29: Sustainable Aviation Fuel

Anna-Marie:
Hello, and welcome to our latest episode of 30 for Net Aero 30 here on ESG Matters at Ashurst. I'm Anna-Marie Slot, Global Sustainability and ESG Partner here at Ashurst, and we are speaking with 30 change makers around the globe about actions to take now to deliver on 2030 goals.

Today I'm very excited to be joined by Jeff Ovens, Managing Director UK, Europe and Middle East at Fulcrum BioEnergy, a clean energy company pioneering the creation of renewable drop-in sustainable aviation fuel from landfill waste. Back in 2013, Jeff's been doing this a while, Jeff founded and led the first ever investment by an airline in a sustainable aviation fuel company, which has been replicated many times since then. Jeff, great to see you, and thank you for joining me today.

Jeff:
Anna-Marie. Thank you for having me. It's a pleasure.

Anna-Marie:
So maybe Jeff, can you tell us a little bit about yourself?

Jeff:
Sure, sure. Well, I'm a bit of an aviation geek. I've been in aviation and aerospace now for, gosh, 25 years, and for probably getting on for almost half of that now I've been deeply involved in sustainable fuels, obviously with a focus on aviation. So that's been my area of focus and is indeed my passion, quite frankly.

My background is engineering with a sprinkling of commercial as well over that period of time. So those two key elements really have put me in a good spot to really understand the technical and commercial challenges that building a sustainable aviation fuel industry presents. But I'm happy to say that we are definitely turning a corner on that now and sure we can go into more detail.

Anna-Marie:
Super. And it's interesting, you've been at this a while, you've been thinking about this a while. I think probably fair to say, the vast majority of the public has not been hearing about it for as long as you've been thinking about it. What do you think that's from? What do you think maybe the biggest shift that you've seen then in this space over the last kind of 18 months, two years?

Jeff:
Yeah. Well, I mean the very fact that we're having this conversation, and you've kindly invited me to speak with you, says a lot in itself. You're absolutely right, it is really only in the last three years or so that sustainable aviation fuel has started to get its share of the spotlight in de-carbonization.

It has been a frustrating time since I got involved in 2011. There was only a handful of people globally in the space and they were mainly driven by airlines. So I worked for an airline in Hong Kong for 12 years, Cathay Pacific Airways, and I headed up and developed their renewable jet. It wasn't even called SAF then, it was called something completely different. It was called Renewable Jet Fuel or Biojet. So I developed their programme and there was only a handful of airlines at the time who were really pushing for it, Cathay being one, British Airways, Qantas, KLM, and that was pretty much it and Boeing and Airbus as well.

But in the last three years, it is just gone exponential in terms of its general interest and most people now, most travellers, particularly frequent flyers, understand what sustainable aviation fuel is and what the benefits it brings to both aviation and their journey as well.

Anna-Marie:
It's great to hear about your work with Cathay. I have to say Cathay is one of my favourite airlines, but it's really fascinating also to hear about that progress coming from Asia. A lot of people think about the energy transition, they focus quite a lot on what's happening in the West and what various people are doing in the EU and the US. So I'd love to hear how that project came about and in that more global aspect of how you were looking at things.

Jeff:
Sure. Well, yeah, absolutely. My time at Cathay, I thoroughly enjoyed my tenure there and one of the reasons why I stayed there for so long relatively speaking was because they have this and they still do have this very laser sharp focus on ESG and all touchpoints of their business. Be it from fuel all the way to food in-flight services and meals, et cetera, is always with an eye on sustainability. And it's got even more so since. But as you alluded, aviation is a global industry and Cathay, flagship international airline, they literally fly everywhere and at the time to go along with this focus, there was an obvious solution to decarbonize. And this is quite trailblazing for them at the time that they wanted to pursue this to the point of actually putting skin in the game rather than just signing MOUs or LOIs.

This was real money that was flowing into early stage startups. But the fact remains is that despite Cathay being an Asia-based airline, the startup that they invested in was based in California. And the reason why is because that's where all the action is in terms of de-carbonization and policy support. So it made a lot of sense for the airline to do that then. That said, since I left many, many years ago, Cathay continues to advocate for a more of an Asia pack type SAF industry to grow. There's lots of feedstock available in that region of certain types. Hong Kong itself has a waste problem. They only have two landfills, I believe.

Anna-Marie:
That's true.

Jeff:
So there's incentive there, but the policy's still missing and that's one of the critical pieces that places like Hong Kong need to look at. But further south Singapore, they're looking at similar things and similar challenges and further north into China. The Chinese are doing a hell of a lot in this space, and I was deeply involved with some of the oil majors back in the day, and it's good to see that some of the work that they were doing 10 years ago is now coming to fruition.

And there's a bit of irony in this that what really made people laser focused on sustainable fuels for aviation or sustainable aviation fuels was covid. And the irony being that all of the aircraft were grounded, a vast majority were grounded, yet the focus shifted into, well, hold on a minute, I'm looking out the window. There's no cars on the road, there's no contrails in the sky, the air's clean. People think, well, hold on, what do we need to do? This is an opportunity to take stock on all types of transportation and heavy emission type industry and see what's out there.

And I think it became very obvious, very quickly that most of the forms of transport, be it land or water, have options available to them to decarbonize. Hydrogen, electrification, ammonia, et cetera. But aviation really particularly long haul doesn't have any option other than to keep the fuel that it uses from a technological perspective.
So the only answer really is to decarbonize the fuel that it uses. And that means you can keep the infrastructure, you can keep the tanks and the hydrants at the airport and everything else that goes with it. You just change the fuel origin. But the fuel itself is chemically identical. So I think the penny dropped after over a decade of trying, and here we are and there's a lot of focus, there's a lot of investment, and most importantly, there's a lot of focus and momentum from governments around the world as well.

Anna-Marie:
It's fascinating really the impact that covid has had around so many aspects of sustainability, but particularly interesting that it's the stop of travel that's caused the biggest jump in thinking about this. And I think the other thing you talk about, which people probably don't think about when they think about business travel and how do we come up with a solution, is the entire infrastructure around travel. It's not just the plane, right? It's every other aspect of how an airport works and how you get the plane from one place to another and refuel it and get it back again. It's a very interconnected system.

Jeff:
Absolutely. It's a huge... I mean, there's a lot of companies out there with great ideas and doing great work in alternative fuel types like hydrogen, and it should be applauded. And I definitely think there will be a role for those types of propulsion in the future. But when you take a step back and you think, okay, we've got this aircraft that works on hydrogen, fantastic, okay, well now we need tanks, now we need delivery system. We need to make the hydrogen somewhere. How do we deliver it to an airport? We can't use the same pipelines. We can't have a hydrogen aircraft next to a kerosene fueled aircraft. And to repurpose a large airport is two to three billion dollars. And then you have to fly to somewhere. So that's another two to three billion dollars.

So do that airport and then you need to make sure that if there's a problem halfway, you need to divert, that's another two to three billion. So again, you very quickly realise that the cost of changing your fuel type goes well beyond the aircraft itself and it's into the infrastructure and the supply chain. So again, you really need to see the total cost of this transition when it comes to changing fuel.

And again, it leads back to the obvious advantages that SAF has, that you don't have to touch any of that. You can maintain existing infrastructure and you just focus all of the effort and the funding and the investment onto fuel production. And then once you have the fuel produced and it meets the certification requirements, you are off to the races. You just put it into the system and away you fly.

Anna-Marie:
So I guess following on from that, is there one specific action? We like to talk about actions and deliverables here. What do you think would really accelerate this transformation? I know there's a lot of comments in the press about the amount of SAF you could produce, for example, is there an upper limit on that? And then what happens when you don't strangely have enough landfill waste to use, but what do you think the specific action or something that really could accelerate how we're going about this?

Jeff:
Yeah, I mean I touched on it briefly earlier on, and a lot of it really comes down to government policy. Government policy, particularly for energy transition type projects and industries really is key at the early stage. You can't expect private money to underpin all of the risk on a perpetual basis when there are opportunities out there today that perhaps are a lower risk and provide better returns in the short to medium. So this is where the government can step in.

And that support from government can come in several forms. You can have the early stage grants that help develop a project and take some of the risk off the table. And then you have the longer term policy support mechanisms that provide, for example, revenue certainty or revenue support for the life of the project, or at least a certain amount of project life that enables you to pay down your debts and your financing.

So it really is vital that the policy is in place to underpin the business models that developers such as ourselves and others are looking to build on. And there are some good signs, good indications, some better than others. I mean, I'm sure most of your listeners will have heard of the Inflation Reduction Act in the US. And closer to home here in the UK we have a SAF mandate that's been proposed for 2025, and then more recently we have the EU mandate proposal that was agreed. So that will also be coming into force with some very aggressive, ambitious targets for SAF implementation. And these are all great, but no one policy is perfect. And with mandate, a mandate basically forces the issue, but then even that might not be enough to incentivize investment. So you need to ensure that down at the business model level, there's the incentive that support the revenue.

And as you get more hours on the board, you can start to rely less on revenues going forward. And there's lots of examples of that in wind and solar where it was heavily subsidised initially, but then you come down the cost curve and it's less reliant on subsidies. But again, it is really important that where we have the ability and the infrastructure to build these facilities, you need to have that policy support in place. And it needs to be long-term, as I say, because short-term policy only gets you so far. It needs to be long-term to make these projects bankable.

Anna-Marie:
And especially with the life cycle of all of the entire industry. You're not buying a plane for Christmas, it's a longer term investment than that. So fair point about that. You were talking earlier about your long-term commitment to trying to get all of this moving. So I am kind of a little bit hesitant to talk about your own commitment to net-zero. Maybe it's the last decade and a half of your life that's been spent trying to explain to people that this is possible, but any commitments that you're currently focused on for yourself?

Jeff:
Yeah. Well, outside of my wheelhouse, I think that the work that I'm doing along with my team and Fulcrum and the industry as a whole is a significant contributor to de-carbonization or de-fossilisation, which is the latest term that we're using. I quite like that one. But at a personal level, I fly much less than I used to. And I think that is true for many people. I used to travel at least once a month to West Coast US from the UK, and that was both tiring in itself with the time zones and the travel, but also energy intensive both personally and from an aircraft perspective.

So now I travel much less, and this is a good example, I could have come to see you in person, but this is a much more efficient way of doing things. So we rely a lot more on virtual meetings, to a point. Eventually you have to go and meet people if you really want to seal the deal or make progress. But during these initial interactions and certain meetings, virtual is king.

So that's my contribution that I'd like to say was voluntary, but I think that was forced upon us all and we continuing to push that going forward. And it's the small incremental things that myself and my family do. I try to take more public transport when it turns up on time. I try to, let's not talk about the trains, I try to walk more. It is the usual stuff. I don't think I'm trying to do anything that's unusual that most people have not thought about.

But little things like turning your thermostat down in wintertime or turning your thermostat up if you're on AC, depending on which way you look at it, to try to try and save on that. But generally speaking, anything that has a cost saving element along with the emission saving element really kind of makes things easy to do, to be perfectly honest.

And that's where there's this slight opposite approach because certain de-carbonizations in industry are more expensive, you have to spend more to get the de-carbonization. So it's interesting how on a personal level, certain things you can do to save costs have a benefit, but on an industry level, you tend to end up spending money to make the benefit, which is slightly ironic.

Anna-Marie:
Yeah, exactly. And it's interesting, it also brings back in that covid kind of that it basically made everybody feel okay to talk virtually. Before there was such a reticence to that, oh, I need you here in person in order to really have those initial conversations. And I think we've all learned maybe we could cut those half-and-half, do half of them in person and half of them virtually, and you still come generally to a good outcome, but it's more about that balance.

And as you say, it also helps the body politic to not be pulling yourself around different time zones all hours of the day and night. So that's all been super fascinating, Jeff. And if you could provide listeners with one key takeaway, maybe it's around the aviation industry or around SAF, what is the one thing... Or maybe it's around encouraging better government guide rails and consistency there's rather a lot of problems with consistent government behaviour across the world at the moment. Not just the realm of non-democratic countries anymore, now it's kind of a free for all everywhere. What's your one action takeaway?

Jeff:
Yeah, it's hard to have just the one. I think there is a basket of measures that one can suggest as a key takeaway. But my view is we talk about energy transition and it is just that, it's a transition, it's not going to happen overnight. And there's this sense of urgency that we need to do something and totally, we do need to do something. That's something that I do agree with. But it is a transition. So there needs to be an element of understanding, an element of pragmatism that we are looking to transition from something that's been done for a hundred years into something entirely new.

And we talk about new infrastructure as an example, producing hydrogen at commercial scale, which seems to be the next best thing ever. And I have my own views on that perhaps for another time, but again, that's a good example. Things take time, you need to be realistic along with it. But it is just about maintaining focus, perhaps look for the lower hanging fruit in terms of what you can hit first and decarbonize before we look at the next shiny object that looks sexy and it's a great thing to do, but it's really expensive and it's made of titanium alloy and all of that.

I think if you look at things that typical petrochemical production right now, there are lots of processes that you could relatively easily decarbonize without changing anything other than the fuel source. So there are lots of opportunities. I think focus on the low hanging fruit first, get the lion's share of de-carbonization in heavy industry and then once you've nailed that start to refocus on some of the harder to abate sectors or perhaps the sectors that traditionally, like hydrogen propulsion in aviation, there's absolutely a part for it, but it's quite a long way away. It requires a lot of investment. So again, get the money where it needs to be now, but don't ignore the future because it'll be here before we know it.

Anna-Marie:
Great. Perfect ending. And thank you so much. I don't think I could add anything to that. Thanks so much for joining us today, Jeff.

Jeff:
Thank you. Appreciate it. It's been a pleasure. Thanks, Anna-Marie.

Anna-Marie:
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