Argus launches 1st eSAF indexes

Global energy and commodity price reporting agency Argus announced Nov. 19 that it has launched the world’s first calculated prices for eSAF (electro sustainable aviation fuel).

The modeled production costs will support offtake-agreement negotiations and provide new transparency to help the energy industry address environmental requirements.

“Governments recognize that biofuel-based SAF alone cannot decarbonize aviation because renewable feedstocks, mostly used cooking oil, are a finite resource,” Argus stated. “As a result, the industry will need to use eSAF, which is produced directly from hydrogen and carbon-dioxide molecules.”

Mandates for use of eSAF in aviation take effect from 2028 in the U.K. and from 2030 in the EU, with significant penalties for noncompliance.

Yet the industry is nowhere near ready.  

Of the 70 proposed eSAF plants in the U.K. and EU tracked by Argus, no commercial-scale plant has yet reached a final-investment decision (FID).

Plants take three to four years to build, so FIDs must be taken within the next year if targets are to be met.

As a pioneering technology, eSAF is more expensive than biobased SAF and conventional jet fuel.

The new Argus calculated costs for eSAF production in November show it is currently 13 times the cost of conventional jet fuel and 3.5  times the cost of biobased SAF (produced using the HEFA SPK pathway) in northwest Europe.

“Long-term eSAF offtake agreements are essential to the financing of production facilities,” said Adrian Binks, Argus Media chairman and CEO. “But buyers are wary of committing tens of millions of dollars in such agreements, and this has created a disconnect between supply obligations and demand, which in turn has stalled investment. Our new modeled costs will provide important independent transparency upon which participants across the eSAF value chain can rely to inform their long-term decision making.”

The new weekly indexes compute the production cost of eSAF in the Amsterdam-Rotterdam-Antwerp region of northwest Europe on a euro-per-ton and U.S.-dollar-per-ton basis and are published both inclusive and exclusive of capital expenditure.

These new calculated prices expand Argus’ SAF offering, building on well-established market references in northwest Europe, Asia-Pacific and the U.S. for hydrotreated esters and fatty acids synthesized paraffinic kerosene (HEFA-SPK) biobased SAF.

The calculation methodology draws on Argus’ pricing and consultancy expertise across biofuels, natural gas and hydrogen.