As you may have heard, the Norwegian government will discuss a mandate of 1% sustainable aviation fuel (SAF) for all international and domestic flights from January 1, 2019. A proposal was drafted and is open for submission of thoughts and views up until August 10th.
Therefore, the mandate is not yet set in stone, as the final text still has to be reviewed and adopted by the Norwegian Parliament. The public hearing documents can be found here (only available in Norwegian).
SkyNRG was asked to share their insights on the challenges that might lay ahead and the feasibility of such a mandate in general. In his role as SkyNRG’s CFO and board member of the Fly Green Fund, Theye Veen is closely involved in the current developments of the SAF market in Nordics. Theye shares his opinion on the feasibility and potential impact on the SAF market of implementing the proposed mandate:
This is a very important step towards a structural market for SAF. It is a brave move, and if done the right way it can serve as a showcase for other progressive governments that have SAF ambitions. As it stands now, the mandate starts with 1% of all jet fuel consumed in Norway in 2019 with the intention to grow to 30% SAF in 2030. Although ambitious and progressive, it is important to realize there will be different challenges along every step of the way.
As the first commercial SAF volumes were only delivered in 2011, and all of the SAF uptake has been voluntary since, it does not imply that the needed Norwegian volumes are easily produced and supplied. But it can be done, and it can be done sustainably. To ensure that the mandate is met with truly sustainable aviation fuels, the Norwegian government has to take a strong position. There’s currently no information available on how the proposed mandate will be maintained and whether penalties will apply when targets are not met. However, this will be a very important factor for the extent to which the mandate will be successful.
If the boundary conditions are clear, and the economic incentive is there, the industry will find a way to comply. Especially in these first years the various market players will need to work hard and work together, to ensure the actual volumes will be delivered. In parallel, the investments in new SAF production capacity need to be made to ensure the higher volume targets can be met as well. A clear and reliable market signal (e.g. a mandate) is essential for this. Showing continuous progress and effort will be key to give comfort to all stakeholders that a mandate has been the right decision and that pushing up the volume targets is realistic. In pioneering tracks like these, confidence is everything.