Boeing used less SAF in 2023 than planned

US aerospace manufacturer Boeing used less sustainable aviation fuel (SAF) in 2023 than it had initially planned, citing "supply chain issues."

Boeing doubled its internal SAF consumption in 2023 compared with year-prior levels according to its latest sustainability report, with the fuel making up about 3pc of its total aviation fuel use over the year. But the company's use of around 478,000 USG neat SAF in its own operations was still less than its previously announced purchase commitments.

Boeing early last year committed to funding 5.6mn USG of blended SAF from Finnish biofuels producer Neste over the course of 2023, with 2.6mn USG to be used directly by Boeing and another 3mn USG to support SAF use elsewhere as part of a book-and-claim accounting process. Since the Neste blend contains about 70pc conventional jet fuel, the Boeing commitment in essence was to purchase and use within its own operations about 780,000 USG neat SAF.

But Boeing's direct SAF consumption last year, which reflects fuel used internally and not fuel it supported for use elsewhere, was around 61pc of its earlier purchase agreement. The company, confirming the discrepancy, said not all the planned 2.6mn USG were received because of "supply chain issues" but declined to elaborate further.

Under the initial deal, Epic Fuels and its parent company Signature Aviation were supposed to supply 2.3mn USG of the Neste blend to Boeing, while Avfuel was supposed to supply 300,000 USG. Avfuel manager of alternative fuels Keith Sawyer told Argus that it ended up supplying more than the planned 300,000 USG at Boeing's request last year and that the fuel supplier is on track to meet its obligations to supply 1.5mn USG of blended SAF to Boeing this year.

Epic Fuels and Neste declined comment.

Boeing has set plans to use 4mn USG of the same Neste SAF blend in its own operations this year, with some coming from Epic and some from Avfuel, and to purchase SAF certificates associated with 5.4mn USG of blended SAF used elsewhere.

Boeing added that SAF, which today mostly comes from hydrotreated vegetable oils and waste fats, is "the biggest lever for the industry to decarbonize by 2050." The company plans to use more of the fuel internally and to ensure that all the commercial airplanes it produces are compatible with 100pc SAF by 2030.

In short supply

Aviation companies see SAF as crucial for meeting climate goals, though usage to date has been limited by SAF's steep premium to conventional jet fuel. Though prices for SAF delivered to the US west coast have recently fallen on expectations of higher supply, it is still more than twice as expensive as conventional jet according to Argus assessments.

The fuel's growth thus hinges on government policy, but low environmental credit prices in the US and uncertainty about a clean fuels tax credit kicking off next year have created a difficult investment environment for biofuels producers. Few potential suppliers and thin market liquidity then make it hard for prospective customers to rapidly scale up their SAF consumption.

American Airlines for instance wants to replace 10pc of its jet fuel with SAF by 2030, but the US airline reported in its own sustainability report last week that it used 2.7mn USG SAF in 2023, an increase from the prior year but still less than 0.1pc of its total fuel use. Chief executive Robert Isom said that "we've signed commitments with multiple SAF producers, at a premium, to try to secure supply" but that "the volume of SAF available today and likely to be ready over the next several years is a tiny fraction of what's needed."

By Cole Martin