to existing fuel tanks and aviation infrastructure with minimal changes — and therefore must share similar chemical and physical properties to conventional aviation fuel (CAF). This is where sustainable aviation fuels (SAFs) come in, which are jet fuels created synthetically rather than from crude oil. Typically formulated from feedstock such as biomass, they simply return carbon (absorbed by plants or captured directly from the air) back into atmosphere rather than add to the total atmospheric carbon content, and therefore are theoretically carbon-neutral (but not entirely in practice).

The investment opportunity

Sustainable aviation fuels are still in their infancy— than 1% of all flights used some form of SAF in 2021 — but this amount is growing as OEMs conduct more testing and governments draft mandates to encourage uptake, in an effort to meet our 2050 net zero goals. The market is therefore primed for investors and innovative new startups to flood the space.

Since any new fuel must closely approximate the chemistry of current jet fuel, most innovation in the SAF space occurs through optimisation of either the feedstock or the fuel synthesis process. For a new SAF technology to be an attractive prospect for investors, it must have 3 crucial characteristics:

Fast path to cost-parity with existing jet fuels;
Minimum possible climate impact;
Potential to completely replace CAF without blending (100% drop-in).

Production pathways

The aviation industry has stringent safety and regulation standards, and so any process used to formulate SAF must be approved by a governing body (ASTM) before having any chance of being commercialised.

There are currently 7 ASTM-approved production pathways to make SAF, the pros and cons of which are outlined in the table below (with Fischer-Tropsch SPK gasification separated into both BtL and PtL variations). For each pathway, the SAF end-product is required by regulation to be blended with CAF (maximum 50% SAF in most cases) as the aviation industry seeks to minimise risk and gradually ease SAFs into widespread commercial use.

Road to cost-parity

For any of these pathways to be implemented on a large scale, they must be competitive in price with CAF — otherwise airline companies will not be incentivised to adopt the new technology.

The commercial viability of each pathway is driven by:

Cost of production plant (capex and opex);
Cost of feedstock.

The World Economic Forum and McKinsey released forecasts for how costs of the most widely-used pathways will evolve from 2020–2050 (highly sensitive to underlying assumptions, so should be used just as a guideline).

The key takeaways from this data:

HEFA (Hydroprocessed Esters and Fatty Acids) — currently the most cost-competitive pathway. The c.20% drop in cost from 2020 to 2050 is driven mostly by the gradual decrease in price of hydrogen (used as a reagent in this pathway), with the bulk of today’s cost being feedstock which is relatively fixed and unlikely to change too much over time. Therefore it’s unlikely HEFA will achieve cost-parity with CAF ($620/tonne) in the medium-term.
Alcohol-to-Jet — capex and opex expected to decrease over time due to economies of scale, with price of feedstock staying relatively constant. Capex and opex reduction will depend on the technology’s learning curve and scale affects, but is unlikely to achieve cost-parity with jet fuel any time soon due to the feedstock cost.
FT (BtL, MSW) — waste feedstock assumed to cost zero as of 2020 (expected to rise over time as large-scale waste removal scales up). Capex represents 80%+ of total costs today and is expected to fall over time due to economies of scale and improvements in technology — there’s potential to reach be competitive with CAF cost-wise depending on how fast this progress takes place.
FT (PtL) — c.84% of total costs is capex and opex associated with hydrogen production and storage, dropping to 62% of the total by 2050 as the technology matures. This estimate is highly sensitive to assumptions, driven by the future price of renewable energy, electrolysis and carbon capture, but with continued acceleration of investment into the energy transition there is a distinct possibility of achieving cost-parity in the coming decades. By integrating directly with a growing hydrogen infrastructure, PtL costs can be lowered further still by 2050.

While the FT Power-to-Liquid route requires more upfront expenditure, feedstock costs could drop drastically depending on the speed of the wider green energy transition. Current trends suggest this is a very promising long-term solution. FT Biomass-to-Liquid also shows a lot of promise, with the extra benefit of removing unsightly and polluting waste from urban areas if MSW is used as feedstock. Other pathways either have fixed feedstock costs or more expensive processing methods, which are deemed to be less promising unless there is a sizeable technological breakthrough on the horizon.

Optimising costs

To maximise commercial appeal of their technology, new market entrants and incumbents can pull a number of levers to minimise both production and feedstock costs.

To achieve lower production costs:

Minimise the number of separations required in the process (i.e. optimise the chemical pathways);
Utilise existing infrastructure / equipment as much as possible;
Retrofit existing plants;
Set up processing plants as close as possible to production of feedstock, to minimise storage and transportation costs;
Leverage co-processing of waste / chemical by-products;
Experiment with lower temperatures, lower pressures, and alternative construction materials;
Invest in new catalysts and separation technologies.

And here are some methods for minimising feedstock costs:

Use more plentiful feedstock;
Use feedstock that is available 24/7, to avoid excessive storage and handling costs;
Consider using cheaper feedstock, for example waste streams;
Experiment with the widest possible range of feedstock, in order to scale up operations as quickly and cheaply as possible;
Explore a wider range of hydrocarbons to limit or eliminate blending requirements;
Increase throughput and reduce feedstock pre-processing (higher total carbon utilisation);
For biomass processes — invest in improved farming yield technology (e.g. robotics) to reduce land use and GHG emissions.

Lifecycle emissions

To contribute to net zero goals, SAFs must significantly reduce the carbon footprint of conventional jet fuel. While SAFs are theoretically carbon-neutral, there are in fact lifecycle emissions owing to the sourcing, processing and transportation of these fuels.

Below are simplified analyses to compare the lifecycle emissions of different jet fuel manufacturing processes, based on the literature:

CAF — for conventional fuels, the vast majority of emissions (measured in grams of CO2 equivalent per megajoule) are produced by combustion (analysis conducted by Jing et al. 2022)

HEFA— here, a number of different oilseed crops are compared, where the values shown are in gCO2e / MJ (analysis conducted by Seber et al. 2022). As alluded to previously, it’s assumed all CO2 absorbed during the life of the crop is directly offset by combustion; therefore the values in the table below are purely emissions from farming, refining, and jet fuel production. The upshot is that using these crops for synthetic fuel results in a c.50% reduction in GHG emissions compared to CAF.
When selecting a crop for fuel it’s important to also consider the cultivation and oil extraction processes, as producing large amounts of the biomass will have direct environmental, societal and economic impact — e.g. land and water use, as well as potential competition with food supply. Metrics like seed yield (kg/hectare), seed oil content (wt %), oil extraction efficiency and amount of fertilizer (g) are critical to get the full picture.

Fischer-Tropsch (PtL) — The emissions from the power-to-liquid process with direct air capture to make synthetic diesel are listed below, comparing two different calciners (analysis conducted by Liu et al. 2020). Both methods prove vastly superior to CAF, with over 80% fewer emissions in the best case. (Figures are in gCO2e / MJ and are approximate. “Other” includes chemicals and overheads.)

Optimising the chemistry

In order to be able to replace 100% of current jet fuel without the need for blending, the chemistry of proposed SAF must closely approximate existing fuels. 4 key hydrocarbon families currently found in CAF are:

n-alkanes
Iso-alkanes
Cycloalkanes
Aromatics

The table below from the US Department of Energy compares the positive (+) and negative (-) attributes of each hydrocarbon:

A summary of the properties:

n-alkanes have high specific energy (J/unit mass), good thermal stability and do not contribute to sooting (they burn cleanly), but are limited by a low energy density (J/unit volume) and a relatively high freezing point (as a result they struggle to meet ASTM D1655 specifications);
Iso-alkanes are similar but with a lower freezing point (a benefit);
Cycloalkanes are generally strong across the board;
Aromatics have great energy density but contribute heavily to sooting (they burn very dirty).

It seems that a combination of iso-alkanes and cycloalkanes is preferable, as this can theoretically provide good specific energy and good energy density (potentially even higher than CAF), while otherwise meeting the mechanical demands of current jet engines. Also, low aromatics content would mean fewer particulate matter emissions during flight (up to 97%), which are responsible for aircraft contrails.

However aromatics are a necessary evil, as they encourage seal swelling in the jet engine (and so decrease the likelihood of leakage) in older aircraft that have nitrile seals. The current regulation requires aromatics to be present, with CAF averaging 17% aromatic content. An option is to replace all nitrile seals with a new material, but with a large proportion of the 25,000 aircraft currently in service having this older seal design, it’s a monumental task and undermines the whole simplicity of drop-in fuels. Note that more modern aircraft typically have fluorocarbon / fluorosilicone seals, for which aromatics are not required.

A lot of work is being done to optimise the chemistry of SAF in order to achieve 100% drop-in. The main goal should be optimising the iso-alkane and cycloalkane content while keeping aromatics to a minimum — or ideally finding an alternative chemical to aromatics that promotes seal swelling while not contributing to sooting.

Here are some key milestones regarding 100% drop-in SAFs:

Virent — first commercial test flight with 100% SAF in one of the engines (Dec-21). It used synthesised aromatic kerosene (SAK) derived from plant sugars, blended with SAF produced by the HEFA pathway. Despite containing aromatics, testing saw reduced particulate emissions due to different aromatic chemistry to CAF.
Neste — first commercial test flight completed with 100% SAF (Jun-22). Resulted in 80% fewer emissions than CAF (calculated using LCA).

Takeaways

Given the above, these are the key areas of R&D to keep an eye on in the coming years:

Novel chemistries demonstrating ‘aromatic-replacement’ — giving the benefit of 100% drop-in for legacy aircraft while avoiding the sooting issue — a lot of room for startups to innovate here;
Localised production of fuel, for example through modular plants;
Full exploitation of the potential of waste streams as feedstock;
Optimisation of upstream technologies — carbon capture and electrolysis;
Any new pathways that promise significant drops in cost, bearing in mind that new methods can require millions of dollars and up to 5 years to be approved—thus innovation in this area more likely to come from incumbents.

Ultimately, the success of SAFs is intrinsically linked with the pace of the energy transition, breakthroughs in green technology, chemical innovation, and regulatory mandates. Attention should be focussed on all these areas to promote ‘flywheel effects’ that will accelerate progress towards the 2050 targets. If progress in other areas accelerates, especially hydrogen generation and storage, the question will then become whether it’s more cost-effective over the long term to replace the current global fleet with H2-powered planes — in which case SAFs will be a bridging fuel to a carbon-free future.

With SAF poised to be a crucial component of the green transition in the coming decades, I’ll be following up this article with a deep dive into one of the more promising SAF technologies. Stay tuned!

Bonus: Proposed criteria for SAF startups

When deciding to invest in a new startup in the SAF space, investors should ask the following:

What is your business model? Are you processing / sourcing / distributing SAF?
Are you planning to scale SAF at your own plants or license out your technology?
What is made in-house and what is outsourced?
What do you predict the split of capex and opex will be?
Is your technology patent-protected?
Is your fuel 100% drop-in? If not, is there a clear path to full drop-in?
Have you done an LCA (life cycle analysis)?
How have you innovated on chemistry / distribution?
What are the unit economics of your solution? Will costs decrease with scaling?
What are the long tail / unforeseen costs? Is there raw material pricing risk?
Are costs minimised up front? E.g. are your processing plants located near the biomass / crops / waste streams to minimise transport costs?
Which supply chains are you dependent on for feedstock? How can you ensure reliability of your supply chains?
Does your process produce any by-products that can be repurposed / sold on?
Have you done any pilots with OEMs / customers? If not, do you have a roadmap to this?
What is your technological / manufacturing readiness level?
Are you using an ASTM approved pathway or a novel approach?

SAF landscape

Below is a non-exhaustive list of key players and innovators in the SAF and synthetic fuels space.

Early Stage:

SkyNRG — Source, blend and distribute SAF
Metafuels — Green methanol through direct air capture and electrolysis
Flyoro — Modular blending technology to be used on-site at airports
Waste Fuel — Converts waste to fuel
Ash Creek Renewables — Distributes low carbon feedstock for fuel
XFuel — Converts waste and biomass to diesel
Alder Fuels — Converts biomass to fuel
Spark e-fuels — Converts water and CO2 to fuel via FT PtL process
Arcadia eFuels — Converts water and CO2 to fuel via FT PtL process
EFuel — Converts combustion engine exhaust into oxygen
Liquid Wind — Combines water and CO2 to make eMethanol

Late Stage:

Sunfire — Electrolyser manufacturer providing SOECs to create syngas in the PtL pathway
Prometheus — Converts water and CO2 to fuel via FT PtL process
Ineratec — Converts water and CO2 to fuel via FT PtL process
Fulcrum Bioenergy — Converts waste to fuel via FT gasification process
Twelve — Converts water and CO2 to fuel (and other materials) via FT PtL process
C-Zero — Converts natural gas into hydrogen and solid carbon
Carbon Clean — Modular carbon capture systems

Acquired / Public:

Neste — #1 global producer of SAF
Virent — Converts sugars to fuel for 100% drop-in fuels
LanzaJet — Converts alcohol to fuel via AtJ process
Swedish Biofuels — Company behind the original AtJ process
H2GEN — Develops, builds and operates plants for making hydrogen and e-fuels