Frontier investigates feasibility of industrial production of sustainable aviation fuels in Bavaria

The use of Sustainable Aviation Fuels (SAF) is an important building block for achieving climate protection goals in the transport sector. However, SAF currently accounts for only a very small share of the fuels used in the aviation sector worldwide.

On behalf of a consortium that stretches across the entire aviation value chain, Frontier Economics investigated the resource and energy availability for industrial SAF production in Bavaria, which included quantifying the costs associated with production. A plant with synthetic SAF production capacity of 50 kt/a, 100 kt/a and 200 kt/a was evaluated with an assumed start of operation in 2030. The process paths were modelled for three scenarios:

a) SAF predominantly from renewable electricity ('power-to-liquid', PtL);

b) mixed biomass- and electricity-based SAF ('power- and biomass-to-liquid'; PBtL) and

c) flexible, green hydrogen production based SAF, taking imports into account ('flex-to-liquid').

Based on these analyses, the study shows the need for action if investments in SAF production capacities are to be entrepreneurially possible. The following areas are particularly important:

Extension of current infrastructure

As it is, the infrastructure represents a critical bottleneck for electricity-based SAF production in Germany. Extending current infrastructure would include both the extension of the electricity grid infrastructure as well as stepping up the building of hydrogen transport infrastructure.

Increasing the availability of renewable energies

This can be done by the German government ensuring policy continues to focus on targets already put in place.

The creation of an investment-friendly regulatory framework

Minimising regulatory uncertainties is key here. Currently, the design of various regulations at EU level that have a significant impact on the economic viability of SAF products is uncertain (e.g. the delegated acts on the electricity criteria for green hydrogen). This leads to significant investment risks.

Designing regulatory requirements in such a way that input factors for SAF are not made unnecessarily more expensive is also important. Examples of this are the definition of the electricity criteria for green hydrogen or the grid fee exemption for electrolysers in Germany, which is due to expire in 2026.

Frontier regularly advises on market analyses and business cases in the area of alternative energy sources and fuels. For further information please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.