SAFing wicked this way comes

A couple of months ago, I wrote a post here about the costs of sustainable aviation fuels and how airlines were balking at said costs because they made SAFs quite unaffordable for the target audience. Since then, things appear to have got only worse, following a very familiar logical sequence of events commonly called a vicious circle.

Remember how carmakers blamed the lack of EV chargers for people’s unwillingness to go electric, and how charger builders blamed the lack of enough EVs on the roads for depriving them of motivation to invest in more chargers? Same thing with SAFs.

“Airlines complain that sustainable aviation fuel (SAF) is too expensive and not enough is being made. But energy companies are reluctant to invest in more production until there are long-term orders,” the Financial Times reported this month, on the heels of another, more interesting report. That second report was titled Top sustainable fuel producer to cut spending and jobs after disastrous year and gave us a timely snapshot at the state of an industry that may never survive beyond infancy.

The top sustainable fuel producer is Neste, which saw its stock price plummet by 60% last year because after it “spent nearly $10bn transforming itself from an oil refiner into a leader in green fuels, […] it found that the market had failed to grow as expected,” and I am lost for words but not for giggles.

SAFs are, per reports, between two and three times more expensive than jet fuel. But the UK and the EU introduced mandates requiring airlines to blend at least 2% of SAFs into their fuel — a percentage that should rise to 6% in five years and to a whopping 70% by 2050. Theoretically. Because nobody wants them. Even with the mandates.

So SAF producers are struggling — Neste is by far not the only one and it’s even not the worst-off one. Even with the mandates. And you know who else is about to start struggling? Those forecasting a boom in SAF demand. Because of the mandates. And because of certain bets made on SAF certificates because of course we also have SAF certificates now. It’s a cute little house of cards whose builders forgot you need a stable foundation if the house is to avoid crumbling down.