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: ASAFA - Developing Asia's SAF road
This week on The SAF Podcast we turn both eyes and ears to Asia with the three founders of the Asian SAF Association, Fabrice Espinosa, Gabriel Ho and Dietmar Posselt. Covering 48 vastly differing countries from the Middle East across to APAC, ASAFA aim is to promote production levels to decarbonise the regions growing aviation footprint.
Rather than waiting for perfect policy frameworks, Asian countries are taking practical steps forward, setting achievable targets that create immediate momentum. This cultural pragmatism, coupled with abundant feedstock resources and growing refining capacity, positions Asia to potentially leapfrog other regions in sustainable aviation development.
The conversation explores the unique challenges of Asia's diverse landscape - from feedstock traceability issues to financing innovative technologies. While mature HEFA processes using waste oils are gaining substantial investment, newer pathways utilizing regional resources like cassava-based ethanol and agricultural waste require additional support. The founders detail how they're working to mobilize capital through partnerships with development banks and create harmonized standards that could eventually unify the region's approach.
Southeast Asia emerges as a particular hotspot, with Malaysia, Indonesia, Thailand, and Vietnam all developing significant production capacity that could contribute over 2 million tons of SAF within 5-8 years. Meanwhile, India's renewed focus on biofuels and ethanol production signals another major growth area. These developments are supported by a wave of national policies, with Singapore, Japan, Vietnam, Malaysia, Indonesia, and Korea all set to announce SAF targets or mandates.
Anyone involved in SAF globally has one eye on Asia, so check out the full discussion to find out in detail the updates and trends across the region.
SAF Investor New York is in two weeks on the 23rd September, it is still not too late to join us, so don't miss out and book your place here: https://eu1.hubs.ly/H0mv63z0
Hello and welcome to another episode of the SAF podcast. This week I'm delighted to be joined by all three founders of the Asia SAF Association. We have got Fabrice Espinosa, we've got Gabriel Ho and we've got Dietmar Posselt all joining me in the recording today and we are going to be looking at all things Asian SAF and how the SAF market in Asia is developing, where the challenges are and what impacts Asia could have on global SAF production and demand outlets going forward as the industry scales. But before we get into all that, thank you all so much for joining me. Fabrice, dietmar and Gabriel, it's great to have you all.
Speaker 2:Thank you, Oscar. Hello everybody, Pleasure to be here as well. From Fabrice.
Speaker 1:Perfect. So I might start with each of you going into your backgrounds and how you ended up in the current position that you're in, and then, once we've done that, we'll go into how the Asia Staff Association started and what its major focus and goals are. So, fabrice, should we start with you. What's your background and how have you ended up where you are today? Briefly.
Speaker 2:Thank you, oscar. I'm probably the newest kid on the block in terms of staff compared to my two colleagues, gabriel and Dietmar, but at the same time, I'm the longest one in aviation, so I have over two decades of aviation leadership, having worked mainly with Asia, half of it being based in Europe, and I've been based in Asia now for 12 years Hong Kong, korea, korea and now Singapore and I worked in both strategic, business development, sales and operational roles. So and I discovered somehow we say the sustainability in aviation and sustainable aviation in 2020. And since then, this is a passion for me and I believe there is no aviation going forward without sustainable aviation.
Speaker 1:Perfect. Thanks, fabrice and Gabriel. Let's come to you. How have you ended up in your current role and what you're doing now?
Speaker 3:I'm really excited to be here and likewise I'm really passionate about FUSE. In my whole career of, let's say, 20 over years working for MNCs, really chemical engineering by training, and really had the fortunate insight to understand at a molecular level how F fuels are working in land transport, air and marine. That's something that I bring to the team and, like Fabrice, I have quite a bit of sales and marketing experience covering Asia Pacific also with global marketing roles in various organizations. This typically in fact, the approach that we really treat SFR as it's, let's say, startup mode really for us here.
Speaker 1:Moving on, and finally, last but absolutely no means, lee Stietmar, what's your background?
Speaker 4:first of all, thank you for the invitation and it's a pleasure to be here with all of you. And yeah, my background I'm a chemist by profession and I'm working in the industry since 35 years now and I think my whole career has to do with fuels. I started in a big European chemical company and I started the development of refinery catalysts. Then I worked for many years for fuel additives and this was also the start, 21 years ago, when I discovered aviation. It's a very interesting topic and since then, since 2004, I'm working for aviation fuels Fuels First for additive.
Speaker 4:This was also the time when I learned how to approve something and the collaboration with all the OEMs and the aviation community. Nevertheless, since nine years, I decided to be my own boss and I started my own consultancy company, aviation Projects Consulting, and so SAP is the main topic and I'm very much dedicated to all technical development. I'm supporting people and companies with technical support and with Google-related support, and I think during our our conversation, we come to this again when we talk about new developments. And for the aviation, yeah, and last year I was asked what I think about the idea of joining Asafa as a founding member. And back from the beginning, from the first minute, I was enthusiastic about this wonderful idea, and that's why all three are here.
Speaker 1:Perfect. Well, it's great to have all three of you here at the same time, considering we are battling time zones. I know two of you are currently in Singapore and Dietmar you're in Germany, so you are spread all over the place. But for those people that don't necessarily have such a good understanding, do you want to explain what Asafa is, what its purpose is and how it works for the listeners?
Speaker 2:Sure, thanks, joska. I think that's a good way to start our podcast today. So SAFA, it's Asia SAF Association, fair enough, but it's the first and only independent, neutral, non-profit industry association fully dedicated to the aviation decarbonization. And I think all of those words are very important to us and very important to our members and partners. Independent because we are promoting asia as a whole. We're not like supporting one single country or link to any one single country in the region or beyond. We are non-profit uh, independent as well because we are industry agnostic, we are representing the whole ecosystem and I think same same. It's very important to us. Last but not least, deepmar mentioned it a bit but we all run our own companies, so we don't have any hidden agenda because we're working for one being MNC which is trying to promote its own interest behind that. So I think that's very important to us. That's key, that's a very strong message in terms of credibility towards members from all around the world that have been joining us, and this is why, also, we get more and more traction from around the world.
Speaker 2:We have defined our missions very clearly. I think that for us, we had that in mind since the very early stages. So the first mission is to accelerate self-adoption in Asia, and when I say Asia, I forgot to mention the Asia for us is a whole Asia as per the United Nations definition, so it's 48 countries plus so it's Asia, pacific and the Middle East, and in fact we will maybe come back to that. But I think, why is that such a widespread region? Because all those countries are very fragmented. They are all different. They all have different objectives, different policies, different certification, different everything, and so the idea of the association is to gather and to unify all this region and all the stakeholders in order to promote SAF.
Speaker 1:It just sounds like you did that just to make your life harder.
Speaker 2:Yeah, indeed, but if you were easy, oscar, then you wouldn't need an initiative like SAF, right? That's the beauty of it. That's the beauty of it. That's the beauty of it. It's not easy. It's not an easy task, but at the same time, that's why it's amazingly enjoyable on a daily basis. Right, you have so many different things to do and so many challenges to overcome, but, yeah, I think we again, as I mentioned, we get interest from private sector, from public sector, and we move forward.
Speaker 2:So back to my mission. So, first mission is accelerated staff adoption and decarbonization of aviation across Asia. Two things capacity building and industry and policy makers engagement Very important to us to be in between those two worlds. I think that is key. Our second mission is enable market and policies, by building and harmonizing policies, to support regional staff and low-carbon technologies. And when we say that we look at supporting all feedstocks and technology pathways, including heifer alcohol to jet power, to liquid fishery drops and more, right, we really are technology agnostic and I think that's something very important to us. And last point, in terms of our missions, we are also willing to mobilize capital and leadership, because we recognize that this is very important Capital, so that we can reduce investment, risk to scale, production and deployment. And leadership so that we can provide regional technical leaderships and credible standards. Risk to scale, production and deployment. And leadership so that we can provide regional technical leaderships and credible standards, because standards are also a key for SAF, as you know, for SAF and convene, a multi-stakeholder community, focuses on outcomes.
Speaker 1:So that's really our three missions, key missions that we want to push and that we are pushing at SFR Excellent excellent, gabriel, I want to come to you, um, briefly and I wanted to ask you about the global south industry's got a whole host of challenges that it's trying to overcome, but what are some specific regional asian challenges that are maybe slightly more unique to the region and maybe preventing scale-up or adoption potentially as quickly as you might expect or could potentially be seeing All?
Speaker 3:right, give it a go. Asia really holds the promise as, I would say, the fastest-gr growing aviation hub. In other words, people want to fly for work, for pleasure. It's really amazing just being in this part of the world seeing the growth and obviously I think there's a growing awareness already to again supply this industry the amount of SAF that's needed or, similarly, some low-carbon solutions. It's not going to be easy tasks and already you've seen a lot of green roots on the ground, green shoots, in a way that there are really, as of this year, at least three projects that have come online and commissioned across Asia to supply new SAF with really oil-based feedstocks, hepa technologies, and this leads to the point that really the first wave of plants in Asia no different, they're really HEPA-based projects. Different, they're really heifer-based projects they require mass amounts of used crude oil, maybe other oil residues, greases, tallow.
Speaker 3:This is really about mobilizing the entire waste collection feedstock ecosystem which has been slowly, I guess, developing in the background for the last decade or so. Some of the earliest pioneers, like members of FedHope Energy. They've been added for the last decade or so. Some of the earliest pioneers, like members of FedHop Energy. They've been added for more than 10 years now. There are also new entrants, new players coming to the space to build more infrastructure, fleets and really improving traceability and transparency in the system. But this is just really one element and when we talk about other kinds of feedstocks, we really want to be able to provide sustainable choices and this region is really looking hard to quantify. For example, in Thailand, where we were based our events just two months ago, they have a large supply of cassava-based, molasses-based ethanol that could be again feedstocks for the region from ATG-SAF pathways. There are even more projects at large. Some of them will be, I guess, shaping up proving the concept of fish tropes from biomass agricultural waste.
Speaker 3:But underlying there needs to be not only just investments on the plants and facilities themselves but the whole waste ecosystem. There needs to be the right, let's say, policies in place to incentivize these projects, these projects and of course you mentioned Asia it's really very, almost I would say, fragmented Right now. There's really no harmonized market, no policy for biofuels in general there's a SAF that really encourages companies to grow at scale, unlike much larger unified markets like Europe, arguably even Latin America. There's really critical mass numbers, volumes and policy support. Asia is still, I guess, a little further away, and I think what's also unique to Asia is there is a drive towards greener solutions on the whole. This underpins a bit of this.
Speaker 3:Let's say energy addition, I would call it right. There's a lot of new energy coming from solar, wind, hydro. They're certainly more renewable, more sustainable. So Asia is actually taking the lead, especially places like China, india, building new capacity. This actually plays variably into newer technologies like ESEF in the future, supplying green hydrogen to build again more molecules. Like ESEF in the future supplying green hydrogen to build again more molecules, more ESEF molecules, or even heifer projects need ATG, needs hydrogen. So I think it's really really looking very promising for Asia. But it's really up mix to really see this I would say overall spectrum of technologies and feedstocks and really kind of rebuild the whole SAF ecosystem.
Speaker 1:DMR, I wanted to now come to you. Given what Gabriel's just sort of outlined as sort of the overall arching landscape, the overall arching landscape Do you just want to tell us what can be done to help develop this alignment regionally versus globally? So how much of this as a challenge, and the challenges that Asia is facing can be solved within the countries in Asia. Can it all be solved on the regional level, or is there an element of there needs to be global collaboration alongside markets like Europe and North America, latin America, because aviation is so globally integrated and the fuel supply chains are also globally integrated. So how do you see that balancing out?
Speaker 4:globally integrated. So how do you see sort of balance it that balancing act? I think this is a mix of international collaboration and interaction and also regional activities. For example, when you look at, well, aviation is a global thing. This is all what we know and this is we should never forget when we define and describe challenges and targets, and everything from sustainability to production capabilities and to flying and to maintain the quality production side. You see that in Asia Pacific, there are always well, the most prominent example is the Nestle facility in Singapore. They already produce one million tons of sub and other related sustainable fuels over there, and China is already a big player in production.
Speaker 4:But, of course, there is also the need that there is the collaboration with the international and global bigger companies on the one hand side, who own refineries, who share refineries in Asia Pacific, and what we should not forget maybe it's not so far away today, but there are already some good examples that there are also activities regarding the development the ASTM with all the OEMs. So this is a global collaboration by IHI, the Japanese global company, and this is an annex which is established in ASTM and it's number 7. The first fast track approval that was made in 2020 and this is based on a special HEPA product, based on a special algae feed. A second good example is and this is currently under work, it's done by the Indian Petroleum Institute A new not a new, but an improved HEPA route to avoid single production steps, to make EBR and better. This is currently under ASTM approval. So these are examples where in the region, there are also R&D activities, and all this together has to be done in a global framework. And one example for this are the clearinghouses and, for example, the US clearinghouse started many years ago already with the whole OEM group, from the big ones up to smaller engine OEM, and they work together in a harmonized way to improve it so that it can be used globally.
Speaker 4:And meanwhile we have in the UK well, you know that, saying UK, we have UK clearinghouse almost three years and since two years old EU clearing out and their target are to work together and really to de-bottleneck also the time that is needed for such an improvement to really achieve that. There is a good ground for improving new technologies and I'm pretty sure there will be other technologies available and the pipeline is already filled, so there is a need for a good. There will be new technologies and I'm pretty sure there will be other technologies available and the pipeline is already filled. So there is a need for a good collaboration all over the world. And now, coming back to Asia-Pacific, I think that also in the near future, that there is a need to also include the Asia-Pacific region with some of the nations, with some countries. It's very flexible, it's very open, how it can look like, but the cooperation between the innovative standard in Asia-Pacific and the other parts of the world when it comes to aviation, aviation is a global thing.
Speaker 1:Interesting distinctions because obviously, at the beginning of this discussion, fabrice outlined what Asia is to you guys. But because it's such a vast landmass, you're subdividing it into APAC, middle East, the subcontinent. You're having to do those subdivisions. Does that mean that there can be policies and alignment across this massive landmass? Is that a realistic achievement? Because they are going across totally different economic, political, global and they're in very different places. So how do you go about managing those differences within the vastness that is Asia?
Speaker 2:very quick results. You know how it is with policies. So that's more a medium to long-term task and role for Asafa, and we are honest with our members and partners, we are onboarding them and we are getting together for an experience for several years there. Having said that, I think that we think that, yes, there is a need, okay, a need to harmonize, to harmonize policies, to harmonize standards, to harmonize market mechanism around the region, because you see that, for example, europe has done it okay and they have 27 countries, so it doesn't mean that we want to apply the same rules as Europe. Okay, that's another topic. I'm not sure we have enough time to talk over that today.
Speaker 1:As someone from the UK? I'm going to avoid that question entirely. I'm not going to get involved in that one.
Speaker 2:But the value of what Europe has done is not specifically on the criterias and so forth, but it's that they have unified 27 countries together under a common framework. Then it doesn't mean that every single country within this framework cannot set up its own rules. So there are going to be differences and that's what we will recognize because, as you said, you have like a wide variety in terms of culture, in terms of industry, in terms of level of financing coming from the country, et cetera, et cetera. So we have to take all that into account. But if we want to be successful, we need to have kind of that harmonization at the regional level.
Speaker 2:And one of the main reasons is because, if you look at SAF again, and if you want to be successful, we need to ramp up SAF production and SAF R&D. And the issue we're going to have is in the region, apart maybe from one or two countries, that all domestic markets are going to be too small to be successful in terms of ramping up, scaling up SAF right. So we need to go beyond single countries, we need to go at a regional scale, and that's what SAF is about and that's why we have that idea. And that's why we have that idea and that's why we have traction there, because everybody recognizes that if you want to be successful, you need a big staff capacity, you need to invest in R&D in terms of production capabilities, in terms of technology, in terms of feedstock, in terms of everything. And we have these specificities in the region, so we have to go for it or do you say that individual countries can't do a lot?
Speaker 1:half of asia's production does come from one country and will do till 2030 it from china. So you're sitting across the backdrop of china being this behemoth of the SAF industry with this ability to grow, with vast production sites that have come online so quickly, with the backdrop of lots of individualistic countries. So there is a little bit more nuance than You've got to balance China being this huge growing market against all these other markets that are still very much slightly further behind and still emerging.
Speaker 2:Sure, I mean, china is going to be massive, as we've seen it in all the renewable energy, in EVs. So, yes, that's going to happen in EVs. So, yes, that's going to happen. Having said that, I think we see a lot of drive and a lot of attention from governments, from all governments in the region, specifically on SAF, because they see SAF also, as you know, having two major inputs for them or two major strengths. One is it's a diversification, so it represents a new business for them, and many of the countries have their own feedstock, so meaning that they can produce it themselves. And the second aspect also, it's a way for them to reduce their dependency to fossil fuels.
Speaker 2:All right, and therefore I mean for them, it's an interesting pathways, it's interesting ways to achieve that, sustainable aviation with having local production. So you're going to have and you have drive and you're going to have local production from a lot of countries in the region supporting different technologies, and you're going to have also feedstock that are not in China, that are in other countries. I mean China, we know the feedstock, and Gabriel, of course, and Dietmar can talk more about that but you have feedstock that are specific outside of China and that will be very interesting for different pathways. Gabriel, do you want to say something about it?
Speaker 1:I was going to follow up on that slightly. With the vast amount of feedstock available in asia and you know across the whole region, the variety that's there, there's also been the the slight negative, the negativity around sort of palm oil and the contamination with yuko and how that that coming from asia, coming to europe has. Do you think that's been you know damaging for sort of building a negative perception of you know feedstock export from from asia sort of globally and sort of production within the region and do you think there's sort of anything to worry about there or is there actually a really strong, you know stable sort of um accreditation process for processing all this, all this feedstock across the region, gabriel?
Speaker 3:um, with regards to this, I think we've been hearing again from from our members underground, from policymakers as well. We've seen really first-hand how the whole value train and I think you briefly talked about again, maybe use cooking oil, uco, in short, this is an onerous task to actually collect UCO. We're talking about small restaurants, maybe bigger factories aggregating all. This is an onerous task to actually collect UCL. Right, we're talking about, you know, small restaurants, maybe bigger factories aggregating all. There are now digital apps to track again the collection points. It's just a cash trade. It goes to the restaurant owners themselves. This ecosystem involves millions of players, right In short, right Across Asia. It's not just China, it's been developed across again Malaysia, vietnam, indonesia, you name it Thailand, everywhere. There are used cooking oil companies, collectors, everywhere.
Speaker 3:A truth be told, in such a vast system, we are, let's say, quite reliant on certification bodies like IACC to step in along with certification bodies locally to audit the process and it's really, really working by all means, really at this scale for now.
Speaker 3:Are there little cracks in the system, little loopholes in the system? Yes, admittedly so. Means really at this scale for now. Are there so-called little cracks in the system, little loopholes in the system. Yes, admittedly so. They might have been exploited not only just to produce again feedstocks for SAF, but really feedstocks for HVO, feedstocks for other different biofuels, right, and I think now industry is really really quite alert on high alert on all this in terms of the producers themselves. They put in their own, let's say, standards of checks, audits in place, on top of what's already required internationally. What we'd like to see next is really the next step that the countries themselves actually set up or regulate used critical oil collection, for example. This has really twofold benefits, right. One could be, as you say, there's available carbon feedstocks, low-carbon feedstocks, and once they really kind of develop, the national standards and regulators in place.
Speaker 3:This also really complements what's done place. This also really complement what's done internationally. This will bring much more confidence to the system and really discourage any bad actors from coming. What we're really saying this is really a really really fast-growing industry that really requires more regulation and, truth be told, there are also digital tools to do this. I think there are also digital tools to do this. I think there are lots of players coming with blockchain solutions, even so-called AI solutions to really detect discrepancies. This all really can be done, but this requires investments, both from again, maybe producers themselves or willing investors who see growth in this industry.
Speaker 3:By and large, this extension or this can be extended from used critical oil to other waste feedstocks bait, palm residues, palme, pfat, same thing. The large mills really big companies, but there are smaller, small holders across the region. They may not even have the means or resource or the expertise to really, let's say, provide the necessary certification work that's needed, right, and I really think bad actors will persist if there's just not enough regulation, and I'll take it as so far. We're really quite, quite open about it. There's so much waste to be used and we can't just stop let's say stop the whole industry just because of few bad actors and fraudulent trades, because this has happened across the fuel ecosystem for biofuels, for fossil fuels. When there's again an opportunity to make money right, there's always some unscrupulous practices in place. So that's not addressing the root cause. To outrightly ban a certain feedstock from a certain region, yeah.
Speaker 2:To complement maybe, oscar, if you don't mind, what Gabriel is saying our role at SESAFA is also that there are international standards and IQ has set up those standards. And when we discuss with the stakeholders either public or private stakeholders from the region, I mean we are really really clear on that one and we don't want to compromise. It's a bit like safety in aviation, right? I mean here we cannot compromise on certification and trustability Because if we do so then it's going to be very, very dangerous for the whole industry because we lose completely our credibility.
Speaker 2:So we wanted Asia to be successful, so we need to make sure that countries and international regulation is implemented at the highest level, like Corsair level, ikea level, and we get, to be honest, quite positive feedback as well, because the industry is understanding that there have been issues and part of the production that will happen in the region will be for the region. But they also export willingness to the Western world and if we want to sell to the Western world, then we cannot compromise on the quality and the transparency of the feedstock. So I think more and more people are understanding that, again, we might not avoid but it's not specific to Asia we might not avoid having a depot. We see what's happening with the oil, with the fossil fuel from Russia. It's forbidden to sell in Europe and we know that some of it is arriving in Europe anyway. But we will try our best with the stakeholders here to maintain that quality.
Speaker 1:Yeah, on the point you just made on the export side of the Asian, the South market, whether it's finished product product or feedstock, whatever's getting exported, a lot of it um goes into sort of europe and and the us. Um, how, what's the sort of thought around the balancing of domestic production growth, domestic utilization obviously it's a very fast growing aviation market with a lot of growth set to be experienced over the next five, ten years, versus sort of the maintenance of that sort of traditional, as it were, sort of export side where the majority of it has gone thus far to to other other markets as an export products. So, dmr, what are your sort of thoughts on sort of, what are your thoughts on that balance and how that balance might be readjusted as domestic or regional domestic production and utilization grows?
Speaker 4:Well, I think, oscar, that this will be regulated by the market itself and so, for example, I think a growth in production rates in Asia Pacific of SAAT will help the whole world, it will help the local airline, it will help the international airline to go to Asia so they can fuel, they uplift fuel containing SAAT.
Speaker 4:On the other hand, if the price is okay and everything else like Fabrice mentioned, the quality and the fix to the EU or US regulation it helps definitely because of the richness of feedstock in Asia and also the speed in setting up new plants, for example, compared to other companies I don't mention any companies it merely helps to fulfill the mandates we have employed already.
Speaker 4:And when we want to stick to our policy, then we need, within 5 to 10 years, we need to generate higher volumes of tar, and there the supply from tar blending components from Asia Pacific is only helpful. But the market, I think, will regulate by its own laws like price and availability and these navigation, and it also will depend on how much more sap is needed in the local area in Asia. Because if there are some more and more stringent mandates in place in the future, then of course, yeah, it's consumed over there, but honestly, from a global point of view, wherever we fly sub, I enter the plane in Singapore and go back to Munich where I live, or vice versa, it doesn't matter. So the emissions are the same. It's helpful anyway. But of course, we have other requirements when it comes to policies and amendments.
Speaker 2:Fabrice, I wanted to jump on what Dietmar is saying. No, I wanted to jump on what Dietmar is saying about policies because, I mean, we haven't covered policies yet, but it's something very important because so far, asia, pacific, middle East or the region we're talking about right, has been lagging Europe. But here we see a lot of dynamism in the region to settle some policies. They are, I would say, first steps in a long process because, of course, if we need policies, we need to go 2040, 2050 and beyond, see where we, where we're going, and what we see at the moment in the region is not really there. We more look for focusing on short-term up to 2030, for example. Right, but I think it's interesting because you see more and more countries having their own policies. So, of course, singapore and Japan was the first one. Then you had Singapore. We have also now Vietnamietnam won us 10 by 25. Uh, we here very much. Korea is about to announce something. Uh, also. Uh, starting by 2027 potentially. Uh, malaysia also has announced one percent from 2027, indonesia three percent by 2026. It's fun. It's interesting because, uh, I forgot, no, don't forget Thailand, obviously, but it's very interesting to see that.
Speaker 2:Okay, then all those policies, then they will require also domestic, farm, regional staff production. So this will drive the production up. And if we one of our surface objective or target is 5% of staff usage across the region by 2030. So if we one of our surface objective or target is 5% of staff usage across the region by 2030. So if we say 5%, we take a bit into account the increase of traffic, it means about 8 million tons, right, 8 million tons of production just for all Asia's needs. So we're not there yet. Of course there's a lot of projects in the region, but we're not there yet. But there's a lot of projects in the region, but we're not there yet.
Speaker 2:But we see that that dynamic is really positive. Having said that, again, it's incomplete still, if I might use that word again. First step it's very much more on terms of volumes. It's a target on volume, so it's not on carbon intensity, on reduction of the carbon, which we see as the next step. And we also see as the next step more a regional framework, as we mentioned right, so that we have kind of alignment with different market mechanisms that will allow to reduce the purchase price of staff for airlines so they don't have to buy two or three times more expensive the purchase price of SAF for airlines, so you know they don't have to buy two or three times more expensive, because if that's the case, then there's no way they can reach 50% of SAF by whatever, 2014, 2050. They're just going to die right. So yeah, that's the dynamic we see and, as Dietmar was saying, I mean that's really evolving. That's just the beginning of the story and we are supporting our members, partners and the states and the region to move into that direction.
Speaker 1:It always seems that production levels in Asia are evolving and growing in spite of lack of policy. In other places in the world there seems to be a big pause whilst people wait for policy clarity. But that doesn't necessarily seem to align so much with Asia. Because there's such an abundance of feedstock and there's this such obvious demand. The policy isn't such a critical pillar that needs to be implemented for there to be a scale up. Would you say that that's that's true? Or would you say it's true in certain countries, not so true in others?
Speaker 2:and there is still a really heavy requirement in some places to develop that they need that more stable policy structure in place it's difficult maybe I I start on the, and gab, gabriel and Dietmar will follow me and it's difficult to make a generality on such a wide area, right On such different cultures. But I think the region, though, is. One thing that is common within the region is pragmatism. I would say All right, and again I can say that I'm European-born, I've been living part of my life there and I'm based in Asia. My kids are born in Asia, so I can really compare the two aspects.
Speaker 2:But I think in Asia, what we tend to say is we need to be pragmatic and, as I mentioned earlier, basically SAF is seen as a way to decarbonize aviation, but it's also seen as a new business opportunity and as a way to reduce the dependency of a lot of economies in the region from fossil fuel. So when you said that, then you know you have three big drivers for governments to apply, but also for private companies to move into the SAF direction, and the governments then, but also for private companies to move into the south direction, and the governments then you know they won't. I mean, when they decide to put the regulations in place, they have done a lot of consultation with their own industry and they are sure that that's going to be achievable, all right. So in Asia I think that's really the message is a target is nearly equivalent to a mandate, in the West as well. So when you put the target, because you engage your own credibility, so you make sure that you're going to achieve that, all right.
Speaker 2:So I think that's something people also have to understand. It's a very peculiar culture and it's very strong messages. All right. So governments are maybe moving after the industry, but because they want to make sure that when they set up something, then it's going to be achievable. So I think it's a joint dynamic. So companies are embracing or bringing the governments with them, and the government is bringing the company to them. Gabrielle, I mean?
Speaker 3:what do you think? Yeah, I think another perspective is it just really changed quite a bit? In terms of capacity of oil refining Just for example, I think it's really not a net exporter of Finnish fuels like gasoline, jet diesel, free oil, home marine, just because there's so much capacity, obviously built up in the last 10-15 years, right, china, india, obviously, but every, every, let's say, major region has enough refining capacity. Again, if you look petrochemicals, it's the same. Now I think Asia is also almost unbalanced or even net exporter supplying to other parts of the world. I think the same trend might really continue.
Speaker 3:I think it's late to the game in terms of biofuels per se. Asia has now, let's say, quite a bit of biodiesel and most recently quite a se. Asia has now, let's say, quite a bit of biodiesel and most recently quite a bit of ethanol out of, let's say, india, I think, another 6 million tons or so. I think it might really follow the same path that if you do have the feedstocks, you just have to build those plants. You can produce higher value products like SAF, like HBO, green Nafta. They certainly, you know, will play, let's say, into overall energy and petrochemical mix.
Speaker 3:So I think for policymakers it's almost a no-brainer and really I think the first wave of's almost a no-brainer and really I think the first wave of projects are really led by some of state-owned energy companies, obviously, or traditional energy players. What we haven't seen is really, let's say, the second wave, where private enterprise really steps in, smaller players with innovative projects. I think that segment is really price really steps in smaller players with innovative projects. I think that segment is really waiting for a stronger policy mandate to come in where clearly, let's say already 5% on average of service being deployed across Asia, then the business case is really really clear with that.
Speaker 1:Demar, do you have anything you want to add to that?
Speaker 4:Yeah, I'd like to make a short comment here. First of all, I agree to what my colleagues are saying here and perhaps as an example, because one word I think is very important to realize in this context and I think Fabrice mentioned it is pragmatism. And about two months ago I was participating as a panelist in an international conference here in Germany and the topic was also contributions from Asia Pacific on also regulations and so on and so forth. And it really came up because the majority was from Europe in the audience and also from the European Commission and so on, and it was very clear that they have this pragmatic approach as to we just describe, we do what we can do, but we do it and then we have made a step forward. And this was a clear signal and this was also given by one of our nimad, mr Asapa or Hop Asapa.
Speaker 4:They were also in the room, the audience and on the stage. So this was a clear message also from other part of Asia Pacific. And this is the difference in the approach. There is no good or bad, so we shouldn't have done that, but it's a different approach compared to the new and also compared to the US. There is also another approach and I hope now speaking as a passenger on board of an Airplug, that whatever the motivation or the high priority motivation is, I hope that SAP is used in the Delta. So it's really interesting to have this global perspective.
Speaker 1:I think one of the things you notice if you're looking at EU-US policy there's a lot of industry conversation around. That, I think, leads to the idea that perfection can be the enemy of the good that you try and sculpt, this perfect policy environment that helps build everything and builds the end product before you can put the stepping stones in place, whereas in Asia it seems like that's not the case. It's very much goods perfect, but it's just slightly less perfect than perfect. It's just a step along the way that you can use to build from.
Speaker 2:Ultimately we reach perfection, but it doesn't mean that we don't do anything in between now and the perfection, right? So yeah, correct.
Speaker 1:I want to pick up on something that Gabriel was saying about first movers being state-owned energy companies and maybe waiting for policy to line up before we see the private, more private involvement. I want to just sort of ask you guys your thoughts on investment in in SAF and these SAF refineries, because they're not small infrastructure projects, they're not small in capital costs up front or the operating expenditure is currently a lot of the financing coming from internally within Asia, like Gabriel says, and then we mentioned earlier that Neste have got their refinery and there's a and what needs to sort of be in place to crowd in a bit more private investment to really get production going.
Speaker 3:I think we should be able to kind of also put into two buckets right Really mature technology, which is really Heifer. These projects are really, if you build on one of them, a function of how much feedstocks you can, let's say, access. And really what we've seen is this momentum where governments are stepping in to provide grants. In Japan we've already seen Cosmo, idemitsu, ineos, even Tayo. They've all stepped up to build new projects and they're really, let's say, greatly benefiting from the grants that were provided to them. In terms of CAPEX, they will be receiving it looks like it also potentially some, let's say, subsidies for selling SAF in the future per litre as well. I think that's not been finalised, but this is really really one notable example, I think. Similarly, in Australia, the government's really, through IRENA, given grants to promising new projects as well. Even at the state level there's funding granted to certain notable projects as well. So I think this is, in a way, I think I would say, riskless, but this is really, when it comes to half of projects, it's a very bankable. It's really really, really bankable for these projects to take place and to take shape and there's really financing and really really easily accessible, I think.
Speaker 3:Then we look at the other bucket, where there's it's called newish technologies, where it offers lower technology maturity, readiness, whether it's the scale or in terms of feedstocks, there's a bit of uncertainty. I think that's where, in Asia particularly, these projects are somewhat harder to be finding the right level of investor interest, which really comes back to a few factors, right, maybe the finances themselves are not so, let's say, knowledgeable or comfortable with CERF or BioFuse per se. They need a lot of really just understanding the market. They need to do their own mapping and seeing if it's viable. I think there's also the investors.
Speaker 3:Already the project developers also try to get equity to come on board, equity partners to come on board as well. So that looks somewhat promising right now with more again, more certainty from the market through policies. But I think what's really still absent is really even more, let's say, government support, whether it's incentives or direct grants, to really promote newer technologies in the region. And that's something actually as of how we've been really looking at very hard. That's really trying to pull together public banks, even private banks, in the near future, to really, you know, create some kind of Asia SAF fund of sorts to really, you know, incentivize and identify promising new projects right? Yeah, I think we're not quite there yet, but I think this needs to be done very quickly if we really want to see new technologies scale up.
Speaker 2:This is one of our medium-term projects. But, yeah, we received quite positive feedback, to be honest, and, as Gabriel mentioned, we're discussing with development banks from the region, but also with IFC, world Bank, and we saw them financing projects. So, basically, when we discuss both with public and private investors, I think today R&D is not very much to really consider because the return on investment is way too risky, way too risky and way too far, and we are missing financing on that one. Now, financing a project with mature technology, I think they just look at two things. Okay, well, if the stock is there, it's guaranteed. So if you have, like secured fee stock for the plant and if you have secured the uptake agreements for the plant, and then if you have secured the uptake agreement for the plant and then if you have those two the inputs and the outputs secured, then the financing is not a problem where it comes from the region or it comes from beyond the region there's been some really innovative financing structures being placed.
Speaker 1:One that comes to mind is a project in Pakistan where the Asian Development Bank was involved. There's been stuff in Kazakhstanakhstan with the european um bank for development and reconstructions. At abrd. They've been involved in kazakhstan. So it's a great region for these sort of public private relationships and sort of helping using public money to crowd in a bit of um private funding for these projects. So it's a really good place to sort of innovate on the project side.
Speaker 1:But on the um, on the development side, in the r&d side, it kind it kind of gives me. Reminds me of sort of early 2000s when sequoia were first sort of branching into asia and the vc world and everyone was like why are you going to Asia? And they found a really good understanding of the market and there was such a huge upside potential because they had a really strong regional understanding that allowed them to understand and then exploit the opportunities that exist. As we've sort of discussed, the opportunities are huge. It's just understanding how the market works and what is feasible and understanding the risks. And once you do know that there is so much upside along to sort of and you can mitigate a lot of the risks just through understanding really closely what the, what the market dynamics are. So on on on these sort of um.
Speaker 1:One final thing on the on the investment piece do you think there's enough understanding from western sort of finances? Do you need them to come into asia and be more involved, or is there the financing structures already regionally within Asia to be able to finance these projects? Or do you need to see some more sort of investment from the big sort of funds in the US and some in Europe as well to sort of help drive development further? Does anyone want to take that one?
Speaker 2:Okay, development further. Does anyone want to take that one? Okay, just a very political answer to you, oscar. But you know we say we are technology agnostic. We are technology agnostic, so we are also finance agnostic as well. And you know, as you said, r&d and the facilities, they require a massive amount of money, right, and we're talking about dozens of billions of dollars there, right? So wherever the money is coming from, then ultimately it will take it. What we want is we want to build capacity building. But let's be honest, right, we want to build capacity in the region, we want to build to build expertise in the region. So you know we'd be. I mean, we're happy if the money is coming from the region, we're happy if it's coming from outside the region. We just believe there is so much, so many opportunities and so much potential in the region that everybody, in fact, should be looking at it very seriously.
Speaker 1:so one final thing. I want to go around everyone and I want to ask you know what your sort of current sort of really strong short-term sort of market or country is for for saff production in asia? So once the top sort of dog right now I think we'll we'll exclude China for argument's sake, just because it's it's the biggest by far. So, apart from China, where's your sort of immediate right now, sort of leader in the Asian market and then, looking sort of maybe five to ten years down the line, who do you think you're excited about to see sort of emerging over the next sort of five, ten years as sort of a really heavy industry player that can make a really big, big difference? So, gabriel, we'll start with you. Who's your sort of immediate now? Who's your sort of hot markets that people should look out for?
Speaker 3:We're actually making some efforts to provide a regional forecast in our annual outlook paper. This will be published end of the year. The intention is really to, as you said, look at Asia as a whole and understand its potential because of its let's say future policymaking potential.
Speaker 3:Let's say feedstocks, where are they really? And this will be really a series of interviews with policymakers and industry players to really get from bottom up right what's really happening in the market. But so far we've kind of realized Southeast Asia is the hot spot. Why? Because you are probably aware in Malaysia there are already two major projects underway. One will start up end of the year, one in 2028. That's going to bring at least almost 800,000 tons of capacity online just out of Malaysia alone. Indonesia is also heating up. We've seen state-owned padamina again introduce cold processing and obviously they're sitting on acres and acres, hectares of palm residues waiting to be unlocked. These are two really notable examples. We also understand Thailand will plan to, let's say, utilize some of the excess ethanol capacity into again future ATJ plants. That's maybe a bit later, later 2032 story.
Speaker 3:Vietnam, I think Fabrice mentioned very briefly top down, the government issued a mandate to really, you know, grow the self-industry. But just Southeast Asia alone we're looking at easily right 2 million tons or more supply coming online in the next 5-8 years from now. Is that a big number? Probably because that's enough to again supply the next five, eight years from now. Is that a big number, probably because that's enough to again supply at least five or more percent of the SAF that's needed in sub-Asian alone. And I think we also should mention about India particularly.
Speaker 3:I think India is always a bit misunderstood because they were particularly. I think India's always a bit misunderstood because they've, rightly or wrongly they were actually early pioneers in biofuels. They look at Jyotropha 20 years ago, is they not really work out? But right now I think it's got new momentum with the new ethanol programs. I think it's about 6 million tons of ethanol production and they've been able to scale up rapidly this whole new industry and they are looking to do the same for SAF in the next 2-3 years and they are really governmental support, strong governmental support, to make this happen.
Speaker 3:That's really a bit of Asia that we're really looking at and obviously what's underlying as well. Maybe some of the oil refineries will pursue co-processing program facilities. We know that again, in Korea all major refiners do co-processing and this can be really almost easily be done at most complex sorry, modern, complex, large-scale refiners across Asia Pacific. So we're also quite optimistic there as well. And underlying is really the whole ecosystem which is fresh, right. The waste ecosystem has to improve has to catch up right For all of this to happen.
Speaker 1:So if you had to pick one out of the world of all countries?
Speaker 2:I was going to ask you. It's too tough a question. Listen, nick and Kenneth.
Speaker 1:You can't pick one. That's the beauty of Frasier. It's not favoritism at all, it's pragmatism, as we've been saying, it's just being pragmatic.
Speaker 3:I think if the policymaker, if we put ourselves in the shoe of policymaker for now, right, I think SAF is part of the bigger story, because most of Asian countries want to become bigger and bigger aviation hubs. Right, because they've seen again the kind of leverage that aviation brings right in terms of, again, tourism, business opportunities, you know, just more services and all that. This is very clear. So I think if you frame it that way for SAF, the major aviation hubs across the region, be it out of Bangkok, singapore, already will be, let's say, in front ahead, right, and other countries just somewhat want to catch up, right. I think that's just the play here.
Speaker 1:So I think, if I'm not going to tie you down to one country, what I'll do is I'll let people who listen to this put in the comments what their favorite is, and then you can see what everyone else has got as a as their shit. Um would be great for brief. Gabriel, do it mal. Thank you so much for um for joining us and taking us through everything that's going on in asia. It's an incredibly complicated and fashion fascinating region with so much potential and so much activity, so it's absolutely one that I think the whole world's got it. It's one eye firmly on, but thanks so much for giving up your time to give such a a great explanation about what's going on thank you, os.
Speaker 2:Oscar, pleasure was yours and please stay tuned because there's going to be some fantastic news for SFAP before the end of the year, so increasing again our footprint in the region. So, yeah, please stay tuned and looking forward to see you soon, oscar, thanks again for inviting us.
Speaker 1:Absolutely.
Speaker 4:On my side for this opportunity and for this interesting talk all together.
Speaker 1:Thank you very much the absolute pleasure having you all and we'll keep a keen eye out for announcements later in the year. But um thanks so much everyone for um for giving up your time.