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OMV Lines up SAF Buyers For its Bold Expansion Plans

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Austrian oil company OMV has just signed memorandums of understanding (MOUs) with two of Europe’s biggest airlines, underpinning the oil refiner’s plans to scale up its sustainable aviation fuel (SAF) production to 700,000 metric tons per year (15,100 barrels per day) by 2030.

Commitments totaling around 1 million tons of SAF delivered between 2023 and 2030 have been signed this week. Germany’s Lufthansa Group pledged to buy more than 800,000 tons on Sep. 13 and budget giant Ryanair signed up for 160,000 tons the following day.

Lufthansa Group, whose Austrian Airlines subsidiary became OMV’s first SAF customer at Vienna airport in March, is already Europe’s biggest airline buyer of SAF. The MOU signed this week also includes a commitment to cooperate with OMV on new locations and new SAF production technologies. Ryanair says it expects to take delivery of OMV-made SAF at its airports in Austria, Germany and Romania, but is already hinting it could look to expand the deal. The airline has committed to using 12.5% SAF by 2030.

OMV's SAF Ambition

OMV says it sees SAF as an important portfolio upgrade to its jet fuel range and has ambitions to become a regional leader in SAF. It’s 700,000 ton/yr target is equivalent to a third of its current Jet A1 into-wing sales. The refiner began producing small volumes of SAF from used cooking oil (UCO) in the paraffin hydrogenation unit at its Schwechat refinery earlier this year. Current OMV SAF production is just 2,000 tons per year but offers a more than 80% carbon saving compared to conventional jet fuel.

Schwechat’s process engineer Sonja Platzer-Ozenil says it took just six months from the start of the project until the first liter of SAF was ready. But she admits that scaling up SAF production will take much longer. Technical limits mean existing units can run at most 0.3% UCO by mass. Refinery co-processing of UCO has been seen as a short-cut to boosting SAF availability but large-scale commercial production remains a challenge.

“Refineries are a complex whole made up of countless units and processes that cannot be changed that easily. If you turn a cog, you sometimes set more in motion than you would like,” Platzer-Ozenil explains. “At the same time, our goal was to start SAF production as soon as possible. That’s why we started blending small amounts of used cooking oil — and doing it in our existing facilities.”

EU Still Negotiating

Europe’s aviation industry has meanwhile written to the three EU bodies responsible for finalizing the bloc’s Fit for 55 program, urging clearer action to promote SAF.

Final negotiations on how the EU can cut carbon emissions by 55% from 1990 levels by 2030 are due to start between the Council of the EU, the European Parliament and the European Commission this Fall. The largest ever EU package of environmental legislation contains ReFuelEU, which includes plans for a SAF blending mandate and taxes on conventional jet fuel, and updates to the EU Emissions Trading Scheme (ETS) to include aviation.

In an open letter dated Sep. 6, the directors of European airline groups A4E and ERA, airport body ACI Europe and air navigation service providers association CANSO Europe urged the EU institutions to help guarantee a single market for SAF in Europe. They want the European SAF mandate included in ReFuelEU legislation to supersede the plethora of national mandates being announced. “National SAF mandates would lead to competitive distortion … and create problems of availability … hampering the uptake of SAF in Europe,” they warn.

The directors also called for a “SAF allowance mechanism” to be included in parallel plans to update the EU Emissions Trading Scheme (ETS) for aviation. Current EU proposals include a cap of only 20 million allowances for SAF under the ETS until 2030. Industry leaders want an unlimited number of SAF credits made available to help bridge the price gap between SAF and fossil jet fuel and boost SAF uptake.

Industry leaders reiterated industry calls for a “book and claim” style mechanism to build flexibility in Europe’s physical SAF supply chain. “It is critical to allow for the most cost-effective logistics, by minimizing CO2 emissions while promoting SAF production across the EU." Alongside efficiency, ACI Europe argues book and claim would help promote airport safety if SAF refueling is concentrated at airports with the right expertise. Current EU plans call for mandated levels of SAF to be available at all EU airports.

They also suggested a “Sustainable Aviation Fund” be set up, funded by taxes on jet fuel included in ReFuelEU and revenues generated from the auction of EU ETS allowance to help finance aviation’s transition to net zero. Calls to maintain a strict definition of SAF and to research the impact of non-CO2 emissions from aviation were also included in the letter.

Topics:
Biofuels (incl. SAF), Low-Carbon Policy
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