Navigating SAF: Market insights,

forecasts and strategies

May 2024
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Navigating SAF: Market insights and strategies

▪ What is the current state of play? Regional breakdowns of the SAF market in Europe,
Asia and the Americas
▪ How can I reliably price SAF? Pricing trends and strategies
▪ How is legislation around the world impacting the SAF market? Update on emission
targets and government mandates
▪ Can feedstock supply keep up with demand? What is left for SAF?
▪ Will SAF supply keep up with demand? Get a view and an outlook on global capacity
Global SAF operations
HEFA and Co-processing Operational Plants

▪ Volume of SAF produced 3

4
▪ Type of pathway – HEFA
▪ First ATJ – Lanzajet
▪ Europe – more refineries 6

co-processing 2
9

▪ Asia SAF volumes head to 1 5

8
Europe 7

HEFA
Co-Processing
Global SAF
announced
capacity
 How to Value SAF? HEFA is the main pathway
Bio crack spread – UCO to Hydrotreated Esters Fatty Acids (HEFA)

+ HEFA SAF
Hydrodeoxygenati + ASTM D7566
UCO Cleaning Isomerization
Hydrogenation on + 13.9 gCO2/MJ
Upgrading Hydrocracking
Decarboxylation

Animal fats
waste
feedstocks H2
Green Diesel
POME (HVO class II)

Fossil Jet Fuel crack spread values refining margin: crude oil to jet :

Kerosene Hydrotreating
Atmospheric + Fossil Jet fuel
Crude oil Furnace
distillation + ASTM D7566
Gasoil + 89 gCO2/MJ
Cracking

Copyright © 2024 Argus Media group. All rights reserved.

Pricing sustainable aviation fuel

8
Global HEFA SAF pricing – tracking flows and liquidity

Europe SAF operating plants

Neste - Finland
Eni – Italy
ST1 - Sweden
Repsol – Spain
ST1 – Sweden

© 2024 Argus Media group. All rights reserved.

Spot RED-compliant Argus SAF fob ARA methodology

▪ Certification: RED-compliant
▪ SAF meeting ASTM D7566 specifications ▪ Included Pathways: HEFA-SPK
▪ Currency/unit: ▪ Feedstock: RED-compliant UCO
▪ Outright in USD/t and USD/m3 ▪ GHG savings: min. 80pc GHG savings
▪ diff. to ICE Gasoil in USD/t and in USD/m3
(escalated for SAF density)
▪ Timing: Loading 7-28 days forward
▪ Location: Fob ARA range
▪ Size: 1,000t
▪ Assessment time: 4:30pm London time

© 2024 Argus Media group. All rights reserved.

Increase in liquidity and a transparent SAF price– the path to robust,
trustable spot pricing and risk management
Development of Argus SAF pricing

Argus launched Market survey Market survey + deals

Futures trading of
SAF pricing via + Deals via posted on pricing
SAF (swaps OTC &
Market survey back office platform Argus Open
reported
exchange listing))
Markets

2020 2023 11th April 2024

Increase of production capacity and imports into Europe – ARA point of maximum liquidity

Price of
Appears in Use in contracts for physical
reference for
bids/offers supply
market

© 2024 Argus Media group. All rights reserved.

SAF joins biofuels suite on Argus Open Markets (AOM)

▪ RED-compliant, UCO-based, neat HEFA-SPK

▪ 1,000t barges
▪ 2,2 Mnt of Biofuels initiated trade in 2023 ▪ Fob ARA range
▪ 7-28 days ahead loading
▪ UCO, Biodiesel, UCOME, HVO ▪ USD/m3 premiums over SAF-escalated 7-28 day Ice gasoi
▪ Window opens every day 4,00-4,30pm London time
Bids, offers and deals
already happening!

© 2024 Argus Media group. All rights reserved.

HVO class II a proxy SAF pricing?

HVO (Class II) swap tonnes traded

UCO-based HVO (Class II), AOM activity,
1000
tonnes
900
250000
800
200000 700
600
150000
500
100000 400

50000 300
200
0
100
2021 2022 2023 2024 (January-29
April) 0

Offers Bids Deals initiated Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24

Source: ICE

▪ Argus HVO has been success; A proven approach to work with the industry to develop robust
pricing in emerging markets leading to an increase in pricing liquidity of pricing data and listing.

▪ HVO producers with consolidated books who are able to produce SAF may use HVO as pricing
proxy

© 2024 Argus Media group. All rights reserved.

European market update
National mandates, incentives driving bulk of demand today

Airports schemes include:

Norway: 0.5% mandate since 2020

Sweden: 0.8% GHG emissions reduction

target since July 2021, 3.5% in 2024.

France: 1% mandate introduced in 2022,

increased to 1.5% in 2024.

+ SAF supplied to UK, NL aviation sectors

can generate renewable fuels tickets
Supply growing more rapidly than spot demand, weighing on prices
HEFA-SPK SAF fob ARA range, USD/t UCO ex-works ARA range
3,600 1400.000

3,400 1300.000
Supply growing faster
3,200
than demand 1200.000
3,000
1100.000
2,800

2,600 1000.000

2,400 900.000

2,200
800.000
2,000 03-Jan-2023 03-May-2023 03-Sep-2023 03-Jan-2024 03-May-2024
03-Jan-2023 03-Apr-2023 03-Jul-2023 03-Oct-2023 03-Jan-2024 03-Apr-2024

▪ EU production on the rise, growing flows from east of Suez

▪ Increase in supply has outpaced demand growth so far in 2024
▪ SAF own market fundamentals developing, highlighting link to renewables’ complex & decoupling
from fossil
EU, UK mandates starting in less than 8 months
EU SAF mandate UK SAF mandate
25
22%
20 UK - PtL UK - Total
15%
15

10
10%

5
3.5%
2% 1.5%
0.2%
0
2025 2028 2030 2035 2040

+ 20mn EU ETS set aside to incentivise SAF use until 2030 ▪ HEFA capped at 71% in 2030 and 35% in 2040
▪ Buy-out at £4.70/l (£5,875/t) for main obligation, £5/l
(£6,250/t) for PtL target
North America market update
Federal RINS and State regulation incentivise SAF and RD
North America subsidies available to biofuels
Inflation reduction act

▪ Extension of $1/gal biodiesel and $0.5/gal alternative fuel

tax credits to 2024 with additional incentives for SAF.
▪ SAF credit is now $1.25-1.75/gal based on lifecycle GHG
emissions. 40B SAF-GREET 2024 model also approved
April 2024- provides another methodology for SAF
producers to determine lifecycle greenhouse gas (GHG)
emissions rates.
▪ Transition to Clean Fuel Production Credit starting 2025
through 2027.
▪ 45Z – Clean Fuel Production Credit: New credit based
on life-cycle GHG emission levels and requires a minimum
of roughly 50% reduction versus conventional fuel.
US State Level SAF Tax Credits

Illinois Washington Minnesota Nebraska

SAF purchase tax credit SAF production tax credit SAF production tax credit SAF production tax credit

$1.50/USG tax credit for $1.00/USG tax credit $1.50/USG tax credit for 75 cents/gallon for SAF
airlines – for domestic produced or blended to SAF produced or blended produced
flights producers with 20 min in state.
USG in state.
June 1, 2023 to June 1 Available for 10 years Expires 31 December Available January 1 2027
2033 once producer meets 2034 to January 1 20235
capacity threshold
Impact of Policy on RINS/Credit Markets
▪ 2016-2019 Small refiners exemptions - to
waive their obligations to comply blending
renewable fuel with the Renewable Fuel
Standards kept RINS at lower levels
▪ Change in Administration and denial of
outstanding small refinery exemptions waivers
caused RINS prices to increase
▪ Environmental Protection Agency's (EPA)
lower than expected biofuel blending proposals
released in early December caused market
declines
LCFS credits weaken, market looks to rulemaking
US west coast spot LCFS $/T
180

160

140

120

100

80

60

40

20

0
Feb 2023 Apr 2023 Jun 2023 Aug 2023 Oct 2023 Dec 2023 Feb 2024

California LCFS Spot Oregon OCFP Spot Washington CFP Prompt

Rules governing feedstocks vary significantly – SAF
Permitted Feedstock Lists
Carbon Intensity / GHG
∙ Map (left) based upon existing
Volume (no feedstock restrictions) policy
No relevant policies Includes policies covering biofuels in the market in question.
Where no SAF policy is available, biofuels policy is used. For
example: Korea’s biodiesel mandate;.

∙ Rules will vary from nationally and

internationally
EU, North America and CORSIA will treat feedstocks
differently.

# ∙ Voluntary demand may not align

Biocomponent Eligibility – SAF
ReFuelEU California LCFS CORSIA
with policies
(Permitted to meet % (established pathways) Default LCA As we have seen in other sectors, some companies may
mandate) gCO2e/MJ gCO2e/MJ apply their own rules when it comes to feedstock eligibility.
SAF – Palm X X 76.5^
SAF – Soybean Oil X 62.0 66.2
SAF – Animal Fats* 3% cap 45.4 22.5 ∙ SAF prices will likely vary
SAF – UCO Yes 31.7 13.9
SAF – PFAD X X 20.7
significantly by feedstock type
SAF – AtJ (sugarcane) X tbc 33.1 Certain feedstocks may not be eligible in Europe but may still
have strong GHG / CI reduction profiles, creating potential
*Unclassified / category 3 animal fats for a two-tiered market.
^assumes biogas captured from POME ponds
# New Zealand designation based upon proposed national biofuels policy
International Feedstock Trade Flows
US WC SAF price and SAF 100
Published daily in cents/USG
ASTM D7566 specifications.
Currency/unit: cents/gallon
Location: delivered West Coast - California or
Oregon
Basis: assessed as a dif. to conventional Los
Angeles Jet A fob Kinder Morgan and includes
environmental credits
Based on market survey -Differentials are
assessed monthly as a multiple of the
underlying jet fuel price.
Outright prices are calculated daily.
Differentials may be assessed more frequently as
liquidity increases
SAF100 prices reflects the maximum achievable
value based on credits available to the
producer
Asia market update
 Sustainable Aviation Fuel – Asia Pacific (Jan 2023)

Asia Pacific Jet Fuel Demand (2019)

China ~37mn t
Japan
Singapore
India
Australia
Hong Kong
Korea
Thailand
Indonesia
Markets with potential physical
China: Civil Aviation Taiwan
Administration of China mandates as of 2023:
(CAAC) Jan 2022 set a SAF Malaysia
14.2 mn t (2019)
cumulative consumption Vietnam
targets of 50kt by 2025
Philippines
New Zealand Notes: 2019 used due to impact of COVID-19
Source: Argus Consulting
Physical Blend Mandate Enacted Pakistan
Relevant Policy Enacted
mn t 0 5 10 15
Relevant Policy Proposed
Relevant Policy Discussed Physical % Mandate Enacted/Proposed/Discussed

29
Sustainable Aviation Fuel – Asia Pacific

Asia Pacific Jet Fuel Demand (2019)

China ~37mn t
Japan
Singapore
India
Australia
Hong Kong
Korea
Thailand
Indonesia
Markets with potential physical
Taiwan
mandates as of 2024:
Malaysia
39.1 mn t (2019)
Vietnam
Philippines
New Zealand Notes: 2019 used due to impact of COVID-19
Physical Blend Mandate Enacted Pakistan Source: Argus Consulting

Relevant Policy Enacted

mn t 0 5 10 15
Relevant Policy Proposed
Relevant Policy Discussed Physical % Mandate Enacted/Proposed/Discussed

30
 APAC SAF demand takes off 2030

Mandated Asia-Pacific SAF Demand

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

-
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

India Indonesia Japan Malaysia Singapore Thailand

 APAC Production HEFA-focused
Announced Asia-Pacific Supply Asia-Pacific Output Technology Pathways
9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000
AtJ-SPK Co-processing FT-SPK HEFA-SPK PtL

0
2022 2023 2024 2025 2026 2027 2028

China Indonesia Japan Philippines Singapore South Korea More than 80pc of production via
Malaysia Australia Thailand Pakistan India New Zealand HEFA technology pathway
SAF market outlook
 SAF market balance: Europe
European SAF demand, 2020-2040 ▪ SAF demand is forecast to increase from ~20,000 t in 2021 to
25mn t/yr by 2040.
▪ Before 2025, national mandates and offtake arrangements will
Demand for biogenic and synthetic SAF often be the main drivers of demand. After 2025, national
mandates are not allowed under ReFuelEU, thus, most of the
mn t
demand will be driven by ReFuelEU.
60
Firm supply Swing supply Open demand Synthetic demand ▪ Before the passing of ReFuelEU, Germany had a synthetic SAF
mandate starting in 2025, however, national mandates
Thousands

wouldn’t be allowed under ReFuelEU; this means that the main

50 incentive to consume E-SAF has been delayed to 2030 when
the ReFuelEU synthetic SAF mandate kicks in.
40
▪ Nevertheless, synthetic SAF can still be used to meet the ‘open’
portion of the EU mandate, though, in Argus’ view it is unlikely
given the higher cost of fuel.
30 ▪ Demand is expected to reach 5.1mn t and exceed firm supply
in 2032. Demand will increase further to 14.5mn t and exceed
20
firm + swing supply by 2035.

Note: European SAF demand projections are based on mandated SAF demand
10 and publicly announced offtake contracts. Airline SAF blending targets are
classed as voluntary blending and are not expected to provide firm demand

0
Note: The supply side scenario is based on 100pc utilisation of firm
2020 2025 2030 2035 2040 2045 2050
capacity. Speculative capacity is not included. Swing supply is based on the
potential flexibility of hydrotreatment plants increasing their share of SAF
output.
—Argus Consulting

© 2024 Argus Media group. All rights reserved. 34

 Competitive advantage of SAF pathways
Alternative processing technologies still have barriers to overcome before commercial deployment

Summary of technology
Blend wall
Feedstock Other barriers
Technology Feedstocks Feedstock costs Production costs Technology maturity (percent Main limitation
availability (legislation, etc.)
v/v)

TRL 8-9 (Commercial)

Crops (1G) – veg oils High availability High
Low Finite supply of waste FOG
Fully commercial and Road: 100 1G SAF excluded from
HVO/HEFA Production costs driven most mature HVO and feedstocks + high
Aviation: 50 European market
Wastes – UCO, POME, by feedstock costs SAF production feedstock prices
Low availability High
tall oil etc. technology

1G ethanol Ethanol Production: Road: Declining gasoline

High availability
Medium Medium TRL 8-9 (Commercial) pool and technical blend
(Sugarcane, sugar
(of crop) limit typically at 10-15pc
beet, corn, etc.) 1G Ethanol for road
fuels fully commercially
AtJ: 1G excluded from
mature
European market High alcohol production
Road: 10-15
Ethanol/AtJ High Potential competition for costs (especially for
Cellulosic ethanol AtJ Production: Aviation: 50
High availability alcohol intermediate from cellulosic alcohols)
TRL 7-8* (Pre
Driven by expensive Medium road market (especially
(Lignocellulosic commercial)
(of waste biomass) hydrolysis of cellulosic ethanol) and
biomass)
biomass feedstock First commercial facility biochemicals market will
LanzaJet's Freedom require policy to support
Pines opened in 2024 high SAF prices

Lignocellulosic/waste High
High availability Low High investment
Gasification biomass – agricultural Large Capex costs TRL 7-8* Pre Road: 100 requirements
+ FT residues, forest (limited by biomass MSW lowest cost commercial) Aviation: 50
required for gasification
residues, MSW, etc. density) feedstock *TRL 6-7 for FT-SPK/A
and syngas cleaning
BARRIER IMPACT
SMALLER GREATER

© 2024 Argus Media group. All rights reserved. 35

Feedstock market outlook
Lipid feedstocks drive short-term renewable fuel need, yet over longer-term, biomass, ag residues and MSW are required

Greater
commercial Higher potential/Moderate use
biofuel maturity feedstocks
Lower potential/higher use UCO • Feedstocks such as manures and
Animal fats sewage sludge already see
feedstocks
demand from biogas production
• These are feedstocks that POME oil
are currently commercially • High availability means there is
Brown grease room to increase production
exploited for advanced
biofuel use and predicted to further
be the majority of the Animal
Sewage
market in the short term Manures
sludge
• However lack sufficient Higher potential/Low use
availability to supply the feedstocks
CTO
advanced market in the TOFA/ • These are feedstocks that have
medium-long term TOR high potential for use in biofuels,
but that are not currently being
Lower potential/lower use Tall oil pitch utilised on a large scale
feedstocks Municipal
Straws • Feedstocks of this nature will be
Solid/Food
• Feedstocks that can be important in coming years to
Waste
processed in existing make up for increased demand
Forestry
commercial facilities,
Agricultural residues
however low volumes or low Processing residues
feedstock quality limits Greater
use/competition availability

© 2024 Argus Media group. All rights reserved. 36

Pricing methodology: SAF
European SAF prices are forecast using supply, demand and production cost projections

National buyouts

National SAF buyout prices set

price ceiling

Price ceiling

SAF capacity

SAF demand SAF

Supply – demand balance

projection

Palm oil Price floor

Additional costs of HEFA

Rapeseed oil HVO 1G HVO A and B production

Production costs method Bioticket method derives other Additional processing costs of
Soybean oil derives HVO 1G prices biofuel prices HEFA vs HVO sets SAF price
floor
Feedstock prices from external
agricultural bodies
– Argus Consulting

© 2024 Argus Media group. All rights reserved. 37

 SAF price forecasts
Feedstock shortages driving medium term projected price increases

NWE SAF Part B, Fob ARA 2018-2050

$2023/t ▪ HEFA SAF Part B (UCO and tallow) is forecast to make up the
majority of SAF in the European market and will act as the price
5,000 setter for all other SAF types from the various production
processes in the short-medium term (including alcohol to jet)
4,500

4,000
▪ From 2025, the introduction of ReFuelEU Aviation is expected to
increase demand and slightly reduce the capacity surplus, over the
3,500 longer term increases in underlying production costs of HVO are
3,000
expected to increase SAF costs

2,500
▪ However increasing commercialisation of competing technologies
such as gasification FT and alcohol to jet are expected to undercut
2,000 HEFA prices.
1,500 ▪ SAF prices in the low case are forecast to strongly decline
1,000 between 2022-2025 following falls in feedstock prices and a large
wave of new capacity additions in Europe coming online
500

0
2020 2025 2030 2035 2040 2045 2050

High Base Low

© 2024 Argus Media group. All rights reserved. 38

 Renewable fuels price forecasts: Feedstock Shortage Scenario
Insufficient supply of Part A fuels to lead to buyout price levels being reached between 2027 and 2031

NWE Part A fuel price forecasts (Insufficient Supply scenario), fob ARA, 2018-2050

Real $/t HVO A FAME A ▪ High case price scenario assumes enforced REDIII mandates and penalties
Cellulosic Ethanol HVO A Buyout for non-compliance with no leeway
6,000 Cellulosic Ethanol Buyout FAME A Buyout
▪ In the case that insufficient FAME A, HVO A, cellulosic ethanol, or other
advanced renewable diesel capacity comes online by 2027, there will likely
5,000
be a shortage in advanced fuels to meet the Part A sub-mandate

4,000 ▪ Prices for Part A fuels in Europe would then be expected to rise to the
lowest buyout in the region that is not ignored by the market (Germany).

3,000
▪ High prices expected to offer sufficient price signals for producers to
ramp up capacity development of high-cost renewable fuels like RFNBOs
2,000 and gasification-FT to tackle the supply shortage

▪ Facilities are likely to take 3-5 years to come online from FEED and FID
1,000
stages, hence capacities will likely start to come online from 2031 to
alleviate the undersupply and bring prices down from buyout levels
0
2018 2022 2026 2030 2034 2038 2042 2046 2050 ▪ By the late 2030s, supply should begin to balance demand and prices are
expected to return to levels indicated by the base case price scenario

— Argus Consulting

© 2024 Argus Media group. All rights reserved. 39

Conclusions
Long-term viability dependent on feedstock availability and technology readiness

▪ Long-term mandates materially different for the volumes seen the market today – will require significant changes in
the feedstock, capacity, supply chain and blending infrastructure

▪ Mandates appear a long way beyond what can be achievable through HEFA and liquid hydrotreatable feedstocks – will
require new technologies to come through

▪ Alternatives to HEFA are some way behind with no guarantee of viable commercialisation – experience of cellulosic
ethanol provides cautionary tale

▪ National buyouts set a ceiling for prices but likely that consumer reaction will be prevalent before this kicks in

▪ Prices likely to be set by cost+ of the marginal technology – may be AtJ or BtL but either will set prices significantly
above fossil jet

Source: Argus Consulting

© 2024 Argus Media group. All rights reserved. 40
Thank you!