Kathryn Clay / Tuesday, March 7, 2023

Opportunities for Liquid Terminals in the Sustainable Aviation Fuel Boom

A global push for decarbonization of the aviation sector, which accounts for over 2% of global energy emissions,[1] has led to a considerable increase in demand for sustainable aviation fuel (SAF). SAF is a “drop-in” liquid hydrocarbon fuel made from renewable or waste resources which has lower greenhouse gas emissions than petroleum-based jet fuels and can be used in existing airplanes and engines. Just last month Boeing announced that it will purchase 5.6 million gallons of SAF in 2023.[2] To put this purchase in perspective, it is equivalent to 25% of all jet fuel used by Boeing in 2022. Similarly, United Airlines, along with 5 corporate partners, announced the creation of a venture capital fund focused on SAF production, accompanied by an initial $100 million investment.[3] In response to the goal set by the Sustainable Aviation Fuel Grand Challenge (launched by the DOE, DOT, and USDA) of supplying enough SAF to meet 100% of aviation fuel demand by 2050, the Federal Government has also moved to increase SAF supply through several measures, including the creation of a SAF-specific tax credit in the Inflation Reduction Act of 2022.[4] All of these efforts feed into a market trend that present an opportunity for liquid terminals

Role of Liquid Terminals in the SAF Boom

In 2021, the National Renewable Energy Laboratory (NREL) published a Technical Report[1] that emphasized the role of terminals in the SAF industry. The report described the difficulties of blending SAF and petroleum-based jet fuel at airports or refineries, and concluded that blending at a terminal that services airports would be the best option for blending SAF. Given all SAF is currently blended with petroleum-based jet fuels before being loaded into an aircraft, there is an important market opportunity for liquid terminals, who could take on the blending process in the supply chain. Two options for blending SAF at terminals are explained in detail in the figures below.

With the White House estimating that SAF demand will reach 35 billion gallons per year by 2050,[1] the liquid terminal industry has the possibility of playing an important role in this new supply chain. Experts in blending and storage will be crucial for developing a safe, sophisticated and efficient supply chain. Liquid terminals are uniquely situated to fill this gap by leveraging their current expertise while only making minor changes to existing infrastructure and investments.

The full article can be downloaded below.

[1] https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/09/fact-sheet-biden-administration-advances-the-future-of-sustainable-fuels-in-american-aviation/

[1]https://afdc.energy.gov/files/u/publication/U.S.-airport-infrastructure-and-sustainable-aviation-fuel.pdf

[1] https://www.iea.org/reports/aviation

[2] https://boeing.mediaroom.com/2023-02-15-Boeing-Doubles-Sustainable-Aviation-Fuel-Purchase-for-Commercial-Operations,-Buying-5-6-Million-Gallons-for-2023

[3] https://www.reuters.com/business/sustainable-business/united-airlines-launches-100-mln-sustainable-fuel-investment-fund-2023-02-21/

[4] https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-new-sustainable-aviation-fuel-credit

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Opportunities for Liquid Terminals in the Sustainable Aviation Fuel Boom

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