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: Jet Zero Australia - Making SAF down under
In this episode of The SAF Podcast, we dive deep into Australia's emerging sustainable aviation fuel landscape with Mac Irvine, CFO of Jet Zero Australia. With 15 years of banking and finance expertise, including his role at the Clean Energy Finance Corporation (CEFC), Irvine offers unique insights into Australia's SAF development landscape.
The discussion explores Jet Zero Australia's two flagship projects: Project Ulysses, an alcohol-to-jet facility in Townsville utilizing LanzaJet technology, and Project Mandala, a HEFA pathway development in partnership with Apeiron Bioenergy.
Our conversation moves into the strategic alliances that fuel Jet Zero's mission, including a key partnership with Idemitsu and the pursuit of innovative financial avenues such as SAF certificates for carbon abatement. With $14 million in grant funding already secured, Mac explains how Jet Zero is engaging with entities like the CEFC and the National Reconstruction Fund to explore flexible capital options.
Key industry insights include Australia's position as the eighth-largest global jet fuel consumer, with 90% of current fuel being imported. The episode provides valuable insights into the nascent SAF market in Australia, including the current lack of specific SAF policies and the challenges this presents for developers. However, Mac also outlines the positive momentum, such as the federal government's Future Made in Australia program and its potential impact on the industry.
If you enjoyed this episode, check out our previous discussion with Sophie Byron, S&P Global Commodity Insights to find out about the complexity and importance of accurate SAF pricing data: https://www.buzzsprout.com/2202964/episodes/15975107
SAF Investor London - January 2025
SAF Investor London will be back in London in January 2025 and will bring leading producers, investors, customers and policy makers together to discuss the major issues around scaling SAF production globally.
We would love to see as many of you there as possible and you can find out more information, including book your tickets here: https://www.safinvestor.com/event/145508/saf-investor-london-2025/
Good day and welcome to this episode of the SAF podcast. This week we're going to be focusing on Australia with Mac Irvine, who's the CFO of Jet Zero Australia, and we're gonna be looking at what sort of what's going on in the SAF industry down there, what Jet Zero Australia's got going on and working out all things Australian SAF. So, mac, how are you?
Speaker 2:Very well, thanks, oscar. Thanks for having me.
Speaker 1:No, delighted to have you. Thanks so much for taking the time. Before we sort of get into the nitty gritty of things, do you want to just explain your background and what Jet Zero Australia is all about to those that aren't necessarily in the know?
Speaker 2:Yeah, very happy to so in terms of my background, so, look, I've been in the banking and finance industry for about 15 years and that's working across a variety of things like corporate and investment, banking and advisory, and now in a CFO role at Jet Zero Australia. Prior to joining Jet Zero earlier this year, I was at the Clean Energy Finance Corporation, or better known as the CEFC, in Australia, and the CEFC is essentially the Australian Commonwealth Government-owned Green Bank and that was established just over 10 years ago. And at the CEFC I was an investment director focusing on what I would characterize as the hard to decarbonize sectors, so things like energy from waste, biogas, recycling, circular economy and, of course, biofuels, which included SAF, but biofuels more broadly, as well as working across some of the more traditional renewables like solar and wind and even more sort of generalist infrastructure. I guess you'd call it a bit of a privileged position in a way, given it was a government-owned entity and a lot of you know projects and developers and companies would come through at an earlier stage, you either pitching their investment opportunities or even just seeking earlier guidance and advice, and so in that position, I guess I got to see a lot of the projects in not only the SAF space but other sectors coming through, which actually, I guess, bode well for me, you know, in the future.
Speaker 2:And then, recognising that I was, you know, well across the SAF sector and got to talk to Jet Zero at an early stage of development as well, and in my view, jet Zero were sort of the best early stage greenfield development company that I'd seen, even sort of two years ago, and it's just gone from strength to strength ever since. So, look, late last year I was interested in going from the more investor and financier side into the developer side answer your side into the developer side. You know, rather than sort of waiting for things to happen and come to me and providing early stage guidance, really wanted to get an underground floor, so to speak, and be supporting projects in this sector. So I reached out to the ceo and founder, a guy called ed mason, uh, late last year, and you know, as they say, that the rest is history and, as I said, I joined the jetser as the cfo in february of this year and in terms of you know the origins of Jet Zero Australia and who we are and what we do, so the business was set up about three years ago by Ed Mason, the CEO and founder, and originally looking for decarbonisation and energy transition opportunities for players in the more traditional sort of oil and gas resources sectors, but something where they didn't need, you know, billions of dollars of capital at really cheap cost of capital and, more importantly, looking for opportunities that didn't decimate the existing workforce.
Speaker 2:So, you know, looking at skill sets like chemical engineers, petrophysicists, things of that nature, which are skills that aren't typically required in more traditional renewable sector, like solar and wind and batteries, for example. And so, after a bit of time scanning the market and doing a bit of a deeper dive into the SAF space, you know, we believe that the SAF market had a lot of potential and today Jet Zero is, we believe, the leading green field developer of SAF projects in Australia.
Speaker 1:So you said you've gone from the finance side into sort of the developer side. How has that transition been as you expected? Because obviously you said you're aware of a lot of these projects and what sort of goes into developing them because you speak to a lot of them as a financier at the ec cefc. Am I saying that right?
Speaker 2:that's right. Right yeah, c E, f, c, yep.
Speaker 1:Yeah. So has that transition been what you expected, or has it been more challenges that you couldn't?
Speaker 2:necessarily foresee being on the other side. Yeah, look, I think there's definitely things that I wasn't aware of. Going from financial side to developer side, and that's really what interests me, to be fair, doing something that's new and different and interesting. I think, having said that, at the CEFC, you know what. I wasn't a traditional investor of finance, as I said, being sort of a government-owned entity and looking to support projects at an earlier stage and taking sort of, you know a higher risk positions, if you like.
Speaker 2:We actually did a lot of work that would be considered development or in that realm. So you know, introducing developers to advisors in the market or connecting people through different networks or even supporting them on their you know, development journey in some respects and supporting the diligence materials and those sorts of things. So there was a lot of, I guess, overlap in that regard. And so you know my role apart from sorry, my role at Jet Zero, I should say, apart from the broader, you know financial aspects and managing cash flows and the P&L and balance sheet and those more traditional aspects of being a CFO, I've got a lot of sort of core responsibilities around project structuring, capital raising and execution. So those are all really transferable skill sets, going from the investment and financing side to the developer side and ultimately, you know, looking to make all of our projects bankable such that we can raise what is ultimately going to be significant capital and bring these projects to market and being delivered and operating successfully.
Speaker 1:So you've got two projects you're working on currently, one called Ulysses and one called Mandala. Is that right?
Speaker 2:Yeah, that's right. So they're the two projects that are publicly announced. So, like all developers, we've got a portfolio of projects at various stages of development. But Project Ulysses and Project Mandala are the two that have been publicly announced and I'm happy to sort of provide a bit more background on each of those. So, look, I'll start with Ulysses, and the reason being that Project Ulysses is essentially our flagship project and our most developed and most advanced project to date. Project Ulysses is utilising the Alcoholder Jet technology pathway and we've got Lanza Jet as our technology licensor. So for people who aren't familiar with Lanza Jet, they are currently commissioning what will be the world's first commercial scale Alco jet facility in sopid and georgia, in the united states, and so that's essentially going to be the reference facility for our projects.
Speaker 2:Project ulysses. Project ulysses is going to be built in townsville. So for anyone listening that's not familiar with townsville, it's essentially in the northeast of australia, relatively close to the barrier reef. So that site is a very interesting site, very strategic site for us, for a whole bunch of reasons. Look in no particular order One it's in industrial park or industrial estate. So in terms of looking to build a new refinery, essentially it's really important to be in a zone that, sorry, in an area that has a zoning for that type of infrastructure. It's also eight kilometres to the port of Townsville, so very close proximity to a port that will ultimately be supporting us with our ethanol coming into that facility and then making its way down to our project, as well as the potential for SAF to go to that port and then be shipped to wherever the SAF may otherwise go. There's many billions of dollars of renewable investment going into the North Queensland region, and so we're able to leverage and utilise a lot of the existing investment going in there and sort of skill sets that are going to be developed over the longer term as well. We're also very closely linked or I should not not say linked it very closely located to a potential hydrogen supply as well, so our project will need hydrogen to to create the SAP at the end of the day as well, and that's actually a potential green hydrogen supply. So, the last but not least, it's actually what's going to be called the garrison city in Australia, where you know there's up to 10,000 defence personnel that'll be making its way there in the not too distant future as well, and we're hopeful that the Defence Force of Australia will be a an off-taker of our SAF or renewable diesel at some point in the future as well, whether it's this project or another project. So um and sorry.
Speaker 2:One other one I definitely shouldn't forget is the state of Queensland, where our project is located, has been incredibly supportive of Jet Zero to date. That includes some preliminary grant funding of just under a million dollars to support feasibility. More recently, we've been provided five million dollars from the state government of Queensland for our feed program and feed being front-end engineering and design. And then we've had really strong engagement. You know we've had really strong engagement. You know we've got fortnightly catch-ups talking about, you know, the project development and any support we may need, for example in approvals, pathways or anything like that.
Speaker 2:So I think to date, more than any other state in Australia, queensland's been the most supportive. So there's a whole bunch of reasons why it's been really strategic for us to locate that project, and I might just add as well that alongside the five million dollars of state grant funding we've received, we also received nine million dollars in federal grant funding for project. This is again for the feed program. So that's a cumulative 14 million dollars of grant funding for our project and we believe that's the largest grant funding for a SAF project in Australia to date, which is, you know, whilst the money's important, for us as a sort of early stage developer, it's actually more important than that that we've got both federal and state government support because it adds, you know, credibility and validation to what we're doing as not only that project but a sort of a SAF development company more broadly. So, yeah, it's a really exciting time for us.
Speaker 1:On Ulysses in particular, so I'm going to come back to the state versus federal sort of policy and grant situation in Australia because I think it's actually really interesting. Um, what about your other project? Is that also in Queensland, or is that in a different part of the country, and what sort of stage is that at?
Speaker 2:Yeah, so the project two which has been publicly announced is called Project Mandala. So that's a different project in the context of being a different technology, a different technological pathway. So that's what's called the sort of the hydroester sorry, hydro processed esters and fatty acids or heifer pathway Heifer is obviously a much easier term to describe that. So that heifer pathway essentially takes oils and lipids and fats and things of that nature and turns into SAF, whereas the alcohol to jet pathway, the difference being it takes ethanol as the feedstocks and it is SAF. So that's at an early stage of development whereby we're currently working through a feasibility which we'll look to complete about the middle of next year. We haven't, um sort of signed an agreement for a site as yet, but we're currently working through a couple of prospective options, um, the most perspective of those being the sort of the lands down eco industrial precinct which is in queensland as well. Um, so for all the reasons I mentioned earlier around, you know, queensland being a really, you know supportive state, etc. This site sort of isn't as well located as a site for Ulysses but still has a lot of really important characteristics to that as well. So working through that at the moment.
Speaker 2:Important to note that that's actually a 50-50 JV with a company called Epirion Bioenergy out of Singapore. They are essentially Asia's largest collater of used cooking oil. So, as you'd appreciate, securing feedstock for any staff project is critical. Without feedstock you can't develop projects ultimately. And so we've got a really strong partner there, as I said, based in Singapore, and sort of importantly, as I mentioned earlier, around sort of grant funding. We jointly received some grant funding from the Australian federal government and the Singaporean governments to support that. So, again, more credibility and validation of sort of the work that we're doing alongside our partner Apeeran. So, as I say, look, it's a really exciting time for us to be progressing. You know two different projects of different technologies and you know technological pathways with different partners, as I said, early stage of development, but arguably HEF is the most commercial SAF pathway to date, but important for us to be exploring a whole variety of options when it comes to technologies.
Speaker 1:If we take a step back and look at sort of Australia as a whole, where would you say the maturity of the SAF market is? If you take the US or Europe, it's very mature. There's lots of different policy incentives, different strategies going on. But if you look at some other regions of the world, it's still sort of establishing itself in terms of policy as well as sort of getting refineries up and running. Where would you say australia is on the scale in sort of as a whole, because I know you've mentioned queensland a couple of times being very helpful for you guys in terms of grant funding as well as the federal government. Is that true for sort of the whole of Australia or is that primarily sort of a Queensland sort of specialty?
Speaker 2:Yeah, look, I think, on the whole, australia is relatively nascent when it comes to sort of the SAF industry, and so, look, if you so we take a step back and think about what's going on here at the moment.
Speaker 2:There is a lot of sort of interest in the market and a lot of projects that are under development, but there isn't currently any SAF policy or policy mechanisms at the state or federal level at the moment, and so that obviously creates some challenges, as you'd expect, you know, in terms of looking to develop projects.
Speaker 2:Having said that, there are a lot of tailwinds in the market at the moment.
Speaker 2:So, at a federal level, in the budget earlier this year, the federal government came out with some sort of discussion announcements around, for example, a 1.7 billion dollar program called future made in australia, and there's an innovation fund where that 1.7 billion dollars will be held with what's called the australian renewable energy agency, or arena for short, and, as I mentioned earlier, arena provided some earlier stage grant funding for us, the $9 million of Project Ulysses. So $1.7 billion is not an insignificant amount of money to be providing to projects in the Australian market, but also recognising that's not SAF specific, that's for a whole range of different types of decarbonisation technologies. So it's not clear yet how much of that funding envelope will go towards SAF. Obviously we're hopeful that it's significant, but we don't know yet. But it's still obviously a move in the right direction for the government to be providing capital, particularly early stage capital, to the industries more broadly. They also made some announcements around supporting SAF accounting mechanisms and things of that nature as well. So in terms of broadly supporting the industry, that's really important.
Speaker 2:And the industry has just gone through, very recently I guess, an industry consultation process as well where the government came out with a consultation paper seeking, you know, advice and commentary, et cetera, on what types of policy mechanisms you know industry would be looking for. We obviously submitted into that, alongside a whole bunch of other industry participants, and, whilst policy is ultimately a role for government to be implementing and we didn't specifically state what type of policies they should implement, it was more broad discussion and different examples, you know, policies they should implement. It was more broad discussion and you know different examples for you know, for example, but also recognising, I think, from our view, that we believe that both demand side and supply side mechanisms are important. So the demand side, I guess you could argue, is more of a, you know, from a carrot and stick approach. It's more of a stick approach. So implementing mandates or carbon intensity schemes and things of that nature is really around creating obligations on parties to meet, so that's creating a level playing field, so to speak, for those obligated parties. And then on the other side, you've got the supplier side, which is really around providing capital ultimately to support developers like jet zero, australia and others to be producing projects which have, you know, an economic and commercial case and can produce SAF that ultimately will be, you know, purchased in the market.
Speaker 2:So, as I said very broadly, we provided some examples of things that we think you know could be considered by government. We believe a lot of that was consistent, you know, based on our own industry engagement as well. So, as I said, in short, there's no policy to date in Australia at a state or federal level. But the tailwindwinds, you know, no pun intended, the tailwinds are there and we're hopeful of something coming out, you know, hopefully next year, to support the industry more broadly. At a state level, again, there aren't any policy mechanisms in place, but Queensland I've already sort of touched on and also New South Wales, are looking at some, you know, different types of mechanisms and industry consultations to think about how they could play a role, whether that be in isolation or alongside the federal government, for example. So there's plenty of happening. So there's plenty happening in Australia. The momentum's good. I guess it's now just a case of, you know, the implementation and the action to support industry and support projects and ultimately getting, you know, saf to be produced in country.
Speaker 1:How does it work in terms of the remit of the federal and the state? Is it sort of like the US Is that quite a good comparison where you have sort of the Federal Inflation Reduction Act that covers the USA in its entirety and then you've got its individual state policies, like you've got a different one in Illinois with a different strategy compared to a California or a Washington or other states like that, and they've got a lot of autonomy to shape policy how they think suits their. You know their region best because I know in Illinois there's a lot of demand side stuff because that's where United Airlines are based. So that's, that partnership is very important to creating that policy. Is it like that? Or is there a bit more sort of federal government nudging states in sort of a more sort of unified direction in Australia?
Speaker 2:Yeah, look, I guess it's hard to say at this point in time because we don't have any policy implemented yet. So the ultimate shape of that, as I said, it's sort of impossible to say today, I guess at a high level. Um, the federal government, you know, ultimately has a bigger balance sheet than the states, and so we would, I guess. You know, personally, I would think that the federal government has a bigger role to play here in terms of whether that be mandating sat, for example, across the whole of the country, or providing a bigger, bigger pool of capital, bigger funding envelope to support the whole of industry. But having said that, there's no reason why, you know, a state government can't look to implement its own policies.
Speaker 2:Again, we would hope to be supportive, you know, alongside the federal government and ultimately always hoping that state governments are working with federal governments, and I think some of the discussions we've had to date would suggest that that would be the case. It would be ultimately supportive. But again, it's really too hard to tell what that looks like. So, yeah, as I said, we're hopeful of not only just policy, but sort of strong policy with teeth that will get industry moving quickly to be ultimately delivering strong economic cases for projects, and we're hopeful of that. Having said that, jet know Jet Zero Australia isn't sitting still waiting for that. We are ultimately progressing all of our projects, regardless of policy that may or may not come, and we believe we'll be successful in doing that. It would obviously just be easier if there were and faster, a faster route, so to speak, if there were really supportive policy mechanisms in place supporting not only us but the industry more broadly.
Speaker 1:Are you happy with the speed of these policy discussions? Because I know you just said that you know you're sort of going along working your own projects out without this policy being in place, but a lot of other people are sort of struggling with a lot of different aspects of it because there's not of developing a project, because there's not this policy in place. Is that? Do you get frustrated by the speed of these policy discussions? Would you wish there's a bit more urgency, or do you think we don't necessarily need it yet, but if it comes along in sort of the next few years, that's sort of good and good enough for our timeline?
Speaker 2:where, where we're at look, I think, in reality, um all developers are, all all participants in this industry are seeking policy to come through, you know, sooner rather than later, and the reason being that, ultimately, it supports the industry, it supports projects, it supports jobs, it supports decarbonization. So there's a whole range of reasons why, you know, um all supports the industry, it supports projects, it supports jobs, it supports decarbonisation. So there's a whole range of reasons why, you know, all of the industry participants would be looking for that support to come sooner rather than later. There's, I guess, a way that I think of it really simplistically.
Speaker 2:It's really about the opportunity that we may lose if policy doesn't come in, in my belief, quickly.
Speaker 2:So, for example, the best outcome ultimately is that policy is implemented and we're utilising Australian-grown feedstocks in Australian-delivered projects, with SAF being utilised in Australia.
Speaker 2:That's called the Nirvana outcome, right? The next outcome, sort of taking a step back from that, would be the feedstocks being utilised in projects developed in Australia but the SAF being exported to other markets and Australia losing the opportunity to either utilise the SAF or having to import that. And then I guess, arguably the worst outcome would be the feedstocks go offshore, which some of those are currently already doing, which some of those are currently already doing, and that means that there's no jobs, there's no investments and we are ultimately importing SAF in-country, which is what we're already doing in the fossil fuel markets. You know, about 90% or more of liquid fuel in Australia is imported, including jet fuel. So, you know, we believe that there's a really strong argument and a really strong opportunity that otherwise could be lost if we don't act quickly. And so, for a whole range of reasons which we can talk about in a bit more detail, we believe that, you know, implementing policy sooner rather than later would be of great benefit to Australia.
Speaker 1:I mean that's one thing that I think people not from Australia kind of forget about. Australia is just how far it is to anywhere else. Really, even if you're talking southeast Asia, it's still a sizable distance. I mean, it's a four-hour flight from one side of Australia to the other.
Speaker 2:I think I think that's about right yeah, depending which way you go, between four and six hours, but it's, it's, it's exactly, that's exactly right. It's the tyranny of distance, as we call it. And, um, you know, for context, I think australia is roughly the eighth largest user of jet fuel globally. So when you think about us as a country or an island nation of 25 26 million people, um, that's a significant volume of fuel. Um, I've also heard some other stats where the route from from sydney to melbourne I believe it is is like one of the top three you you know most flown routes in the world.
Speaker 2:So I think the reality is that, as I said, we have a great opportunity here that could otherwise be lost if we don't act quickly. And we have a significant fuel demand. You know we've got a requirement of up to 10 million litres of jet fuel by 2030. So there's you know that even that goes even more towards the argument to say that we've got a significant opportunity for decarbonizing and producing our own liquid fuels for aviation. So, as I say, for us it's all about the opportunity that we believe that the country should be capitalizing on.
Speaker 1:It's so interesting that you say you import 90% of your fossil fuels and yet SAF represents, as you've been rightly saying, this opportunity to bring domestic supply of aviation fuel to this huge market that hasn't had it before and that could massively change the dynamics of how fuel and flying and air transport works in Australia, let alone sort of the sustainability benefits of it. Because even though there's a premium, everyone talks about the SAF screen premium how it's more expensive to make. Surely there's a big mitigation factor by the sort of the level of importation and the reliance on others as opposed to having domestic sort of fossil fuel production to the scale of the market they're currently in. So there's sort of a twin benefit to actually bringing about this more, more SAF projects across Australia as a whole look, that's absolutely right.
Speaker 2:I think that there's a whole range of benefits to, to, to producing SAF domestically and sort of you know, know, in no particular order. Look, touching on that aspect, fuel security, that's critical, obviously. So, as I mentioned you know, we're importing 90% or more of our liquid fuels, including jet fuel. So when we think about, from a defence capability in particular, just you know, more sort of general or broad fuel security, the fact that we have an opportunity to be producing SAF as well as the renewable diesel, which there's a bit of that production as well in our projects, we think that fuel security is critical and also recognising, as I mentioned earlier, that Project Ulysses, which is based in North Queensland, which will be very closely, you know, located to this, this Garrison City that I mentioned, that's, that's an incredible benefit, as I said, in terms of fuel security and direct supply to the defense force.
Speaker 2:Decarbonization is an obvious one. So, um, you know the the rate of decarbonization, the percentage of decarbonization, varies from project to project, but project ulysses, as an example, based on our feasibility assessment, will be about a 71 reduction against fossil fuel, a 71% reduction against fossil fuel. The other is jobs, and so we think about jobs being a critical aspect too. So Ulysses will have, at its peak, about a thousand construction jobs, and the construction timeframe is anywhere between two to three years, but at its peak, about a thousand jobs, and we're also talking about 100 ongoing operational jobs. And so if we compare that to other more traditional renewable sectors like solar and wind, it's a significant increase in long-term operational jobs, and the asset could be a 40 or 50-year or even longer life, and so it's a very long period of time where you're going to be securing those jobs and also some of those jobs that could support the transition away from the fossil fuel sectors like oil and gas and mining more generally as well.
Speaker 2:So we think there's incredible benefit there, and also recognising that a lot of these projects are going to be delivered in rural and regional communities as well. So it's not just the number of jobs, it's also about those local communities who will benefit from that. So, look, there's some of the key aspects. As I said, we think it's really a win-win-win-win-win scenario across all those different things, and that's also another reason why we've had really incredible bipartisan support from all parts of government, because it's not just a focus on the decarbonization aspects, it's about all those broader aspects that I've just mentioned, and so there's pockets of that which both governments, for all sides of government, are really excited about in terms of domestic feedstock availability?
Speaker 1:um, because obviously, in order to make this viable, you won't want to be shipping feeds, importing feedstock, from across the globe, because that's logistically challenging, massively cost intensive and not very supply chain efficient. So, what are the feedstocks that you're looking at for both you obviously, your Alcosjet facility and your Heifer facility, and is there enough domestic supply to fulfill those requirements going forward?
Speaker 2:Yeah, look, focusing on the two projects that we've already sort of briefly touched on, the short answer is there is, yes, currently enough domestic supply of feedstock for those. The question really becomes when you're thinking about, you know, a roughly 10 billion litre per annum fuel requirement and, for context, project Ulysses is producing about 100 million litres of that. We're talking about an exponential requirement for feedstock and SAF production. So just touching on those in a bit more detail, so, ulysses, we already have our feedstock secured, so that's an ethanol feedstock domestically. But once we've utilised that, there's not a lot more domestic ethanol capacity to date. Having said that, there is a significant like a very significant opportunity to be supporting other sectors like sugarcane, for example, and sugarcane to ethanol. So there's very limited supply of that to date, but we believe over the longer term there's an opportunity to be repurposing that industry, and not in full. We recognise sort of the food versus fuel debate and the social licence to operate is critical. But to be supporting, I guess, an alternative revenue stream for those farmers and supporting the industry more broadly and ultimately looking to decarbonise the aviation sector, we believe that there's significant and strong opportunities over the longer term to be looking at sugarcane to ethanol and we're even going so far as looking at even longer term opportunities for other types of feedstocks and non-edible feedstocks to be supporting the ethanol sorry, the alcohol to jet pathway, and then look focusing on sort of the project mandala and the heifer pathway and the oils etc.
Speaker 2:Australia does currently produce a variety of different oils and animal fats and tallows and things of that nature and we're obviously going through a process now to secure those. So the short answer is yes, there is capacity to date, but also recognising that we are competing with other project developers in the market as well. So there are a couple of projects you know on both the east coast and west coast of Australia that are also looking to secure that feedstock and so again, we're turning our mind to well, over the much longer term, is there an opportunity for us to be progressing our own? You know feedstock trials, for example for supply of oils for HEP as well. So I think the short answer is yes, there is supply to date to support a few projects in the market, but over the longer term, the only other opportunity is to be either importing the feedstocks or to be supporting the growth and development of future feedstock supply, which we're very much looking to do.
Speaker 2:I think what I would say, though, is, on a more global scale, we're all in on alcohol to jet and sort of the ethanol you know. We believe that ethanol has a much bigger capacity to be supporting SAP, and so, whilst I think, ultimately, we need all technologies, whether it's alcohol to jet, heifer or others all technologies and pathways need to be continued to develop to support what is, you know, a very significant decarbonization requirement in the aviation sector. You know, roughly three percent of global emissions today, then, will be increasing over time as other sectors decarbonize, but we believe that the alcohol jet pathway, you know, has more significant opportunity because of the feedstock in particular.
Speaker 1:So we're looking to explore all those avenues I think another pathway that you should look at is the deadly animal pathway. Just I know from someone looking australia. You should get all the spiders, snakes, sharks, crocodiles and all the other deadly animals you got in australia and find a way to utilize them, because I'm sure the tourists tourism board in australia will absolutely love that yeah, look, I'm not sure about the social license, uh aspects of that, and I I haven't seen any analysis on, um, you know, the, the oil yields or the the ethanol yields coming out of animals.
Speaker 2:But to look at, we'll take that one on notice and um, we'll.
Speaker 1:We'll see what the future holds yeah, I think there's quite a few. You need quite a few spiders for that to work. I'm not sure how much an individual spider is getting, but that's just a bit of free advice that I'll um. I'll give you um today, so um I'll take that on notice yeah, please do um.
Speaker 1:So, moving on to sort of the we've touched on, sort of the grants you've um been able to receive from both the federal and the state governments, how have you found financing and raising capital, obviously coming from the sort of green bank, government owned sort of financing side of the equation? Coming on to the project side, is that a challenge, given the issues around sort of scalability of feedstock going forward or the lack of policy? Is there enough sort of read like australian-based capital available? Have you had to look sort of elsewhere? How have you found that?
Speaker 2:yeah, look, I probably separated into um, our development company or head company being jet zero, which is doing the whole range of different development activities we talked about, and then the project level. So I might probably just separate those two. Um. So, thinking about the, the head co-level at Jet Zero, so Jet Zero recently did a Series B raise for 29 million dollars. That was announced in March of this year.
Speaker 2:So, within our sort of capital stack and investor base at the moment, you know we're very privileged to have the likes of Airbus, qantas and Idemitsu in there. So you know, airbus is the world's largest OEM of aircraft. We've got Qantas, which is Australia's largest airline've got um, itamitsu, kosan of japan, who's a very large, you know, global energy conglomerate and, look, developing their own projects. Um, so, from a, from a very large strategic investor base and what we call, you know, partnership based, not just investors. We're very privileged to have those names and those relationships as investors at headco. We're also, you know, very privileged to have some of the those relationships as investors at HEDCO. We're also, you know, very privileged to have some of the institutional capital there, the likes of sort of Dragonfly, environmental Capital, nero, tribeca, odesi, chancery Hill and the likes as well. So, in terms of that mix of investors, as I say, it's all very strategic the way it's been put together and very supportive. So, look, we're well funded at the moment. As I said, we's all very strategic the way it's been put together and very supportive. So, look, we're well funded at the moment. As I said, we raised $29 million. It was announced in March. We've also got the grant money of $14 million from state and federal government as well for our feed program, for Ulysses. So we're in a really good position at the moment.
Speaker 2:You know we're not currently seeking capital, but we also recognize that there's a lot of opportunities for development. As I mentioned earlier, we're looking at some, you know, going further upstream, if you like, to looking at what opportunities are there at feedstocks, for example. We've also been approached by some projects. You know developers and other players and strategic partners globally as well. So we're looking to expand beyond the shores of Australia and what opportunities may lie outside of that. So I think, in reality, you know we're always open to what opportunities there might be, you know, in investment later down the track. But as it stands today, we are very well capitalised and then we sort of shift the focus to the project level. So we think about, you know, as you mentioned it's.
Speaker 2:You know, alcohol to jet, in particular, is still a nascent type of technology in many regards. You've got the likes of lanza jet which are commissioning and will be producing sap imminently from what is our reference facility in soap it in georgia. So the reality is that the technology works and the chemical, you know, engineering works and that's been scaled up over the last, you know, I think 10 to 15 or so. It's really about just putting it into, ultimately, refinery and delivering that at scale, also recognising that our Project Ulysses will be a roughly three-time scale-up of the reference facility in Georgia as well.
Speaker 2:But I think, coming back to your original question, apologies for sort of, you know, diverting a little bit, but it's important just to provide that context. But I guess, in reality, reality we've had incredible support and engagement from the financing community to date, both locally and with with overseas banks as well. They're all really looking for opportunities to support not only projects but, you know, decarbonization, energy transition and aviation being a sector which is which is really challenging as well. So the engagement today it's been very strong. We do recognize that, um you, not all of those lenders and financiers are going to be there at the end and we appreciate that. But ultimately we're not just looking for capital, we're looking for partners, we're looking for people to go on the journey with us and obviously we'll sort of find our way through that process over the next, you know, six, six to twelve months. But I have to say that the, the appetite and interest has been sort of resounding today.
Speaker 1:I think there's a really interesting dynamic between sort of Australia and you mentioned Idemitsu and Japan and that sort of relationship in terms of both sort of exporting and importing but equally the financing and building up of infrastructure in either country. What are the push-pull factors sort of bringing that relationship to the fore, particularly around SAF and this renewable space?
Speaker 2:Yeah, it's a good question. So Idemitsu is a very well-established Japanese company and a global energy company, and a mandate came out sort of I think it was middle of last year for a 10% mandate for SAF in Japan. So they're obviously looking at how they can play a role in the SAF space in Japan and globally as well, and taking lessons learned from other parts of the world into their projects. And so there's a few parts that. The first is that they are actually developing their own SAF projects, both the alcohol to jet pathway and one of their existing refineries, and also the heifer pathway as well, and no doubt exploring other opportunities and other technologies. You know, within the broader, you know, saf remit, they're also looking to support the airlines where they possibly can too, in Japan. And so there's a whole raft of reasons why being a, you know, a significant player in the SAF space is important to them.
Speaker 2:I think both parties so both Jet Zero Australia and Idemitsu felt that it was a very interesting strategic partnership to tie into, because they're developing projects, we're developing projects, they're different technologies, we're developing projects, they're different technologies, you know, for some of those projects though, but there's, you know, not sharing IP, obviously, but there's a lot of lessons learned that can be gained from that in different jurisdictions around the world, whether it be, you know, design, philosophy, capex, improvement, you know, ethanol feedstock supply or otherwise.
Speaker 2:And so, as I said, you know sort of in the opening commentary, the money is important, and more so for us than Idamitsu in providing capital, but actually the strategic nature of the partnerships is really important. You know even, for example, idamitsu having an ethanol trading capability. We think that that's an interesting, you know strategic proposal for us as well about the potential to supply ethanol to our projects in Australia or globally as well. So I think that the strategic nature is the most critical part of that and we look to have a very long standing relationship with them going forward we speak to sort of CFOs developing projects, is worries about the cost of capital and how it.
Speaker 1:You know whether it's affordable to actually get this, the large scale investment required and to build these refineries, because they're going sort of north of a billion dollars to construct one of these facilities and there's obviously a lot of financing required along the way to get through the different stages. Is that something that later down the line you're concerned about, or is it something you're not so worried about? You think there's sort of ways around it, or is it something that you think this this is going to be a challenge going forward?
Speaker 2:yeah, I wouldn't say concerned, um, that's, that's, that's quite, I guess, quite a strong word, um, so to speak. But recognizing that it will be challenging, like there's no one at jet zero that believes this is going to be easy, um, you know, we often say that if, if all of the project participants in ulysses or other projects for developing walk away mildly unhappy, then we'll probably all be happy at the end of the day because we've delivered a project, and I think that's the nature of developing any first of a kind project anywhere in the world. It's going to be hard and we recognise that and it's you know, we're eyes wide open. But when it comes to cost of capital and, I guess, the economics more broadly, we sort of take a step back to the feasibility phase that was undertaken and completed end of last year for Project Ulysses. There was a very pragmatic approach taken to that. So you know it was a sort of a class four estimate, you know, which came out at roughly $600 million. You know, capex cost, sort of a cost of capital which was akin to, you know, an oil and gas type project, sort of in the mid-20s, let's call it. There was no government grant funding included, there was no concessional debt financing included, it's all sort of commercial rates. There was a gearing ratio that was pretty typical We'd expect for a project of this nature, of this nature, and there was no other revenues or or you know, um uh consideration in the capital stack for the likes of SAF certificates and those sorts of things or environmental attributes. So, as I said, it was a very pragmatic approach taken and the outcome of the SAF price in that that modeling and feasibility exercise was roughly ballpark with what we've seen, you know, in in markets similar to Australia's, like in Singapore, in in in that region, for example. So that gave confidence to the board to ultimately pull the trigger and approve, moving towards the detailed development stage.
Speaker 2:So, as we look to continue to develop projects, we'll be looking to pull on all of those levers, you know, as I mentioned. So, for example, we've already received $14 million of government grant funding. I appreciate that's, you know, not a significant amount of capital from, you know, in the broader $600 million or more funding envelope, but the fact that we've been able to secure that at an early stage, with both state and federal government, as I've said a few times, is a really strong show of support and validation. Federal government, as I've said a few times, is a really strong show of support and validation, credibility for us as a developer and for our project. And you know, we already know, that there's more pools of capital available, um, you know, within in the grants for at state and federal levels as well. And so, look, you know, there's no guarantees in life, as they say, but we're confident being successful for more you knowID capital at the grant level.
Speaker 2:There's three different government agencies, or government investment entities, I should say, in Australia, which are the CEFC, which is obviously where I previously worked, there's the Northern Australia Infrastructure Facility and, more recently, the National Reconstruction Fund. Those three federal government entities are designed essentially to be supporting projects. Three federal government entities are, you know, designed essentially to be supporting projects like ours, which are, you know, more challenging than traditional renewables, for example, and it's all about supporting, you know, new industries in Australia, and so we've had early stage engagement with each of those and they're very supportive of that and we believe that there's, you know, arguably more flexible capital they could provide as compared to the commercial banking market. We've done a fair bit of work on the SAF certificates or the scope 3 certificates as well. You know, anecdotally, those are trading anywhere between 300 US dollars a ton and 800 US dollars per ton of carbon abatement. We'll we'll be producing roughly 250,000 tons of carbon abatement for our projects.
Speaker 2:So, depending upon what we're able to trade our certificates for, that could take, you know, roughly a dollar off our SAF price, for example, and that's not necessarily just in terms of, you know, selling those at the time of production. It could be a prepay instrument, for example. So there's a whole bunch of different, you know, levers, as I mentioned, that we could be looking at and ultimately, when we de-risk all of the project components, where that's the epc, ethanol supply, offtake, etc. Etc. That ultimately should reduce the cost of capital because ultimately people are pricing for risk. So, um, you know we're well advanced for each of those, but, um, we obviously haven't reached financial close yet, so we'll, uh, we'll be looking to continue to reduce that cost of capital and ultimately making our SAF, you know the project, bankable and the SAF affordable in the market.
Speaker 1:Those three federal banking institutions that you mentioned are those the sorts of institutions that can give you access to sort of the concessional debt, the first lost capital, those sorts of financial opportunities that can help also in bringing in further investments and sort of, in an effect, helping knock down further dominoes later down the line, because, equally, those sort of opportunities and financing sort of structures are really critical. I know from speaking to people over sort of in europe and sort of in other regions, sort of with more nascent markets, that those sort of institutions providing those opportunities are critical in order to attract that private investment as well.
Speaker 2:Yeah, that's absolutely right. So, as I said, they are purpose designed, whether it's providing debt or equity or guarantees. Typically they're all designed slightly differently in terms of their investment criteria and the types of you know investment structure that they can enter into, but in short, they should all be the most flexible type of capital and and the most, I guess, opportunity for concessional financing and things of that nature. So, whether that be a reduced interest rate compared to market, whether that be longer legal tenor or longer notional amortization periods or deferred amortization, there's there's a whole range of sort of financial engineering that can occur, um, you know, through each of those different you know investment entities.
Speaker 2:We haven't got to the stage of sort of detailed discussions on that yet as we still have work to do on our project before doing that, but I guess, at the high level you know, we believe that they've got a very big role to play in our projects.
Speaker 2:We do still want the commercial banking market to be participating in working alongside that, because ultimately we want them. You know, the role of each of these investment entities, I guess, is such that they're not needed in future, and the reason being that they've played a role to ultimately catalyze investment of the private sector and the commercial sector such that they can sort of take over that role over the longer term. That role over the longer term, so, um look, we'd ultimately take whatever capital we can get and what's you know best for project and fit for purpose and and ultimately you know best for economics, etc. But the reality is that we would actually like to see the commercial banking market participate because we think there's a role for a whole variety of investors and finances in our projects one of the critical things for various financial institutions when it comes to investment opportunities in this space is demand and long-term demand signals.
Speaker 1:And I just wanted to get your thoughts around domestic sort of australian demand because obviously said it's a, it's a big aviation industry in and of its own right. I think it's slept on a bit in terms of the actual size and significance that it has in contributions to global aviation transportation versus sort of the global side of it and how sort of important it is to have regional Australian demand versus, you know, the overall global demand aspect yeah.
Speaker 2:So I mentioned earlier that the um, the Australian sort of jet fuel portfolio for, like, there's going to be roughly 10 billion liters by 2030, um, which is obviously significant and, you know, being roughly thearbonising liquid jet fuel or, you know, jet A1 kerosene over the longer term.
Speaker 2:So the reality is the demand, both in Australia and globally, is exponential. It's very significant. There's a lot of projects under development at the moment, but you know most of them are having a lot of challenges and that's, you know, that's pretty well publicised. It's if you go to Google sort of SAF projects globally, you'll see what's going on in the market. And, again, like we know that, you know that our project's not going to be easy either. We are very well positioned.
Speaker 2:So the reality is that the demand is there and it's mainly driven by, as I said, we talked about the carrot and stick approach earlier, but the mandates have already been implemented in some jurisdictions or they're going to be implemented in the next six years. So 2030, sort of that critical moment, if you like, where there's going to be billions of litres of demand under a mandated requirement. So in short, the demand is going to be significant and so there is significant opportunity for not only Jetser Australia but other developers in the market to be significant. And so there is, you know, significant opportunity for not only Jet Zero Australia but other developers in the market to be supplying that.
Speaker 1:Matt, thank you so much for that. We look forward to hearing all the updates and following how Jet Zero Australia is getting on across its portfolio of projects and, hopefully, global expansion as well. Um keep an eye on that very closely. Thanks for um. Thanks for giving us your time.
Speaker 2:Thanks so much for having me Appreciate it.
Speaker 1:So if you enjoyed this, you should absolutely come along to the conference. It's a bit like this, but with more interaction audience questions, networking opportunities, all sorts of fun stuff. Lots of critical discussions around moving the SAF industry forward and how capital can help do that. On the 28th 29th of January 2025 I'll put a link in the description for so you can book your place, and we look forward to seeing as many of you there as possible.