Note: This podcast was recorded on April 13, 2021, and there have been a few updates since then. In addition to World Energy, Gevo, and Neste, Eni and Air BP are now also producing SAF, and Fulcrum completed construction of its waste-to-fuel facility in Nevada and will likely be producing fuel by the end of 2021.
Katherine Gorman: (00:05)
You are listening to Climate Now. I’m Katherine Gorman.
James Lawler: (00:08)
And I’m James Lawler. And in this episode, we’ll be taking a closer look at sustainable aviation, specifically the state of sustainable aviation fuel technology and aviation industry stance and approach to adopting these fuels.
Katherine Gorman: (00:22)
And we have the perfect person to have that conversation with: today our guest is Steve Csonka, executive director at CAAFI that’s C-A-A-F-I which stands for the Commercial Aviation Alternative Fuels Initiative. Steve, thank you so much for joining us today. And we ask all of our guests the same question first, how did you get where you are? What’s been your career journey to the position you hold now?
Steve Csonka: (00:48)
Uh, so I grew up in Western Pennsylvania on a farm, and was fascinated with aviation, was actually a poultry farm. Not that that had anything to do with flying, but, I was fascinated by barn swallows flying around the tractor as I mowed fields, right. And was just amazing, you know, coming within touching distance. Um, so that got me interested in understanding the physics of flight. I learned to fly at a fairly young age and, uh, then I worked for a few years and then decided to go back to school, and went and got my BS and MS in aerospace engineering that took me to GE aircraft engines for the first 12 years working in advanced technology primarily. I then took a sabbatical mid career and went to work for American Airlines in Texas in operations development and fleet planning, learning much more about the way that the airlines think about the business.
Steve Csonka: (01:46)
And then GE enticed me to come back. And from ‘99 to 2012, I worked in various aspects of very advanced engineering and product launch of advanced products. And it was always kind of working in this nexus of very advanced technology, policy, long-term trends, health of the industry kinds of scenarios. And so aviation, generally, worldwide is governed by a UN body called the International Civil Aviation Organization or ICAO. And based on the background that I had working with technology operations, really having a good understanding of what it means to fly aircraft and their environmental impact. I started getting pulled in the direction of supporting ICAO Cape work. And so that was around from 1999 forward. And then we started delving in alternative fuels in the 2006 timeframe with the introduction of CAAFI, and then in 2012, CAAFI asked to consider taking the executive director role. And I did that. And that’s where I’ve been since then.
James Lawler: (03:04)
Can you tell us more about how CAAFI was formed and what your work focuses on today?
Steve Csonka: (03:08)
So CAAFI was an entity that was formed in 2006, as I said, as a result of what I think a lot of people don’t recognize as a result of the industry getting together on a regular basis to evaluate how things are going with respect to market trends, the need to continue to improve environmental performance, et cetera. So we have been obligated under ICAO for several decades on things like airport noise and tailpipe emissions or criteria pollutants coming out of the tailpipe. And those have been standards that continue to ratchet down every few years. What we knew we didn’t have at the time was anything related to CO2 or greenhouse gases. And there was additional focus on some things that we hadn’t been regulated on before, including particulate matter coming out of the tailpipes and an interest in an aircraft fuel efficiency standard.
Steve Csonka: (04:16)
So since that time frame, both of those have been put into practice. And now also ICAO has introduced the Coresia program, carbon offsetting and reduction scheme for international aviation under which the aviation industry has made commitments for carbon neutral growth from 2020 onward, as well as a long-term aspirational goal of a 50% reduction from 2005 levels in CO2 emissions by 2050. And basically that was established a couple of years ago. And what we see now is society demanding more commensurate with Paris accord agreements and things like net zero carbon by 2050. And some people ascribing to whether it’s a two degree standard or a one and a half degree standard with respect to a warming, you know, potentially even pulling those requirements into the 2035 timeframe. So we’ve been working this strategy since the mid 2000s. And what we see is, you know, society around us demanding more, and driving in the direction of considering it and greater goals in the 2008 timeframe is when the aviation industry, which was the first industrial sector to come out with an approach to limit our greenhouse gas as an entire entity.
Steve Csonka: (05:42)
That was broadly signed onto by the airlines, the equipment manufacturers, the airports, the air navigation service providers, et cetera. So we’ve been working this strategy of a multi-pronged effort using technology, improvements in operations and infrastructure and policy elements to basically execute on the strategy of carbon neutral growth on international operations, and the long-term goal and SAF, sustainable aviation fuel, and I’ll use that nomenclature throughout the rest of this, is a key element of that overall strategy of controlling and subsequently reducing the CO2 emissions from aviation.
Katherine Gorman: (06:27)
It sounds like this is a pretty large scale operation that CAAFI is running. What entities are currently involved in the partnership?
Steve Csonka: (06:34)
So yeah, I refer to it as a public private partnership. On the public side, it’s the federal aviation administration. On the private side, it’s Airports Council International, where we fly, airport, the Aerospace Industries Association, the group of folks that make engines and aircrafts and Airlines for America, the large airline industry organization in the US representing 10 US and Canadian carriers.
James Lawler: (07:08)
Steve, you mentioned the mandate for reducing CO2 emissions to 50% of 2005 levels by 2050. How is the industry doing along those lines? And do you feel that sustainable aviation fuels are being developed fast enough to meet that goal?
Steve Csonka: (07:21)
I guess what I would say is look at the first goal first, which is we’ve got the mechanics of that goal now put in place, international regulation that’s been promulgated down to the different countries. It’s initially a voluntary period, I think there are 80 some countries that have signed up to that and the airlines associated with those countries. So that’s all in place. So from this year forward, we will be delivering on the goal of capping missions at 2019 levels, basically. So that’s in place that will happen through physical reductions, improvements in technology operations and infrastructure, and the introduction of sustainable aviation fuels. The longer-term goal, I’ll summarize the challenge this way, aviation is in demand especially with developing economies. We see that in, in some countries, when their people get to a reasonable cost of living, one of the first things that they want to do is be able to travel.
Steve Csonka: (08:24)
So it’s in significant demand and a large part of the world is still undeveloped. Uh, you, and some areas of the world that we think of as developed, uh, their transportation infrastructure is poor. And, you know, there’s still a lot of growing demand for travel. I think of Brazil, for instance, doing a fair amount of business down there and needing to travel a trip from one, uh, industrial center to another. And your options were something like an 18 hour bus ride through mountains and jungle or a 45 minute flight in an airplane. And it just goes to show the power of aviation and in certain aspects. So we’re on our way to this concept of sustainability in the future, we’ve got a 5% growth trend, approximately 5% per year growth in traffic driven by demand. We have historically demonstrated our ability to introduce technology and other improvements, operating efficiencies, et cetera, at about a 2% per year rate.
James Lawler: (09:32)
And what does the 2% per year mean?
Steve Csonka: (09:34)
Efficiency, fuel per passenger mile.
So, fuel per passenger mile or efficiency can come in various ways. The biggest one of which is when an airline retires an old airplane and introduces a new airplane, they’ll typically get a 15 or 20% improvement in fuel efficiency with that new product. Sometimes it’s even much more than that because they’ve actually skipped a generation of, of, uh, technology and corporation. On the whole, if you look at those introductions of new technology and efficiency improvements, we’ve been able to demonstrate this approximately 2% per year improvement in efficiency. So we’ve got a 5% growth, a 2% level of efficiency improvement leaving us with a 3% gap. And so when you hear NGOs and other organizations talking about the challenge of aviation, that’s what they’re referring to: a 3% annual increase in emissions compounded over 25 years, 30 years. By the time you get to 2050, we’re at a pretty large number somewhere between somewhere around 300% of what today’s emissions are, right? So that sets the enormity of the challenge. It’s not so bad thinking about the volume of fuel that we have today, and being able to start to introduce SAF in and start to bring that down. But man, we’re not even close to a level of introduction, that, that starts to take a bite out of that 3% problem.
Katherine Gorman: (11:08)
So what do you think it’s going to take to get to that introductory level?
Steve Csonka: (11:13)
Yeah, if I look at the last five years, and we just passed our five-year anniversary of introducing or having SAF being brought into the aviation system on a continuous basis. We’re at minuscule levels worldwide. You can think about aviation burning about a hundred billion gallons of fuel per year, and we’re using something less or something on the order of magnitude of 4 million gallons of fuel per year. So a very small fraction. And that’s really the essence of what I’m doing today, right? So we’ve done all this background work for the last 10 years, putting this foundation in place to allow us to get new fuels approved, um, working through the logistics of different companies, helping them with research and development, initiating demonstration, and deployment. And, the challenge now is really boosting effectivity of that demonstration and deployment kinds of efforts, physically bringing more production facilities online.
Katherine Gorman: (12:18)
So it looks like there’s some pretty large steel barriers in getting SAF into the market. Is it also correct to say that the main hurdle in developing SAF is that there’s just, that it’s just not yet economically viable?
Steve Csonka: (12:34)
I would say that’s very much correct. Um, we’ll talk in a minute about the concept of drop in fuels and the fact that there aren’t a lot of other costs associated with the introduction of this fuel. It really is the fundamentals. It’s can I make a viable business case out of the production of SAF comparing my price point to the price point of petroleum-based jet fuel and will my creditors or capital providers allow me to take advantage of policy mechanisms to show them that I’m able to close my business case and pay the burden on the debt that I’m about to acquire from them. Those are the key issues. So yeah, I talk about standing up facilities because we have a mixed bag right now of people in the capital markets saying, yes, we actually recognize the policy is going to be at play here, right?
Steve Csonka: (13:34)
So we’re not as concerned about that as we were perhaps 10 years ago. And we’re seeing things like blending mandates start to show up, right? So we’re getting some sense of surety from the policy side that helps give the confidence that they will loan, uh, funds to the sector to allow them to scale up. But it’s still a difficult challenge because these facilities can run anywhere from a couple of hundred million to several billion dollars per facility. So it’s, you know, it’s no small task for an entrepreneurial firm to decide, ‘Hey, I want to jump into the space and, and, and go out and compete.
Katherine Gorman: (14:15)
So you mentioned that there are several million gallons of sustainable aviation fuel being used today, who’s making that fuel? How is it economical in those places where it’s being used today?
Steve Csonka: (14:28)
Yeah, so we now are lucky enough to have four producers physically producing fuel, uh, World Energy from a facility in California, Neste from a facility in Finland, Gevo from a facility in Minnesota and Texas, and Total now just announced a week or so ago that they were now producing fuel from their new facility in La Mède, France. So, um, we’ve got those four producing fuel, um, World Energy, in fact, all four of those have already communicated their plans to significantly increase production, both at existing facilities, as well as at secondary tertiary, uh, you know, uh, facilities. So that’s, that’s, good news. Then we also have, uh, several others that are in the process of trying to complete facilities and, uh, just bring the two to mind that we think about a lot in the US uh, Fulcrum Bioenergies and Red Rock, and uh Fulcrum is just about ready to complete the facility outside of Reno, Nevada that converts municipal solid waste to jet fuel.
Steve Csonka: (15:43)
And Red Rock is working on their facility in Southern Oregon using forestry residues. You know, I say all of that to point to the broader fact that what we’re trying to do, what the aviation industry has committed to do, is make sustainable aviation fuel available worldwide. And what that inherently means is that we need to have fuel that’s able to be produced from a broad range of resources or feedstocks, as we’ve discussed in one of your prior sessions, hydrocarbon resources that we get from nature and other waste streams. And so what that means is that we want to be able to use prevalent feedstocks, and we want to have the right conversion technologies that go along with those feedstocks. So far, the aviation industry has approved seven different methodologies whereby a fuel can be produced from a renewable resource. At the end of the day, what we’re really after is being able to take the primary things that nature gives us and convert those into fuels.
Steve Csonka: (16:51)
And those are lipids, sugars and starches, lignocellulose, generally, and then these, I refer to them as circular economy by-product streams, things like industrial off gases, waste streams that come off of food processing facilities, and there’s a lot of waste streams, actually there’s seven or eight different waste streams that we’re accounting for. Some of those we’ve tapped into pretty well. The first one that I mentioned, the lipids we’ve got two pathways approved for lipid conversion, and lipids include all of the fats that come from animal food processing for the food that we eat, waste cooking oil that we refer to as yellow grease, brown grease, as well as a virgin oils that come from different kinds of plants, oil seeds, some trees, et cetera. So that’s the, the encapsulation of what we’re trying to talk about in a nutshell, being able to utilize these different streams of hydrocarbons that we’re able to convert readily and having the appropriate technologies for all of those.
Steve Csonka: (18:02)
And what I can report today is that, do we have that in hand? No, we don’t. For a couple of them, we probably have the appropriate technologies or the appropriate technologies are close to being finalized. And some of the other cases like, like lignocellulose, lignocellulose is somewhat recalcitrant in some ways, which means that the technology that would pull the hydrocarbons out of that lignocellulose also needs to be nuanced. So we don’t have those technologies all in hand yet some of them are in development look promising, but that’s the essence of what we’re talking about is being able to see those four feet stock streams be expanded, be utilized, I guess, is the better terminology with appropriate technology and at an appropriate price point. And not all of those combinations will necessarily give us at, some have more promise of being able to drive in the direction of petroleum based pricing. Others, not so much.
James Lawler: (19:05)
Now you listed five or six companies that either currently have production facilities for alternative fuels or on the cusp of having them, and I’m wondering who’s buying these sustainable fuels and what’s their motivation to do so if they are currently being sold at a higher price point than petroleum based fuels?
Steve Csonka: (19:23)
Yeah, that’s a, that’s a great question. And, the answer leads you to believe that the airlines are serious because it is the airlines that are buying this fuel. And in several cases, those are long-term offtake agreements for up to 15 years. So the airlines recognize that they couldn’t totally stand by and say, please industry deliver us the solutions without some level of direct involvement. And that’s what we see. Some airlines have committed to offtake agreements, even at current pricing. Some airlines have actually made investments with the companies developing fuel in these spaces, and they’re participating in various kinds of ways. So, it’s probably, realistically, less than 20 airlines around the world who have demonstrated this level of engagement. Others are more or less sitting on the sidelines waiting to see how things play out, how policy support unfolds itself, et cetera, before they get in. But at the end of the day, this is an industry voluntary commitment, and the industry recognizes that it will probably become more than a voluntary commitment, rather a legislated one. Uh, and so, you know, they’re all showing some level of interest, but it is truly only a handful who have physically spent the incremental money to do it.
James Lawler: (20:53)
And what kind of incremental money are we talking about here? What’s the factor between existing commercially available jet fuel and SAF?
Steve Csonka: (21:00)
Yeah, I think realistically it’s at least two X, two times the price of petroleum-based jet fuel. It’s at least that much. I think there may be some unique cases where even that number is paired down to something less. There are other cases where the number can be significantly higher. So I see quotes in the press of people referring to different techno-economic assessments that have been made or some other wild observations that they made. And they’re talking about fuel being as much as five times more expensive. And what I can tell you with some, uh, level of sincerity that if there’s a fuel production process out there, that’s at five times the current price of jet fuel, not much of it, if any of it is actually being bought today. And it’s very unlikely that it will going forward, right? So we’re more interested in solutions that are much lower than five X the price of petroleum jet fuel.
Katherine Gorman: (22:01)
There has to be a wide range of approaches that airlines take to assess these new technologies and strategically negotiate business arrangements with sustainable fuel providers. It makes sense then that the majority of airlines haven’t ventured out into this new enterprise. Can you say a little bit more about those that are taking the steps to blend SAF into their operations?
Steve Csonka: (22:22)
I made the general comment before perhaps 20 airlines worldwide. In the US for instance, we’ve got: United airlines, Jet Blue, Southwest, FedEx have all actually been rather aggressive and progressive with respect to bringing in sustainable aviation fuels, Alaska Airlines also. So they are demonstrating both those near term and long term focuses. And then around the world, KLM, uh, has been pretty aggressive. Uh, Lufthansa has done a lot of background work. They haven’t had as much success in actually inking offtake agreements. So it’s around the world. And then there are even some unexpected scenarios like Air India is in that mix. So it really is unique. It’s clearly driven by the philosophy of the leadership of the company, therefore leaning views, perhaps they’re driven by boards of directors that, you know, have the same concept in mind. Um, there are a couple of low-cost carriers too, that are in that bucket.
Steve Csonka: (23:24)
We don’t see it so much anymore. Five years ago, you used to actually see some pretty caustic comments from some airlines about the folly of artificially increasing your cost base so much, you know, by where we’re fuel represents 30, 35 as much as 40% of an airline’s total operating costs, right? And then you take that and you suddenly double it overnight. You know, it’s an insane business approach. So you used to see a lot of caustic comment along those lines. That pretty much has tapered down to almost nothing. And, to me, you know, we’re seeing even some of those airlines now, you know, noodling around the edges, trying to define how they’re going to be involved. And I think that’s all a reflection of what’s happened on the policy side in the last five years. We will likely see an EU-wide blending mandate for SAF for aviation, right? So it’s a compulsory requirement that this fuel gets blended in. Once an airline knows that that is absolutely going to happen, then it’s in their best interest to determine how they can obviate the costs associated with that. So, you know, they will naturally engage with potential producers.
James Lawler: (24:38)
Looking on the cost side, you mentioned that fuel makes up about 35% of the cost base of running an airline. If you’re now talking about doubling even a portion of that, that’s a very significant increase, and I’m guessing that this cost would eventually get passed down to consumers and their cost of travel. My question is, while we wait for new technologies to take off and lower these costs, are you aware of any modeling that tells us how policy might influence what consumers will have to pay, and hence the adoption of air travel in relation to that 5% growth curve that we expect for aviation in general?
Steve Csonka: (25:13)
There’s been a lot of analysis done both inside the sector and outside of the sector, because you’re only able to bring in very modest amounts of that sustainable fuel in the near term, right? So it will be irrespective of the policy mechanism that we’re talking about a very gradual introduction of cost to the airline, you know, albeit on a gallon dollar per gallon basis, a significant one. But with that gradual introduction, think, you know, the airlines will determine a way to pass that cost on to customers. And, you know, there have been studies that that actually point out that that incremental cost will result in a truncation of demand, uh, by virtue of the, of the price going up. So, uh, there was actually just one put out recently that that did a pretty good job at addressing that, uh, any elasticity issue, and pointing out that by the time we got to 2050, instead of having that 3% problem, we probably won’t, it’ll be, you know, something significantly less than that.
Katherine Gorman: (26:18)
Do you happen to know what percentage of our global greenhouse gas emissions come from commercial aviation? How does that break down in terms of emissions released in flight versus on the tarmac?
Steve Csonka: (26:31)
In line with the best analytical techniques and things like, uh, results out of the IPCC reports, et cetera, and then a rough order of magnitude, perhaps. Um, and this really varies from airport to airport, depending on the kind of operation that you have, but rough order of magnitude, less than 10% of that total fuel burn gets produced in ground operations, what we refer to as the landing and takeoff cycle and the rest of it is burned in cruise.
Katherine Gorman: (27:04)
It’s interesting that you say that not all emissions from aviation fuel technically count as greenhouse gases, but the reason being is that we don’t yet fully understand how these compounds interact in cycle in the atmosphere. But I guess what’s special about aviation fuel in comparison to other types of combustion fuels that makes that harder to understand?
Steve Csonka: (27:26)
So jet fuel is produced from the distillation of petroleum in existing refineries, in a very similar way that gasoline and diesel are produced. And in fact, it’s all actually all one continuous stream of hydrocarbons from light-end gases to really heavy compounds that get reused within the refinery and continue to be refined and in circular approaches, but in this middle distillate category of gasoline jet fuel and diesel, jet falls right in the middle. Gasoline really runs from about, uh, carbon numbers of C4 to as much as C12, jet fuel runs from C7 to C17, and diesel fuel might go from, uh, about C12, C14 and upward, up through some very heavy compounds. And so what you see there is the problem that if there weren’t jet aircraft, that string could be split in half the bottom end would go entirely to gasoline, the top end would go entirely to diesel.
Steve Csonka: (28:30)
And guess what? Both of those markets are significantly larger than jet fuel, diesel being about three X, gasoline being about five X. So there’s always this healthy competition within the refinery about how I make products that satisfy all my customers’ needs, et cetera. At the end of the day, it’s still a hydrocarbon – compounds, purely comprised of carbon and hydrogen and chains. So what makes jet fuel different? Jet fuel does have some more strict characteristics associated with it. And then within that range of hydrocarbons different types of these hydrocarbon chains in Gaussian distributions that make jet fuel in its Iso/normal paraffins these straight zig-zaggy chains of hydrocarbons branched zig-zaggy chains, cycloparaffins where the chain closes on itself and forms a ring structure of some kind, and then aromatic content, which wind up being groups of double ring compounds. They all actually bring some attribute of significance to the nature of jet fuel.
Steve Csonka: (29:42)
Jet Fuels is used for lots of purposes, other than just combustion that you don’t find in a car or a truck. And so we use it as a lubricant, as a heat transfer mechanism, as a capacitant agent, um, you know, four or five different kinds of usage. And the reason that that’s the case is because an airplane has a physical engineering system that is designed to be more sophisticated to make it efficient, to fly at 10 times the speed that you can drive a car on the road. So we’ve really integrated the concepts or the attributes of this jet fuel into the overall engineering of the vehicle. So we care more about the properties. And so if you look at the jet fuel specifications, you’ll find in there both physical attributes and fit for purpose attributes that we require of jet fuel, that you don’t find in the other specs.
Steve Csonka: (30:39)
And so now the task is – there all these characteristics that we know and love about petroleum-based jet fuel. We did a lot of analytical work upfront and decided, yes, these fuels can be a complete drop-in fuels requiring no change to distribution, systems, aircraft systems, airport fueling systems, et cetera. So in essence, keeping the societal cost burden low or zero, associated with this switch in an energy carrier. And as I said before, we’ve already approved seven of those pathways. We have another six that are physically in process right now, and at least another 15 by my count of additional combinations of feedstocks and conversion technologies that will in the end, at the end of the day, be able to produce a synthetic jet fuel.
James Lawler: (31:36)
And when you say we have these pathways, what organization is in charge of getting these fuels certified?
Steve Csonka: (31:41)
In any of this discussion, when I talk about ‘we,’ I’m talking about the Aviation Enterprise, working together on the development and introduction of these fuels. There are some CAAFI efforts specifically that we’re working on, but this really is an industry-wide effort. So people sometimes see the quotes about ASTM, and they think that there are a few people in this organization called ASTM that are making these decisions. And it doesn’t work that way at all. What ASTM does is creates a framework for an industry to come together, to work collaboratively on the definition of the specifications, and then creates a repository for those specifications that can be used by any commercial entity in the world, that body of people that get together, that’s the aviation enterprise. It represents big petroleum, the people who make jet fuel today, lots of people who work around the testing and analysis space, all of these sustainable aviation fuel producers are immersed in that process. The airlines themselves, the fuel handlers, anybody who touches, smells, tastes this thing called jet fuel is involved in that process of approving the production methodology to make a synthetic fuel that meets all of those jet fuel characteristics.
James Lawler: (33:05)
Understood. And so in terms of say a biofuel made from lignocellulosic material, the pathway, there might look like a group of investors partner with the lab that is proposing this new fuel. What kind of pathway would one of these new fuels go down to become approved and then go on to actually achieve commercial viability? What does that look like?
Steve Csonka: (33:24)
So, yes, it starts out pretty much as you envisioned, where somebody develops a conversion technology and that somehow gets licensed, that might happen in a national lab, it might have happened at a private company, it might spin out of an academic effort, et cetera, that technology is defined. They might then subsequently go execute some, a bench scale validation of that technology, perhaps even taking it up to a demonstration scale of some kind before someone does say, yeah, I want to license that technology or buy that technology, or even go develop something similar on my own. So we have all kinds of ways that that is actually happening, both the technology development and the commercialization part. But yeah, when someone has a vision that they’re able to produce jet fuel, then they can approach the ASTM community, this group of experts, and say, I’m interested in producing this fuel.
Steve Csonka: (34:22)
We’ve done enough work around techno-economics, life cycle assessments, our business case, et cetera. And we’re interested in producing this. So a company comes into the process. The process can actually take several years. We’ve had some cases where it’s taken more than five years to get all the way through the process and several million dollars. And one of the major cost drivers, uh, that, that rolls up to that several million bucks is that that producer actually has to produce fuel up to several thousand gallons to demonstrate all of these characteristics, that the ASTM community is concerned about, demonstrate that they can make the fuel, have the quality control associated with it, that everybody is satisfied with that yes, they are indeed able to make this on a, you know, a mass producible scale. So that all goes on in a stepwise fashion. And we continue. We, CAAFI, uh, working collaboratively with the industry continue to try to take costs and steps out of that process.
Steve Csonka: (35:26)
The more we learn, the more we’re able to more efficiently make those processes use less quantities of fuels to get through the testing. We’ve created a clearing house in collaboration with the FAA that allows a one-stop shop where that commercialization entity can go to the FAA through the University of Dayton and say, here’s my first sample. Tell me what you think of this. Will this work as a jet fuel blending component? Yes, it will. Okay. Then we will start into the ASTM process where we’ll get a national laboratory to validate those a physical and fit for purpose properties, that all gets put into a research report. It gets delivered to the equipment manufacturers. They review that and say, yes, I have questions or no, this looks good to go. And then the whole community votes on it or more work is required. And that more work is typically more sophisticated analysis like physically running the fuel in a sector test at an, at an engine manufacturer, a full engine test, the rig test, perhaps even, and there’s been some work done on this in the past where that fuel was physically loaded onto an aircraft.
Steve Csonka: (36:38)
And some in-flight measurements were done on that aircraft to satisfy different concerns or interests that folks had.
James Lawler: (36:46)
Can you give us some numbers around the scale of investment that’s required to go from lab bench to jet engine?
Steve Csonka: (36:55)
It can be several million bucks. Yeah. It can be several million bucks depending on how much fuel has to be produced. And the primary driver for how much fuel has to be produced is how different does that fuel look than the conventional jet fuel we’re used to seeing, you know, I’ve talked about C7 to C17 for families of fuel. When someone comes in and says, um, my blending component will be from C9 to C13 only, and only give you three of those families. Are you interested in that as a blending component? So we have, we have all examples. We have one approved pathway. That’s very much like the example that I just said, a very narrow distribution of hydrocarbons and only a couple of hydrocarbon types and it was approved, but at a modest, maximum blending level. A pathway six, developed by a company called ARA catalytic hydrothermolysis, it very much looks like a fully formulated jet fuel in every sense.
Steve Csonka: (37:58)
It was approved at a 50% max blending level, but it has the capacity to go up to a hundred percent. And the industry has been working on for a while, and actually just implemented the first ASTM task force meeting on this topic of how we remove the 50% blend wall barrier going forward. Um, and so there’s work going on in that arena. Uh, the Navy is working with ARA on the concept of being able to use that fuel in a Navy aircraft at a pure basis, a neat, a hundred percent drop in fuel.
Katherine Gorman: (38:35)
Now, if you could name three key factors that could accelerate the transition of SAF most effectively, what would they be?
Steve Csonka: (38:44)
Yeah, if I was a smart Alec, I’d say policy policy policy, um, I’ll be a little bit more, uh, focused on that. And I’ll say policy, policy, capital availability.
Katherine Gorman: (38:57)
So that’s policy twice and then capital availability.
Steve Csonka: (39:00)
You can’t gloss over the fact that you have this price disparity. It’s real, it’s tangible, It goes straight to the bottom line. That’s unavoidable. Boards of directors demand accountability on that kind of thing, et cetera. So you can’t overlook it, right? We can, we have some confidence of what that might look like in the future. We have no confidence, realistically speaking, whether policy will fully address that issue or not, right? How long have we been talking about, I mean, even going back to the days of Kyoto, I’m talking about worldwide mechanisms to move us in the direction of sustainability, uh, things like carbon taxes to, you know, address the greenhouse gas, gas issues, et cetera. So people don’t like to hear this from me, but I would posit that society still has not got their heads wrapped around exactly what we want to do as an international society to really address this issue head on. We continue to work on it, but you know, the mechanisms are not in place.
Steve Csonka: (40:12)
So in the near term, what you find is this patchwork quilt of different approaches. So we have the folks in the EU about to set up blending mandates as one way to force the issue. In the US we’ve been, depending on your perspective, we’ve been a little bit more lucky because we’ve had really good support from federal government and the agencies in terms of federal policy, through the RFS, federal tax treatment state, uh, treatment through LCFS systems at the international level, we have ICAO Corsia in place. And then, you know, everything in between both carrots and sticks that different people are considering to try to help close the price gap. I truly believe that when that gap starts to close or closes completely that you get a significant uptake of SAF. There’s absolutely no remaining reason, no impediment left because it is a drop in fuel.
Steve Csonka: (41:16)
It’s not affecting anything else. There’s no other societal costs associated with it. It’s just ‘go’ from that point on. So policy is important, and it can come in a lot of ways. And my hope is that when that picture becomes more clear then you get a total influx of capital availability into this space to allow this transition to occur. Another thing that might occur, is when policy becomes more clear, I really do expect that big oil, the big oil companies, the refiners are finally going to step into this space and say, okay, you know, society you’ve delivered the clear message we’re going to start the transition. And some companies are already done that there are, I think, three or four cases that I’m aware of where refineries have been shuttered, and the company has decided to convert them wholly into renewable fuel production facilities, and a lot more can be done in that regard, not to put Shell on a pedestal, but Shell has been fairly aggressive in this space, both going all the way down into the investment, into discrete conversion technologies, as well as viewing themselves as a major distributor of fuel to the aviation enterprise.
Steve Csonka: (42:35)
So being involved in the technology portion, somewhat in the production portion, also in the distribution portion. So there are signs, clear signs of progress, that we’re on our way. Um, are we going as fast as anyone would like? No, not really, but all the signs are positive.
Katherine Gorman: (42:56)
But why weren’t advancements in technology on your list? I, one would assume that major breakthroughs would have an impact on lowering production costs and make SAS more broadly available.
Steve Csonka: (43:08)
So the reason that I don’t throw R and D into that list, it’s not that it’s not required. It’s just that there is fairly sufficient progress occurring along that front, particularly in the US and EU. So what I can report is that we continue to make significant progress in technology development for these pathways and different feedstocks, but the problem remains even with the most aggressive approaches, we still have a price point issue that probably still needs to be addressed by policy. So yeah, I said that tongue in cheek, but don’t get me wrong. There’s no lack of opportunity, right? So fundamental research and development issues around feeling up issues associated with feedstock systems, supply chain systems in general, all of those things will, can, and will contribute to lowering the price point. It’s just that in the near term, all of those things that we can envision, don’t, still don’t quite get us there, especially when we appear to be, and maybe an extended period of $50, a barrel oil or $50 or $60 a barrel oil, it’s problematic.
Steve Csonka: (44:29)
Believe me, um, you know, working these details on a day-to-day basis is problematic. Um, and so even under some of the best scenarios that we can envision in 20 years, you know, it’s actually that kind of timeframe probably taking 20 years with continued and continued roll out of technologies, continued learning curve, continued supply chain optimization to get us to that point of being equivalent with $50 or $60 a barrel oil. So yeah, all of those, all of those things are important, but, um, the primary focus I have is what can happen in the near term to make a difference to significantly increase the uptake of these fuels in the near term. It does need to be policy. There is no question in my view, otherwise we’ll just continue this very, very slow ramp up that nobody will be satisfied with.
James Lawler: (45:25)
Well, thank you so much for taking the time to talk to us today, Steve, all of this was truly fascinating, and we’ve learned so much from you about sustainable aviation, and what you know, what the challenges are. And, you know, how the industry is evolving toward more sustainable fuels.
Katherine Gorman: (45:43)
Yeah, Steve, really amazing to be able to hear this conversation, and to think about how this whole market is unfolding and what that’s going to mean, not only for our planet, but our lives. Amazing to be able to talk to you about it. Thank you so much for your time.
Steve Csonka: (46:00)
Yeah, I’m happy to do it.
Katherine Gorman: (46:04)
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