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Sustainable aviation fuel could boost Aussie farmers

written by Jake Nelson | May 28, 2024

An Air BP sustainable aviation fuel vehicle. (Image: BP)

Growing demand for sustainable aviation fuel (SAF) will offer opportunities for Australian farmers, a new report suggests.

The two-part report from global agribusiness banking specialist Rabobank predicts that the transition to SAF, which is commonly made from agricultural products and byproducts, will be the largest contribution to cutting aviation emissions over the next 10 years.

“Demand for SAF in Australia will rise over time, as airlines are expected to become more aggressive in their decarbonisation efforts and also government financial support, such as in the form of the latest budget, help fast track investments,” said the report’s author, RaboResearch Australia & New Zealand general manager, Stefan Vogel.

According to Vogel, there is planned capacity to produce 17 million tonnes of SAF within the next two years, rising to more than 25 million by 2030, which would be “equivalent to almost half of the global biodiesel volume in 2023”.

“The good news for growers in Australia, and around the world, is that this announced SAF capacity will often require agricultural products as feedstock – with three quarters of the announced global production capacity expected to use a technology that requires fats such as vegetable oil, animal fat, or used cooking oil and almost 10 per cent requiring ethanol derived from sugarcane or grain,” Vogel said.

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“Farmers may want to think about the future of SAF as a potential next wave of demand, similar to what we have seen globally over the past two decades for road transport biofuel.”

While a domestic SAF industry in Australia is still “far from certain”, said Vogel, SAF demand will still “be big globally” and farmers could profit from export demand.

“Developing an Australian SAF industry would be beneficial for agriculture, as it could provide another demand outlet for canola, sugar, bagasse (a sugarcane production residue), tallow and potentially grains,” he said.

“The development of the global SAF industry can further benefit Australian farmers who may become feedstock suppliers to these export markets.

“The lower the carbon footprint these agricultural feedstocks have, the higher the price premium they are likely to be able to command.”

Australia’s 2024 federal budget featured billions of dollars in spending to support SAF and other aviation sustainability measures.

This includes $1.7 billion over 10 years to support ARENA commercialising net-zero technologies including low-carbon liquid fuels; $18.5 million over four years to develop a certification scheme for these fuels, including SAF; and $1.5 million over two years for analysing costs and benefits of SAF mandates and other demand-side measures.

CSIRO, in last year’s Sustainable Aviation Fuel Roadmap, developed in concert with Boeing, asserted that Australia has a “moment-in-time opportunity” to develop its own SAF industry, with domestic demand for jet fuel expected to surge 75 per cent by 2050.

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