France to invest Eur300 million/year in clean aviation over 2024-30

French President Emmanuel Macron said June 16 that France will invest Eur300 million/year ($328 million/year) over 2024-30 to finance research and innovation to decarbonize the aviation sector, through the development of clean fuels and new aircraft and engines.

Speaking at Safran Aircraft Engines factory in Villaroche near Paris, broadcast by France Info radio, the French president said: "We just secured total capacity of SAF [sustainable aviation fuel] production of 500,000 mt/year in France by 2030."

Currently, SAF is produced in France in TotalEnergies' La Mede bio-refinery near Marseille and will also be produced from 2024 at its Grandpuits site, which is being reconverted into a bio-refinery.

Macron confirmed June 16 that a third bio-refinery will be built in Pardies, in the industrial Lacq area in the southwest of France, as part of a series of investments to decarbonize aviation.

The start-up Elyse Energy will build the third French bio-refinery with partners Avril, Axens, Bionext and IFP Investissements. The plant will have a total capacity of 110,000 mt/year of biofuels including 75,000 mt/year of sustainable aviation fuel and 35,000 mt/year of bio-naphtha.

"The BioTJet project aims at providing by 2027 air transport operators with a sustainable e-biokerosene volume equivalent to 30% of the annual consumption of Bordeaux Merignac airport, and derivatives for shipping and road transport as well as for chemical industry," Elyse Energy said on its website.

"The BioTJet project leverages the BioTfueL(R) process, which produces advanced bio-kerosene from biomass consisting of residues mainly from local forestry resources and end-of-life wood waste. It combines biomass production with low-carbon hydrogen injection to optimize the biomass-to-fuel yield."

SAF set to progressively replace traditional jet fuel in Europe

According to the EU regulatory announcements of the "Fit-for-55" and ReFuelEU Aviation packages, from 2025, airlines taking off from EU airports will have to use at least 2% of SAF; from 2030, 6%; from 2035, 20% and from 2050, 70%. Currently, the maximum amount of SAF that can be blended with traditional jet fuel to fly aircraft is 50%.

Only three countries in the world have a blending mandate for SAF, 1% in France, and similar amounts in Sweden and Norway.

SAF's yearly production in Europe ended 2022 at 514,000 mt and is expected to reach 766,000 mt in 2023, according to estimates from S&P Global Commodity Insights analysts. When looking at the next five years, typically the most important forecast period for refinery expansion, SAF production is forecast to reach 2.806 million mt as of 2028.

The European SAF complex remains at a high premium to conventional jet, with the Platts Sustainable Aviation fuel ex-works NWE flat price assessed at $1817.69/mt on June 15. The CIF NWE jet fuel cargo was assessed at $749/mt, while the FOB FARAG jet fuel barge flat price stood at $746.75/mt. Platts is part of S&P Global.

Bio-naphtha boost

The construction of new bio-refineries, especially those focused on the production of SAF, are good news for the emerging bio-naphtha market due to a high yield. The current production of bio-naphtha in Europe relies mostly on biodiesel (HVO) plants, which yield an average of 5% of naphtha. SAF meanwhile yields around 10%, with some market sources indicating that refiners could push the rate to 15% depending on their configuration and margins.

Such an increase in production capacity is expected to bring bio-naphtha prices down in Europe. A typical 1,000 mt with ISCC+ bio-naphtha cargo is currently trading at around a $1,300/mt premium to the Platts naphtha CIF NWE physical assessment, according to sources. The value is considered to be a prohibitive price by many in the petrochemical industry, especially because of the weak economic outlook for Europe.

Platts assessed naphtha CIF NWE cargoes at $542.50/mt June 15.