Air New Zealand’s Greg Foran uses his first long-haul trip as boss to visit Neste’s sustainable aviation fuel plant

Air New Zealand chief executive Greg Foran took advantage of his first long-haul trip with the airline to visit a sustainable aviation fuel refinery in Singapore, which next year will be the largest in the world.

Flights
powered in part by sustainable aviation fuel (Saf) are now on the radar following the signing of an agreement between New Zealand and Singapore to coordinate research, development, test beds and trials of this fuel.

The deal, announced by Singaporean Prime Minister Lee Hsien Loong and New Zealand leader Jacinda Ardern, will also lead to a study of the commercial viability of “green lanes” between the two countries to encourage consumers to take flights operating at sustainable fuel.

Speaking at the Neste factory in Singapore, Foran said his airline had made “significant progress” with sustainable aviation fuel, particularly over the past year.

“The progress we are making with sustainable aviation fuel is significant and must be because time is running out. We are not just talking about it anymore – we are now working hard with [the Ministry of Business, Innovation and Employment] and others to find solutions that can solve a thorny problem.”

He said understanding what a major Saf producer was doing was key to helping the airline meet its emissions reduction targets.

“If we want to solve net zero by 2050, we must be able to solve [it with] sustainable aviation fuel; there is no technology that solves the problem of long-haul flights,” he said.

“Working with Neste and working with others is going to be absolutely important in solving this problem.”

Air New Zealand flies some of the longest routes in the world and they account for a larger share of its business than most other airlines.

Neste, a Finnish company, is already the world’s largest producer of Saf and is now spending billions of dollars to expand its Singapore plant to produce both aviation fuel and green diesel.

Foran said the cost of setting up a Saf production network was too much for a sector such as airlines or energy companies to solve. Currently, Saf costs three to five times the cost of traditional aviation fuel, even at today’s high oil prices.

“The government needs to come here and they will provide mandates and policy parameters, as will other suppliers throughout the supply chain. This can be resolved, but it requires everyone to look here. cannot be left for airlines.”

Sami Jauhiainen, Neste’s vice president of business development, renewable aviation, said the current global production capacity of 100,000 tonnes will increase to 1.5 million tonnes thanks to investments in Singapore and Rotterdam.

While Saf production at Neste and other companies is growing rapidly, it still accounts for a small fraction of fuel consumption by airlines, which contribute more than 2% of global CO2 emissions.

Jauhiainen said the increased production from Neste would cover around two-thirds of New Zealand’s aviation fuel consumption. His Saf was made with used cooking oils or animal fats.

Palm oil was not among the raw materials used, he said.

Neste claims that over its life cycle, including the impact of production and logistics, sustainable aviation fuel has a carbon footprint up to 80% lower than conventional fossil jet fuel.

It is fully compatible with existing jet engine technology and fuel delivery infrastructure when blended with fossil jet fuel, typically at around half and half.

He said his company is starting production in the United States with a joint venture partner and is constantly looking for partnerships and investment opportunities globally.

“We do not have existing agreements in place for New Zealand, but we are open to collaborations and partnerships. important first,” said Jauhiainen.

Air New Zealand has signed a memorandum of understanding to partner with MBIE on a feasibility study for domestic production of Saf and the government support that may be required to make this commercially feasible. Besides Saf, the airline is exploring hydrogen and battery technology for its planes.

Late last year, the government announced that a biofuel mandate for Saf would be drawn up this year, taking into account work already underway.

While land transport mandates are scheduled from 2023, MBIE officials have recommended to Cabinet that aviation be given more time, with a regime by 2025.

Establishing sustainable aviation fuel production in New Zealand, or even securing a reliable imported supply, requires significant infrastructure investment at an average cost of around $1 billion, according to a cabinet document.

The sharp rise in oil prices – exacerbated by Russia’s invasion of Ukraine – has led to soaring jet fuel prices.

Aviation Weekly reports today that the average Jet-A price in the United States was 30% higher than a year ago. The level of East Coast jet fuel inventories stood at 6.5 million barrels, its lowest level since 1990.

In the United States, airfares have soared since the start of the year, with the average cost of a round-trip domestic flight at US$235 ($346) in April, up 40% until now this year, and another 10% increase. is expected in May.

Airlines typically pass on passengers up to 60% of higher fuel prices, Aviation Weekly reports.

This year, Air New Zealand has raised fares by 5% on its international network, citing rising fuel prices and other costs.