The SAF Podcast

The SAF Podcast: Neste - The importance of being flexible and nimble

• SAF Investor • Season 3 • Episode 6

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In this episode of The SAF Podcast, Alex Kueper, VP of Renewable Aviation at Neste, the world’s leading producer of sustainable aviation fuel (SAF)joins Oscar. As the industry pushes towards net-zero emissions by 2050, Alex provides a deep dive into Neste’s expansion, the evolving market landscape, and the key challenges shaping the future of SAF. 

What began as Finland's post-WWII oil refiner evolved into a renewable energy leader that placed billion-dollar bets on sustainable fuels long before mandates or incentives existed. This wasn't profit-driven speculation – it was purposeful innovation rooted in environmental stewardship.

 The conversation explores Neste's significant production capacity expansion in Singapore and Rotterdam, and how the company quadrupled its SAF sales between 2023-2024 despite market challenges. Neste’s partnerships with major customers such as Air Canada and DHL are another key topic, showcasing the importance of long-term agreements in driving SAF adoption. 

 He also discusses the growing role of mandates and incentives, including the impact of RefuelEU Aviation, the evolving U.S. tax credit landscape, and how policy support will determine the industry’s trajectory. 

 With governments, airlines, and corporate buyers navigating shifting regulations and cost structures, this episode offers essential insights for industry professionals looking to stay ahead of the SAF transition. 

If you enjoyed this discussion, check out our previous episode with CR Sincock, Avfuel: https://www.buzzsprout.com/2202964/episodes/16057604

Oscar:

Hello and welcome to another episode of the SAF podcast. This week, I'm delighted to be joined by Alex Kuiper from Neste, the undoubted world leader in SAF production in 2025 and for the last few years. So we're delighted to have Neste on the podcast. Alex, how are you?

Alex:

Very well, thank you, delighted to be here with you and look forward to this session.

Oscar:

Excellent, so I think most people that listen to this will be familiar. So I think most people that listen to this will be familiar, at least vaguely, with Neste.

Alex:

But could you maybe introduce yourself, your background and then a very brief introduction to the very few people that don't necessarily know about Neste. Okay, yeah, pleasure, yes, yes. So I'm the VP Renewable Aviation in Neste, which basically means that I lead the aviation renewable aviation business in Neste, which is one of the things that we do in this company. So we also have renewable road transport and renewable polymers, and then aviation is one of the pillars, so to say, of what we offer.

Alex:

Maybe starting a bit with my background, so I'm a lawyer by training, but I didn't really enjoy going to court and being a lawyer, so I stopped doing that and joined Lufthansa.

Alex:

Pure coincidence, it happened to be fuel management and that's how I got into fuel and I've never left this world because it's actually quite fascinating, and also the people that have been in aviation fuel for a long time. It's a bit of a family, so we all know each other. It's a community, a good one, and that is, of course, also something which is very nice. And then I did several things in aviation fuel started with Lufthansa, worked in Shell Aviation and then was responsible for a company that does fueling service, like ground handling, and then sort of a bit of IATA advocacy for aviation industry and now I'm with Neste and been with Neste for almost exactly two years, and it's, of course, I think, a fascinating place to be because of the importance of SAF that I think we all acknowledge. But, of course, being with the market leader and having been given the opportunity to lead the aviation unit is, of course, fascinating. I'm very grateful for that.

Oscar:

So I didn't know you were a lawyer by training. That's my dark secret. So you say you've been with Neste two years. Last year was quite an interesting year for Neste when you're looking at SAF. There were a lot of things changing and shifting, moving within the business. How did you found sort of you know the last 12 months and sort of the second half of your period with Neste?

Alex:

Yeah, it's been very dynamic. A lot of things, of course, have happened. I mean, first of all, neste. Iseste is, of course, not a huge company, so I think maybe also, you know, looking a bit at what kind of company is it? I mean, I've always worked, you know, places like Lufthansa and Shell, global big companies with a hundred thousand plus employees. Neste is relatively small, which many people don't realize, but it it's just 5,000 people, so just 5,000 people.

Alex:

It used to be the Finnish refiner that used to supply the Finnish market with all products after World War II, and it then developed into developing the ability to process difficult feedstocks, eventually also non-fossil feedstocks, and that's how they came into it, non-fossil feedstuffs and then how, that's how they came into it. And and there was some very visionary and courageous people in in the 90s and the 2000s that decided, okay, we'll go full in. Um, we have to remember, you know, in the 2000s I mean, you know, there was zero demand it was really kind of a almost a visionary thing to do to like start spending billions and billions of dollars for something where there was no support, there was was no mandates, there were no incentives. It was really something that was basically driven by a strong sense of purpose to protect nature and reduce the impact of the fossil products that the industry is producing. And then they started to get into that. So when you go to Nest, there's someone that joins the company new and then you go to Espo, which is close to Helsinki, and then you go to the headquarter and there's this kind of quiet sense of purpose but also a sense of pride that we are really the market leaders. And we've done this Because some people had a lot of courage and a lot of vision and it was certainly not driven by any short-term profit thinking at all. So you see this, which also you had in Lufthansa in the 90s, that you know, there was a certain sense of pride, in a positive sense, to be working at that place and to be part of the few that have the opportunity to work in that company.

Alex:

Now, coming a bit to the last 12 months or so, if we look at 2024, it's been a very dynamic year, a lot of challenges as well, but of course the main thing is that we've ramped up the production of SAF significantly. Also the sales of SAF, the Singapore refinery, you know, is producing more and more. And I mean, if we look at maybe to set a bit of context, in the industry, like beyond Neste, in 2021, we had 80,000 tons of SAF double production give or take, but According to IATA in 2024 it's a million tons. I mean that is a massive ramp up from 80,000 to a million, but of course, it's nothing compared to what we need to reach because, according to ATAC and WAPON 2050 and the projections that say we need to replace all fossil fuels by SAF, you're somewhere above 500 million tons. So I think the daunting challenge of going from 1 million to 500 million is still amazing and people say, okay, that's 2050, I'll be retired by then and whatnot. But 25 years is not a huge time if you know that it takes years and years and years to build those refineries and to work up to the FID and the investment decisions. So it's still a massive challenge.

Alex:

But I think we can be proud of what we've achieved. We've increased our sales big time. We have fantastic opportunities, a huge deal with Air Canada, 60,000 tons. I mean, compare 60,000 tons in one single deal that we did last year to the 80,000 tons global production in 2021, which is not that long ago. So we have done a couple of really good deals. We entered Shanghai Airport in Singapore, which kind of makes sense because we have a refinery there. So there have been a lot of good things.

Alex:

But of course, at the same time, nestle has also become, of course, now a player that has some competitors, which is perfectly normal. Any other company would say, yeah, that's new. But of course, having been first movers for many years, we were of course in a position where Neste was basically the only one that had industrial scale, produced volumes in a large quantity, in a large quantity, and now we are a company that has some competitors, which is there's nothing wrong with that. That's not new. But of course, it also means that there is some adjustment going on, and that's why we had and that was also communicated in the press, of course a reorganization and some changes in the company, and now we have another round.

Oscar:

That's basically where we adjust a bit the company to go into that normal world, which is that we need, of course, to be more efficient and have a stringent cost management, just as any other company would always do. Just as any other company would always do. You mentioned the huge ramp up in SAF production and the increase in sales and production you guys had in 2024. What do you put that down to? Do you put that down to more voluntary market and there being sort of a stronger demand side on the voluntary side, or is it a reaction to mandates coming in place in places like the UK and Europe? Or is it a balance of the two?

Alex:

Yeah, I think that in 2024, mandates have not been a big driver for the demand Because obviously, as we all know, refueling just came into force in 2025. And people will usually not buy. You know, because a lot was still unclear last year about how refueling will exactly work and even to this day we now have February there are some things that are still unclear, so people have not really bought large quantities to fulfill their mandate needs. I think one big driver is, of course, the incentives you have in the US. They work very well. I think the US is, for good reason, a leader in this field because they have very they have central schemes that work very well and just cause a mix of different things under the IRA. And then you have you have a quarter of state level. You have a lot of incentive schemes that help a lot. And then, of course, you have the you know the ramp challenge and I mean there is really a lot of momentum going on and a lot of support and that has enabled a lot of sales also on that part of the of the Atlantic.

Alex:

Then, of course, what you also have. You have quite a few corporate companies that are buying CO2 reduction certificates and they want to offset and I know offset is kind of a difficult word, but in that sense it makes total sense. They want to offset the impact of their business travel with an in-sector solution. So basically, they pay SAF to the airline, the airline flies on the SAF and the emission reduction certificate goes to the company that does the business travel and then, therefore, they can basically reduce or offset the impact of the business travel that they do. And you would think this is really small, but it's actually not. It's quite significant, and there are a lot of companies out there that have very stringent ERP reporting goals. They also have very ambitious targets to reduce their CO2 footprint. Our big, big customer, dhl, is one of those. They have very, very ambitious targets and in that sense, you know, you have quite a few people paying airlines to basically buy SAF, which the airline themselves don't have to pay, and therefore that generates quite a bit, especially in 2014,. It did generate quite a bit of demand there and that's, of course, good and it should continue. And I think we will see more of that, as companies now have more stringent and more demanding goals when it comes to their own emissions and ESG reporting. So that that's a good one.

Alex:

And then of course you have the purely voluntary demand where either companies, passengers or even airlines just buy soft, just basically to contribute to, to to the impact that they have, but also because they want to try it and they want to sort of, you know, be ready for them, refuel you. So how do you take a batch of SAF down a pipeline to the main hub, for example, and all of that? Some of them didn't want to wait until you know it's 2025. And then suddenly you find out you know there's a challenge, it doesn't work or whatever. So those were drivers in 2024. But of course now we have quadrupled the volumes from 23 to 24. And of course this year we are also planning to sell a lot more than we did in 24, which of course is in a way driven by the mandates. I mean, the mandates is about a million tons as a refueling Plus. You have the mandate in the UK. You will start to have a mandate in 26 in Singapore. So it's kind of popping up quite a few places then in 26 and 27.

Alex:

But for this year, for 2025, of course REFU to you provides a pretty big demand driver and that is good because it helps really the investors to see, yeah, there's a case behind it, there's a demand behind it, um and uh. That is important. I mean, we've, of course, now made our investments very early on without, with very little kind of assurance. You know, back in the, let's say, 2000, 2010, there was very little kind of assurance and it was more kind of a, as I say, purpose and vision driven thing. But if you think that if we want to go to those 500 million, a lot of investment will need to happen and if we don't have the certainty for the demand, that's simply not going to happen, I think we are already now kind of seeing it's a bit slow. Already now kind of seeing it's a bit slow.

Alex:

I know that every politician I see, from Europe to maybe an African country, everybody goes, oh, can this, please come and build a new refinery here, and I say, look, we're a company of 5,000 people.

Alex:

We put $10 billion already in the ground building renewable refineries, which is amazing, and you can't compare it to the big five oil companies that have very deep pockets, of course, and other resources that they're responsible. So we can't, unfortunately, go into every country and every region and start building new refineries, because the amount of resources that we have is, of course, limited, but I think what we've done to say we have a very big funder in Singapore with a million tons production capacity, and now, of course, we have Rotterdam that is expanding and will come online with another very significant part. It's a good geographical split. Then, of course, for renewable diesel, we also have a joint venture in the United States. So it's kind of, you know, I mean, our coverage is actually pretty good and pretty global. Diesel we also have a joint venture in the United States. Our coverage is actually pretty good and pretty global.

Oscar:

How is the capacity expansion going in Rotterdam? Is it all on schedule?

Alex:

There's two things in Rotterdam. In Rotterdam, we have an existing facility which is producing sub as we speak. I've just been there last week, not this week, actually this week and then, and you know, we have stuff coming out. We have a fantastic, you know big two, actually two big tanks for the south, which is kind of the holy grail of of, of, of nesta or for a best aviation at least, and and this tank is now filling, it's now the surface is, is now flowing, so to say, which is fantastic. So we have that.

Alex:

And then we have an expansion project in in rotterdam, which is about two kilometers from the original site and it's connected by pipelines. It will be basically um run by one steering kind of, you know, a headquarter from one side, so it's basically two kilometers apart, but it's just you can look at it as one big factory and that will um increase our production capacity further, you know, beyond the 2 million tons a year. And that is a bit delayed Um. That will be now sort of uh not come online this year, uh, and and and then we need to see how that goes, but it's, it's a little delayed um, which is also something that we communicated about in our earnings call last week.

Oscar:

You mentioned something before about exporting to the US and the tax credits that are favorable over there and, obviously, 2024, they were very helpful in being a driver for you guys. Um, there's a bit more uncertainty coming into 2025 with what shape they're going to look like. Are they going to endure the longevity? Um? So, with all that uncertainty around the US and the tax credits, are you taking your approach to where your export locations and your production capacities, are you sort of reviewing those or are you sort of going full steam ahead with what you had planned for 2025?

Alex:

Well, I think, first of all, I mean you know we need to be agile. We always have been. I mean, you know we take our product where the demand is and you know even before if there's a lot of demand, if we can, you know, do deals with local customers in any region, really we'll take the stock there, which is what we do now. So I think we need to see it's true that at the moment there's a lot of confusion and a lot of uncertainty, which is not helpful, but at the same time we have a very solid demand. Our customers in the US and it could be the big gallons in the US, but also at Canada they are very advanced in their self-attentiveness, they have a lot of corporate customers. They, you know, they're sort of probably, you know, the most advanced players in the market and you know that uncertainty is problematic because it's not like they can just drop it because they're so far ahead that it's just ongoing and know it's already something that is so established. So it's it's it's not helpful and we all need to deal with that uncertainty. But, of course, in in terms of if demand goes slightly down or up, and it, yes, it will depend, but depend of course, on on on the incentives and how they develop, but at the same time, we can adapt to that. I mean, whether we have, uh, you know, a ship sailing from singapore or rotterdam or polvo or whatever, um, we, we can basically take it anywhere. It's a global business. And uh also, I mean you know the the co2 impact of taking large, large amounts of stuff um on a large vessel from one region to another is very, very low. Indeed, we made the analysis and it's not like it has a major impact. So basically, we can take it around and we can adapt accordingly.

Alex:

Now I'm hoping that, of course, in the US it will continue. Certainly, I had the pleasure this week to speaking with the governor of Minnesota, tim Walz, in our family in Rotterdam actually, and I mean there are a lot of state on a state level in the US. There are a lot of players that are very determined to further this agenda and to give the right incentives and to really ramp up sustainable aviation big time. And of course, you know that's part of the political system in the US. There's a lot of power and a lot of decisions that can be made at state level, not just at federal level, which will also have an influence desire to protect the environment, which is also the case, but of course, there's also an agenda to support the local agricultural infrastructure.

Oscar:

So you would always you know that's also an angle that you know no matter which side you stand on the political spectrum, you would always have an agenda to, of course, you know, not take away the support from the farmers, for example. So that's, of course, also an aspect that it's not totally yes or no one and zero binary. It's more kind of. You know, there's different aspects. It's quite complex, but we do hope that it will ramp up and it will stay stable because it is a very, very important market for us.

Oscar:

The other just before all the tax credits were paused by the new administration, there was a. The credit was due to change from the Blenders tax credit to the Producers credit in 2025. What is the difference? What's your position on that changing? Because I know some people are a lot more against it than others and quite like the benefits and structure of the Blenders tax credit. Would you like to see potentially a return to sort of that model if there were to be tax credits coming back into play from the new administration? Yes, I mean, I think, you know, think BTC offered a more broad support across the industry than CFPC and we believe that is more beneficial for ramping up staff for supporting the industry. But of course there's a lot of policies again also on a state level.

Alex:

What is important is that these policies are there, whether it's mandates, incentives or incentivizing more local production a lot. But what matters is that really the support is there to ramp it up. If that went away and you don't have a mandate or an incentive which I don't believe will be the case, you know then it will be very difficult to sort of continue with the ramp up, especially because I think of course Hefa provides a pretty efficient solution because it's relatively scaled up. Therefore it's relatively efficient to produce Any other technology you will put on top and we will need those, by the way, both Nest and the whole industry if we want to go to 500 million, we won't be able to do it with HEFAR, just with used cooking oil and animal fat.

Alex:

There is a way to go with HEFAR, but it's a relatively cheap solution if you compare it to other technologies like e-fuels, alcohol to jet. And of course, we believe that regulation should be technology agnostic, in a sense that it shouldn't matter A which pathway is it, but also where is it being produced. Just as jet fuel, it is in a way, a global commodity, and imagine that jet fuel was basically segregated for domestic production, for example, which you do have in some countries. It just leads to super high prices. So in a way, you know, I think the setup of BTC was something that the broadness of it was very useful for the ramp-up.

Oscar:

So we've mentioned that you've got your Rotterdam facility, your Singapore facility and that you know, in the grand scheme of things, you guys aren't necessarily not a huge company. How do you sort of look at? There's a lot of discussion around, you know the transparency around feedstocks and where people are getting feedstocks from. How are you sort of managing that with multiple facilities across the globe? You don't have a huge team. It's and it's, you know, a really important aspect from us. You know, just a price point of view, the price you can get for a clean sap. A cleaner sap is much more beneficial than a lower carbon intensity one. And also just from a pr point of view, you've seen a lot of issues around around this globally. So how are you managing that?

Alex:

Yes. So first of all, I mean it's a very good question because the supply chain of feedstocks, which you know coming to the market very early, thanks to those great guys that I don't know, but they have been there, you know, around the turn of the century. You know we came to the market early, but they have been there around the turn of the century. We came to the market early, which also means we have a pretty well-established supply chain for the feedstocks which is global. It's very diversified, so it's not like we take a huge amount from any particular country. It comes from everywhere. You would have subsidiaries of Neste driving around cities in the US connecting US coconut from restaurants. You would have trucks connecting US coconut from the McDonald's price and the Netherlands and from all over the place really, and that, of course, means you need a very robust chain of custody.

Alex:

This is something which I believe really sets Neste apart from others is that we have an extremely robust chain of custody.

Alex:

In every country where we source the feedstocks and where we have activities connected to the feedstock, we have people on the ground that actually go there and look at it and check it it and it's not just the.

Alex:

You know the provenience and the quality of the pizza, also other things like social and other standards that they need to adhere to our suppliers, but really having those people. They are not just saying you know, we'll have some fishy certificate from somewhere, and then you know we're just important and we really don't care whether it's true or not. That is very different again, because this is not just about making money. This is very strongly purpose-driven and part of this purpose is that you know if we don't make sure it's really sustainable, then you know the whole kind of purpose and the whole idea of Meste is then, of course, in question. So we take a lot of care in this, we spend actually quite a bit of money on this, but of course I think we can really say that our chain of custody and it's a bit like safety mindset, right. So the culture is things we just don't do. It's just, even if nobody was looking, the culture is kind of certain things you don't do. You don't cut corners in that place.

Oscar:

And really this is why some of the corporate customers that I mentioned really prefer to buy stuff from Nestle, because there is a trust and the knowledge that there is a thorough kind of you know organization behind it. And you mentioned that you've got sort of your a global supply chain. I love the idea of people you know going in and looking at this, this feedstock, and maybe getting a burger whilst they're there at the same time. Um, that doesn't. That seems like quite a good job to me. Um, and then you've got, and then you've got. How does this sort of your global production capacity and your global feedstock supply network help you sort of shield you from fluctuations in feedstock prices, because presumably those many tentacles that go out are vital in order for you to be able to make sure you can make the most competitively priced staff you can.

Alex:

Yes, so I think being a global player there and having production capacity and also a network for feedstocks which is very global Europe, asia, us, whatever that of course gives you some degree of protection.

Alex:

If there is a change in tax regulations in one country, for feedstock exports, for example, or anything, then of course it's good to have a very diversified feedstock supply chain.

Alex:

But of course, in a way again also, feedstock is a commodity in a way is you know the commodity?

Alex:

In a way and sort of, if there's a more demand and less supply, despite being active in 60 countries, it will still kind of impact maybe the global price levels. And you know, yes, I mean there are some, you know measures you can take, you know some things you can hedge, some things you cannot. But of course then also the price of of staff is not cast in stone, right, I mean you, there is, as the reporting agencies, your report, there's a lot of fluctuation and and double of course also be be a factor that, just like crude oil, right, if OPEC cuts the production and there's, there's less supply and more demand, price goes up and then it would just be passed on to the end customers on the jet fuel side, on the fossil fuel side, and I think of course you know that, you know the way we play in the market. Of course it needs also to be reflected that this is you know subject to a certain degree of change.

Oscar:

subject to a certain degree of change. I'm going to go back to your 2024 SAF sales. It was mentioned in your quarterly reports recently that sales for 2024 weren't necessarily where they thought they were going to be. I mean, production levels were up, which is fantastic and what is needed, but sales weren't quite where they were expected. But there was a really good rally in the fourth quarter. There was a lot of sales going on in Q4. What caused that? What do you think caused that sort of increase in the last quarter?

Alex:

I think of course, we played a certain role there. I think people were, of course, waiting a bit to see how the things will pan out and what the regulations would exactly be. I mean, there's still a certain degree of clarity around who the mandated party is. Now we know it's going to be the suppliers, but there's a lot of details that are missing. But in 24, people didn't know anything at all. So, of course, before you start buying and thinking, okay, let's just wait for this. Of course, then I think also the fact that the end customers, in a sense airlines, were anticipating that they would of course have to spend some money on the fulfillment of the mandates ultimately also led to a certain conservative approach when it came to do that. And then, of course also our production capacity ramped up throughout the year and of course that kind of explains why, towards the end, we had a very strong fourth quarter in 2024.

Alex:

But, yeah, it has been a bit slower than anticipated, even though I have to say I'm not unhappy with the result. It's very much. You know, we've grown quite a bit and I think the demand outlook is also very robust. I mean, yes, you have the million tons, but then you have all the voluntary and on top of that you have the UK. You have quite a few mandates popping up, not in 25, but then in 26 and 27. You know, I just went to India last week when you know they want to introduce a mandate in 27. It's a huge market, you know. Then you have other countries in Asia Pacific that also have very ambitious plans to ramp up. So I think there's still this outlook. But in many ways 24 was a bit of a wait and see for many players on the market, I think, and I would have wished that we would have clarity sooner. Even now, sort of this question marks them. But yeah, I think now this is beginning to kick in and we're ramping up and this has really helped on the Mondays.

Oscar:

Is that sort of what's needed, sort of to turn SAP around, because, although you know production was up, there were reports that it was under what IATA expected it to be, or anticipating. Is this, you know, more global mandates, more policy structures being sort of suggested put in place, sort of the thing that's going to turn the market, not really lead to a faster expansion in the global staff market, not really lead to a faster expansion in the global south market.

Alex:

Yes, I, I think that, uh, I know. Um, of course, the airlines represented by iata have a position which I can, which I obviously understand. And the truth is, if you want to decarbonize aviation by 2050 and and get to 500 million tons, which iata willh and everybody says, you know, this is what we want to do, this is what we need to do to retain our nicest operate. This is not going to work without regulation. If you just wait and I think we've left this kind of we will buy every drop. There is kind of thing behind quite a while ago. There is ample supply. Neste alone could deliver the entire refueling volume, the million tons. We could do it on the run. Of course there's others out there, but there's sufficient supply for all the demand that there's going to be at least until 2030, not longer. That's not a problem at all. So really there is enough SAF available. But of course I also. So really there is enough SAF available. But of course I also understand if the cost of SAF is two to three times and then if you talk about e-fuels or whatever, it's much, much higher. Even that an airline that has very thin operating margins that makes eight dollars for every ticket on average that they sell. I of course understand that this is challenging. You can't just say, oh, that's great, let's do 30% of our complete requirements as an airline. That would be great, but of course that will come with a significant impact on your cost structure. So I get it. However, if we don't get the regulation, this is not going to kick off, and the aviation industry needs that. So in a way, I think we shouldn't be fighting regulation Now.

Alex:

You can, of course, debate whether mandates or incentives are better. I think there's a bit of a black-and-white discussion around sticks and carrots, and it's a bit more complex than that. Actually, I believe that the combination of both is actually ideal. A mandate provides a long-term security for an investment. Without mandates, you will probably not get those big investments going, because the business case is simply not going to work. If you have a mandate, you can't just abolish it tomorrow.

Alex:

Let's assume for a moment that next year, for whatever reason, we have a different EU commission. There's a shift and for some reason I know, the Commission has elected for a while to go. But if that were the case, even then you couldn't just take away the money. This is basically now a legal regulation that is in place which is not that easy to repel, whereas an incentive is pretty easy to change. And look at the US right. So you have a different administration and suddenly it's like, okay, we'll just cut this whole IRA stuff and certain incentives, and that, of course, is not helpful. If you want to generate investments, which we all agree, we need to do so.

Alex:

In a way, the combination of both is great. In Europe, we do have both carrots and sticks. We have the mandate, but of course, then we have a lot of free EU ETS allowances. We have a lot of mechanisms also that will support the alliance in uptaking this and the more we can have all those regulations. And, of course, also globally.

Alex:

The ideal thing would be if there could be a global SAF levy, so to say, to then sort of have a level playing field. Now, that is unlikely to happen. There's too many different players on the table. But I think, of course, the competitive distortion needs to be addressed. I think the answer to say you know we have a problem with that because we need to address this, you know that really needs to be answered by also everybody coming on board and realizing this.

Alex:

You know that really needs to be answered by also everybody coming on board and realizing that you know, if you want to stay on site, okay, that might give you a competitive advantage today, but then I think in the mid and long term this probably comes back to haunt you. So I think the regulation is absolutely crucial. Without it it's not going to work. And then we repeat that there is enough SAF crucial. Without it, it's not going to work. And then we repeat that there is enough SAF. So you know, just nobody will get away with saying you know, we would buy a lot of SAF but it's not there. That's something we probably could have said five years ago or three years ago maybe they're still trying.

Oscar:

I think people are still trying that story. You hear it here and there. Yes, and of course, another thing with the um, the incentive model for policy is that it's not as the longevity is the issue. The mandate goes through to 2050. You've got that 25 year stability from from that side, but any american incentive only went up to 2027 anyway, and then it was going to have to be totally fixed as well, and now you've got none of it. So it never had the longevity that a mandate in the UK had as well, which is another thing that potentially wasn't as enticing as comparatively.

Alex:

Yes, and if I may kind of jump in there with a review of the EU mandates, I think the fact that it is flat for five years and then goes up in very steep steps is not particularly helpful if you look at the producer side. So basically, having a huge ramp up from one day to another is complicated. It might still somehow work for the 2030 jump from 2 to 6 percent. So if 2% is 1 million, all things equal. I mean there's going to be growth and stuff, but let's just assume all things equal. Then 6% is going to be 3 million tons, which, yeah, okay, you can. Maybe with all the ramp-up that we have, you might be able to do that. But then think about 2034 to 2035. You go from 3 million tons to 10 million tons and suddenly, from one day to another, you just need to have this massive production which you would struggle to sell before that, but of course you don't construct a refinery to be ready on day X. I mean this is like a very long-term process.

Oscar:

I think a more linear ramp-up would probably help the industry to justify more investments to ramp up and over a more linear way, and I think this is something that definitely should be addressed in in the review I suppose, if I'm playing devil's advocate and I'm a bit put in the sort of eu shoes, the they would say, presumably, that if there's a jump from x to in 2025 to y in 2030, you've got five years to gradually build up to that, to that point of view. Is that that's, I'm guessing, not how it works in the reality? As a refiner, you you can't anticipate that that curve. No, um, I I think of course it's very. I mean, as we see, and we have made our experiences with that in Neste.

Alex:

You know we just mentioned Rotterdam, right it's. You know there is material scarcity, there is some engineering capacity that you need to add or some challenges that you find it's quite normal. So you can't just say, well, have it ready on day X and we'll start producing and selling. Ideally, if you play it right, you would have it ready a bit earlier, but then you might sit on a lot of capacity that you can't sell, which that business case is not going to go through.

Oscar:

Or you're going to be delayed, which is also happening sometimes, and also, if you look at our competitors, enough examples for that. So, in a way, getting something a refinery ready for a certain start date is extremely challenging. That's not how reality works, so you're absolutely right there. One thing that I know you're quite sort of passionate about is that SAF should be included in any sort of EU anti-dumping measures, like they've got for renewable diesel. You think that it needs to be included to encourage European-level production rather than just relying on excessive imports from China or elsewhere around the world.

Alex:

Yes, that's correct. Yes, so I mean, the European biofuels industry really has enabled the EU to be a leader and play a pioneering role in mitigating climate change, contributing to decarbonization, and the viability of these European producers really is threatened by the increasing volumes of imported biofuels, is threatened by the increasing volumes of imported biofuels which are basically flooding the market at unfairly low prices and that, of course, will destroy the business case that you might have for further growth. It's really a threat and these growing volumes of unfairly low-priced biodiesel and SAF, it affects our competitiveness of the European biofuel industry and, of course, it jeopardizes further investment. So I think the European Union is always, every time I talk to the European Commission, they're very keen to have a strong local European production Rightly so.

Alex:

And of course, it's nice to be in a European company I mean we kind of play in that but despite being a global company. So I think it's just going to slow down the green transition. And again, just to be very clear, I'm not saying there shouldn't be a global trade. I mean it's a global commodity. It should be traded globally, absolutely. But of course, the question is is there unfair competition? We believe that the EU should introduce effective measures not just for ground transport but also for SAF, and protect the European industry from unfair competition and really safeguard the competitiveness of the European industry.

Oscar:

So, moving from the policy discussions to looking at sort of your sort of partnerships and I know at the end of last year you mentioned your very large-scale deal with Air Canada. You did one with Air New Zealand. You've got a very sort of long-term ongoing relationship with DHL. You've got a very sort of long-term ongoing relationship with DHL. Those sort of continually developing relationships are really important to both Neste and you know industry because they're sort of their long-term large-scale offtakes.

Alex:

And these are the sorts of things that industry wants and needs to see and potentially doesn't see enough of. Yes, I mean, you know those relationships which, by the way, I'm extremely of course I'm also an aviation guy, but you know, I'm extremely proud of those relationships that we have with airlines like Air New Zealand, air Canada, air France, klm, lufthansa, united, delta and so on. These are really long-term relationships. I think it's extremely important to have those. And, of course, why do these airlines also like to work with Neste? I think the answer is we're in for the long term here and also Neste is not just a producer that happens to produce something that is just at the moment there's a demand. It's kind of a fashionable product or you know there's demand for it. But of course, we're in there for the long term. We have this very, very deeply rooted kind of purpose and thing that we want to do, which is we want to decarbonize this industry. We are a very engineering driven company. 25% of the 5000 people or so that work in Neste are working in R&D engineering. It's kind of a very engineering R&D-driven company and we have groups of people that I talk to a lot working in also new technologies, and it starts with Lignocerolosix, which is a very fancy name for forestry waste that you can use as a feedstock, and you would be surprised how much software you will eventually be able to produce with these. You know, renewable source basically all the leaves and the trees and the branches and whatever that falls down, but you don't actually cut the trees. So the forest is actually the source that provides these things on a sustainable basis, but you don't touch the substance of it, of course, otherwise it wouldn't be sustainable, and so you have that. And of course, we have people looking into alcohol to jet into e-fuels and sort of. And of course, these partners know that Neste is a partner for long-term kind of growth and we want to be with them all the way through 2050, when, sort of you know, we want to have reached our goal.

Alex:

Now many islands, of course, beyond the regulatory demand, also have sustainability targets. There's a lot of pressure, of course, also from the public to sort of see what are these guys doing? You know, are they looking at it? And of course it's not just SAF. They also buy, you know, much more efficient aircraft and there's a lot of other measures that they do. But I think, I think these global capabilities that we have so that you can fuel Nestex off in an interplanetary contract in Amsterdam, in Singapore, in Los Angeles, is of course for a global airline like you would have Lufthansa, klm. It's fantastic to just have a one-stop shopping. You just go there and say, oh you know what about Singapore? Or can we do Los Angeles, whatever?

Oscar:

that's, of course, also something that that is really good that we have this. You know, pretty deep penetration to the supply chain, all the way to the to the wing tip of the plane. Really, it's the. The global nature of your airline partners that you've all read out is the one that sort of that stands out, and obviously Nesta's ability to service them all across the globe is something that's really a differentiating factor, because you know New Zealand, canada, europe, america, all across the globe and and only will ever grow. You're covering the full 360 degrees indeed, that that's one factor.

Alex:

the other factor is that and and I know when we set up the organization last year for you know what aviation should look like I was very, very adamant about I need a strong technical field team.

Alex:

So we have. I have a team of people, fantastic people that usually don't get a lot of recognition because, if nothing goes wrong, nobody ever realizes, realizes they do a good job, but they're actually instrumental for what we do, because this is not just you know, basically technical people on a refinery level. This is dedicated aviation fuel technical people. As you know, you have Energy Institute, you have JIC, you have ASTM, you have, you know, a lot of regulations also that will tell you how you need to blend fuel, what kind of specification it needs to have, how you need to handle it, and having an expertise there is, of course, also important for our customers, because you know they have people that have been doing technical fuel for decades, literally, and so if there's a question, we have an issue of sort of you know how do you blend it, you know and what about the density, what about the? You know the blending ratio and stuff. So we have people that are really probably world-class experts and can help the customers, which is also important Again.

Oscar:

Also, if you I mean, you can buy soft bulk from someone and you pick it up at the refinery gate, so to say, and of course that's perfectly valid for the mandates you know that's also going to happen. But then, of course, if you, if you really want a partner that helps you ramping this up, then it becomes a very different story where you need much more. Same goes for sustainability. We have world-class experts in sustainability. What kind of certification you need to have? How you know what about your, your, your POS, your proof of sustainability. What does you need to have? How you know what about your POS, your proof of sustainability. What does it need to look like? Where can I use it and what can I use it for?

Oscar:

This kind of know-how that we have is quite unique and it's you know again, it's very, very good people. They're very hard to get, by the way. I mean, there's not a lot of people out there that have this kind of knowledge about sustainability. Final question Looking through 2025, what's your anticipation in terms of demand and then in terms of your supply and production for SAF in 2025 across, you know, rotterdam and Singapore?

Alex:

Yes, I mean, our production capacity now is, you know, above 1 million, 1.5 million, so we have a pretty massive production capacity. Also, you know, as I said, there's other players now in the market. So, despite the fact that we could supply the entire Reefy to you mandate, also, you know, as I said, there's other players now in the market. So, despite the fact that we could supply the entire refeed eu mandate which I don't think we would want to, we even if, if that was an option, because there's a lot of demand in the us, of course, I, I think also serving that voluntary demand, those corporate customers, is extremely important. Um, so I I think, as any good company, you would look for a mix and a certain diversification of your customer base. I think it's important from the bulk the wholesale customer basically, that needs to fulfill its mandates and they buy it at the refinery gates as a neat unblended staff to the delivery at the airport of a blended SAF and you just basically have it delivered into wing. And then to the corporate customers that basically buy the SAF and then an airline flies, you know, basically burns it, so to say, and they get the SCOPE 3 certificate. All of these segments are hugely important. All of those will grow. Of course, the biggest growth will be generated by a review to you, and then we of course need to see what's happening in the US. But I think what I'm seeing now is that, again, it's very much and maybe what you are is not the right word, but it's, it's an established market. It's way too advanced to just scale it down now to zero and say, oh yeah, okay, we'll try something else. This is already kind of, you know, a stable, you know sizable part of the business, in a way of doing business. So we will have that in the US, we will have the upcoming Monday 7 26 in Singapore and some ramp up there.

Alex:

So I think that there's going to be quite a significant growth and I think, if I look all the way up to 2030, I think you know you will see a demand between 7 and 10 million tons somewhere in that range, which you know 2024, according to IATA was a million tons. You know it's a tenfold could be produces a million tons of can produce a million tons of stuff. That double set you back about two billion dollars. It's, it's huge and that's just a million tons production capacity just, in a sense, right. So if you want to do ten, I mean, imagine what kind of investments you need to happen. And so I think, in a way, what I think we could do more and we should do more as an industry to wrap it up, and we need more policy support. I do think that the ramp up that we're seeing from 80,000 to 1 million and 10 million, and eventually it's going to be 500 million, is actually taking place. If we get the right support from every player, industry and the regulator, we will be successful in doing that.

Oscar:

Excellent, alex, that has absolutely flown by. Thanks so much for your time and your insight.

Alex:

Thank you. It was a pleasure to talk to you. Thank you for your really good questions and I hope that the listeners enjoy the podcast.