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The Gulf is well-placed to soar on SAF – but not yet

Sustainable aviation fuel is in its infancy but the Gulf has a hydrogen trump card

An Emirates jet taking on SAF at Dubai airport. The airline has a SAF deal with oil major Shell Reuters/Rula Rouhana
An Emirates jet taking on SAF at Dubai airport. The airline has a SAF deal with oil major Shell

For the world to reach net zero by 2050, people born this decade would have to emit no more than 34 tonnes of carbon dioxide each during their lifetime – but a single Dubai-New York economy return flight emits 1.75 tonnes.

If the Gulf’s airlines are to retain their position as the global connector in a climate-friendly future, they need a new way to fly. 

This problem extends across the whole aviation industry. And so far, sustainable aviation fuel (SAF) has been billed as the preferred solution. SAF is chemically very similar to traditional jet kerosene and can be used in traditional engines with only minor modifications, and blended with kerosene or used neat as required. 

But SAF is made, not from crude petroleum, but from feedstocks that recycle the carbon – either plant and animal matter (biofuels) or carbon dioxide captured directly from the air and combined with hydrogen.

The theory is great. But SAF is available today only in minute quantities, and it costs at least two and half times as much as traditional jet fuel. Offtake agreements by airlines to buy from SAF producers are if anything slowing down, rather than speeding up.

At the current rate of progress, just 5 billion litres will be committed in 2024, less than half the rate of 2023, which was itself half that of the year before.

The International Air Transport Association (IATA) estimates that SAF will rise to 0.53 percent of total fuel consumption this year, a tiny fraction, but still adding $2.4 billion to airlines’ fuel bill, which was about $271 billion in total last year. IATA has released net-zero roadmaps for the industry, which envisages hundreds of millions of tonnes of SAF and low-carbon synthetic fuels by 2050.

The EU has sought to kick-start the adoption of SAF. From 2025, EU airports must provide at least 2 percent SAF, rising to 6 percent by 2030 and 70 percent by 2050. Of this, 1.2 percent by 2030, rising to 35 percent by 2050, must be synthetic fuels – which don’t rely on biological feedstocks. 

The Gulf countries are also responding to the challenge. The UAE plans to supply 1 percent SAF, made locally, to its national airlines by 2031, and to produce 700 million litres annually. Etihad, Emirates, Adnoc and other entities formed a consortium in November 2023 to develop and deploy SAF. 

In March, Emirates began receiving SAF from Finnish fuel provider Neste at Amsterdam’s Schiphol Airport, and it has a deal with Shell to receive SAF at Dubai Airport, starting at the end of last year.

More important for the Gulf are plans to produce SAF. It does not have large resources of biomass, so synthetic fuels are the way to go.

There is a guaranteed market for turning hydrogen into synthetic fuels, and they are easy to transport

Abu Dhabi’s clean energy company Masdar, for instance, is leading a consortium to produce methanol from hydrogen, which can then be converted to SAF. Etihad has formed a partnership with Twelve, a California-based startup using renewable power to electrolyse carbon dioxide. 

Such moves play to the Gulf’s strengths. The UAE, Saudi Arabia and Oman in particular have ambitious plans to make hydrogen – mostly “green”, from renewable electricity – but some “blue”, from fossil fuels with carbon capture and storage.

They will be among the cheapest locations globally to produce these fuels because of their abundant solar and, in some places, wind power and available land near coasts.

They have substantial experience in refining and petrochemicals, and existing facilities for storing and exporting jet fuel. Qatar hosts two of the world’s largest synthetic fuel plants today making jet kerosene and other petroleum products from natural gas.

But like most low-carbon hydrogen projects worldwide, they have struggled to advance to investment decisions, because of the need to find customers willing to commit long-term to paying a premium price, and the high cost of transporting hydrogen over long distances.

Turning hydrogen into synthetic fuels solves both of those problems. There is a guaranteed market, in the shape of airlines seeking to meet their EU and IATA commitments, and companies that have committed to zero-out their business travel, such as Microsoft and consultancy BCG.

And liquid synthetic fuels are as easy to transport internationally as today’s jet kerosene, or can be provided directly to Gulf airports.

The US is the leading competitor, because of the generous subsidies provided in its Inflation Reduction Act, along with a similar bounty of renewable energy, and petroleum experience. It also has what the Gulf so far mostly lacks, a vibrant system of venture capital and technology development into carbon capture, hydrogen, biotech and other related areas.

But even with subsidies, the US won’t make all the SAF that the global aviation industry needs. The GCC has its own mega-hub airports and successful international airlines. It also has the advantages of proximity to markets in southern Europe and Asia. 

For the GCC, extending the life of its traditional energy industry will also ensure the sustainable future of one of its key economic engines.

Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis

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