TOKYO -- Mitsubishi Corp. and Eneos Holdings on Monday jointly announced that they will produce sustainable aviation fuel (SAF), which significantly cuts down on carbon dioxide emissions from aircraft. The companies will as soon as 2027 establish a domestic supply chain that handles everything from procurement of raw materials to manufacturing and distribution.
The announcement confirms Nikkei's earlier report on the matter.
With aviation decarbonization regulations becoming more stringent around the world and competition for SAF picking up, the two companies aim to reduce their dependence on imports by establishing their own system for mass production.
SAF is derived from biomass, such as used cooking oil and plants. It is mixed with jet fuel derived from crude oil. Using it, emissions of carbon dioxide from aircraft can be reduced by 70% to 90% compared to conventional fuel. Worldwide in 2020, 63 million liters of SAF were used, less than 1% of the total amount of jet fuel used. It is estimated that the introduction of fuel regulations will require about 13 billion liters of SAF in Japan, the U.S. and Europe alone by 2030.
The Japanese government has set a goal of replacing 10% of aviation fuel used annually (about 1.3 billion liters) with SAF by 2030. The plan is to build a facility to receive SAF at Chubu International Airport in the fall of 2022. All Nippon Airways (ANA) and Japan Airlines (JAL) have partially introduced SAF but are still dependent on imports.
With the government's goal in mind, Mitsubishi and Eneos agreed to create a domestic supply chain. Mitsubishi will handle procurement of raw materials and distribution. In addition to its own grain and chemical networks, the company will also consider incorporating the procurement networks of group companies such as Mitsubishi Foods and Lawson. Eneos will use some of its refineries for production.
Production volume has not yet been determined, but it is expected to be in the hundreds of thousands of tons per year. The partnership will be the mainstay of the government's 2030 goal. SAF will be supplied to airlines arriving at and departing from airports in Japan. Specific details of the tie-up, such as whether a new company will established, will be decided later.
The production cost of SAF depends on the raw materials used but averages 1,000 yen to 2,000 yen ($8 to $16) per liter, up to 10 times higher than ordinary jet fuel. When importing, logistics and other costs also factor in. Carbon dioxide emissions from transporting the fuel are also an issue. The two companies will establish a domestic mass production system for SAF to significantly reduce costs and lower the hurdles to widespread use.
The International Civil Aviation Organization, which counts 191 countries and regions as members, in 2021 ruled that airlines should not increase their carbon dioxide emissions above 2019 levels. It plans to make the restriction mandatory in 2027. If the ICAO enforces the rule, planes that have not taken measures to reduce carbon dioxide emissions may have to leave service. Considering this international rule, Mitsubishi and Eneos aim to start mass production by 2027.
Europe and the U.S. currently lead in SAF production. Finland's Neste has already commercialized its product, and it counts ANA and Delta Air Lines among its customers. Fulcrum Bioenergy in the U.S. began production in fiscal 2021 in partnership with JAL. Lanzajet, a U.S. company, has received investment from Microsoft, Shell and others and will begin production in the state of Georgia in 2023.
In Japan, JGC Holdings, Cosmo Oil and others plan to build a commercial plant in 2025. The Tokyo-based company Euglena is also moving forward with testing the production of SAF using euglena, a type of freshwater flagellate, and other raw materials. Japanese companies lag behind their European and U.S. competitors in terms of production technology and cost, and they have not yet paved the way for mass production.
Mitsubishi and Eneos will also work with other companies participating in SAF production, aiming to bring cost competitiveness down to the levels of Europe and the U.S. Eneos will start a feasibility study with Total Energies of France on SAF production.