Avfuel to buy 1bn gallons of SAF from Alder Fuels

Conor Feasey

Avfuel Corporation has agreed to buy 1bn gallons of Sustainable Aviation Fuel (SAF) from low carbon fuel specialist Alder Fuels over 20 years. The multi-million-dollar deal represents the biggest publicly-announced SAF commitment to supply business aviation and will begin in early 2024.

“There have only been a few deals of this size announced in the world of SAF and they’ve all been with airlines,” CR Sincock, executive vice president, Avfuel told Corporate Jet Investor (CJI). “This is the first deal of this size with a business aviation supplier.”

There is increasing competition between business aviation and airlines to secure SAF supplies, he said. “There is potential for a situation where airlines end up with the vast majority of SAF or at least cost-effective SAF, with business aviation left out in the cold. So, it is important for business aviation to have a SAF supply.” While airlines have traditionally used the bulk of SAF production, during the pandemic, business aviation significantly boosted its use of SAF as airline activity fell.

Fuel is one of the largest variable expenses for an airline. Some bizav operators who are not in the business of selling seats have more flexibility in their budgets to pursue SAF adoption,” said Sincock. SAF is considerably more expensive than standard jet fuel but boosting supply and innovation in fuel technologies will narrow the gap.

The price of SAF depends on a range of factors. These include: the ratio of its blend with petroleum jet fuel, the distance SAF is transported, the feedstock and technology involved in its production, and what credits and incentives are available for operators who use it.

“The price of SAF will likely come down over the next five years as supply increases, widespread use grows and legislative action is taken in the form of financial incentives,” said Sincock. “The price coming down will also help to support demand, which, in turn, will help motivate producers to bring more product online.” Plus, the cost of conventional jet fuel is rising, as the price of crude oil has soared following the Russian invasion of Ukraine. Also refining capacity is tight, which has also helped to narrow the price gap.

As the industry becomes more focused on achieving net-zero status by 2050, business aviation’s demand for SAF has grown simultaneously. “It’s almost become a joke amongst some of my colleagues that wherever we go, SAF takes up half the conversation, if not more,” said Sincock. “You have large corporate flight departments that have annual targets to buy a certain percentage of their fuel in SAF.”

Alder Fuels converts biomass such as regenerative grasses and agricultural residues into a low-carbon crude oil that will replace crude oil in refineries producing aviation fuel.

According to the US Department of Energy (DOE), forestry and agricultural residues in the US could provide enough biomass energy to generate more than 17bn gallons of jet fuel and displace around 75% of the nation’s aviation fuel consumption.

“By also using grass with deep root systems that can sequester huge amounts of carbon, you end up with a process that is carbon negative or zero as opposed to just a carbon reduction,” said Sincock.

“There’s a huge potential of untapped demand. In creating a sustainable future for business aviation, collaboration is the best approach. We welcome everybody else to join us in this endeavour.”

The investment was made using its subsidiary, Avfuel Technology Initiatives Corporation.

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