End Users
CAAFI’s Role
CAAFI® seeks to support airlines and airports by maturing supply chains to provide reliable, sustainable, cost-competitive alternative jet fuel to aviation end users. CAAFI works to facilitate direct engagement between airlines and fuel suppliers to achieve mutually-beneficial offtake agreements to enable Sustainable Aviation Fuel (SAF) supply into the commercial aviation sector. CAAFI is also working with airlines and airport partners to identify logistical challenges associated with allowing SAF into existing fuel distribution and delivery systems.
Current Status
Current and Projected U.S. Jet Fuel Market
In 2016, over 24 billion gallons of jet fuel were consumed in the U.S. by all end users, including airlines, the military, and business and general aviation. Of this, 21.17 billion gallons are estimated to have been used by civil aviation aircraft according to FAA’s Aerospace Forecast. By 2020, the civil aviation aircraft demand for jet fuel will be nearly 23 billion gallons, and by 2030, it is anticipated to be nearly 26 billion gallons. Therefore, the demand for jet fuel is large and growing, and is of sufficient size to present an attractive market opportunity for sustainable SAF production to begin to displace petroleum-based jet fuel.
Current Airline Interest and Offtake Agreements
To fulfill growing demand, the aviation sector is ready and willing to enter into offtake agreements for cost-competitive, sustainable aviation fuel (SAF), as evidenced by the over 200 million gallons of offtake agreements already in place. Interest in SAF is in part driven by sector-wide, international consensus on the goal of achieving carbon neutral growth starting in 2020 and 50% reductions in carbon emissions by 2050. The aviation fuel marketplace is a highly concentrated one, with a limited number of key fuel purchasers from each of the major airlines. CAAFI works with these entities to facilitate communications and agreements with sustainable AJF suppliers. See a list of current offtake agreements here.
Key Topics
Doing Business with Airlines
CAAFI has worked closely with sponsor Airlines for America’s (A4A) Energy Council to develop a Guidance for Selling Alternative Fuels to Airlines. The document outlines why airlines are interested in SAF and describes airline requirements for purchasing SAF, including reliability, cost-competitiveness, and environmental performance/sustainability. The document also explains the ways in which airlines might be willing to support SAF deployment and production, including long-term offtake agreements, product delivery flexibility, cooperative purchases, and equity investments, among others. A description of key elements of an agreement term sheet are also included.
The International Air Transport Association (IATA) has also developed an Aviation Fuel Supply Model Agreement that can help prospective fuel producers understand the potential elements of an agreement and can streamline the agreement development process.
Airports as an SAF Opportunity
In general, airlines, not airports, purchase jet fuels, and the primary driver for uptake acceleration is contracting between the airlines and SAF producers/suppliers. However, one of the driving factors in the aviation sector’s focus on drop-in SAF is the fact that at any given large airport, there is usually only one fueling system for all airlines. Thus, although airlines purchase their fuels separately, all fuels are generally incorporated into a single fuel pool that is stored and distributed throughout the airport. Airports can facilitate SAF update by identifying opportunities to incorporate SAF deliveries, handling, and distribution into airport operations. CAAFI worked with our sponsor Airports Council International of North America (ACI-NA) to develop a white paper on “Sustainable Alternative Fuels: Why, How, and When for Applications at Airports” on the rationales for sustainable SAF at airports, means of incorporating sustainable SAF into airport activities, and timing and circumstances for evaluating project adoption. However, challenges still exist with regard to getting SAF into the existing transport and distribution systems. Find out more in CAAFI’s R&D Team’s white paper: Refinery to Wing: Transportation Challenges Associated with Alternative Jet Fuel Distribution.
Blending and Tracking Fuel
There are two ways SAF can be delivered to the end-user:
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Neat (not blended with petroleum-based jet fuel prior to arriving at the airport)
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Blended
SAF is currently qualified and approved for use in existing jet fuel infrastructure as blends only. Therefore, if SAF is delivered to the airport neat, it must be blended on-site before going into the aircraft and there may be on-site blending challenges for airports.
For example, with limited infrastructure, dedicating tanks for blending may not be possible without adding additional infrastructure (another tank) that would require the airport to have the available land to support such new equipment. In addition, the airport would need to monitor that blend levels do not exceed the ASTM specification for that fuel. Thus far it appears that fuel producers are blending their fuel at the biorefinery, but how this will be accomplished as the industry scales up is an open question.
