Itochu will supply SAF to Etihad Airways at Narita International Airport from June
Japanese companies are expanding their supply network of sustainable aviation fuel (SAF). ITOCHU will partner with a European company to supply SAF to overseas airlines for the first time in Japan from June. Environmental regulations have become stricter in the aviation industry, and countries / regions that cannot supply SAF may be bypassed. In order to increase the competitiveness of airports in the decarbonized era, we will prepare for competition with overseas by looking at both domestic and imported products.
In late May, Itochu signed a SAF supply contract with Etihad Airways of the United Arab Emirates (UAE). Procurement of SAF from Finnish energy giant Neste to refuel Etihad planes in service at Narita International Airport. This is the first attempt in Japan to supply SAF to overseas airlines that do not have fuel tanks or other refueling equipment in Japan.
Itochu partnered with Neste in 2020 to supply all Nippon Airways (ANA) planes. Neste is the world's largest producer of SAF, with an annual production of about 100,000 tons. By the end of 2011, it plans to expand its Singapore plant and other plants to increase production to 1.5 million tons per year. ITOCHU and Neste will expand their supply network to domestic and overseas airlines, aiming to become a part of Japan's SAF supply infrastructure.
Neste currently supplies SAF in Asia only in Japan and Singapore. Sami Jauhienen, who oversees the SAF business in the Asia-Pacific region, told the Nihon Keizai Shimbun, "We will determine whether there are pioneering airlines or government measures to form the SAF market." We will soon start supplying SAF in Malaysia.
The Ministry of Land, Infrastructure, Transport and Tourism has set a goal of making 10% of aviation fuel (about 1.3 million kiloliters) SAF by 2018, and will consider an investment promotion tax system when creating production bases. "If the government takes the initiative in mandating and subsidizing the system, Japan will become a big growth market," Sami said.
Expectations for growth markets have led to the entry of other Japanese companies into manufacturing.
ENEOS will start manufacturing SAF at the Negishi Refinery (Yokohama City) in collaboration with TotalEnergies of France. With Mitsubishi Corporation, we have begun to consider creating a supply network that includes raw material procurement by 2015.
JGC Holdings (HD) and Cosmo Oil will mass-produce SAFs made from waste cooking oil from restaurants and food factories in Osaka Prefecture in 2013. JERA, in which TEPCO HD and Chubu Electric Power have a 50-50 stake, will continue to demonstrate SAF production of woody biomass raw materials with Itochu and Toyo Engineering.
The International Air Transport Association (IATA) has set a goal of virtually zero greenhouse gas emissions in 1950. If all jet fuel is replaced with SAF, carbon dioxide (CO2) emitted from manufacturing to operation can be reduced by 70 to 90%. Mandatory use of SAF and subsidy systems have taken the lead in Europe and the United States, and there are no concrete moves in Asia yet. The SAF supply network is indispensable for targeting Asian hub airports.
Japan's rival is Singapore. The government established the International Advisory Board (IAP) on Sustainable Aviation Hubs in February. A plan to establish a base for the SAF market by the beginning of 2011 will be announced. In February, British Shell began supplying SAF in the country in anticipation of market expansion.
In Asia, Japanese airports are being pushed by Nakain. According to the Airports Council International (ACI), Beijing Capital International Airport had the highest number of arrivals and departures at 590,000 times in 19 years before the spread of the new coronavirus infection. Shanghai Pudong International Airport, Guangzhou Baiyun International Airport, and India's Indira Gandhi International Airport follow.
Haneda International Airport is 5th with 450,000 times, and Narita is out of the upper ranks. The competitiveness of the future “empty gateway” will depend on how the SAF supply network can be prepared in anticipation of the tightening of environmental regulations.
(Yudai Hasegawa, Mamoru Tsuge)
Challenges in cost and raw material procurement Government is backed by subsidies
One of the challenges to the introduction of sustainable aviation fuel (SAF) is cost.
According to the Ministry of Economy, Trade and Industry, the production cost of jet fuel is about 100 yen per liter, while the SAF is 200 to 1600 yen. The government has set a goal of "100 yen level by 2030" and will prepare a subsidy of about 30 billion yen through the fund. It is difficult to improve price competitiveness without establishing a framework that encourages continuous technological innovation rather than one-off.
It is also necessary to secure raw materials. In particular, waste cooking oil is in a state of competition in the world.
According to the materials presented by Idemitsu Kosan at the public-private council, 90,000 tons of the 380,000 tons of waste cooking oil collected annually in Japan flow to Europe and Singapore. In order to keep important raw materials in Japan, it is necessary to have a mechanism to purchase them at a higher price than overseas.
At the public-private council, a surcharge system that adds an additional cost to the fare for flights using SAF was discussed. France-Ran Air France KLM introduced a SAF surcharge system of up to 12 euros (about 1650 yen) per ticket in January.
The government aims for a mixing ratio of 10% for SAF by 30 years. In order to realize this, it is indispensable to actively guide policies such as giving preferential tax treatment to jet fuel and increasing the motivation of raw material companies for domestic supply through subsidies.
