Norwegian government closes consultation on a 1% mandate proposal for aviation biofuels
Fri 17 Aug 2018 – A consultation by Norway’s Ministry of Climate and Environment on a proposal to introduce a mandate requiring all commercial jet fuel sold in the country to contain 1% of sustainable aviation fuel (SAF) from 1 January 2019 closed yesterday. The intention is to bring the mandate into line with road transport requirements for fuel suppliers, with the SAF percentage expected to increase to 30% by 2030. Theye Veen, CFO of aviation biofuel supplier SkyNRG, which has established a major presence in the Nordic region, called the proposal a brave move that was achievable under the right conditions. Meanwhile, Red Rock Biofuels has broken ground on its new $320 million Lakeview biorefinery in the US that is slated to produce 15 million gallons of renewable jet fuel annually when fully operational.
The Norwegian consultation, which has been seeking input on market conditions and estimates on possible volumes of aviation biofuels that may be available from 2019, has received responses from a variety of interests including SAS Oil Norway, Neste Oil, Widerøe and Aviation Fueling Services Norway, as well as SkyNRG. To incentivise the development and use of advanced biofuels, the government proposes to apply a multiplier of two towards the sales requirement.
“This is a very important step towards a structural market for SAF,” said Veen, who is also a board member of the Nordic sustainable aviation fuel Fly Green Fund. “If done the right way, it can serve as a showcase for other progressive governments that have SAF ambitions. Although ambitious and progressive, it is important to realise there will be different challenges along every step of the way. As the first commercial SAF volumes were only delivered in 2011, and all SAF uptake has so far been voluntary, it cannot be implied the required Norwegian volumes can be easily produced and supplied. But it can be done, and can be done sustainably.
“To ensure the mandate is met with truly sustainable fuels, the Norwegian government will have to take a strong position. There’s currently no information available on how the mandate will be enforced and whether penalties will apply when targets are not met. This will be an important factor if the mandate is to be successful.
“If the boundary conditions are clear and the economic incentive is there, the industry will find a way to comply. Especially in these first years, the various market players will need to work hard and work together to ensure the actual volumes are delivered. In parallel, the investment in new SAF production capacity needs to be made to ensure the higher volume targets can be met as well. A clear and reliable market signal, such as through a mandate, is essential for this.
“Showing continuous progress and effort will be key to providing comfort to all stakeholders that a mandate has been the right decision and that pushing up volume targets is realistic. Confidence is everything.”
State-owned airport operator Avinor has been involved with the Norwegian government and civil aviation authority in investigating the feasibility of the mandate. In 2013, a report commissioned by Avinor and the national aviation industry concluded cost-competitive, large-scale local production of SAF from woody biomass was viable. The following year, Avinor pledged up to $16.5 million in investment towards supporting national SAF production. In 2016, Oslo Airport started offering a regular supply of jet biofuel through its existing fuel farm and hydrant dispenser system to all airlines serving the airport.
Also in 2016, KLM Cityhopper started a series of 80 flights on its Oslo to Amsterdam route using SAF provided by the European ITAKA consortium. The fuel was derived from RSB-certified camelina oil supplied by SkyNRG and Air BP, and produced by Finland’s Neste.
Meanwhile in Oregon, after seven years of planning, Red Rock Biofuels has broken ground on its Lakeview facility that will take woody biomass and convert it into renewable jet fuel, and is said by the company to be the first of its kind in the world. Red Rock has long-term offtake agreements in place with FedEx and Southwest Airlines.