Global Sustainable Aviation Fuel Report

Whilst the Danish SAF market is still in its nascent stages, it is evolving rapidly, a testament to the country’s commitment to renewable energy and climate action, having pioneered the commercial wind energy industry in the 1970s.

A supportive policy framework is at the heart of this, with the Danish government committing funds to incentivize the commercial-scale production of SAF, as it targets ambitious decarbonization milestones, such as the first “green domestic route”, a flight fuelled entirely by SAF, by 2025, all of which entails approximately 10,000.0 tons of SAF (MeSAF, n.d.). This policy support has spurred investment activity, leading to a large pipeline of domestic SAF development projects set to start to producing SAF as early as this year.

Whilst progressive policy support will continue to foster SAF investments, the Danish industry is not immune to the challenges faced globally, including the high cost of production compared to traditional jet fuel, the growing need for technological advancements to improve SAF economics, and a globally coordinated consensus on the adoption of SAF to foster the investment required. However, the country’s abundance of domestic renewable energy, particularly offshore wind, as well as its long history of biofuel technology development, means Denmark is uniquely positioned to capitalize on the market opportunity presented by SAF.

Denmark is targeting a 70.0% reduction in its carbon emissions by 2030 compared to 1990 levels (State of Green, 2022) and Net Zero by 2045, five years earlier than set out in the 2016 Paris Agreement.

The aviation industry poses a significant challenge to these global Net Zero commitments. The vast amount of energy consumed by airliners and the inherent impact of aircraft weight on its fuel consumption mean targeted policy support will be required if the aviation industry is to have a sustainable future. As renewable energy, such as wind and solar PV, continue to shift from subsidised to unsubsidised business models, governments are increasingly focusing their efforts on these hard-to-abate industries.

The Danish Government is no different in this regard, as it has introduced a comprehensive suite of policy support and taxation measures to fund and subsidize the ongoing development of the domestic SAF market. Some of the major policy targets include launching a 100.0% sustainable domestic flight route by 2025 and finalising green domestic routes by 2030. In September 2022, the government enhanced the budgetary outlay for the domestic SAF industry by over DKK1.8 billion (€0.2 billion), supplementing its previous DKK3.0 billion (€0.4 billion) allocation (Ministry of Foreign Affairs of Denmark, n.d.) (State of Green, 2022).

Other strategic initiatives are underway to complement the policy funding. The Danish PtX flagship project, ‘Green Fuels for Denmark’ (GFDK), aims to enable the transition required for green fuels in domestic aviation by 2027. It is fully funded by the government and has already received DKK600 million to kickstart the initial phases, focusing on large-scale production of renewable hydrogen and green fuels (Bioenergy International, 2022) (State of Green, 2022) (Everfuel, 2022) (Ørsted, 2022).

GFDK sets an ambitious policy target of fulfilling the country’s aviation decarbonisation goals three years ahead of schedule (State of Green, 2022). The government’s commitment towards eFuel technologies, like power-to-liquid, adds to the planned measures of the flagship project. For instance, in March 2022, the Danish Parliament had an agreement among all main political parties to scale up “power- to-X” (PtX) production, which can help boost local supply of green fuels for both domestic and export markets (Bioenergy International, 2022) (Aviation Week Network, 2022). Also, Denmark’s high share of renewable energy places it in a leadership position in future rollout of eFuel technologies. Such a cohesive strategy not only supports Denmark’s green energy targets but also sets a precedent for other nations looking to transition to sustainable fuel solutions.

Demonstration projects, funded through government grants, are contributing to the critical need for achieving commercial scale in new SAF technologies. The support from the Energy Technology Development and Demonstration Program (EUDP) is one notable instance. One of EUPD’s major projects, the MeSAF, aims to produce the first eSAF at a pre- commercial scale in Aalborg. Its total budget is $2.6 million, of which the EUDP funded $1.4 million. The remaining amount was from the project partners, including European Energy, Kosan Gas, Vertimass, Aalborg University, Aalborg Airport, Port of Aalborg Logistics and Cemtec Fonden (Biobased Diesel Daily, 2023) (EUDP, 2023).

The supportive policy measures also include fiscal initiatives to improve SAF competitiveness. In December 2023, the government announced a plan to levy tax on air passengers to raise resources for fuel subsidies. The proposed tax, to be phased in from 2025 and fully implemented by 2030, ranges from €6.7 to €55.0 per flight based on distance. The estimated revenue collection by 2030 is €73.8 million, which could help promote emerging technologies such as power-to-X and hydrogen (ETIAS.COM, 2023) (Aviation Week Network, 2023).

Additionally, the Danish government, in conjunction with EU funding programs like Horizon Europe and the European Green Deal, is providing substantial financial support for research and development to ensure the competitiveness of domestic suppliers in the global SAF market.

Progressive government policy will continue to foster a favourable environment for SAF investment within Denmark, with opportunities present across the value chain, from continued research, development and innovation, aiming to lower production costs and increase energy yields, to the development and construction of SAF facilities that will deliver the SAF capacity required to transition the industry towards a sustainable future. In this context, some of the ongoing projects indicate the rising investor interest in tapping into the opportunity.

Haldor Topsøe, a Danish catalysis and process technology company, is currently building a facility in Herning, Denmark, focused on producing SOEC (solid oxide electrolysis cell) electrolyzers. Such facilities are crucial for scaling up and optimizing production, potentially reducing costs and increasing manufacturing efficiency. This technology could be pivotal for the future of eSAF, as it supports Power- to-Liquid processes and facilitates advancements in methanol and, consequently, the Methanol-to-Jet pathway (Topsoe, 2024).

There are multiple R&D projects underway that are aiming to reduce the cost of producing SAF. For example, in June 2023, the Danish Energy Agency’s EUDP granted DKK26.9 million in funding to Topsoe A/S for FrontFuel, a SAF demonstration project. The project has been launched as a pioneering initiative to design, test, and install the world’s first demonstration facility for producing SAF which will be obtained by converting CO2, water, and renewable electricity to synthetic crude. This production facility also aims to demonstrate the integrated processes involved in SAF production, from feedstock conversion to final fuel output, using Topsoe technology (Aarhus University, 2023) (Chemical Engineering, 2023) (Green Car Congress, 2023).

Among other notable other developments, Copenhagen Airport is involved in a proposal to establish an aviation climate fund, which is to be funded using passenger levies on flight tickets that could generate annual revenues of up to DKK750.0 million. These funds would then be invested into SAF R&D. (Technical University of Denmark, 2022).

As the SAF industry is still in its nascent stages, collaborations and partnerships are becoming increasingly common, which allow for the diversification of risk and pooling of resources.