The SAF Podcast
Welcome to The SAF Podcast, the only podcast on the internet that exclusively covers sustainable aviation fuel (SAF). So if you want to find out the real issues and challenges are for commercialising and scaling SAF production, look no further.
Every week we will be hearing from senior industry leaders who are actively shaping the future of SAF and aviation.
Hosted by Oscar Henderson and brought to you by the team at SAF Investor. Connect with us at www.safinvestor.com
The SAF Podcast
The SAF Podcast: CleanJoule - Making the most of what's been granted
On this week's episode Mukund Karanjikar, CEO, CleanJoule joins Oscar on The SAF Podcast to discuss their approach to accessing biomass to create sustainable aviation fuel.
Listen in to hear Mukund's thoughts on the debate around the availability of waste biomass as a feedstock to accommodate demand levels and the importance of Carbon Intensity (CI) scores. We also look at the role that government grants have had in helping CleanJoule get to their current stage, since their founding in 2009. Mukund highlights how critical these grants are, highlighting the example of Tesla and other start ups that rely on government funding.
We also look at the signals of long term certainty and how the current form of the Inflation Reduction Act could do more in financial support for producers, potentially looking at aligning with oil prices to truly unlock SAF production, rather than the maximum $1.75 currently available. We also discuss how targets like the SAF Grand Challenge and mandates align with financial incentives to to give longer term certainty to investors, and what we can expect to see in 2027 when the current tax incentives expire.
We end the discussion by looking at the private consortium that invested in them including three airlines (Frontier, Wizz Air and Volaris) and two decarbonisation investment funds (GenZero and Cleanhill Partners). This is an optimistic tale of airlines engaging in securing their decarbonised future and poses the inevitable question of should/could they be doing more?
This is a fantastic discussion, but if you want to hear about another key industry in developing the SAF market, listen to our recent episode with Sven Rieve, Air bp: https://www.buzzsprout.com/2202964/15390671
Host and Producer: Oscar Henderson, SAF Investor
Hello and welcome to the latest episode of the SAF podcast. This week, we're delighted to be joined by Mukund Karanjakar, the CEO of CleanJewel. Mukund, how are you?
Speaker 2:I'm doing great, you, oscar.
Speaker 1:Jewel Mukund. How are you? I'm doing great. You, oscar, absolutely fantastic. Thank you so much for joining us. So, just before we get into Clean Jewel, do you just want to give us sort of a brief appraisal of your background?
Speaker 2:Absolutely Well. First of all, thank you for having us. I know you have a wide and broad reach, and so we are grateful that you have given us the platform to speak here. I'm a chemical engineer by training. I have bachelor's and a PhD in chemical engineering. As a young engineer not now back then I worked in chemical manufacturing and then, after my graduate school, I worked in oil and gas, largely focused on alternative liquid transportation fuels, and while I was working in the petroleum industry.
Speaker 2:fairly quickly, I realized that innovations of high magnitude that change the incumbency will have to be incubated in an entrepreneurial structure to be incubated in an entrepreneurial structure. So me and my team have been working on the innovation that is CleanJewel as an enterprise since 2009. I saw it back then and we see it now very clearly. Long-haul transportation, particularly aviation, sustainability will primarily be enabled by energy-dense hydrocarbon-like liquid fuels that are sustainably produced in near, medium and long term. Hence the Clean Joule journey.
Speaker 1:So you've been working on this for quite some time. You're one of the sort of early movers in SAF in sort of the late 2000s.
Speaker 2:That's exactly correct.
Speaker 1:Do you want to take us through? What is CleanJewel, what's your process and how you're going about SAF?
Speaker 2:Sure, absolutely yeah. So just in short, cleanjewel is focused on developing a process to produce full-performance aviation fuel, and what that means is it does not need to be blended with petroleum. So if you take a look at the state of the art in commercial successes in sustainable aviation fuel production, all of those pathways are limited to 50% blendability production. All of those pathways are limited to 50% blendability. So the other 50% must be petroleum-based Jet A in America or Jet A1 in Europe and some other parts of the world. So, essentially, 50% petroleum, 50% sap.
Speaker 2:Our approach allows us to create a pathway that can fill the whole tank. So if you look at IATA's projections to 2050, aspirations to 2050, if you will call them, to be net zero by the time, and that scenario will require at least 65% contribution towards decarbonization from use of sap. These are this is what our customers say, not we right, and if you want to get a greater than 50% contribution of decarbonization from anything, that thing then must be at greater than 50% blendability. Hence the journey to 100 sap. Uh, in short order. So clean joules goal is essentially to make aviation fully independent from the petroleum industry, and we believe it is very much feasible based on the work we have done so far and you're going about this using biomass.
Speaker 1:Is that correct? That's your sort of of core feedstock.
Speaker 2:That's right. Biomass is our feedstock.
Speaker 1:And where are you now in terms of the journey? What sort of stage of production are you at?
Speaker 2:We are currently building our first industrial demonstration plant, having developed the process for the number of years that we have done and a lot of that had to do with early stage de-risking of the innovation, oftentimes those earlier stages. You need more time, less money. We are at a point where the first industrial demonstration plant will be operational in very short order and then we'll begin the work on full-scale commercial plant in 2026.
Speaker 1:And what's your timeline to get to sort of FID full-stage commercial production?
Speaker 2:So we hope somewhere around 2026, 2027, we have the FID because that's based off of the front-end engineering and design, what they call the feed process the front-end engineering and design, what they call the feed process To get to full-scale commercial plant. Some of it depends on how the supply chains in vendorship and other places are, but roughly 24 to 36 months after that to commission the full-scale manufacturing plant.
Speaker 1:So, going back to your feedstock, what's your plan in terms of getting feedstocks? You mentioned the challenge of de-risking projects. One of the sort of cornerstones of that is getting long term stable feedstock supply in line. So where are you getting your feedstock and sort of how have you gone about that de-risking element?
Speaker 2:And sort of how have you gone about sort of that de-risking element? Sure, so we are currently discussing with a number of feedstock suppliers. These discussions will become formal relationships very soon, over next year or two. Since we use waste biomass, you know, let's take a couple of examples. So one example of that would be corn stover in the Americas. Since we use waste biomass, let's take a couple of examples. One example of that would be corn stover in the Americas. Corn stover is essentially, after you take the corn grain out, everything else that remains on the field Ag residue. If you go to Brazil, india, thailand, sugarcane producing countries, sugarcane bagasse is an important feedstock there and then there is forest residue. So after people take away their wood logs for building houses and whatnot, so much of residue remains that needs to be sustainably managed and therefore procured by people like us.
Speaker 2:If you want to make a sizable impact both on volumes as well as reduction in carbon intensity, you have to use waste biomass.
Speaker 2:There is no other option because, let's take the example in America, we have this billion ton study. We call it. You may have heard of it, you may have read the report, which is essentially a report published jointly by the US Department of Energy and Agriculture, and it says that we can sustainably harvest 1.3 billion metric tons of biomass. That is non-food that can be used as a feedstock for liquid transportation fuels today. So let's assume, on an average, no matter whose pathway it is, you get 50 gallons from a metric ton of biomass, you would be looking at producing 65 billion gallon of hydrocarbon-like sustainable fuel and in this case, if it happens to be sap, which is what we believe that it needs to be, you are essentially reducing the demand of jet A by 70% and enabling sustainability to the same tune and, on CI score, you are looking to reduce 80 to 90% of the carbon intensity to the base of petroleum-based jet agent A1 when you use waste biomass as feedstock for your sap production.
Speaker 1:I mean, there's so many things in that that we could get into, but the one thing that I wanted to touch on that I draw out is the overall feeling that there is a lot of competition for feedstock. It's not just in SAF, it's in other biofuels as well. Are you confident? You've just given us some stats that seem on the only exponentially growing demand for SAF and other biofuels as well.
Speaker 2:Oh, absolutely, look at it this way. We don't think about competition as much, not because we have some bias towards our innovation.
Speaker 1:It would be unnatural if you didn't have a bias towards your own innovation. I have to say Thank you. I don't think anyone blames you for that.
Speaker 2:If you look at gasoline or petrol, the short haul transportation, so let's divide it into two buckets right, surface transport and air transport. Within surface transport, you have short haul, which is people fretting around in their cars going to work for 15 minutes, largely in large cities, et cetera, and you have trucking, so diesel application, right. So there is gasoline petrol, then there is diesel and then there is aviation fuel and that's largely what's considered the platter for alternative, sustainable modes of transportation. So it goes beyond liquid fuels for gasoline, slash petrol because you have competition from electric cars. So short haul our belief and that's firm belief, and we talked to a lot of people in the aviation industry as well as other transportation sectors, including oil and gas short haul transport is going to go electric and it's going to go electric sooner than we think now that the long period of innovation and development is in the rear view mirror for that industry. So if you take that out, then you are left with diesel and aviation fuel. The urgency of need and importance of problem is far more in aviation because diesel as a surface transportation method, so trucking can always go electric and there is a firm belief that that will go electric. So now you are left with all that biomass and aviation and have fun.
Speaker 2:All of that is your feedstock. We are not blindsided by the fact that something like you know, used cooking oil, for example, is a feedstock for hefa, which is hydrogenated esters and fatty acids for aviation fuel feed, but also it's a feed for renewable diesel. But these are all short-term concoctions of marketplace. Diesel will go surface transport. Wheat trucking will go mostly electric as well will go surface transport. Wheat trucking will go mostly electric as well. So whatever feedstock is available will be for aviation, and aviation has no other options as far as I'm concerned, even as far as most of the players in the industry are concerned, long haul air transport is definitely energy dense hydrocarbons produced from sustainable sources.
Speaker 1:The other thing you mentioned before was about CI scores, or carbon intensity scores, and apart from ESAF, which has probably in the long term got the highest CI score, biomass seems to be the almost certainly the next best thing. It's definitely got a better CI score than heifer, and so is that one of the reasons it's the more attractive short-term feedstock because of this CI score nature to it. Is it a significant factor?
Speaker 2:Yeah, two reasons there. The first one is obviously, yes, high CI score, but, on the commercial side, availability of feedstock right. So I don't want to get into the actual numbers and happy to do that if that's desirable higher in terms of availability and how much liquids you can produce from biomass, cellulosic waste biomass, compared to how much of this used cooking oil, ish feedstock. So fatty feedstocks, greases, are available to you. So two embedded reasons essentially, which I think leads to the urgency on our part as a civilization to enable that ecosystem in the short order.
Speaker 1:So you're based in the US and there's always a lot of conversation whenever you talk about SAF in terms of US and the government's involvement in incentivization. The government's played quite a key role in you in Clean Jewels development over the years. You've worked closely with different departments within the federal government. What are your thoughts about? You know the role they play and how they helped you along the development path over the years uh, sure, so the, the no matter if you just look.
Speaker 2:Take a historical perspective. Let's leave, leave clean, jewel out for a moment. The US government, in particular, has always been very supportive of new innovation ecosystems. You know, you talk about the internet, gps as history, as phenomena, artificial intelligence, clean tech, which we are part of, as modern activities. They have always been extremely instrumental from variety of different perspectives, right? So there is money on the table that you can competitively access. There is policy support, there is regulatory support.
Speaker 2:You find very good counterparts in the federal government. So they are not just bureaucrats, right, they are scientists and researchers and engineers and policymakers, and these things matter to them. So take an example you know, late 2000s, at least in my opinion and I'm using Tesla's name only to identify them as a company that everybody in the world knows of, or most people in the world know of. I have zero relationship slash, any kind of arbitrage with them, but Tesla as a company would have ceased to exist if it wasn't for the Department of Energy loan guarantee program that supported that very first commercial manufacturing activity in those critical years where money was hard to get for that $200 to $500 million range and they came out in fine colors.
Speaker 2:I mean, they are well in the so-called American crown when it comes to sustainability and that would have not happened without US government support. So that's just sort of why government is critical. But when it comes to aviation, it's not only relevant for government support through a decarbonization lens but also critically important for national security, supply chain assurance and domestic jobs creation. Supply chain particularly is a very big issue for most countries around the world Now what we have seen after the aftermath of COVID and how many supply chains were broken at how many places. It's not nationalism as much as it is just an assurance aspect of it. And that's why aviation and the government's role in aviation is so critical, because you could have domestic manufacturing and when you have domestic manufacturing you could create jobs and then you have overall economic development. So that's the US government's role. In our particular case, early stage technology de-risking had been supported by the government via competitive grants, cooperative research and development agreements and contracts from both the research and development agreements and contracts from both the Department of Energy and Department of Defense. Both of those have been instrumental in supporting our work.
Speaker 2:And last thing I would say, which is equally important, governments around the world are purchasers of aviation fuel. Us government since I live here, I have the most mathematical numbers in this country is a purchaser of roughly 4 billion gallons of aviation fuel a year to fly the military planes, to fly the executives around government's own business, etc. And that's a sizable number. I mean it's a 95 billion gallon market. Give and take, you know, a couple of billion gallon. 4 billion is a big number. They can make a sizable difference with real bankable optics with people like us that they have supported over so many years. And same goes for most OECD and developing economies around the world. Government partnerships are just quite essential to succeed in this society-making industrial changes.
Speaker 1:So in terms of SAF specifically, the role of government in terms of SAF for the US is most notably around the Inflation Reduction Act, tax incentives, and then there are obviously the grants as well on the side of that. Is that the major role of the government now? Do you think that's sufficient to help sort of nurture this industry?
Speaker 2:I'll tell you our perspective and then we can jump into the perspective from the government side. Here, clean Jewel, you know we are laser focused on cost competitiveness of our staff with incumbency right. And that's petroleum at a global scale and that's a fantastic opportunity. The here to there which is here is the innovation and you have de-risked it. Now there is commercial de-risking and full-scale commercialization. You have oftentimes two valleys of death. So if we go back in 2009,. Between 2009 and now, we could have died, let's call it that, and that would have been for lack of funding. That's where the grants and the contracts mechanisms come into play from government support viewpoint. So there is a vacuum there. I think governments can do more. The second one is the tax incentives and the mandate. So IRA are important on the other side of the pre-commercial value of debt, not necessarily still in the second value of debt right, which is essentially those tax incentives and mandates say that these projects in the short term can become bankable in an artificial economic sense, because we want them to mature so that they become truly competitive on a cost parity basis with whatever is the incumbency.
Speaker 2:I personally think IRA does not go far enough. When it comes to, specifically aviation. Ira has a lot of fantastic things in it. I think America has shown the global leadership in passing that legislation. I attend a number of meetings in Europe, in Eastern Asia, and oftentimes IRA gets cited as a key piece of legislation for signaling aspect and some real support they have put behind. But for aviation there is like $1.75 per gallon. That's pittance compared to if you were to ascribe true cost of procurement of jet A from petroleum and forget about government subsidies around the world. You are looking at north of $10 a gallon. So what IRA should truly do is bring that subsidy parity up to what petroleum currently gets in various forms and methods to roughly north of $10 a gallon.
Speaker 2:$1.75, it's a signaling mechanism, to me important one, but that's not what is needed. We have long journey not just us, us as an industry between here to 2050, where everybody wants to go net zero and set it on a sliding scale. Let's say you do a $10 a gallon credit and some people may cringe at it and there is nothing to cringe about because the jetty you buy in some form or the other you pay $12 a gallon. So let's say you set it up at that number, set it on a sliding scale against maturing of manufacturing via a given pathway and cut it off at, say, 10 years and take a stock of the situation, see what happens. If an entrepreneur is successful in getting there, great. If not, we all tried. But at least we didn't fail because we didn't try.
Speaker 2:And from the government's viewpoint, then at least the framework is there. Right that they have given all necessary pieces of framework or the arsenal ammunition for the entrepreneurs to succeed. Because the impact of the change is so much right on decarbonization and because aviation fuel is so much needed for smooth functioning of the society, they should also decouple the credits from carbon dioxide, because carbon dioxide is a normalizer, which aviation industry is nothing like surface transport, and so you need to tag those to the volume of fuel sold, which is $1.75 is somewhat tagged to the volume, but the higher number should be tagged to the volume that trades of sap, not necessarily the carbon dioxide piece of it but it's interesting how the conversation has developed because when the inflation reduction act came into existence, there was a lot of excitement about its longevity going up to 2027, its generosity in the, as he said, it's a dollar 75 potentially of.
Speaker 1:Now we're in 2024. Now you're saying it should be $10. It should be parity with traditional kerosene. It needs to look further into the future. It's not long-term enough. So it's not sort of this golden chalice pathway to success, is it? At the moment there are issues in terms of longevity related to it. Is that something that you're curious to see work out when tax credits run out in 2027?
Speaker 2:Oh, it's absolutely short term. I think, to the credit of the American Congress, that sometimes works. They have done what they could and I think it's fantastic at least to get that passed, because most other countries, including certain countries in Western Europe, have not caught up right. So if you were to look at a global list, so they did great.
Speaker 2:But the nature of the generational problem of decarbonization and national security means they will have to renew the credits in some form or the other. It may assume a different, you know outer form, but the credits have to be renewed. The government has to give investors confidence for the long term if they want early stage higher risk investments in the market. That signaling that stability is very important if everyone's you know.
Speaker 2:Here is how I look at it, we've been at it for quite some time and we'll be at it for as long as needed to change the face of aviation here and decouple aviation industry from petroleum for good. The net zero, zero 2050, right, those are kind of the only two words one need to look at. There could be an entrepreneur who is still in the middle school who will have contributions to make well into the 2040s towards the net zero target. So the short-termism of 2027, 2030, 2035 are good in terms of just knowing that let's take a stock of the situation the year has come. But they are fully meaningless when you're talking about decarbonization and net zero by 2050, particularly with how hard aviation is as a sector to decarbonize. Those two should be the only driving objectives that the whole industry needs to follow.
Speaker 1:So what are your thoughts on mandates? Obviously, the US has got the SAF Grand Challenge, which isn't a mandate as such, as it describes. It's a challenge, and a grand one at that. Europe's got a mandate, uk's got a mandate, japan, australia. Is that something that you think the US should look at as another way of sort of incentivizing long-term staff involvement?
Speaker 2:Since you mentioned the grand challenge, let me talk about that for a second. It is an important signaling aspect, but it is just that there isn't an elaborate grand challenge, only funding that backs it. They need to back it, and other governments around the world it holds true for them as well. Large-scale experimentation and I call it experimentation because I'm an engineer, but these are large scale pursuits towards commercialization, towards making these projects bankable in the hundreds of million dollar range to get certain key innovations to the other side. Where then, the IRA tax credits and the $1.75 per gallon and those things actually matter towards further success, because the goal is to go net zero by 2050 and, along the way, attain cost parity with the incumbency.
Speaker 2:When it comes to mandates, it is an important aspect of the ecosystem. Whether you incentivize or you have mandates or you have both. Both need to be looked at by all governments around the world, because unless there is an alarm, we do not wake up. Right, it's just the human nature Unless pushed, we don't do things. Whether you push by incentives or by mandates, in either case you are adding a driving force for the entire industry to come to exist. So they are important pieces of how do we incubate this industry into a full scale commercial existence.
Speaker 1:So you closed an investment round with a private consortium last year. Including that were three airlines, two decarbonisation investment funds. That were three airlines, two decarbonisation investment funds. How did you find that and how are you finding the finding investment piece of this puzzle?
Speaker 2:The investment has enabled us to rapidly accelerate towards scale up, getting industrialisation of SAP manufacturing. Essentially, we are working on a blueprint for a commercial scale manufacturing plant with strategic locations in mind. We have already scaled up the process. As I mentioned earlier, industrial demonstration plant is in progress. We've been providing substantial quantities of our SAP to our customers and then with Indigo Partners and Three Airlines that's Volaris, frontier and Waze backing us we have built what we believe is a formidable aviation ecosystem With Indigo, genzero and CleanHill. It's a formidable investment ecosystem so it leads us to get a number of additional inbounds. We could firsthand sense the urgency the entire industry is having, at least in their mindset, towards transitioning. So we are working on a number of high-impact projects with OEMs as well as airlines to demonstrate accelerated adoption of our SAP. And that's all happened because we raised the funding round that we have raised and the type of people we raised it from.
Speaker 1:Included in the round. The airlines had offtake agreements as well. How important is it creating the right makeup of investors within a round like this, in terms of sort of being able to get the right partners on board, move in the right direction, make sure there's true alignment, because it's a lot more than just getting the money in, isn't it?
Speaker 2:I fully agree. I'm. I was laser focused on building a coalition and there were other investment prospects on the table we had, but we decided to go with this particular coalition of investors for a simple reason the long haul pun intended.
Speaker 2:Aviation is a highly conservative industry, and for good reasons. So build fast and break things doesn't work here. When you are after building a company for the long haul, where your objective is to make SAP available everywhere and affordable to everyone, each step needs to be extremely thoughtful. It begins with choosing the right partners. In our case, that started with getting the right investors on board. The principles of Indigo partner Bill Frankie and Andrew Broderick, if you ever happen to talk to them, absolute orators of innovation. We have learned in such short order so many things. Them and they have investments in multiple airlines around the world, not just in America.
Speaker 2:Our three airlines, the names you mentioned. They transport more than 110 million passengers each year across multiple continents and they're growing constantly. So the alignment of vision is very important as well. So let me give you an example. Frontier Airlines is the greenest airline in America. Some people may not know this. Young fleet, efficient planes, high operational efficiency and now their proclivity towards the off-day agreements that you mentioned for procuring SAF from us will make them even greener.
Speaker 2:Reason Holaris, the other two partners we have on airlines. Their managements are absolute visionaries. If you ever hear Endrike Beltranana talk. He is not only the founder and CEO of Holaris, he is remaking the entire subcontinent of Central America in a different image. Just one example he helped the government of Costa Rica with a vision to standardize fuel cost structure and benchmark that against regional countries. So he's playing a pivotal role. Joseph Varady, the CEO of WIES he's larger than life leader absolutely intense. You know, the founding of WIS has been, in my opinion, a defining moment for most of the Europe, I would say all of Europe. It helps to have backing of such visionaries. You know, every time I meet any of the executives of our airlines, I try to hide away from them in the short term, but they ask me oh, where is my?
Speaker 2:tanker and what they're referring to is where are our staff deliveries? Because they are all eager to transition to a sustainable industry. Coming to the money, part of it Gen Zero, clean Heal Partners not only a lot of capital, but also patient capital. They understand that it takes longer to make an impact, but the corollary of that is when the impact happens it's a lot more than you ever imagined, and that's true of Quintec in a heartbeat. And they understand that they are focused on the long term success of decarbonisation of aviation.
Speaker 2:It's mesmerising to listen to CEO of GenZero if you ever happen to listen to him, frederick Teo, when he particularly talks about decarbonization. The message is very upbeat and upbeat, not in a sense of sort of a pastor in a church. Upbeat, you know it is in the sense of truly it is feasible and let's get after it His whole team. You know, nicholas Hong, feasible and let's get after it his whole team. You know, nicholas, on Melo, kimberly tan, absolute believers of decarbonization and are actively enabling it by investing, by offering necessary strategic help. So we find ourselves very lucky to have it.
Speaker 2:It was it was long and fraud journey to get there, but we find ourselves very lucky to have such a mix of investors. You know a lot of people say aviation is such a hard to decarbonize sector, but that shouldn't be the reason for anyone to stop innovating. Your innovation and you build a coalition. Have the patience and success will come your way. We are firm believers in that journey, part of it, like the famed coach. You know, bobby knight is a famed american coach. Uh, he once said many people have will to win. What matters is do you have will to prepare to win? Having a consortium of investors like this is our first step towards that will to prepare to win.
Speaker 1:And having a lot of money being invested, as well as a nice bonus.
Speaker 2:Absolutely yes, that is, that is important and critical. A hundred percent.
Speaker 1:So you mentioned the sort of decarbonisation challenge that aviation has, and that it's one that needs to be taken up. Only eight percent of airlines have invested in startups relating to SAF, which I think is an astonishing figure. Do you think that needs to, you know, increase? Do airlines need to get more engaged in moving up the the chain, as it were, in terms of SAV?
Speaker 2:Absolutely All of them need to what I say walk the walk. Today, as I am sure you know, the industry largely operates on this concept of offtakes and LOIs, and offtakes essentially mean we'll pay you after. The operative word is, after you reach cost parity or we will pay premium. But only when you make millions of gallons of sap available to where we fly from. There is nothing wrong with it, but it falls substantially short. You know, frontier Airlines CEO Barry Whipple as you know they are our investors, as we talked puts it the best way he says if I believe in a future where SAP is a reality, which is then personified by these off-take agreements I am willing to sign, then I should contribute to enabling that future, not wait for others to build the future where I am just a buyer.
Speaker 2:Now. That's profound right. So everyone should think like Barry. The 8% number should be multiplied by exactly two and a half to arrive at 100%. This is everybody's problem, everybody's challenge and everybody's opportunity, most importantly so, to decarbonize the entire aviation industry. So I say most importantly so, to decarbonize the entire aviation industry.
Speaker 1:So I say help me row the boat, don't be a seagull. There's the alternative reading of LOIs instead of letters of intent, letters of imagination, which has been going around recently. So I think there is an element of, as you say, people need to walk the walk and, you know, put their money where their mouth is and, you know, actually get involved and help get SAF off the ground. So it is, the 8% number, as you said, is low, but hopefully that's only going in one direction, that that is sharply up, particularly with mandated supply needed in 2025. And so hopefully that's the trigger that should unlock a lot more involvement, hopefully particularly in Europe, as that's the European mandate.
Speaker 1:I wanted to talk to you briefly about non-OECD countries, because a lot of the conversation is dominated by Europe, US, uk, japan and moving SAF out of the OECD countries is going to be a big challenge because there's already a lot of risk associated with SAF projects in those countries. So moving them into a non-OECD country in itself comes with a whole heap more risk. But it's a really important challenge that needs to be addressed because it is a global problem. Aviation is global, it's not regional. There needs to be the supply all over the world, not just in these specific locations. So how do you see that challenge and do you see Clean Jewel playing a part in getting involved in those countries in the future?
Speaker 2:So it's a very good and important question, oscar, right, because the growth, as we all know people coming out of poverty in Swats and we are doing fantastic as a planet there the growth is going to be largely in Asia, for example. Africa, if you just, if you just, if you're a math buff like I am, if you take a look at the total number of planes on order, far more number of planes are on order from Asia than they are from US and Europe combined. Right, so that speaks to the way the future is going. But before we jump into the non-OECD part, let me start on the OECD piece itself. It's roughly. The World Bank estimate is 2 to 8 percent. Right, that's done. So 92 to 98% is still missing, right, the top line number is pitons compared to pitonium-derived jet A consumption, so it's autosubmagnitude lower. It's also mostly from this pathway, hefa, right, used cooking oil becoming hydrocarbon-like liquids, waste fats, greases, oils, all of that.
Speaker 1:But there is an upper limit.
Speaker 2:Everyone knows this in the industry. This is not a secret, and people outside of the industry know it too, because they get if it is a secret, is the worst kept secret in the world, particularly in this industry.
Speaker 2:Yeah, so the upper limit? We know it's never so. The true revolution of SAP manufacturing, to me, is yet to begin right, we are not at that shift curve inflection point, which is in the innovations such as clean jewels that use waste, biomass and feedstocks, etc. Coming to your specific question on OECD versus non-OECD aviation is such an interesting industry.
Speaker 2:If you look at the Millennium Development Goals or the Sustainable Development Goals of the United Nations, elimination of poverty is number one and extremely important. Another one that shows up in both the list is environmental sustainability. First sign coming out of poverty for many is have you taken your first flight right? So a significant growth of the industry therefore, then will automatically come from non-OECD countries, as I mentioned. As people are coming out of poverty in masses, the impetus on decarbonization in these countries will be even higher because the growth rate is so much higher. So, if you go by the numbers, asia matters a lot more when it comes to decarbonizing aviation in particular. About non-OECD economies, they need to move well-being of their citizens and the planet to the top of their agenda. You know it's a shared planet, it's a common planet. There is no arguments me versus you here.
Speaker 2:But here is the kicker right. Biomass as a feedstock for sap is available everywhere on the planet, unlike petroleum, where some countries have more and others have none. Biomass as the feedstock also then happens to be in the rural parts of all the countries, oecd, non-oecd, etc. So it's an excellent opportunity to develop an industry of tomorrow and create jobs for rural, less privileged population in their respective countries. So they should look at it not as a mandate for decarbonizing but as an opportunity, first of a kind, for economic development. So SAP presents that opportunity to bridge far too long, if you look at the evolution of us as an industrial planet now, far too long. We have gone away from the agrarian economy to an industrial one, and who knows what next with AI and whatnot.
Speaker 2:But SAF bridges that agrarian economy with the feedstock suppliers, notably the farmers, the ranchers, the foresters, with an industrial economy of SAF manufacturing at the other end for aviation, correct? So? And that's true for all the countries, by the way, that is not any specific country. So now you can layer up AI and whatnot that you want on top of it, but the bridge between agrarian economy and SAP manufacturing, which is the industrial economy, is the most important one. Economy is the most important one and therefore, to me, growth of that entire industry in OECD and non-OECD countries is an opportunity to lift people out of poverty, give them local opportunities for economic development, et cetera. And you can layer these things up with AI all day long. I don't care. I like my pilots both of them on my flight, you know baggage handling can be done by AI. But, all jokes apart, the agrarian economy and industrial economy gets breached with biomass-derived sap manufacturing, and I think it's a once-in-generation opportunity presented to all countries. It's theirs to lose if they don't act on it.
Speaker 1:Mukund. On that very positive and hopeful note, thank you so much for your time. That was excellent. Thank you so much, oscar, for having us.