Joel Makower, Executive Editor of GreenBiz Group, sat down recently with Bryan Sherbacow, SAF pioneer and Chief Commercial Officer of biofuel producer World Energy, to discuss what it will take to help SAF scale to the point where it will be competitive with conventional jet fuel.

“It’s really about getting investors that we have on the sidelines comfortable with deploying capital. We need the policies that are going to support the investment. The dollars are there, [so if] we get the regional low-carbon policies, the ability to be economically efficient, then the money will flow and we’ll be able to expand our production,” Sherbacow said.

California’s cap-and-trade low-carbon policy helped boost the demand signal and establish confidence in renewable fuels, Sherbacow said.

“That policy and that price on carbon allows us to generate additional revenue that as a result allows us to pass that on to our customers, in other words, reducing the cost,” Sherbacow said. “From a technical perspective, we’ve demonstrated viability … and that sustainable fuels can become the new normal if we can just incentivize wider-spread production of the fuels.”

Closing the incentive gap with road fuels

Another factor limiting investment in SAF has been a gap between how aviation and road fuels are incentivized, Sherbacow said.

“Investors want to have security into the future of consistent policy that’s going to support our activity and their return on their investment. And today, we don’t have that. It’s uneven with regard to what types of fuels are being incentivized,” Sherbacow said. “We’re going to look at the marketplace and see which is going to give us our best return. Today, policy has skewed more towards ground transportation fuels.”

Airlines have sought to partner with biofuel producers to support development of SAF and help tackle the industry’s carbon-reduction goals. SAF is expected to be a key part of the solution and is seen growing to meet nearly one-fifth of total demand for aviation fuel by 2040, according to the International Energy Agency.

“Showing that these products are available and low-carbon solutions are available and being deployed, I think these opportunities are awakening certain sustainability officers’ awareness and allowing them to support and ask for these solutions on a more wide-scale basis,” Sherbacow said.

Offtake agreements aren’t enough

In the United States, to earn the label of “sustainable”, fuels must reduce net greenhouse-gas emissions by at least 50 percent compared to conventional petroleum fuels. World Energy is regularly achieving 60-70 percent reductions thanks to policy incentives, Sherbacow said.

Traditional offtake contracts also aren’t enough to spur more SAF production on their own, he said.

“The issue is that the price sensitivity within those contracts is such that they are saying if you can produce it at a price comparable to my current opportunity, then we’ll buy as much as you can produce. The issue is that’s not sufficient today to deploy more production. There’s still an incremental expense that needs to be overcome,” Sherbacow said.

That’s where policy can help. In California, according to Sherbacow, World Energy is driven to find the lowest-carbon solution because every percentage that they reduce it, they generate more carbon credits that in turn allows them to reduce costs.

“The efficient demand from a commercial aviation executive today is to work through policy. The opportunity for executives is to reach out to policy-makers to send demand signals.”

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