The SAF Podcast

The SAF Podcast: S&P Global - Making sure the price is right

• SAF Investor • Season 2 • Episode 27

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On this week’s episode of the SAF Podcast Sophie Byron, Global Head Biofuels Pricing, S&P Global Commodity Insights joins Oscar for a discussion around SAF pricing.

Tracking SAF prices is not as simple as traditional jet fuel. In a nascent market with complex supply chain and production pathways, getting accurate pricing data is no easy feat. Sophie explains this complexity and the challenge addressing issues across fluctuating feedstock pricing, production costs and limited transactions on the spot market and how they work around these to assess accurate prices. Another critical issue is how to approach pricing SAF from different pathways and feedstocks, Sophie explains how they are looking to approach pricing from Alcohol-to-Jet and eventually Power-to-Liquid production, in the near term as well as the current HEFA pathway.

Pricing is a critical issue to help grow SAF production as it is critical to help attract investment. Investors and lenders need certainty in revenue and, along with offtakes, certainty in SAF prices is critical to de-risk future projects. 

We also discuss the correlation of emissions reduction and Carbon Intensity scores and pricing as SAF’s value can be tied to the emissions reductions. We also look at how factors such as anti dumping duties, tax incentives in the US and the introduction of mandates in 2025 could effect pricing formulations. 

The discussion concludes with a reflection on transparency and how important access to data is to get the clearest pricing picture possible. 

Check out this episode if you are interested in how SAF pricing works, the challenges it presents and critically why pricing is such an important component in growing the SAF Industry.

If you enjoyed this episode, check out our most recent discussion with Andrew Symes, OXCCU here: https://www.buzzsprout.com/2202964/episodes/15895179

Speaker 1:

Hello and welcome back to another episode of the SAF podcast. On this episode, I'm delighted to be joined by Sophie Byron from S&P Global Commodity Insights, and today we're going to be looking at SAF prices. What's driving SAF prices and what can we expect in the future? What's the biggest things that are affecting them currently? So, Sophie, how are you?

Speaker 2:

Hi Oscar. Yeah, I'm doing good today, Thank you.

Speaker 1:

Excellent. Thanks so much for joining us. Before we get into the sort of the meaty aspect of it, I just wondered if you could give us a brief background and sort of your career up till now and how you sort of ended up where you are today.

Speaker 2:

Sure. So I have been at S&P Global for over 14 years and starting off on the refined product side before kind of moving over to the US, to Houston, texas, and picking up more of the agricultural kind of feedstock side crop based for North and South America and then relocating back to the UK and then looking over kind of all of biofuels globally and always focusing really on on the price side of the business, or you know the PLATS focus, you know what are the transactable market prices across the biofuel space, across the feedstock space and also biofuels credits as well.

Speaker 1:

Excellent. So I thought we'd start with sort of the big picture of you know what SAF prices do you track, because I don't think it's as simple as there being one singular SAF price that you sort of follow you can correct me if that's wrong and sort of some overall recent trends, sort of large macro trends that you sort of are seeing recently.

Speaker 2:

Yeah. So yes, saf pricing is is challenging and and when we say SAF, what we're talking about is is really neat sustainable aviation fuel. But also, again, it's not as straightforward as if I say jet fuel and there are very few qualities of jet fuel. Sustainable aviation fuel, I believe, has 11 different approved pathways under ASTM and these are, you know, different methods of producing sustainable aviation fuel and each one has its own economics and produces, really you know, a different type of SAF in the fact that, a different kind of cost price of SAF. So when we're talking about, you know, our current pricing that we publish for sustainable aviation fuel, we're very specific in the way that we design the methodology.

Speaker 2:

So at the moment, we're focusing on the HEFA SAF. So this is really the only SAF, or the majority of SAF, available in the market. You know, to an airline, to a blender, at the moment, and this is Heifer SAF under NX2, under ASTM. We also have to define some of the greenhouse gas qualities or the environmental qualities of the SAF, because that's really also what the buyer is looking at. You know, if you're in the US, you might be looking at what the carbon intensity score under the life cycle analysis. You might be looking at what the greenhouse gas savings requirement is and in Europe and this really helps define the benefit of the sustainable aviation fuel to kind of commercial airlines as well.

Speaker 1:

So why is, if we're talking heifer, because that's the one that's most common now why is it so difficult to get an accurate price currently?

Speaker 2:

What are the big challenges?

Speaker 1:

that you see.

Speaker 2:

When we look at kind of, if you look at the volumes of sustainable aviation fuel versus the volumes of jet fuel, at the moment it's a very small volume in relation to each other. Now that is growing rapidly. If you look at the supply and demand fundamentals, particularly for North America, particularly for Europe, there's significant increase in demand when we go into 2025, the 2% volumetric blend to supply to the airports for Europe really kicks in, for the EC kicks in. So this is really kind of the start of that increase in SAF demand. And you know, building on the question you just asked, in terms of what are we looking at? Pricing perspective, you know we've been adding pricing in Europe for that heifer SAF to really kind of make sure that the industry has, you know, an understanding of the market as we head towards that kind of real kickoff in 2025. So this includes a SIF Northwest European heifer SAF price which represents cargos or part cargos delivered into Europe, predominantly coming from Asia, and then we also have the barge assessment, predominantly coming from Asia and then we also have the barge assessment. So this is a much smaller volume and this typically will represent kind of cross European trade flow as well. And that also echoes what we look at on the jet market as well. So we're kind of.

Speaker 2:

You know, these markets are very kind of overlap in terms of supply chains as well, so we want to make sure that they are representative and then to answer the question and why they're so difficult. Um, it comes back to kind of what we were saying before what is the value of the sustainable aviation fuel to the buyer as well? So, really making sure that we've defined the methodology accurately, that we are, you know, we're talking to as many people across the market to see what is that tradable price of sustainable aviation fuel, because that's really what we're publishing at the end of the day. You know not, not what's the contract price, but what is the tradable price of SAF for delivery next week, for example?

Speaker 1:

So that sort of those discussions you're having with people in the market that is focusing on the spot market predominantly, exactly, so yeah, is there enough on the spot market to get accurate data? Because you could say there's not enough SAF, because SAF's only less than one percent of jet fuel. The transactions on the spot market are few and far between in comparison.

Speaker 2:

Is there enough to actually get accurate data or is it just too sparsely spread out in terms of so, yes, it'd be ideal to have as many kind of transaction and trades within the spot market as possible, but also don't underestimate the importance of the bid and the offer level within the market. You know they give you that floor and that ceiling to where the price can be. So even if you have a day, two days without a trade, you still have market indications that give you a value. You know, let's not forget as well that we're not assessing SAF in a vacuum.

Speaker 2:

We have an understanding of what's happening in jet fuel in the jet fuel market. Well, you have an understanding of what's happening in the feedstock market. You know the feedstock value within the heifer price can be as much as 75 percent of the baseline cost of production. So it has a huge impact and potentially on that end SAF price as well. So so it's not just there is no trace today. It's OK. Let's look at all of these other parameters to give us the most accurate price for today.

Speaker 1:

So why is it important to have accurate SAF pricing data?

Speaker 2:

Why is it important to have any accurate pricing data? And a lot of that is around kind of risk management as well. You know, if you look at, you know what is the fuel bill for any you know airline. It's obviously, you know, a significant cost. How do you mitigate risk in the forward market, how do you hedge that risk as well? Now you know, for jet fuel we have a very developed uh forward market and forward curve that can be used to manage risk.

Speaker 2:

And if you think about sustainable aviation fuel and which can be very expensive, you know it could be talking twice, three times we it, you know, five times the cost of the comparable aviation fuel. So you've suddenly got a fuel that is much more expensive, even if, yes, we're starting at very small volumes. So there's, as we, as those volumes grow, you know more and more of that. That cost and that risk factor has to be priced in as well, in as well. So you know, having accurate pricing data is very important from that perspective to help manage that risk and manage that fuel cost in reality.

Speaker 2:

And you know, not forgetting that heifer is typically considered, you know, the cheapest method of producing sustainable aviation fuel as well Co-processed, which is when the fuel is produced from the refinery itself. So you're running the feedstock through a fossil fuel refinery to get a kind of mass balanced equivalent fuel at the end. That method is typically the cheapest but it doesn't produce a neat SAF barrel at the end of the day. So you kind of have this tiering up of the market which again makes it a challenging market to price, but also a challenging market to kind of to trade and to make that that kind of commoditized aspect as well.

Speaker 1:

There's on the sort of the other side of it of the equation, is quite important for producers to understand where the pricing is, because there's a big discussion about around the market about sort of SAF and the green premium that's associated with it. So understanding where those prices are really important from new producer perspective as well as an airline perspective, isn't it it's.

Speaker 2:

I get a lot of questions from airlines on fee stock data. You know there's a real need to understand the whole supply chain of sustainable aviation fuel and feedstock could be used cooking oil it, but also could be other waste-based feedstocks, could be, you know, straight vegetable oils. It could be you know, biomass. And you know, as we go forward, you know the next technology that we see is, you know, as we go forward, you know the next technology that we see is, you know, most common is really that alcohol to jet. Now we say alcohol to jet but within that, you know there's already several categories and different technologies and different alcohols.

Speaker 2:

We're talking ethanol, isobutanyl. You know methanol. So there's not again, even within a separate category or technology pathway. Again, you're already kind of breaking it down into subcategories, which goes back to the challenge aspect as well. So we have ethanol pricing, but we also have corn pricing, sugar pricing, sugar cane price. So it's really important to make sure that we have transparent pricing across the supply chain, from the feedstock to the biofuel component, but also, obviously, the fossil fuel component as well.

Speaker 1:

You mentioned in alcohol to jet the different ways of making alcohol to turn it into SAF, which you said is a problem. But from a pricing point of view, because you know you've got all these different ways to do it, is it a case of you've got to come up with a price for you know, alcohol to jet from ethanol, alcohol to jet from isobutanol, or do you just sort of come up with an average across the three? How do you work those sort of nuances within that particular pathway?

Speaker 2:

So there's a couple of answers to that. It depends on kind of what you mean by a price. If you're talking about a spot market price, then it comes down to what is the value to the buyer. If you're talking and let's focus on America, where we see that that alcohol to jet technology is more advanced if you're talking about a CI reference point, then the buyer may only be focusing on what is the carbon intensity score of the sustainable aviation fuel, no matter what pathway it's being produced on. So in that case, you know, the SAF is measured and valued as the CI. Now that may differ. We may have specific contracts that get designed on different technology pathways. But again, what is the value to the buyer? And what is the value to the buyer? If you're designing a cost of production type price, then you're going to have, yes, potentially a basket based on the different technology and feedstocks, and then you know, but that's not really a market price. You know that's really a kind of, as I said, cost of production price as well. When we look at Europe, you know we could be looking at, you know, a heifer price, an advanced SAF price which takes all of those other technologies, the Fischer-Troff, the ATJ, etc. And then obviously we've got a, you know, a sub mandate of the synthetic of the e-fuel SAF, which is a kind of separate category and is defined as a separate category, you know, under the refuel legislation. So you so that will have an independent price in some fashion. So there's a number of ways it could go.

Speaker 2:

The other question is if we look at renewable diesel, renewable diesel price is divided by feedstock. How does the feedstock feed into renewable diesel under the Renewable Energy Directive? So you've got different categorizations and divisions of feedstock feed into renewable diesel under the renewable energy directive. So you've got different categorizations and divisions of feedstocks. You've got we and our assessments. We look at nx9a and nx9b and we separated it into two.

Speaker 2:

Um, you could see the hefaf being defined by feedstock. So we've got a fuel that's, you know, categorized by technology, production, categorized by the standard parameters of any commodity, you know location, volume, etc. But and then categorized again by feedstock. So already you're starting to see the challenges of this market and a lot of the time it's it is dependent on how the legislation is being developed and we've've seen, unfortunately there isn't, you know, a one size fits all from the legislation as well. You've got, you know, overlaps absolutely but it's slightly more patchwork. You know the two key demand centers Northwest Europe or Europe, I apologize and you know North America. Those two, you know, are not the same but they overlap, but they are not the same.

Speaker 2:

And then we look at asia where we've had many announcements on kind of mandates and some of those are specifically just volumetric based mandates, but also feedstock agnostic, which means where you've got the potential for feedstocks like pAD, POMI, which are palm-based rates feedstocks you know could absolutely filter into those markets.

Speaker 1:

It's really interesting how you talk about the regionality and policy and the impact it has on you know how you even approach coming up with prices and the fact that there's no way you can get just you know the fossil jet fuel price like there is currently. You can't do that with SAF and it's not helped by the policy, because a lot of people are saying that policies in North America and Europe and developing in different areas of the world could start shaping and shifting and influencing how the market behaves. But that is actually really and people don't look at it from a sort of production point of view but don't necessarily look at its impact and pricing and how challenging that is for you.

Speaker 2:

Yes. So you know, for North America, we have in the US the federal renewable fuel standard and the federal tax credit, which are both kind of supportive for biofuels and sustainable aviation fuel, and then we kind of break that down into the state levels. So in, for example, you've got the California low carbon fuel standard and the reason we assess in California it's really based on that, but also Illinois because there's a state level tax credit as well. Now a lot of the you know the airlines through my conversations with them, you know are really wanting to buy sustainable aviation fuel at the price of jet fuel. So you know how does this work?

Speaker 2:

And it's really the the stackable way of the these credits, so the tax credit, the renewable identification number, so the D4 RIN, and the value of the LCFS kind of credit based on the CI of the product. So all of these together have a price that's kind of layerable and the producer can discount the SAF based on this kind of stackable price and that then brings that sellable level of sustainable aviation fuel lower and closer to the price of jet fuel. So, but that's obviously very unique in this case to California or to Illinois or to other states. So, um, you know if you're looking at. You know where is the best place to send my sustainable aviation fuel. You really have to have a good understanding and a good price reference to see you know what is the value in the different regions the um.

Speaker 1:

The credits in the US particularly are really interesting and there seems to have been sort of a trend where production costs and the value you get from these sort of stackable credits, the relationship between the two, has seemed to be changed, where production costs are increasing and the value you actually get from these credits from a producer point of view is becoming less.

Speaker 2:

Yeah, I mean the, the credit prices themselves have been under downward pressure and, for example, that the d4 rin, which kind of also includes uh renewable diesel production, and there has been an increase in renewable diesel production, so an increase in the generation of the D4 RIN, which has seen that price come down, and that then obviously means that you get, you know, that credit itself is worth less and so you know the producer gets less for that and that kind of lessens the stackable value of the credits as well. So you know, like any, any market, there's a supply and demand kind of aspect to it and that has to be factored in, you know, into these credits. Um, on the california, we obviously had recent announcements from the california air resources board. You know one around capping certain crop-based feedstocks, but also about, you know, updating the program itself, um, and the kind of target targets uh associated with the um, the lcfs program another sort of large-scale policy decision that's happened fairly recently is sort of the other side of the, our side of the pond, as it were.

Speaker 1:

We're in um uk, is um in europe, and looking at sort of used cooking oil and imports from China and the tariffs associated with that with those shipments coming into Europe. Depending on sort of specific companies, the amount they're taxed is sort of arranged. How is that affecting sort of? How do you see that potentially affecting SAF prices?

Speaker 2:

Yeah, so this is in relation to the anti-dumping duties, which are focused on biodiesel and renewable diesel as well, and kind of imports into Europe and specific tariffs per company, and these will be next February. February 2025 is when that will be kind of officially finalised and we'll know potentially how long those will be in place. So, um, this is absolutely having a price, particularly on, you know, the chinese yukami uh, which is the, the used cooking oil methyl ester, the biodiesel equivalent, um, but also in yuko that the feedstock and and europe is, uh, dramatically short used cooking oil and so must import significant volumes. And you know there is several investigations. You know the EPA announced recently investigations into kind of two producers in the US focused on the feedstock itself and where that's coming from and if it meets the sustainability criteria as well. It meet the sustainability criteria as well. So it's not just, you know, northwest Europe. You know the US has concerns on feedstock as well, as you know flows and imports really.

Speaker 2:

So we've seen the UK market under pressure absolutely, particularly in Asia. We've also seen discussions around kind of China moving towards sustainable aviation fuel themselves, so using their own used cooking oil to produce SAF for their own consumption and potentially for export as well, and SAF is not included in these anti-dumping duties. There's also been discussions about, you know, potentially producers moving to Malaysia as well and having more exports from that. So I don't think we've yet seen the kind of long term impact. There's still some some questions on how that's going to impact. The margins for biodiesel have definitely been under significant pressure within Europe in Europe, and we've seen that also in sustainable aviation fuel where the premium to jet fuel was, you know, this time last year kind of closer to $2,000 a metric ton and now it's closer to $1,000 a metric ton and that's obviously had a significant impact on production margins. And we've seen that with several companies citing market conditions as to why they've scaled back European specific investment or perhaps paused investment as well.

Speaker 1:

It's interesting that those tariffs aren't finalised till February. Another big thing that happens next year is mandates come into place. They're only 2%, so they're relatively small, but sort of those combinations of those two factors together is something that is potentially a force that we haven't actually had to deal with until sort of next year comes around. How do you see those all sort of playing together? Or have you seen, do you think people are already adjusting to the impending mandate already, as the sort of 2024 has gone along?

Speaker 2:

I think, uh, that a lot of kind of preparation for 2025 is already in place. You know this is something that that companies were obviously well aware from and you know, having been discussing this and discussing this, you know, considering it's such a small volume versus jet fuel, you know there's a huge amount of conversations, you know still happening and kind of questions to be answered. But in terms of available, of ability of supply, in terms of price mechanisms, a lot of that is already kind of either priced in, I think, or you know, you know, companies are very much trying to guarantee their supply chain so that you know they are already covered for a significant portion of 2025. As far as I know, um, then it'll be a question of when that additional supply starts to appear. You know, when do we hit that typical kind of supply demand spot market point? So, um, yeah, it's a long time coming.

Speaker 2:

In terms of the mandate, there are still questions, um, for example, is a book and claim system going to be acceptable for use within europe? And I believe, um, maybe oscar correct me if I'm wrong you know they have until perhaps the end of this year to make an announcement on how that's going to look, and there are a few questions on how that would look, considering the European Airlines requirements under the EU ETS, for example. So, despite that looming kind of 2025 deadline, so to speak, there's still a couple of questions around how it's going to work in practicality of questions around how it's going to work in in practicality.

Speaker 1:

The other sort of everyone sort of looks sort of 2025 mandates come into place and you know that's a a big step that people are sort of excited about and sort of thinks a good thing coming down the down the pipe, the. The next one 2020, 30 is where there's a serious ramp up in e-fuels and the sub-mandate and the heifer cap in the UK comes into place as well. So there's more nuance within the mandate. And I just want to ask you about sort of ESAF and power to liquid fuels and how you're approaching ESAF. Have you started to think about sort of how you're going to manage those sort of things, what sort of requirements and sort of?

Speaker 2:

things need to be in place.

Speaker 2:

I'll give an example of what we did a couple of years ago.

Speaker 2:

So we had requests to start publishing prices for sustainable aviation fuel several years ago and at this point there really wasn't a spot market to which, you know, platts could assess.

Speaker 2:

So what we did is we worked with our research and analytics division, where they have cost of production models, and then we took these and adapted them, using the Platts daily price assessment, and build these kind of heifer cost of production prices, kind of heifer cost of production prices. And so you know, we have the capability to do the same with these other pathways, of which our kind of research and analytics divisions, you know, have these models already built, and so we can do that for something like ESAF as well, where we can kind of look at our you know we've got, you know, hydrogen pricing, for example, and you know we've got feedstock pricing, and we can kind of build that into these models to say, ok, this is the theoretical cost of production price for ESF in Europe. So that's absolutely something we can look at and we may indeed look at that as we wait for that kind of spot capability to be available kind of spot capability to be available.

Speaker 1:

Another sort of thing that I think a lot of people sort of understandably are slightly frustrated by but equally sort of appreciate, is that there are lots of offtake agreements being signed but in those offtake agreements there's not a lot of publicity about sort of you know what the price of the SAF is within those offtake agreements. Presumably, if you guys had access to that data, that would be really really helpful in sort of you guys working out what the price is doing, because then you've got a longer term understanding of what airlines are comfortable paying for for a certain type of SAF.

Speaker 2:

So I mean contract pricing or kind of offtake agreement. Pricing is typically unique to the specific kind of companies in the contract themselves, whereas spot trades often have a certain kind of standardization around them as well, whereas offtake agreements might be specific to your own system and your own demand. So, yes, we do contract pricing, but only in certain markets, like chemicals, for example, where it's much more common Would. I like absolute transparency and as much data as possible, absolutely. But whether that would happen is highly unlikely.

Speaker 2:

There are many different ways that contract prices have been set up. There can be, you know, versus jet fuel, as we've discussed, using the current set prices, using a similar kind of cost of production, ie kind of factoring in feedstock. And then there can be kind of break clauses in these agreements, particularly if you're you know one side is looking at the feedstock side and one side is looking at the fossil fuel side. You know it's always a challenge when you're pricing SAF versus JET. You know SAF typically comes from a biogenic or waste feedstock. You know fossil fuel supply and demand fundamentals are different. So you know that's kind of one of the reasons why we you can see break clauses or kind of additional negotiation clauses within these contracts as well. So, um, yeah, absolutely I would love to see um additional transparency in the market, but I think these contracts are very, you know, unique to specific companies as well I think we should start the campaign here and now to get more transparency.

Speaker 2:

Well, I'm always a fan of transparency.

Speaker 1:

Well, there you go, we've started that campaign here and now.

Speaker 2:

I mean, what we're doing next with our European price assessments is we are building these instruments and what we call the e-window, which is an online communication tool where we license the intercontinental exchange platform and this is a system where traders, for example companies, can voluntarily enter bids and offers and trade through the system, and this is a really transparent way of kind of showing and indicating what price is. And it's something we see across the fossil fuel space. For jet fuel, for example, it's SIF, northwest European Jet Fuel Cargoes. You know this is a method and a key method of us gathering that absolutely transparent space. Company names are, you know, listed on the screen as part of that transparency. So we're building that for sustainable aviation fuel, for the cargoes and for the barges. To, you know, give companies the ability to show price in this method, but also to build on that transparency factor as well. So, absolutely, oscar, you know I'm very much, you know, let's build transparency, let's, you know, showcase where the accurate daily price should be.

Speaker 1:

It's interesting that platform that you're currently working on because it sort of made me think of. We've had sort of biofuels, renewable diesel, hvo are very well established markets and there are other renewable energy markets as well that sort of have allowed SAF to sort of build models on. Is there. Is that very much helpful? Are you very much able to follow a biofuels model from when the biofuels market started and apply it to SAF with a few minor tweaks? Or is SAF sufficiently different that you can't sort of control C, control V, as it were, with a few minor tweaks?

Speaker 2:

So we have ethanol very actively traded in this kind of communication tool that I'm talking about. And I would say there are similarities and differences. For example, you know biofuels don't typically trade by a pipeline. But when you look at SAF and renewable diesel they do have the capability to be entered into pipeline systems but again, you know, volumetrically at the moment it's just not kind of that common. So there are similarities but there are absolutely also challenges in terms of the uniqueness of these markets and you know relatively um kind of nascent but you know growing rapidly. When you look at the, the kind of forward demand projections from, you know our research and analytics division, um, you know also the policy itself. You know where you've got the 70 percent. You know substitution of of SAF um into the aviation fuel. So that's a huge amount of volume as we go forward.

Speaker 1:

One final thing from me, and I want to go back to something you mentioned towards the beginning which I thought was really interesting, about the relationship between price and the carbon intensity and how the carbon intensity often dictates the sort of value of the SAF to the buyer. And do you think sort of going forward? Or even now that there is the higher the carbon intensity, the higher the price of SAF will be going forward and the lower the carbon intensity it will be slightly cheaper because it doesn't have the same value in terms of reducing those emissions, whether it's an airline buying or people.

Speaker 2:

So the carbon intensity of a fuel is based on the life cycle analysis of the fuel itself and the model that's used is often defined by the legislation itself and there are lots of different models in use, which is again, again another kind of point of discussion in terms of aligning policy. Now, typically for carbon intensity, that the lower the carbon intensity or ci score of your fuel, the more valuable it is, because you know it is generating less carbon for each gallon of fuel that is produced. And this goes back to you know if it's crop based, you know how is the crop grown, what's the land use change and all of this. Then when you're looking at, ok, greenhouse gas savings, so the higher the greenhouse gas savings typically the more valuable the fuel. Now these kind of CI scores or GHD savings are typically not linear, because let's take ethanol, for example, in Europe now we have a minimum 64% GHD under RAD2 assessment.

Speaker 2:

But there's typically not a huge amount of difference between that and you know the 70 level because a lot of supply can meet that requirements. But as you get to the higher DHT savings levels, you know we're talking kind of 90 plus. Then you know every point of DHT savings has, you know, potentially a big impact on price or a bigger impact on price. So to say there's an absolute linear measurement between the kind of environmental attributes of a fuel and the fuel molecule itself is not really true, because you also have a supply and demand aspect to the different kind of levels as well, as you know what is the value to the buyer as well as you know what is the value to the buyer, you know. Do they really want a high thg or do they just want a certain, you know, minimum requirement that that kind of everyone can meet.

Speaker 1:

So it's, I'd love to say it's very straightforward, but unfortunately that's just not the case from this conversation, it's starting to dawn on me that none of this is very straightforward and it's all incredibly complicated. So one final question, and you're not going to like that I'm going to ask this and we might hold you to it. We might not. Everyone wants to see SAF prices be the same as JETE fuel. If you had to guess one year that you think, yeah, we'll get there and that will be the time that we'll get to roughly parity and we'll start to see parity with j1 for south let's any pathway you want what year would you? Would you pick?

Speaker 2:

um, there's no way I can answer that question, I'm afraid, oscar. Um, one, I you know I don't know enough about fossil fuel forecasting to have any estimate on on where jet fuel pricing is going. Uh, and two, you know there's, like we've said, you know there's so many challenges around sustainable aviation fuel pricing right now. Um, I think you know the closest thing you could look at is when you we talked about the US market and the stacking of those credits and how they offset the premium associated with the sustainable aviation fuel to bring the price of that molecule kind of much closer to the jet fuel price. So I think you know that's a way of looking at it or kind of looking at. You know european airlines and some of the eu ets give a raise for for staff as well, and these kind of programs that help support, you know, the use and also the investment within sustainable aviation fuel well, I mean, you can't blame me for trying.

Speaker 1:

I'm going to be an optimist and say we're going to do it in 2035. I'll give us a 10 years off the mandates and we'll see how right or wrong I am later. But, sophie, thanks so much for your time. That was thoroughly confusing and enlightening at the same time.

Speaker 2:

Thank you, oscar, and maybe we'll touch base in six months and see if there is more light to be shined on the sustainable aviation fuel market.

Speaker 1:

We'd love that. Thanks so much, Sophie.