Shell Aviation has a presence at some 900 airports in about 60 countries supplying aviation fuel. The company fuels an aircraft every 14 seconds and is taking a leading role is supplying sustainable aviation fuel (SAF) to airlines as well as business aviation and private operators.
In a sign of the momentum growing behind aviation’s use of low-carbon fuels to reduce emissions, Shell Aviation and fuel producer World Energy have begun providing a SAF blend to Lufthansa at San Francisco International Airport (SFO). Supplies to Air France at SFO are planned to begin in June.
ATW spoke with Shell Aviation VP Anna Mascolo. She joined parent Royal Dutch Shell 15 years ago, taking over the leadership of Shell Aviation in July 2019 after holding roles in different parts of the energy value chain, from upstream production to supply chains and chemicals.
What role does Shell play in sustainable aviation fuels? As a fuel producer and fuel supplier, we play different roles when it comes to sustainable aviation fuel. It is a market that is relatively small, less than 0.1% of the whole industry, but which is important to continue to scale up because there are substantial benefits that SAF can bring when it comes to carbon emissions, with life-cycle reductions being on the order of 80-85%. We play a role in different parts of the scaling up of SAF. We are a supply chain and logistics provider. We’re also a technology provider. We are looking at our own technology when it comes to sustainable aviation fuel. We are clearly a fuel producer, so we manufacture jet fuel and eventually we also hope to manufacture SAF ourselves. We have a number of other technology collaborations. One is with SkyNRG on the DSL-01 project in the Netherlands, which is the first dedicated biojet plant in Europe, where we are collaborating both in technology and in the commercial space. We are an investor, so we invest capital and money in some of these projects. We fly ourselves, so we are an offtaker. And we also look at product quality and assurance.
Is Shell Aviation actively promoting the use of SAF? We also have an element of advocacy and helping to shape some of the policies that will help the industry to move forward. I want to mention the Clean Skies for Tomorrow Coalition, which is an initiative with the World Economic Forum where we collaborate with a number of partners in the industry. To mention a few, we have KLM, Airbus, Heathrow, SkyNRG, SpiceJet and Boeing. We have been looking at creating a group that is starting to shape the path toward net-zero emissions by 2050 for the industry, and how can the industry make sure we have sufficient incentives for both [SAF] producers and consumers to scale up from 0.1% today to a much more substantial number.
Where does Shell rank among SAF suppliers? For 2019, I can tell you that Shell would be the number one SAF seller. I can’t give you numbers on this, but it’s a significant market share. However, the market is very small. We see the production of SAF starting to scale up tenfold, but that is still very small. I won’t say Shell will resolve the SAF supply issue, but I think we are trying to make sure there is enough limelight and incentives for Shell and third-party producers—Neste, BP, all other companies—to start really changing the pattern of the demand side when it comes to SAF production.
Are you seeing increased demand for SAF from airlines? Commercial airlines have moved significantly in the last year in terms of their appetite for sustainable aviation fuel. In the past, they looked at test flights, where they wanted to prove the concept, but they wanted for somebody else to take some of the price sensitivity. But I think we’re starting to see consumer pressure, and societal pressure, ask for much more to be done in this space.
Can you give recent examples of work with airlines? Early in 2019, we started selling sustainable aviation fuel in San Francisco, in collaboration with SkyNRG, to five airlines. This was more for test flights. Now we have concluded two deals, one in November with Lufthansa and one in January with Air France, where we are looking at not a one-off sale of SAF to commercial airlines, but for long-term deals with multiyear collaboration, both with producers and offtakers. You can extrapolate that what we have done so far is only going to increase exponentially, because everything is moving very fast. On the supply side, everything is really moving at the speed of light. Early in 2019, we started selling sustainable aviation fuel in San Francisco, in collaboration with SkyNRG, to five airlines. This was more for test flights.
How important are these longer-term deals? The multiyear agreement is really the key to make sure that producers have sufficient long-term security of offtake and offtakers—the commercial airlines or the fixed-base operators—have a supply chain that is long term and they can rely on. We come in as an investor and a producer, and as an offtaker that is helping move the product to the right location. This is not an easy space. The role that we have played here with World Energy has been to help the manufacturer have sufficient financial incentives to continue to produce SAF at scale long term, to make sure we have the logistics to blend the product within our own supply chain, and then make an agreement which is taken seriously by an airline that wants to make sure sustainability is on its agenda.
Will SAF always be more costly than petroleum-based jet fuel? Biofuels are simply more expensive to produce and will continue to be expensive to produce, depending on the technology. You’re looking at two to five times higher premium than the current market. So it is a more expensive product, and if you’re looking at second-generation biofuels—so, waste to biofuel—these are new technologies that are simply more expensive. They are more difficult to scale, so you need less mega plants and more smaller plants in different locations, closer to your feedstock supplies.
What is Shell Aviation’s own approach to sustainability? We are the only traditional oil and gas company that, when we look at our target for carbon emissions, we look at Scope 1, Scope 2 and Scope 3. What that means is we don’t only monitor carbon emissions from taking oil from the ground, manufacturing products and delivering them to our customers; we also count the emissions that our customers will have when they take our product, transport it to their own facility and burn it.
How important is collaboration to the success of SAF? It cannot be only one company. We believe that the nature of the aviation industry is about collaboration between different parties: the airports, the airlines, the fuel producers, the distributors. When you are trying to change the pattern between supply and demand, and shift from traditional jet fuel to SAF, you need to collaborate with a number of players and everybody has a role. We need everybody’s help. This is not a Shell pet project; this is an industry that needs to change and develop toward a very different way of working.
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