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: World Energy - Filling aviation's notice boards with (SAF) certificates
In our latest episode we chat with Kathy Wight, Vice President for Net Zero Solutions at World Energy, and how they are leading the charge in decarbonizing business travel and freight.
Kathy takes us from her roots in the NGO sphere to her pivotal role in driving practical sustainability solutions, sharing insights from her experience with the Rocky Mountain Institute (RMI) and the innovative strides in sustainable fuels like SAF (Sustainable Aviation Fuel) and renewable diesel. We find out why she transitioned to the business side to actively work on developing practical solutions to decarbonise aviation.
We venture into the complex landscape of Sustainable Aviation Fuel certificates, dissecting the intricacies of environmental attribute certificates, and the book and claim system. Kathy helps clarify these often-confusing terms, shedding light on how these mechanisms play a vital role in reducing emissions across industry value chains. We discuss the importance of transparency and the potential for a universal taxonomy to simplify the process for newcomers, ensuring accurate carbon intensity scores and fostering broader engagement in the SAF arena.
Additionally, Kathy explains how long-term contracts with corporations act as “market makers” for SAF, signalling durable demand and unlocking capital to scale up production facilities.
For industry newcomers and veterans alike, Kathy’s insights offer a deep understanding of how SAF certificates and partnerships are accelerating sustainable change in aviation. She emphasizes the importance of taking action now, rather than waiting for the perfect system to emerge.
Check out our last episode with C.R Sincock, Avfuel, where we look at the development of the SAF supply chain: https://www.buzzsprout.com/2202964/episodes/16057604
Hello and welcome back to yet another episode of the SAF podcast. This week we're delighted to be joined by Cathy White, who is Vice President for Net Zero Solutions at World Energy. This is about a year since we did our first episode, where we looked at the origins of World Energy SAF production space Obviously you guys being the first commercial SAF refinery in the US. And now we're going to look at another topic that came up, but in a bit more detail look at the book and claim and SAF certificates system. But, Cathy, how are you?
Speaker 2:I am very well. Thank you. I'm delighted to be with you today, Oscar. I've been looking forward to today's conversation. Thank you for having me.
Speaker 1:No, absolutely delighted to have you. Thank you so much for joining us. So, before we get into the nitty gritty of it all, do you just want to introduce yourself, your background before World Energy and what you currently do at World Energy, because you've got quite an interesting journey into where you're at now.
Speaker 2:I do, Thank you. I am, as you mentioned, the Vice President of Net Zero Solutions at World Energy. I sit on our commercial team where I work with corporations, with freight and logistics companies and airlines, to help them decarbonize their business, travel and the movement of freight and goods around the world. We do that by providing low-carbon, sustainable fuels like SAF and like renewable diesel and maybe even more relevant to this conversation we also provide the environmental attributes or insets that are derived from the production of that fuel. So that's what I've done, or that's what I do at World Energy.
Speaker 2:I've been with the company about two years and prior to that I was with RMI, Rocky Mountain Institute, where I worked on their hard to abate industries team. I focused on cross value chain collaborations, on voluntary action and on demand aggregation. My particular passion in that hard to abate space was aviation. I just love it. It's hard. I love working on aviation. So in that role I helped to stand up Clean Skies for Tomorrow with the World Economic Forum and also helped to stand up SABA, the Sustainable Aviation Buyers Alliance, in collaboration with the Environmental Defense Fund. Both those programs are designed to expand supply chain engagement. They try to aggregate demand and move aviation off fossil fuel and toward a net zero future.
Speaker 1:Perfect. We're going to come back to Clean Skies for Tomorrow and Saba a bit later, but I wanted to start with, more widely, your sort of NGO work and why you moved from the NGO world into the more practical business side of things. What sort of prompted that transition for you?
Speaker 2:Yeah, sure, that's a great question. So at RMI I worked in corporate engagement. I worked with many, many companies wanting to reduce their emissions footprint and move toward their net zero targets. That might be science-based targets, it might be public commitments, but they really had a drive and a need to decrease their emissions. Occasionally I would hear from companies that RMI's theoretical approach or other NGOs' theoretical approach was impractical in a real-world space where pressures are coming from lots of different directions they come from shareholders, environmental groups, they come from customers and even internally from their own employees. And I kept thinking about how valid is that argument and how does theoretical translate into a commercial space? And I wondered if I could create more impact on what I call the do side or the action side rather than the think side. So while I remain confident that there's real power in cross-value chain multi-stakeholder approaches, I did wonder how that works in the real world.
Speaker 2:So about this time, as I'm starting to sort of struggle internally with that, my colleague, adam Klauber, who is a global expert on aviation sustainability and with whom I worked for many years at RMI, jumped over to World Energy to lead its sustainability team and shortly after he reached out to see what I consider.
Speaker 2:Coming over to World Energy, at that point I really knew very little about the company other than some of the things you said at the beginning of the podcast. World Energy was the first producer of SAF at scale in the world, but I didn't know a whole lot more than that, so I began to dig a little bit. I didn't know a whole lot more than that, so I began to dig a little bit and what I found was a company with a vision of a fossil-free transport system globally and a sustainability ethos that matched my own and matched the work I'd been doing at RMI. So you know, in essence I found what I considered to be an ideal situation for testing the premise that doing good for the environment and doing well for a company are not mutually exclusive. So with that in mind, I made the jump about two years ago.
Speaker 1:And what have you found in those two years in comparing the role that NGOs have in driving in this instance, aviation, climate solutions and in the business world? Has your opinion changed since you, you know, left the NGO world and went into sort of the world, energy and the business side, or is it what you expected?
Speaker 2:I would say I thought I think it's a little harder than in the real world, than it is in the theoretical world, but I think that both of these are critical together. So we look at the NGO space and we look at what is driven by industry, and those are both critical. So in my mind, it's not an either, or it's an, and NGOs are absolutely critical in the development of the foundational systems like book and claim registries, and it's helpful in ensuring that incentives and mandates being stood up by policymakers and regulators are actually in service of real emissions reductions. So the NGO contribution is really important, but it's all moot if there's no industry demand. The signaling of a strong industry demand from companies is truly what will drive the scaling of low carbon products Beyond SAF, all low carbon products.
Speaker 2:You know that clear, durable signal from a voluntary market, from industry will go a long way in scaling the SAF industry. And you know I look at that, those signals that come out, and I think to myself okay, where's some examples of where I've seen that over the last couple of years, specifically with world energy, and I think of some of our early announcements a year and a half, almost two years ago, with really large customers like DHL, like Microsoft, like BCG. They created an extraordinary wave of interest from other companies looking to decarbonize their indirect aviation emissions as well.
Speaker 1:So now if we look at sort of SAF certificates and get into the minutiae of it all, there's a lot of sort of phraseology that's used around. Well, saf certificates for one insets, book and claim and have all got their own particular bits of jargon. So I just wanted you to begin with to explain sort of what in sort of basic terms, what all of those mean and how they crucially interlink together, because I think everyone's got an understanding of book and claim. Some people might have an understanding of SAF certificates. I mean, inset seems to be a relatively newer term that's come along as things have started to develop. So could you explain how those all interrelate together?
Speaker 2:I can and you know, I think it's a great point that you make up front, and something that came up recently at Climate Week is, you know, having a universally accepted definitions or a universal taxonomy of how we talk about things would be really, really helpful. Because we look at I'm going to give you the list environmental attribute certificates, carbon book and claim units, bcus, insets. They are often used interchangeably but they all have nuanced distinctions and they add to the challenge and complexity of understanding this space. So we could spend the whole hour on this topic, but let me see if we can go through some descriptions and try to connect them.
Speaker 2:I might kill them on that. So insets Insets or environmental attribute certificates, are in sector reductions. They're emissions that take place within the value chain of an industry. Insets are created when we decouple the environmental attributes from the physical product, from the physical fuel, and I think it may help to understand as you compare insets to an alternative which is offsets. People are much more familiar with offsets. Offsets are carbon credits created from outside a company's value chain and as a substitute for addressing carbon reduction within its supply chain. Think about planting trees. We've all seen the offset debacle playing out in the last year or two.
Speaker 2:But coming back to insets, that in sector actual carbon reduction, insets allow stakeholders beyond the parties burning the fuel and we're talking SAF specifically here but insets allow those parties beyond airlines who burn physical fuel to contribute to the cost of reducing emissions. So we're looking maybe, at scope three customers here. They have indirect emissions from business travel and from the movement of goods in their emissions inventory and they need to address those. So those scope three customers, if you think about who they are in the supply chain, those are global advisory firms, those are large tech companies, pharmaceutical companies, consumer goods logistics companies, and so those are the people that would typically be looking at a SAFC as a solution. And you know, I highlight again, safcs or insets are. You know, they result in actual displacement of fossil fuel. So, in my mind, insets are catalytic market makers because of their ability to open to new ecosystem participants. So, beyond an airline funding this, now we have a giant pool of scope, three customers who are able to contribute to the cost of SAF. So SAF-C.
Speaker 2:You asked about what's a SAF-C and Oscar, jump in if I'm like talking too much here. Okay, saf-c is an inset, effectively, it's a sustainable aviation fuel certificate and it's a term commonly used to represent a SAF environmental attribute, specifically, saf-c. A SAF-C inset represents the environmental benefit derived from a volumetric metric ton of physical unblended SAF or neat SAF. And so you would also ask about book and claim, and so let's jump into that.
Speaker 2:Book and claim is a chain of custody system at its very simplest, and it allows for environmental attributes that have been separated or decoupled from the physical products to be transparently tracked, transferred and retired using a consistent set of rules and best practices, and some of those just so I'll give you a little bit more information. Some of those best practices include requirements around independent certification of the sustainability elements, consistent with some of the certification schemes like ISCC or RSV. They include protection against double issuance and double counting, and it provides confidence in additionality, making sure that volumes are not also being claimed for a compliance or obligatory mandate. And finally, I think one of the greatest values is that it identifies a consistent set of data inputs and accounting methodologies. So that's the description of our definitions of many of those pieces. Now, how do they fit together? So a producer produces SAF and at the point of blending, the inset is decoupled from the physical fuel. The fuel goes into an airport fuel system as Jet.
Speaker 2:A effectively meeting all Jet A standards but no longer having any environmental attributes associated with the fuel. So at that point we can enter the inset or the environmental attribute which we've pulled from that and enter that into a book and claim registry. That inset, which at that point is called a BCU or a book and claim unit, has both scope one claimant or an airline claimant and a scope three or indirect claimant like our corporate customers. The BCU is transferred to the board by the producer to the claimant, who can retire that BCU when they're ready to claim the emissions, as long as that's within a two-year time frame. This is done really transparently and publicly to ensure that we have confidence in the book and claim system. That's a lot, isn't it?
Speaker 1:I was going to say I think my next questions need to be smaller. That was quite a big question. To say I think my next questions need to be smaller. That was quite a big question. Um, so a lot of the issues around getting saff into more people using saff is getting more first timers involved, because we've you've mentioned a few people you've been working for for a few years, like dhl, bcg, how how are first timers? Are you seeing more people getting involved for the first time? As you mentioned, establishing this taxonomy will probably help with that because, as we just found out very clearly from your excellently in-depth answer to my previous question, there's a lot of nuance and complexity around SAF certificates. Specifically, it's not as simple as getting fuel and just putting it in a plane and off you go. So are they sort of? Are first-timers receptive to this? Do they understand it? Are they sort of actively looking to work out more and get involved?
Speaker 2:out more and get involved? Interesting question. I want to first point out that first-timers almost everyone is a first-timer this is an emerging space, so almost every customer we talk to is doing this for the first time. We work with companies who are some of the most sophisticated companies in the world around sustainability and those who are just beginning the decarbonization journey and trying to figure out how insetting works, and truly each and every one of those companies is looking to be educated on SAF, on SAFC, on book and claim, on carbon accounting, and we take that very seriously. We know this is a complex area to jump into, so we spend an extraordinary amount of time working with the sustainability leaders from companies, who are typically the first person that we reach out to. But we also work with their internal stakeholders to help them understand how insets can accelerate and de-risk their solution or their objectives toward sustainability. We realize that our customers are not only those sustainability professionals within the company who typically understand this pretty quickly, but they're also the legal teams, the procurement teams and, finally, the senior leadership teams, all of whom have to be on board for, you know, signing off on what's often a very significant investment in emissions reduction. It's a lot of we take that very seriously is moving them along that learning curve.
Speaker 2:You know, certainly our company alone is not alone in helping customers enter this market and one way companies are engaging is through groups like Saba, the Sustainable Aviation Buyers Alliance.
Speaker 2:Saba is a member-supported NGO and it's working on accelerating investment in SAF and scaling SAF's production. It's the demand aggregation approach, so it has roughly 30-plus corporate members, very prominent global companies who participate in a joint RFP tender, global companies who participate in a joint RFP tender. They put out their second tender in late 2023 and awarded the volumes in that in early 2024. It included, for example, 20 of the 30 member companies and volumes of about 500,000 metric tons of carbon reduced, and World Energy got a little more than half of that volume awarded to us. But my point is that there are programs like Saba who can help de-risk that for companies. That feels better. Nobody wants to be on a branch all alone. Nobody wants to be on a branch all alone. They want to understand that they're supported by other companies that are also moving in the right direction but may not exactly know how to do it on their own.
Speaker 1:You've given me an image of sort of Saba and Saba being basically like the SAF support group, where all these companies can go and sit together and sort of share their needs for sustainability.
Speaker 2:I mean, I think that's part of it, right? Misery loves company. Success breeds success. People want to know they're not getting the worst deal out of that. They need to understand that somebody is helping them through this initial stage of this to make sure that they're looking at the right things as they talk to field producers, that they're considering the important elements of entering into what is often a long term agreement for a fairly significant price tag.
Speaker 1:So I've had a few conversations relating to sort of aspects of book and claim on the podcast and I'm curious to know from you what you think the biggest challenges are around SAF certificates and book and claim, in terms of both rollout, making sure it's available as widely as possible, but equally the sort of accuracy and transparency side of the equation what you think the biggest challenges are there, because it's something that keeps turning up, but you've got the added benefit of being both a producer and working on this side, so you're seeing sort of both sides of that equation.
Speaker 2:So, yeah, yeah, great question and and maybe a follow-on to the our last, our last question. So we've talked a bit already about the steep learning curve and the complexity, um around internal stakeholder buy-in, but customers are often unclear on how, on, on basic, on how to compare offers, Like they go out, most companies that are coming to us for this are not just reaching out to us. They're going to reach out to our competitors, and they should, but they're often unclear on how to compare offers. What should they be considering as they talk with producers, with suppliers or with airlines, all of which can offer them SAF-C? You know they need to be considering carbon intensity or carbon reduction potential, ensuring high quality or high integrity SAF. They need to understand certification, validation, transparency. They need to understand the cost and you know, understand that what's important is not necessarily price per gallon, but rather price per metric ton of carbon reduced, because that's really the metric they're going for.
Speaker 2:And you know we talked about a lack of definitive guidance on carbon accounting. This remains a challenge for many companies, a lack of definitive guidance on carbon accounting. This remains a challenge for many companies, you know. Additionally, as we talk about where we are in the development of this industry book and claim registries are just coming online. We know they're critical to the industry's success and actually to the success of most differentiated green products that will be coming online. But they are just coming online and rules vary by registry so companies want to know which one should we be used which meets our needs the best.
Speaker 2:There is some uncertainty on when science-based targets will explicitly allow the claiming of SAF certificates as a valid action. Many companies World Energy included here think this is just a matter of time. In the meantime, we support a number of different efforts to more quickly define those carbon accounting rules that would de-risk the use of SAF or insets. More generally, Things like the Advanced and Indirect Mitigation Platform, AIM, or the Center for Green Market Activation. They're working on accelerating SBTI's approval or creating alternative systems being developed in parallel by NGOs and some university research teams.
Speaker 2:So, first mover, you know there is uncertainty out there and that adds complexity and that adds risk. But even when I see that I also see really big first mover companies willing to lean forward. You know, lean in and move forward with SAFC. In the vacuum of that clear guidance, Momentum is building around it. You can't stop it. It's like how to put those guardrails and make sure that it's credible, that there's integrity to the system. That's what's important, and we do see many, not many a number of first mover companies truly willing to take that risk.
Speaker 1:Another aspect that could potentially be hindering the growth of SAFCs is that the amount of SAFC you can insets you can buy is directly proportional to the amount of SAF that's produced. So you can only sell as many SAF certificates as you've got SAF molecules, even though they're not in the right space the same space, sorry. How do sort of insets help bring more molecules to availability for airlines or these corporate customers? How does that sort of relationship work between those two?
Speaker 2:Yeah. So at its simplest, at its very simplest, insets allow a broader range of value chain or supply chain stakeholders to share the cost of SAF. Airlines purchase physical SAF. They're typically unable or unwilling to take on that full cost of what some people call a green premium, others call it a scaling premium, I just call it the cost of decarbonization. So corporations who fly their people around the world, airports whose operations impact local air quality, they don't purchase physical SAF, but they do have a need to decarbonize those activities, these activities, and SAF-C allows for that to happen. They also have balance sheets to support SAF-C purchases, unlike most airlines. So in my mind, airlines. So in my mind, long-term offtake agreements with major corporations are the gold standard for unlocking capital flows into expanded production. They send a clear, definitive signal to producers and to financiers that there's a real and durable demand for SAF. That's what's going to increase SAF production.
Speaker 1:So there's a pretty strong link between volume of SAFCs, the duration of these agreements and the amount of molecules that can be produced. But equally, how does it work? So I mean, how does it work in terms of you can buy SAF certificates, sort of five years into the future? Would that presumably only work with an existing producer? You wouldn't be able to go into one of these agreements with a non-existent producer with a project that's due to come online, because that doesn't necessarily reduce any risk, because there's nothing going on. So it's only really for existing producers. Is that right?
Speaker 2:Well, I don't think so at all actually. So SAFC allows investments from corporations that want to use their influence and their balance sheets to accelerate not only exist or to fund the purchase of that, but also to accelerate new technologies and new production pathways For world energy. That means using those SAFC contracts which actually go much longer than five years. I mean we do long-term agreements, that's typically seven to 10 years or longer. We do do some five year but we'd like a longer one. But we use those contracts to obtain financing for technology improvements or additional facilities. It's like our planned Houston SAF production facility or a really great ambitious project we have on green hydrogen on the coast of Newfoundland, canada. So that's from an existing producer, but beyond world energy emerging producers can use this model as they forward some production of their projects, and so there's an incredible interest right now in next generation fuels and you know.
Speaker 2:An example of how this can be used for these next gen fuels is a recent announcement we've seen from 12 and from International Airlines Group. It is a 14-year offtake and it is supported by Scope 3 SAFC inset purchases by Microsoft and Shopify. I mean that is a significant contract. It allows 12 to go forward in their production and the building of their facility. So it's absolutely a tool that both existing producers and emerging producers can use. You know, and as we look at that, that's really exciting.
Speaker 2:But I do want to say and this is really important SAFC is not just a driver for new technologies and facilities, but it does help existing producers scale production of existing plants and provide solutions right now. And you know, we all know, that action taken right now is exponentially more valuable than delayed carbon reduction. Action now is exponentially more valuable than delayed carbon reduction action. Safc and broadly insets in general are products that should be used right now by companies. We shouldn't be looking towards seven years down the line or 10 years down the line. It provides a solution that can be used right now.
Speaker 1:The example with 12, iag and Microsoft using SAFSI. That's almost tripartite style agreement for an offtake is not something that is overly common. Do you think there needs to be more sort of offtake agreements structured like that, with the SAFSI element included into it, because a lot of it is just sort of producer and airline directly relating to that to it, because a lot of it is just sort of producer and airline directly relating to that. Do you, could you do you see there being more scope for having these corporate customers being involved in these projects, which presumably would only be beneficial for everyone involved producer from a risk perspective and then obviously these corporate customers as well?
Speaker 2:I think that's that's absolutely correct. I think there's a complexity in tri-party agreements and those can be handled many different ways. But we know that when a deal happens like this it's their direct burn and it will likely not necessarily contractually but there is likely conversations happening with scope three customers Our airline partners typically are looking to forward sell that scope three environmental attribute to their corporate partners. They aren't entering into these agreements with no line of sight for who's going to assume the cost of the environmental attributes. They very typically have scope three customers lined up to take on that expense.
Speaker 1:So another thing you've brought up, it's been mentioned a couple of times is SAF being measured volumetrically, ie sort of per metric ton of SAF, or whether things need to be measured through emissions reductions of the SAF that is being delivered, because obviously that's a very complicated issue and we've touched on that already. So where do you see this going? Being a more volumetric based discussion or being a more carbon intensity related discussion? Because presumably having some doing it bivolumetrically, some having it done by you know, this intensity of emissions is incredibly confusing and doesn't lend itself to this simplicity, this taxonomy or any of these things we're looking for to get this clarity.
Speaker 2:Yeah, and this is something that comes up time and time and time again. The answer, the short answer, is 100 percent. It should be emissions based and we should be looking at the emissions reduction potential of SAF. So volumetric accounting does not adequately reflect climate impact. Emissions reduction is a key element of all SAF. Lower carbon intensity, which translates into a higher carbon reduction, is significantly more valuable to companies than SAF with a higher CI score.
Speaker 2:And I have an example, if you'll let me walk through. Let's say and this is a real example from a company that I spoke with about a month ago a large technology firm they wanted to buy. They came in asking for a million gallons of SAF a year, no other things. They want a million gallons of SAF. Okay, so let me tell you what that could look like.
Speaker 2:At World Energy, our carbon reduction level is about 84% carbon reduction. So a million gallons of SAF at an 84% carbon reduction level is about 84% carbon reduction. So a million gallons of SAF at an 84% carbon reduction level reduces emissions by just over 10,000 metric tons of carbon. The same volume of fuel, if you were to get it from a producer with a 50% carbon reduction level, results in 6,000 metric tons of carbon reduction. So you would need to purchase, instead of a million gallons of SAF, 1.7 million gallons of SAF in order to reach the same carbon reduction that we were talking about with a higher carbon reduction level. So if you're looking volumetrically and using price per gallon as a decision metric, you're missing a hugely important consideration, and that's the carbon impact of the fuel.
Speaker 1:So, but with that there's the additional complexity of when you've got the fuel that is presumably your 84% is. Is it when it's left the refinery or is that through the whole supply chain as well, when it's actually on an aircraft, Because that aspect of transporting it is also very important into developing Absolutely.
Speaker 2:And that 84% does include the full life cycle analysis. Well, to wake of that fuel. However, you know you asked about that it's not an 84% in the plane because we do have to blend SAF with traditional jet in order for it to meet traditional the standards required for jet fuel and to ensure safety and and the proper operating of the aircraft. But the lifecycle analysis of any carbon reduction, as you look at fuel, should be the fuel-full well-to-weight analysis.
Speaker 1:But the difficulty with that is keeping everything on. The timeline is sort of what I'm thinking about now, because when you've got someone buying a, you know a SAF certificate there and then are they buying it. You know at the time that the SAF's used. If the SAF's being used in the future, it's hard to actually work out the entirety of that emission score because you, although you've got a very clear idea of what the supply chain looks like, there are things that might not necessarily be in your control that could affect it, and if it's done in the past, you'll know. So surely? Transparency aspect is quite, quite challenging as well from a carbon intensity point of view well, I I would.
Speaker 2:I would disagree with you on that.
Speaker 2:Having looked at our traceability certificates, our, our proof of sustainability, the bill of ladings, there is a tremendous amount of information that goes into calculating the carbon intensity score and putting a book and claim unit onto a book and claim registry book and claim unit onto a book and claim registry.
Speaker 2:So all of that is included in the full life cycle analysis. So a book and claim unit or an inset is created at the point of blending and at the point that we deliver fuel to an airport fuel system. So we know what the transport has been from our facility to, for instance, lax. Los Angeles fuel system is the closest to ours and, in an effort to keep carbon emissions as low as possible, we deliver to the very most effective closest airport system we can and that is all included in the carbon intensity of that fuel At the point that it's entered onto a registry. We know all of that. There can't be a delay in understanding where the fuel has gone and that's also an assurance that the fuel has actually been burned, that it has gone into the fuel system.
Speaker 1:So earlier you mentioned your projects in Houston. You're on in Newfoundland for renewable hydrogen. How important have sort of SAF certificates been in being able to develop those projects, because obviously there's loads of other producers around doing the same thing. The scaling of production is what everyone's supremely interested in, the sort of ideally we get to a point where saf's totally replacement of jet a. So you know, in an ironically in an ideal world this soft certificate idea becomes quasi redundant because you actually got all the fuel you need in all the places. You've got it now. So how has SAF certificates helped with those projects, getting them financed and developed and constructed?
Speaker 2:They are critical in making that happen. So it's hard to get financing for a SAF producer. This is a much riskier space than traditional oil and gas development. It is hard to get financing and what allows us to get that is taking these long-term SAFC contracts and bringing them to possible financing partners as effectively collateral to secure the loans we need, and these loans are not. It is not inexpensive to stand up a production plant. It's not in the millions or even hundreds of millions. It's the billions of dollars and the financing is hard for that. So these SAFC contracts, particularly and actually exclusively long-term offtake contracts, de-risk the lending from both institutional lenders and loan guarantee programs like the Department of Energy's Loan Program Office Funding sources that we need to go to the, the small subset that are able to to lend at the extraordinary volume.
Speaker 1:You know amount of money that we need for a project I just find that amazing, seeing as you guys have already got this very well established plant that's been commercially producing for years, is world leading and is, I mean, the proof is there that the concept works at scale. But even then you still need all this evidence of demand and to jump through all these hoops that first time is having to go through. It seems like you're still having to go through those same hoops second time around in Houston. And then obviously New Fernland's a slightly separate case because that's still a newer technology project.
Speaker 2:But it's interesting to think about world energy. We are an established player in the space, absolutely, and still money is hard to get. And part of that is because, while we're an established player, we've seen many other people and companies try to stand up a project and the failure rate is high. The technology is hard, it's you know. I would love to tell you, oh my God, we know, we know it all about producing SAF by Heffa and we never have technology challenges. But that's just not true. It's an emerging space, it's a new production we're instituting, first of its kind, equipment and technology, and inherent with that are some challenges. It doesn't always go smoothly, it doesn't always go as expected, and I think that's reflected in the difficulty in securing investment and money in the space.
Speaker 1:Well, cathy, I think we've covered a lot of ground over the last 40 odd minutes, so thank you so much for your time and thanks so much for coming on.
Speaker 2:It's been my absolute pleasure, Oscar, you know I don't want to end on a difficult space though, on saying it's hard to do. It is hard to do, and everyone acknowledges that, but at the same time, I want you to know how excited I am to be in this space and to be working at a pivotal time where I see that we're kind of on the tipping point of moving over to SAF being a really, really strong solution for decarbonizing aviation. So, you know, please bear that in mind as well as we think about where we stand in this emerging and evolving industry. Thank you for having me on the podcast today.