What SAF Mandates Mean for Airlines like Ryanair

Steven Fitzgerald is Head of Sustainability & Finance at Ryanair. In a conversation with RBC Capital Markets’ Erwan Kerouredan, he explains the impact of EU SAF mandates for the airline industry.

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By Erwan Kerouredan
Published June 27, 2024 | 2 min read

Key Points

  • Ryanair’s ambitious SAF targets are an incentive for suppliers to maximize production
  • Supplying SAF to airports may be challenging due to infrastructure issues
  • The EU Emissions Trading Scheme can support SAF uptake

Impact of EU and UK SAF mandates

Ryanair faces differing SAF mandates in different jurisdictions: 2% for both the EU and UK by 2025 and then 6% and 10%, respectively, by 2030. This means the airline will have to navigate different targets across the 37 European nations in which it operates. Ryanair’s strategy is multifaceted, consisting of policy engagement with the UK and EU governments, agreements with jet fuel suppliers, and R&D.

“With jet fuel suppliers, we’ve engaged with offtake agreements with five major oil companies: Shell, Enilive, Repsol, Neste and OMV,” explains Fitzgerald. “Regarding R&D, we’re investing with Trinity College Dublin to look at lifecycle greenhouse gas emission savings as well as certification processes – how to speed SAF up and make it cheaper,” he continues

“Ryanair’s ambitious target was set before the mandates were introduced, as a clear signal to the market that the demand side was there and willing to buy it.”

Steven Fitzgerald, Head of Sustainability & Finance, Ryanair

Fitzgerald believes that Ryanair’s ambitious target of 12.5% SAF usage by 2030 may incentivize SAF suppliers to produce more than the mandated level in anticipation of target increases beyond 2030. “Ryanair will be there to pick up the supply,” he adds. Once the mandates come into effect the EU will put the onus on field suppliers, who are now trying to produce SAF to meet projected demand levels based on predetermined targets. “The engagement Ryanair enjoys as Europe’s biggest airline means we’re in a better position than most to access SAF,” explains Fitzgerald.

Logistical challenges

“Hub airports which have a stronger infrastructure in place will be the first to be served with sustainable aviation fuel – because of the economies of scale that exist in those airports. For smaller, regional airports, the change will come later,” says Fitzgerald.

To offset this the EU has introduced a flexibility mechanism whereby SAF supply won’t need to be supplied to all airports until 2035. “Pipeline-fed airports can receive SAF cheaper and quicker than more remote, truck-fed airports further away from the nearest refinery or blending point,” he continues.   

The potential limited supply of SAF could make it more difficult for airlines to ensure sustainability; they may be procuring SAF from a production point some distance from the point of delivery.

Future efficiencies

Mandates already in force across France, Sweden, and Norway mean Ryanair has been procuring SAF for a number of years now – over a million gallons in 2023. While the price point is substantially higher than jet fuel, there is optimism that prices may fall in the future.  

This could be facilitated by the EU’s Emission Trading System (ETS) which offers funding to help subsidise SAF purchases. “SAF is roughly trading at $2,700 per ton. That’s two and a half times the price of jet fuel,” says Fitzgerald. “But if you add the benefits you get from the Emission Trading System as well as an increase in SAF plants and improved production methods, that price differential could collapse,” he explains, adding that government support is also needed.

As SAF mandates come into effect and their targets steadily increase, Ryanair is also adopting a newer, younger fleet of aircrafts that is more fuel efficient.

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Erwan Kerouredan
Erwan Kerouredan
Energy Research Analyst

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