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Dr Christoph WolffHead of Mobility Industries

World Economic Forum

Ramping up Sustainable Aviation Fuels

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Sustainable Aviation Fuel is the only

near-term large-scale decarbonization

option for the industry

There is enough sustainable

feedstock available to power aviation

in 2030, and beyond

- Power-to-Liquid / e-fuels use captured CO2 as

a feedstock and are thus unrestricted. Today's

technology is not yet fully mature.

SAF could become economically viable

but requires supportive regulatory

framework

-Power-to-Liquid has the biggest potential for cost

decrease and will eventually become the most cost

competitive alternative.

There is no silver bullet! Different

regions will transition to new

technologies at different pace

There is enough sustainable feedstock available to power aviation in 2030 and beyond

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SAF pathways in focus have different opportunities and challenges depending on feedstock and technology maturity

Source: CORSIA; RED II; De Jong et al. 2017; GLOBIUM 2015; ICCT 2017; ICCT 2019; E4tech 2020; Hayward et al. 2014; ENERGINET renewables catalogue; Van Dyk et al., 2019; NRL 2010; Umweltbundesamt 2016

Opportunity

description

Safe, proven, and scalable technology Proof of concept 2025+, primarily

where cheap high volume electricity is

available

Potential in the mid-term, however significant techno-

economical uncertainty

Technology

maturity

Mature In developmentCommercial pilot

Feedstock Agricultural and forestry residues, municipal solid waste4,

purposely grown cellulosic energy crops5

High availability of cheap feedstock, however fragmented

collection

Waste and residue lipids, purposely

grown oil energy plants2

Transportable and with existing supply

chains

Potential to cover 5-10% of total jet fuel

demand

CO2 and green electricity

Unlimited potential via direct air

capture

Point source capture as bridging

technology

% LCA GHG

reduction vs.

fossil jet

73-84%3 99%785-94%6

HEFA Alcohol-to-Jet1 Gasification/FT Power-to-liquid

1. Ethanol route; 2. Oilseed bearing trees on low-ILUC degraded land or as rotational oil cover crops; 3. Excluding all edible oil crops; 4. Mainly used for gas./FT; 5. As rotational cover crops; 6. Excluding all edible sugars; 7. Up to 100% with a fully

decarbonized supply chain

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Scale-up of SAF production encounters multiple potential roadblocks – pathways have specific challenges

Pathway Potential mitigation measure

Power-

to-Liquid

Potential road blocks

Validate technology feasibility in sync with H2 and FT

cost decreases and consider alternative process designs

such as co-electrolyzer (SOEC) without the RWGS step

Technology complex at scale-up: Issues with scale-up of

technology, especially Reverse-Water-Gas-Shift (RWGS) step

Carefully choose H2 production locations providing

lowest cost of renewable electricity and support deep

decarbonization across other sectors to scale-up H2

uptake

High costs of sustainable H2: Potentially insufficient scale of

green hydrogen in other sectors for substantial cost decline

Focus on CO2 captured from biomass-use first (strategic

location in high-density industrial clusters) and invest into

direct air capture technology

Lack of sustainable CO2 supply: Neither direct air capture

carbon dioxide nor biomass based point source capture

available at scale

Refine or alter process to reduce required amount of

electricity (e.g. via Power-and-Gas-to-Liquid) and

support general green electricity turnaround

Extremely high electricity need: Current process consumes a

large amount of energy that has to be produced sustainably

and faces increasing usage competition from other sectors

It is technically feasible to reach 10% SAF jet fuel uptake in Europe by 2030 with strong policy and financial support

Note: Assume 40% of all sustainable biomass available in Europe is used for conversion to aviation biofuels – potential upside from imported biomass or finished SAF product from external regions (see results from scenario 3 below). EU jet fuel demand refers to EU28 including the UK. Source: ETC Analysis.

6

0

5

10

15

20

25

30

35

40

45

50

55

60

20252020 204520402030 2035 2050

PtL

AtJ

HEFA

G+FT

~10% Total EU Jet Fuel Demand ~75% Total EU Jet Fuel Demand

Feasibility Assessment Results – Central Case Scenario: SAF Output by Technology Pathway Mt./yr.

Achieving this ramp up requires

building approx. 40 operating

SAF plants, requiring ~ EUR 5 bn

per year of capital investment

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SAF production costs vary significantly by pathway

Source: Expert interviews; McKinsey analysis

2020

SAF production costUSD/t of SAF

2030 2040 2050

Lower range for

PtL in regions with

cheap renewable

power potential

(e.g., middle east)

HEFA Gasification/FT Alcohol-to-Jet Power-to-Liquid

Jet fuel price

5,500

500

2,500

4,000

2,000

0

1,500

1,000

3,000

3,500

4,500

5,000

6,000

1,850-

2,250

1,100-

1,650

2,000-

2,900

1,500-

5,500

1,500-

2,350

985-

1,400

1,550-

1,950

1,250-

2,700

950-

1,350

1,400-

1,800

1,400-

2,2001,000-

1,700 920-

1,300

1,300-

1,700 850-

1,370

1,300-

2,100

Global SAF production cost shown for a range of selected feedstocks

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UPM, Kotka

Velocys, Altatto

Lanzatech, Wales

Total, Grandpuits

Kaidi, Kemi

Sunfire, Nordic Blue

Total, Dunkirk

SkyNRG, DSL01

Enerkem, Rotterdam

ST1, Gothenburg

Caphenia, Dresden

ENI, Gela

ENI, Venice

Preem, Gothenburg

Colabitoil, NorssundetFulcrum, Stanlow

Engie, Normandy3

Synkero, Amsterdam2

UPM, Lappeenranta

Neste, Porvoo

Copenhagen Airport1

Total, La Mede

CEPSA, San Roque

Repsol, Cartagena

Neste, Rotterdam

Announced Projects with SAF Production Capacity in Europe 2020-2025

Note: * Pilot/demo plans. 1 This project is a partnership between Copenhagen Airports, A.P. Moller - Maersk, DSV Panalpina, DFDS, SAS and Ørsted to trial-scale production facility to produce sustainable fuels for road, maritime and air transport in the Copenhagen area. 2 Final investment decisions expected in 2021. Source: ETC, McKinsey, IRENA (2017) Maersk, Neste, press releases.

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Risk of delays due

to COVID crisis

Copenhagen Airport plans to

use SAFs from PtL for 30% jet

fuel consumption by 20301

HEFA (new)

G+FT

PtL

AtJ

HEFA (existing)

Pathways

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McKinsey & Company 10

Chilean Synthetic Jet Fuel produced with DAC is projected to be cost competitive vs. SAF alternatives by 2030

Global SAF production cost by source, 000s USD per ton of Jet Fuel

2030 20402025 Pre-2030:

Total Addressable Market

Synfuels form part of early-SAF

mix (potentially using

industrial sources) as airlines

seek to establish future,

highly scalable

decarbonization options

~2030 DAC Synthetic Jet Fuel

made in Chile will compete

closely with HEFA

economically and benefit from

greater scalability and

perceived environmental

friendliness

Post-2030:

McKinsey & Company 10

Gasification / Fischer Tropsch Power – To – LiquidAlcohol – To – Jet HEFA

0,8

0,2

1,0

0

1,2

0,4

0,6

1,4

1,6

1,8

2,0

2,2

2,4

1,9

1,6

2,1

1,3

1,8

1,2

1,7

1,9

1,4

1,2

1,8

1,2

1,2

1,81,9

1,7

1,3

1,21,1

1,5

1,7

1,21,0

1,4

1,6

1,0

Industrial

sourced CO2

DAC1

DAC1

DAC1

Source: Clean Skies for Tomorrow Report World Economic Forum report; McKinsey team analysis

McKinsey & Company 11

By 2030, synfuel (jet) costs from production in Chile could get close to USD 1,000 per ton

Source: McKinsey

0

200

400

1,400

1,000

600

1,600

800

1,200

1,800

2,000

2,200

20302025 2035 2040

North Industrial

Source CO2 Cost

USD/T CO2

Traditional DAC

CO2 Costs

USD/T CO260 60 60 60 250 100 92.5 85

Breakthrough

DAC CO2 Costs

USD/T CO2

South Industrial

Source CO2 Cost

USD/T CO2105 105 105 105 30 30 30 30

1,230-1,360 1,110-1,225 1,055-1,165 980-1,085

1,265-1,395 1,180-1,305 1,120-1,240 1,080-1,195

South

North

South

North

Industrially Sourced CO2: Production cost curve for Jet Fuel /

DieselUSD / Ton of Jet Fuel / Diesel

DAC Sourced CO2: Production cost curve for Jet Fuel /

Diesel USD / Ton of Jet Fuel / Diesel

1,200

200

0

1,400

800

400

600

1,000

1,600

1,800

2,000

2,200

2025 2030 2035 2040

1,230-1,360 1,160-1,060

1,165-1,290 1,020-1,130

1,825-2,015 1,155-1,280

1,085-1,200

1,715-1,900

980-1,085 870-9601,085.1,200 925-1,020

Breakthrough

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Thank You

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