Air France Industries KLM Engineering & Maintenance has committed to use sustainable aviation fuel (SAF) for 10% of its engine testing, equivalent to about 30 test runs each year at the MRO provider’s Paris and Amsterdam facilities.
At the same time, its parent airline along with other big stakeholders in European aviation want more to be done to encourage SAF production in Europe.
In an open letter to European ministers, companies including Airbus, Boeing, Air France-KLM, IAG and easyJet said investment in SAF production is being held back because “existing public support mechanisms are not sufficient to address ... two critical market failures,” with these being lack for revenue certainty for producers and price risk for offtakers.
The letter focuses on e-SAF—SAF produced from clean electricity—which, under the ReFuelEU Aviation initiative, must constitute 1.2% of fuel at EU airports by 2030 and 35% by 2050.
To help meet those targets, about 40 e-SAF projects have been announced in Europe, notionally representing about 60% of planned global capacity, but none has reached a final investment decision due to revenue and price uncertainty.
To address this, industry is recommending that a market intermediary similar to a government-backed commodity trader purchases e-SAF under long-term contracts to provide revenue certainty. Then, in what is known as a double-sided auction, the intermediary sells the fuel in short-term contracts to provide flexibility for airlines and fuel suppliers.
“This instrument maximizes public capital efficiency by using double-sided auctions to minimize the price gap while laying the foundation for a self-sustaining, liquid, and dynamic e-SAF market in Europe,” the petitioners stated.
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