1. Offtake credibility: Banks look for companies with long-standing credit history, a healthy P&L and plans to use the committed volumes. 2. Offtake T&Cs: Currently, contracts are often non-binding Memorandums of Understanding (MoUs). For a project to reach FID, contractually binding agreements are needed. 3. Offtake duration: The contract needs to cover the tenure of debt financing (e.g. 8-14 years), and the duration of any incentives supporting offtakes would ideally be aligned with the tenor of the contract. 4. Offtake pricing: Pricing should be roughly in line with other competitive offtake agreements to avoid contract breaches from offtakers as well as suppliers. As the SAF market is still nascent, lenders generally expect a fixed offtake price set in the contract. Offtake agreements often have a risk-sharing mechanism in place between producers and offtakers. With regards to the negotiated volumes, investors often require at least 70-80% of annual capacity to be covered by offtake agreements. Some lenders even require 100% of the SAF produced to have reliable offtake covering the full loan tenor. This reliability is also defined by the creditworthiness of the offtakers. Airlines on average have a lower credit rating and spreading the risk of default across multiple parties is an important de- risking consideration. If there is a merchant portion (i.e. no offtake contract portion), lenders would expect thorough market due diligence on the feasibility of selling the merchant portion and generating stable revenue for the project throughout the loan tenor. However, because the SAF market is still nascent and SAF does not have a well-established market price, lenders may find it difficult to accept the merchant risk. Consequently, lenders may choose to finance only based on the revenue generated from the offtake agreement, excluding revenue from merchant or spot sales from the debt sizing. This approach could result in smaller loans than project sponsors may desire. Risk-sharing can take many forms. Five pricing or contract structures for SAF offtake agreements have emerged (see Table 2). In general, the higher the risk-sharing, the better the overall bankability of the offtake agreement. Offtake agreements provide a predictable revenue stream for the project developer and significantly reduce demand uncertainty, making the project more attractive to investors. Overview of different contract structures TABLE 2 Flat/fixed pricingJet fuel – plus premiumCost-plus Take-or-pay Ownership Description Contracts where price of SAF is locked in for agreed-upon quantities, regardless of change in jet-fuel market price or cost of inputs.Offtakers take agreed- upon quantities at the price based on the market index of fossil jet fuel (e.g. jet fuel price monitor), plus a green premium.Offtakers take agreed- upon quantities at the price of input costs at the time of production, plus a margin.Offtakers pay for the products on a regular basis, whether or not they actually take delivery of the products.Offtakers take any quantity at the cost of production, in exchange for investment capital and risks (mainly through JV). Risks shared by offtakers Security of supply Feedstock risk Technology risk Construction risk Considerations –Uncommon as risky for producer –Most common pricing –Expected to grow more challenging as gap widens between HEFA feedstocks and Jet A indices –Adopted by some SAF producers and common among energy players –Less risky for producers with feedstock constraints –Very high risk for offtakers, but growing as strongest bankable signal towards financiers –Adopted by a few large energy players –Unlikely to be adopted by airports and airlines, due to capital investment needed; but some may be able to take an equity stake in SAF plants. Sources: World Economic Forum, Scaling Clean Technology Offtakes: A Corporate Playbook for Net Zero. Financing Sustainable Aviation Fuels 27

Financing Sustainable Aviation Fuels 2025