Financing Sustainable Aviation Fuels 2025

2.2 Fundraising challenges across the project lifecycle Each phase is characterized by multiple risks, summarized into four main categories: –Policy risk: longevity of incentives, instability and inconsistency of policies, including unclear or short-term mandates, incentives that favour use of renewable fuels in sectors other than aviation, incompatible regional standards, issues in granting operations or environmental permits and trade barriers. –Market risk: uncertainty and volatility in SAF prices when no fixed-price structure exists, vague or non-binding demand signals, short- term or small number of offtake agreements, offtaker creditworthiness, risk of buyers or producers defaulting and lack of alignment on book-and-claim systems. –Technology risk: technical maturity of FOAK plants, as well as challenges in achieving cost-competitive production and scaling- up operations. –Feedstock risk: feedstock availability (e.g. used cooking oil for HEFA, biogenic CO2 for PtL), high and volatile price levels and sustainability concerns (e.g. indirect land-use change, competition with food). Figure 8 provides a high-level overview of which risks are most pertinent for each stage, though it is important to note that the above risks are often interconnected, with policy longevity and consistency being a major driver of the willingness to enter into long term offtakes, as an example. Overview of key risks by phase FIGURE 7 Certification – absence of globally aligned sustainability certification schemes (e.g. CORSIA/GREET/RED) Permitting – permits not secured on timePolicy riskConceptualization and pre-feasibility1 Feasibility and front-end engineering and design (FEED)2 Project financing and final investment decision (FID)3 Construction and implementation4 Commissioning and operation5 Stability/longevity – limited stability of SAF policies which are not in line with SAF lifecycle, better incentives for other renewable fuels (e.g. biodiesel) resulting in repurposing of SAF facilities Market risk Technology risk Feedstock risk Availability – feedstock sourcing challenges and high prices driven by constrained supply, especially for HEFA pathway Sustainability – concerns around sustainability of feedstock, especially for HEFA and AtJ Scaling – limited scaling potential driven by too large green premiumDefault – existing customers default or exercise the exit clause Construction – delays driven by operational execution challengesScaling – limited economies of scale driven by operational challengesOff-take – limited appetite to enter into long-term agreementsCommitments – uncertainty around mechanisms related to mandated demand, limited certainty coming from voluntary demand commitments Competitiveness – preference for alternative pathways (e.g. UK HEFA cap) or emergence of cheaper production hubsFirst-of-a-kind plants – uncertainty driven by low technical maturity of proposed technology, especially FOAK facilities (e.g. G-FT, PtL) Source: Kearney analysis for Airports of Tomorrow, building on stakeholder input. Financing Sustainable Aviation Fuels 16