Sustainable aviation fuels (SAF) can reduce the 2.5% of global CO2 emissions caused by air travel (noting that, after including the effects of contrails and other exhausted gases, the overall effect from flying on warming the planet is estimated at 4%)1. SAF produced via a power-to-liquid (PtL) system is known as electro or electronic SAF: eSAF. Other forms of SAF are derived from natural feedstocks such as oils, fats and biomass. Given the risk interfaces inherent in PtL systems, this article discusses eSAF.
eSAF is a synthetic aviation fuel, meaning the chemical building blocks are assembled by humans. Conventional aviation fuel, kerosene, is refined from crude oil. eSAF is almost chemically identical to conventional aviation fuel, meaning it can be “dropped-in” to existing systems and hardware as a like-for-like replacement. eSAF burns and produces emissions like conventional fuel but its lifecycle emissions are lower.
By recycling existing CO2, eSAF production and combustion has lower lifecycle emissions than conventional aviation fuel. Recycled CO2 is captured via two main sources: capturing emissions from industrial processes or direct air capture. Capturing industrial emissions is currently the preferred route, owing to the cost, scaling challenges and proven operational efficiencies of direct air capture.
The recipe
The key ingredients for eSAF:
- Green Hydrogen (H2)
- Carbon Dioxide (CO2)
eSAF is then produced via three processes:
- Syngas production
Combining H2 and CO2 to create synthetic gas. - Fuel synthesis
Where the syngas is converted into liquid hydrocarbons via one of two methods: Fischer-Tropsch (FT) or methanol-to-jet (MtJ). The FT method, developed in 1925, is the maturer method. - Refining and upgradin
Altering the output of fuel synthesis to create aviation grade fuel (kerosene) that meets industry standards, like ASTM D7566.
A Typical eSAF Production Plant
As feedstock for the eSAF processes, a typical plant will also produce the green hydrogen from renewable energy produced onsite, creating a full-scope system. The CO2 is typically sourced externally and delivered to site, or the eSAF project is located adjacent or nearby a point source of CO2 that can be captured for the project.
The system is innovative, not the processes.
None of the standard processes are innovative. They are all well established with best-in class practices, industry standards and years of compounding lessons learnt. The innovation lies in seamlessly connecting all the processes where they must act in concert. Linking processes creates interface risks: technical, contractual and financial.
Interfaces materialise in the handling, storage and transportation of the various substances at different stages of the processes. It starts with electrons from solar, wind and/ or BESS through to the handling of green hydrogen, CO2 and later syngas, refined products and any waste materials. Mismatches in inputs and outputs between processes can cause problems – shutdowns, thermal cycling and stress, and ramping issues – but these can all be managed, for example, through buffer tanks that can store inputs and outputs between processes, enabling the system to accommodate trips and stoppages.
Contractually, each of the different processes contain a myriad of technologies with unique requirements: warranties, degradation curves, product lifetimes etc. Construction becomes a critical period where all these contract interfaces must be managed through careful installation and integration scheduling and, importantly, during testing and commissioning.
Financial interfaces can arise from marrying the processes through a hierarchy of special purpose vehicles. The system can be designed so that different stages of the processes act as ringfenced entities that are contracted to entities of other processes in the system. For example, the electricity generation could be financed like a typical renewables project, but the offtaker, and PPA counterparty, in this case is from the neighbouring H2 entity that requires the electricity as a feedstock.
Direct air capture and methanol-to-jet present future innovation if they can climb the technology readiness levels and reach commercial deployment.
Insuring eSAF projects
Projects are likely to be raising some form of debt. The debt will most likely be non-recourse, or project finance, with potentially some money from multilaterals. Lenders mandate that borrowers purchase a robust package of insurance policies, including:
- Construction: Construction all Risks with delay in start-up, third party liability (possibly including sudden and accidental pollution and product liability), sabotage and terrorism (increasingly the broader strikes, riots and civil commotion) and marine cargo with marine delay in start-up.
- Operations: the same as construction except operational all risks with business interruption and no need for marine cargo with marine delay in start-up.
- Site specific coverages: Environmental impairment liability when the project is located on a brownfield site and, or the land lease mandates its purchase.
For project developers, securing the cheapest and broadest insurance coverage in-line with lender requirements will require detailed information on the individual processes and interfaces, system balance of plant and system design.
Balance of plant is oven overlooked by underwriters as merely as a necessary cost. For an eSAF production system, appropriate Balance of Plant (BoP) design that addresses interface risks and compliments the site characteristics – geotechnical and hydrological – becomes a key element of the underwriting review.
Interfaces need to be designed for and managed. Underwriters will need comforting on the experience of the procurement, construction and project management teams in managing complex projects.
Given the number of technologies and auxiliary equipment, the spare parts strategy is paramount to ensuring high uptime and reducing exposure to insurers. The strategy should include onsite inventory and replacement times for critical components across all processes.
Underwriting Risk Matrix for eSAF
| Process Stage | Tech Maturity | Key Risks & Failure Modes | Failure Likelihood | Failure Impact |
|---|---|---|---|---|
| Renewable Power Supply | Proven (wind/solar/BESS mature) |
Failures: Turbine component failures, power electronics failure, grid outages, extreme weather damage. Risks: Turbine fire or collapse; minimal off-site impact except in extreme cases. |
Moderate: Minor repairs common; major failures rare. High overall uptime (~95%). | Low–Moderate: Mostly production loss; some property damage risk (e.g. turbine fire, power electronics fires) but seldom severe. |
| H₂ Production (Electrolysis) | Established Core Technology (scale & dynamics new) |
Failures: Water system faults (pump/filter), gradual stack degradation, occasional H₂ leak or impurity triggering shutdown, rare H₂/O₂ crossover explosion. Risks: explosion, H₂ leak, fire. |
Moderate for small stoppages (aux equipment ~annual failures). Low for catastrophic events (multiple safeguards in place). |
High: Significant property damage if H₂/O₂ explosion. Third-party risk if blast not contained. Even minor leaks can halt production as safety trips. |
| CO₂ Capture – Point Source | Mature |
Failures: Solvent degradation/fouling requiring maintenance, corrosion leading to small leaks, CO₂ compressor trips, occasional solvent emissions. Risks: Solvent chemical exposure (workers/environment), CO₂ release (asphyxiation hazard in enclosed areas), gradual equipment wear. |
Moderate: Similar to a chemical unit; periodic maintenance stops, but extended unplanned downtime once stabilized. | Moderate: Property damage is minor (mostly corrosion repairs); main concerns are environmental (chemical spills) and potential regulatory non-compliance downtime. |
| Fuel Synthesis (FT/MtJ) | Semi-Proven (FT is proven; MtJ emerging) |
Failures: Syngas compressor trip, minor leaks of H₂/CO, catalyst fouling over time, reactor cooling issues, occasional unit trips on upsets. Risks: Syngas leak explosion or fire, high-pressure hydrogen fire in hydrotreater, CO toxicity to personnel. |
Moderate–Low: Generally reliable continuous operation; a few unplanned shutdowns per year at most if FT-based. | High: A serious leak ignition can cause large fire/explosion, damaging equipment and causing lengthy outage. Property risk primary; on-site personnel safety a concern (CO, fires). Off-site risk low unless major explosion. |
| Fuel Upgrading & Refining | Proven (refinery tech) |
Failures: Pump or heat exchanger failures, heater tube ruptures, instrument malfunctions. Risks: Similar to refinery – e.g. a distillation column fire or hydrotreater explosion. |
Low: Refining units often run for long campaigns; infrequent unplanned events. | High: Significant property damage potential from fires; environmental impact if fuel released; needs robust safety management like a refinery. |
| Fuel Storage & Handling | Proven (standard practice) |
Failures: Tank overfill, pipe/hose leak, tank roof lightning strike, loading spill. Risks: Jet fuel spill (soil/water contamination), tank fire (could destroy tanks, smoke spread). |
Low (serious events): Rare. Moderate (minor leaks): small leaks or human errors occasionally. |
High: A tank fire or large spill can cause major property loss and environmental damage. Third-party risk generally low (if properly sited), but a fire’s smoke or runoff could affect surrounding area. |