SkyNRG, a Dutch company specializing in sustainable aviation fuel (SAF), has chosen Washington state as the location for a significant new biogas plant. This plant will play a crucial role in the airline industry’s efforts to decarbonize flying. The CEO of SkyNRG, Philippe Lacamp, expects the plant to be operational by 2028 or 2029, providing job opportunities for approximately 600 workers during construction and around 100 permanent positions afterward. Washington state‘s recent legislation, which includes SAF subsidies and expedited permits for plant construction, has made it the most attractive and supportive state for such initiatives.
Investment and Financing
SkyNRG had been exploring potential locations in the Pacific Northwest, and the favorable legislation signed by Governor Jay Inslee tipped the scale in favor of Washington. The project aims to produce about 90,000 metric tons of SAF per year, requiring an investment ranging from $600 million to $800 million. Lacamp expresses confidence in securing the necessary equity and debt financing, highlighting the industry’s commitment to achieving net-zero carbon emissions by 2050, with large-scale SAF production accounting for a substantial portion of the reduction. Despite the current macroeconomic situation, Lacamp believes that capital is available, and there is a willingness to provide the necessary funding.
Legislative Support
State Senate Majority Leader Andy Billig sponsored a bill that offers tax credits, providing subsidies of up to $2 per gallon for SAF. While SAF is more expensive to produce compared to regular jet fuel, these subsidies will help bridge the cost gap. Additionally, another bill aims to expedite permitting and environmental reviews for clean energy plant construction, further supporting SAF production. These legislative efforts have been well-received, positioning Washington state as a leader in promoting sustainable aviation.
Challenges of Sustainable Aviation Fuel
At a recent aviation sustainability conference organized by Boeing, industry experts discussed the significant challenge of decarbonizing aviation by 2050. Currently, aviation contributes around 2.5% of global carbon emissions, a percentage expected to increase as air travel continues to grow. Decarbonizing aviation is particularly challenging due to the energy intensity required to transport large numbers of people safely. While electric batteries are impractical for larger airplanes due to weight constraints, the industry’s plan for achieving net zero by 2050 involves the replacement of older planes with more efficient models and the development of electric, hybrid-electric, and hydrogen-powered alternatives for smaller aircraft. However, the majority of emissions reduction is expected to come from using SAF, a hydrocarbon fuel sourced from renewable feedstocks instead of fossil fuels.
Limited Production of Sustainable Aviation Fuel
Despite the industry’s focus on SAF, production remains limited. In 2020, less than 0.1% of aviation fuel used worldwide was SAF, and only two producers commercially supplied SAF in the U.S.A. To put this into perspective, United Airlines alone uses 4 billion gallons of fuel annually. The White House has set ambitious goals of producing 3 billion gallons of SAF per year by 2030 and 35 billion gallons per year by 2050. Achieving these targets will require substantial efforts and investments.
SkyNRG’s Approach
SkyNRG, founded in 2009, has been at the forefront of developing SAF technology. Although it is a relatively small company with around 50 employees, it has established partnerships with Boeing, major airlines, and shareholders like Dutch airline KLM. SkyNRG is closing in on a final investment decision for a plant in the Netherlands that will produce SAF from used oils and fats. In Washington state, the company plans to utilize a different chemical pathway known as “alcohol-to-jet,” where carbon waste is fermented to produce ethanol, which is then converted into fuel. Waste gases, primarily methane derived from agricultural or municipal landfill waste, will serve as the feedstock. SkyNRG also aims to establish another plant in the Netherlands using the “power-to-liquid” pathway, which combines renewably sourced electricity and captured carbon dioxide to produce fuel. While these pathways are new and currently under development, SkyNRG is determined to make them a reality.
The Importance of Long-Term Market Commitment
For large-scale SAF production to succeed, long-term commitments from airlines are crucial. Investors need to be convinced of a stable market for SAF to justify their significant capital investments. Joe Shanahan, managing director and head of aviation at investment bank Citi, suggests that airlines signing long-term contracts to purchase SAF, even at a premium price, would alleviate investor concerns. The per-gallon subsidy offered by Washington state could prove pivotal in facilitating these commitments. Alaska Airlines has already expressed interest by partnering with SkyNRG, and other major airlines operating in Seattle-Tacoma International Airport, such as Delta and Southwest, may follow suit.
The Future of Sustainable Aviation
The success of SAF production at scale will shape the future of aviation. Lacamp estimates that around 750 SAF plants, requiring substantial investment, will be needed to meet capacity targets set by the U.S. and the European Union alone. The plant planned for Washington state will serve as a leading-edge facility, providing valuable insights that can be applied to similar projects worldwide. SkyNRG remains committed to sustainable aviation fuel, understanding its significance in helping the aviation industry achieve its net-zero carbon emissions target by 2050. The involvement of industry giants like Boeing and the legislative support received highlight the collective determination to make decarbonized flying a reality.
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