Amidst the cool early summer breezes off the Mediterranean, the 32nd edition of EUBCE has arrived in Marseille, and the delegates have been comparing notes on sustainable projects and technologies with elán vital and force irresistible.
The delegates are serious, impassioned, confident and, oh my, detailed. My boat is swamped with forecasts, models, predictions. There are more models at EUBCE than on the Paris fashion runways this season.
As a fashion design juror might remark to you, the trick in judging is to recognize what looks good in the real world. Everything looks good, even unflattering data, draped on the right model.
So, at EUBCE, you ask, what is the buzz on the floor? To paraphrase Monty Python:, it is SAF, SAF, SAF, SAF, carbon price on chemicals, eSAF, SAF, SAF and eSAF. So many people had so many interesting things to say about SAF, and said them so fast and without pause, that I was reminded of the French film Breathless which, coincidentally, also begins in Marseille.
The eSAF story
Meanwhile, I know, you’re asking “what exactly is eSAF?”
It’s the trendy name for eFuels, which used to be PTX fuels, after they were electrofuels, after they were 3G biofuels, after they were that lab thing making fuel from soda water. Take it from me, you can’t make eSAF fast enough to please the forecasters at EUBCE looking for sustainable, affordable, reliable, available aviation fuels in 2040. The belief that this not-yet-at-scale tech will affordably succeed is so intense that it felt to me as if the modelers, planning the EU’s escape from its sinful emissions problem, are more devoted to ‘redemption through faith alone’ than the theologians of the Puritan church.
I’d be far happier if the argument for eSAF was based in sustainable affordable feedstock. Instead we have alluring carbon intensities, the prospect of spiraling electricity costs and tech coming along but not yet here. One of the reasons I am fond of corn, cane and the forest.
SAF prices in decline?
At EUBCE, I presented data on a 20 percent decline in SAF energy values over the past 12 months, as reported in the Daily Digest — every penny of it due to the unintended consequences of policies designed to help SAF, not harm it. As I presented the data, my European friends sat in glum silence, excepting one individual who contended that energy value stacks are not actual SAF trading prices, and therefore there’s no hard evidence that prices are in decline.
To make the obvious riposte, Digest energy value stacks are composed of LFCS prices, RFS prices, Section 45 tax credits and Jet-A prices, each of which is traded, and priced transparently. If the actual SAF prices vary from the energy value stack, arbitrageurs enter the market to acquire gallons, break them into component pieces and sell them off. The practice of arbitrage forces energy value stacks and real-world prices to converge.
So, the price outlook is gloomy, yet fixable. Reason? The broad SAF policy that the EU is pursuing is not a bad one for these times. Old-school, targeted, punitive EU mandates are wildly unpopular with airlines, but they offer efficacy if not pleasantness.
The reason is simple enough. No matter how they are structured, carbon prices are based on a mandate that creates demand. Mandates are the foundation and when they are lacking in ambition, as they are now, even a modest increase of SAF supply floods the market, depressing prices and discouraging capacity building.
The state of technology
Meanwhile, the technology story is getting nice and rosy. To explain the state of play, we’ll have to go almost back to the dawn of SAF — in the mid-to-late 2000s, when it was still called aviation biofuels. Back then, there were two pathways competing.
Honeywell UOP had developed a technology to convert bio-oils to hydrocarbons. The most impressive characteristics at the time? Low carbon intensity, high yields in the 90 percent theoretical range, and cheap feedstock. Feedstock price remains a concern.
Meanwhile, Amyris was founded with a pathway to biokerosene by fermenting sugar to farnesene, and upgrading to farnesane as a SAF blendstock. The impressive characteristics? Low carbon intensity from Brazilian sugarcane, cheap feedstock, and plenty of feedstock. Yields in the 28 percent range theoretical were a concern.
The HEFA pathway, oils-to-fuels, won an overwhelming victory in the competition. Both feedstocks reached commercial scale — but, as sugar and oils became expensive, the low yields of sugar fuels began to tell and rapidly outran any of the incentives and carbon prices. Amyris retreated to ingredients and consumer products where it ran into problems of high fixed costs and small markets.
Honeywell went from success to success, and many others jumped into the field, Affordable plant oils and waste oils became ever more scarce. Major players began to see the path to success required economies of scale that would win the market share wars that were expected to come.
Given the limits on affordable, available HEFA or sugar fuels, the alcohol-to-jet pathway emerged. ATJ featured low carbon intensity if using cane sugars, moderate yields in the 45 percent theoretical range, and abundant feedstock. Feedstock price was a concern, and there were policy impediments.
To press harder on feedstock price and carbon emissions, a number of companies emerged in eSAF, using waste CO2 and green hydrogen to make hydrocarbon fuels. As mentioned above, they have ultra-low carbon intensity, a heroic circular economy story, rising power costs and technical immaturity.
A number of thermochemical systems have been developed, gasifying waste feedstocks and using pyrolysis or the Fischer-Tropsch process to make advanced fuels. They’ve featured ultra-low carbon intensity, low cost feedstocks, moderate theoretical yields. Gasification has been a challenge.
To sum of the sense of the industry right now:
HEFA: Proven – feedstock creates a ceiling to growth
Sugar fuels. Proven – high opex, low yields.
ATJ. Proven, high capex. Carbon intensity concerns with corn.
eSAF. Emerging, elevated technology risk, high opex.
Therm – High technology risk, high capex.
So, we do not have a clear technology winner right now – each pathway has limitations. However, the sugar fuels pathway may have a new opening in Europe.
Why? When mandates get big, start to bite, and there aren’t enough gallons to go around, even $10 fuels come into the picture. And, they have the advantage of abundance – so watch that pathway and companies such as Global Bioenergies.
Sugar fuels show how the wheel turns and turns. They remind me of Marseille: someone will always come by, hoping to conquer you. Greeks, Romans, Visigoths, Umayyad Arabs, Franks, Bourbons, and so on. The Vikings are no longer in charge around the Mediterranean, but they were not wrong in coveting these shores.
Elsewhere at EUBCE
As one would expect from a major conference, the bioeconomy titans were in town and in form. The urbane and unflappable Kyriakos Maniatis was seen gliding between a series of public and private meetings, and where he goes, the walls seem to whisper G7 and G20. The blonde blur of biomass, Angela Grassi, was moving at light speed across the chessboard of the agenda, making the Kessel Run in twelve parsecs. David Chiaramonti is so enthusiastic and informed about soil carbon sequestration, I thought he might need a diaper, but my fears were unfounded, and there’s a point to his enthusiasm that corn ethanol producers might take note of. BioFuture Campaign majordomo Gerard Ostheimer and IEA Renewable Energy chief Paolo Frankl were in town briefly for high-level meetings and IEA Bioenergy high muckamuk Luc Pelmans was on premises for a longer spell. As was US DOE Bioenergy Technology Office’s Jim Spaeth, who appeared to moderate a thousand sessions and never complained about the workload. Final thought: impressive technical posters this year, I ran my iPhone battery into the red zone taking pictures, though there’s never enough on feedstock expansion.
Models on the runway, Vikings at the gates
We will see whether the models work out, and SAF emerges at the scale and pace required. For sure, the data looks good when draped on a model on a runway — but in the real world of take-offs and off-takes, will the shores of SAF be as eternally alluring as beauteous Marseille? Depends on how the mandate bites. The Vikings will wait and see.
Meanwhile, gracious me, EUBCE is pro-SAF. I’ll leave you with this paraphrase of the (bloody) Vikings as they sang it in the original Monty Python “Spam” sketch:
SAF SAF SAF SAF! SAF SAF SAF SAF! Lovely SAF! Wonderful SAF!