Jan Toscka, Zaffra: Realising the romantic potential of eSAF

This episode of The SAF Podcast sees Jan Toschka, CEO at Zaffra, join Oscar for a wide ranging discussion on the potential of eSAF and the Power-to-Liquid pathway.

Jan brings 27 years of energy sector experience—including leading Shell Aviation as its president—to his role building Zaffra, a 50/50 joint venture between Sasol and Tops. Together, they're leveraging their technology expertise and project development experience to commercialize eSAF.

Key Topics Covered:

🇩🇪 The Concrete Chemicals Flagship Project: A 40,000-ton e-SAF facility in Brandenburg, Germany, powered by local renewable wind energy and green hydrogen. Why this project captures the entire German 2030 mandate potential and how €350 million in state funding was negotiated to bridge the cost competitiveness gap.

🌍 Global Site Selection & Project Development: From Spain (with partner Moeve) to the Nordics (abundant renewable electricity) to China (cost-competitive locations), Zaffra's portfolio-based approach to scaling SAF production. Why bespoke project solutions are evolving toward scalable, duplicable models.

⚡ Feedstock Security & Hydrogen Infrastructure: How Zaffra secures green hydrogen through local wind farms, electrolyser projects, and emerging hydrogen pipeline networks—critical to both project financing and operational resilience.

🤝 The Power of Shareholder Credibility: Why Sasol and Topsoe's proven track record—with Fischer-Tropsch technology deployed in 4 out of 10 SAF plants globally—accelerates project development, partner engagement, and capital raising.

💰 Financing the First-of-a-Kind Projects: The critical challenge of proving bankability for novel eSAF projects and how technology credibility, project delivery experience, and operational expertise unlock institutional and commercial capital.

🏛️ The Sustainable Transport Investment Plan (STIP) & Double-Sided Auctions: How Europe's latest policy framework is reshaping market dynamics. Jan explains the mechanics of double-sided auctions: a state-funded midstream entity bridges the gap between producers needing 10-year security and offtakers wanting flexibility as costs decline.

📈 Cost Curves & Learning Economics: Drawing parallels to solar's 15x cost reduction in 25 years, Jan argues e-SAF costs will follow predictable learning curves once the industry gains scale and momentum—but only if players commit to entering the market now.

✈️ Leveling the Playing Field: The crucial policy conversation around European airline competitiveness, international jurisdiction alignment, and how SAF costs—estimated at €5-7 per intra-European ticket by 2035—are trivial compared to other travel expenses.

This is a fantastic listen to really understand the practical challenges of developing eSAF production and how an ecosystem focused approach is crucial to pushing projects through to FID and commercial production.

Huge thank you to Jan for being so generous with his time and bringing such clarity to this discussion. 

Transcript

SPEAKER_00 0:10

Hello and welcome to yet another episode of the SAF podcast. And this week, I'm very excited to be joined by Jan Toshka from Zafra. Jan will be familiar to a lot of people, and a lot of people will be familiar with what Zafra's got going on. So we're very excited to have you here, Jan. How are you?

SPEAKER_01 0:31

Oh, thank you very much, Oscar. Thanks for having me. And uh I'm I'm good today. Very good. It seems as if springtime has started finally.

Career Journey And Shell Aviation

SPEAKER_00 0:39

It really has over the last couple of days. Well, certainly yesterday, at the point of when we're recording this, certainly here in the UK, it was the first spring being sprung, which is a very nice sight to see. So before we get into Zafra and wider thoughts, do you just want to take us through your career up till now? I know lots of people will be familiar with your past at Shell, but maybe sort of extending on before that as well.

SPEAKER_01 1:12

Yeah, no, thank you so much. I'm happy to do that. In fact, there isn't that much uh difference uh than what you can see in my CV. I started with Shell straight after my master's in business economics. That is uh, let me think, 26, 27 years ago, and I did various roles in Shell from a little bit of MA, a little bit of trading, but predominantly sales and marketing. Um, global roles from maritime roles, uh, various retail, we called it retail in those days, that's the gas station side of things. But most of relevant probably for what I'm doing now and why we're having this webcast is I was then the last couple of years in Shell, I was running Shell Aviation as president of Shell Aviation out of London. Um I was in charge of the largest conventional jet fuel supplier, which then also turned into, I guess, one of the largest SAF suppliers. Um, and that all lasted until end 23, beginning of 24, when I was introduced to the CEOs of Sassol and Topsol. Uh, we discussed uh setting up a joint venture to establish a SAF producer, an e-suf producer with focus on synthetic fuel. And uh yeah, that was happened then. I left Shell and I joined Safra as employee number one, beginning of 24. And uh that was the start of this uh episode of Safra, which I'm running right now very happily out of uh the Netherlands.

SPEAKER_00 2:35

Is that because you just wanted to get out of the UK at around 2024?

SPEAKER_01 2:41

No, I mean to be very honest, uh we we 100% enjoyed London, the UK. I've been living in London 12 years of my career. My kids grew up the bilingually educated. I've I I I we totally like London and and also the UK and England. So uh just for the record.

Why Leave Shell For Safra

SPEAKER_00 3:00

What was it about the prospects of this SASO Topso joint venture looking at e-fuels and synthetic fuels that made it so appealing to you that you sort of left Shell after over 20 years there?

SPEAKER_01 3:15

Yeah. It's a super relevant question because as you can imagine, uh we have uh met a number of players, uh, all very good ideas, all very high ambitions. The difference between many players, I should say many, just to be humble, and and Safra is Safra is, as I just said, is a joint venture, it's a 50-50 joint venture of Sassul and Topsu. And that allows us, I think it's fair to say, to differentiate at least on three different um kind of elements. One is clearly the technology. We, our shareholders, we own the technology. Whether it's HIFA, whether it's PTL and everything in between, our shareholders have developed, they own the technology. Um, they have a market share on a side count, you can say four out of ten soft-producing plants on the planet are either using TOPSU or SASOL or TOPSU and SASOL technology. That makes them very, very credible. In particular, when it comes to PTL, when it comes to eSUF, using the Fischer Troph Pathway, um, having the highest yields in that process, using less least electricity and therefore hydrogen, uh, makes these two players incredibly um leading on the technology side. And that is obviously pretty unique for Safra, not only licensing such technology, but basically having shareholders owning and further developing that technology. Second element, second pillar, I spoke about three, second pillar is when you look at the project development experience, and I don't want to talk small what other people are doing, absolutely not. We we we never we never want to do that. But if you have a team who has single-handedly designed and built such mega large projects, gas to liquid projects, Fisher Trops projects, um, in various continents with various different layers of complexity, that obviously gives us credibility when it comes to project development experience, running such large asset developments. And last but not least, number three of those three layers is then when you come to operations, uh, um, you know, running such plants and knowing how to run such a plant and optimizing such a plant, same thing. My people in Safra, as well as those people in Topsu and in particular Saso, we have access to, um, they have they have first-hand experience in all of this. So, therefore, I do truly believe SAFRA has a very, very strong story when we say our ambition is to build, own, and operate such SAF and in particular e-SUF plants. And that story we have been uh developing end of 23, beginning of 24. And until today, I I hear people nodding and agreeing and listening to this and do recognizing that this is a different story than most of the other people too.

SPEAKER_00 6:02

One of the I think interesting aspects of this is that you've mentioned the amount of expertise that SASO and Topso both have, and they're primarily known as licenses licensing their technology to other um projects, people wanting to develop projects in across various technologies and not just SAF. But this is a joint venture, which is a which is a slightly different model. I'm just sort of curious about how why that ended up to be the platform and how that ended to being versus them just following that more tried and tested route.

JV Model And Technology Edge

SPEAKER_01 6:41

Well, I think I mean the Topsu and Sassol are over the last 30 years, they have been collaborating. They have what we call the SPL unit, that's a single point licensing. So by bringing together their two technologies, that is what ultimately drives the yields and the success and the PTL development. Um, having the e-React, the reverse water gas shift, uh, then producing SIN gas and then Fisher Tropch, and then ultimately hydroprocessing the product. That is where these two players, when they come together, are extremely good. So there is a reason for having this as a joint venture. But also, I mean, quite frankly, the both players have different presences in the market. They have different credibility in the different parts of the world, not only where they work together, but also where they work independently from each other. So that gives us access not only from a one shareholder or from one financial shareholder or from something. It gives us access to many, many players through these two parents, which enjoy a significant uh not only market share, but also credibility and visibility in the market.

SPEAKER_00 7:49

And where are you looking at in terms of setting up projects? Where are you? I know you've got one that's very far along, which I'm sure we'll we'll come to talk about. So where are you targeting and what what sort of does the decision-making process does it look like when you're looking at site selection?

SPEAKER_01 8:07

Yeah, I think I think we I mean the one you just referred to is uh is let's call it our flagship project. That's the one in Germany. I think we'll talk about that. Um, just recently we had a bit of press around this. But um well, look, I mean, the product we are producing, at least over the next couple of years, will be certainly for the European market. That's that's for sure. Therefore, it starts in Europe, we have the technology in Europe, we have an understanding of what we need to have for the European market, all of this is in Europe. So we are looking at Spain, where we have this is public knowledge, we are looking at two projects with Mueve. Um, we are looking at the Nordics market, uh, where we have signed MOUs and we are working, we haven't published that yet. But the truth is also, I think it is fair to say in the medium to longer run, and now we can define medium probably like very, very short-term medium run, you also need to grow outside. You need to grow outside of Europe. You want to win in ESAF, you need to look at global opportunities, you need to look at other places where costs are lower, where you know pragmatism speed is higher, the pace of things. So we have um, again, not published, but we have signed a project uh with a Chinese developer. Uh, I shouldn't call the party a developer, they are a very, very decent-sized Chinese company. That is that is part of the reality. Yeah, I don't think you will win if you stay in Europe. I think that is what we have seen in other industries and other energy transitions. You need to you need to think globally, and that's what we're doing at at Safra as well.

SPEAKER_00 9:42

It's really interesting that you're initially sort of targeting Europe and also looking outside. What of those, if you would sort of all those locations you just mentioned, are there any sort of themes that run amongst them in terms of reasons why they're good countries for you to look at locating an ESAF facility? Or are they all good for different reasons and all have their own respective benefits?

Global Project Strategy And Sites

SPEAKER_01 10:08

It's interesting what you say. Um, the Oscar, the at this point in time, I think every single project is bespoke. Every single project is very unique. You either have a partner where there is a wonderful site, a brown field, you have a partner who is the off-taker, you have a partner who brings the hydrogen or the renewable electricity. Um sometimes, if you're lucky, you have two or three of those partners. That is that is totally relevant for these projects. But the truth is, I don't think we see currently anywhere, not in Safra, but not anywhere in the world, you don't see a project which you then simply duplicate in five more places. Uh this is this is exactly where the industry needs to go. This is exactly how we will get the costs down and we're where synergies will kick in. So for the time being, I mean, on the German project, we'll come to this. On the German project, there is a strong political commitment to make it work. In Nordics, we have wonderful access to renewable electricity. We have carbon, so biogen carbon there, we have uh we have the infrastructure in place, the grid capacity. In Spain, we have a super strong partner with Mueve, who again has brownfield assets and is the off-taker. So you have you better have, let me say it like this: you better have one or two of these crucial um either feedstock or off-take or something of those elements in your projects. So that makes the projects feasible.

SPEAKER_00 11:35

Do you have a favorite of those three listed government, renewable power, or strong sort of partnership with an off-taker in a brownfield site? Is there one that you you sort of think's more important than the other or a favored one? They all, I mean, look, I mean, the question is good.

SPEAKER_01 11:51

You know I can't answer this, but I mean the the truth is the truth is um there is there is a there is a there is a strong reason for having a stepping stone approach. You need different projects at different times. We start small with a German project, it's uh close to 40,000 tons, and we grow from there. Uh we will be taking more risk, we will be needing less policy and and and state aid funding. I don't have a favorite project. I think the sequence is relevant, how we how we attack those different projects.

SPEAKER_00 12:22

Yeah. Do you just want to explain? We've talked about your German project, the concrete chemicals facility. Do you want to just explain that in a bit more detail? Why that's sort of how that became your flagship, the timeline from when it started, where you're at now, and sort of in looking into the future as well.

SPEAKER_01 12:42

Yeah, absolutely happy to do so. Um, just um to be to be very transparent, we started this project uh a number of years ago. In fact, it was started before Safra was uh founded. It was started by Susol in those days, together with two other partners, Anatruck and Semex. And then when Safra was founded, we took over their shares in the project. So the whole project is three, four years old, but it has never moved beyond the application, the permitting, and the paperwork basically. Now, as I said, a couple of years ago, three partners started. By now, we're only two partners, one is Anatruk still, and the other one is Safra. Uh, we're looking at the state of Brandenburg, that's east of Berlin, the German capital, where the project is located. Uh, it is close to 40,000 ton plant capacity. Um, eSAF produced with local renewable electricity, then being used to produce local hydrogen, green hydrogen. And we have two different CO2 sources. We originally had a concrete producer, the company Semix. And now we have, I think it has also been published, we have the LIPA, that's a paper and pulp company, um, municipality waste burning there for power generation. So we have, and this is important, we have local partners, whether it is the CO2, whether it is the renewable electricity, then turned into green hydrogen. We have a site locally, and we have an area which is located close to a number of airports. Um, the Berlin Airport, obviously, is the third largest airport in Germany. You can actually, people might not realize this, you can actually fulfill the, for the first couple of years, you can fulfill the entire German mandate by just bringing your product into the Berlin Airport. So it's a it's uh certainly one of relevance. There is also Leipzig, which is close by. Um, you have access to image export routes, there is an industrial park, there is even a refinery there, which brings tankage and blending. So it's by by no means it is all worked out in detail yet, but it is an extremely favorable spot for having your first production plant uh located. And the German government, and that is obviously of relevance. I would be lying if I hide this. The production costs are not the lowest in Germany, nor is the electricity, nor is any of the other elements. But we have explained this over time, and there is clear understanding from the German government. So they basically approached the whole process by saying, what is the gap? How much state funding is needed in order to be competitive with a, let's call it, reasonably small site in the beginning in a place where you don't benefit from the lowest cost? And we came up with that figure, and this is where we then got to the 350 million euro, that's 420 million US uh state fund, and and uh and that obviously makes a huge difference to the project.

SPEAKER_00 15:43

How much of that 300?

unknown 15:45

Sorry.

SPEAKER_00 15:46

How much of that 350? How much of that 350 million was you asking for 400 and them uh offering to give you 300 and meeting in the middle? Or was that fairly amicable? Did it end fairly amicably?

SPEAKER_01 15:58

It might work in other places like that, but it doesn't work with the Germans like this. And I can say that that's the passport. I mean they no, it is it is truly a very, very long exercise calculation, uh, the calculating of the gap funding, uh, using the assumptions of those days, and that was the number we landed, and they looked at this and they checked this, and also the European Commission had to give the approval for that. So um I believe a lot of very, very edu well educated people have looked into this, and we agreed that that's a good that's a good gap funding.

SPEAKER_00 16:30

How long did it take for that sort of negotiation to happen? Because there is often a lot of criticism that governments in this space are potentially moving too slowly, the industry is trying to move very quickly and potentially getting governments involved can slow things down. So, how long was that that whole process from working out that you needed it to actually deciding on the amount and agreeing to that?

What Makes A Good E‑SAF Site

SPEAKER_01 16:55

Yeah, I mean, I I can certainly say it took a long time. Um, it would have taken probably three years. It would have taken three years, but then one of our shareholders exited, we had to find another CO2 source, then we changed the location. So let's be very fair with everyone involved. It is not only us blaming others that it took too long, it was also to some extent because the partnerships we you know we had to redefine it. Um, but the truth is still, it does take long. And I I I want to be grateful that we have ultimately received this grant fund. And I don't want to say anything uh in particular impolite about all of this, but but I think energy transition, let me say it this way: energy transition needs to speed up. It it you cannot win this race if it keeps taking years and years and years to get to this point. Yeah, I mean it's fine if it does for the first one or two projects, but there has to be a learning curve in every player active in this, otherwise, I don't think we'll get there.

SPEAKER_00 17:56

Yeah. On the hydrogen, the the feedstock for synthetic fuels, the electric, the green energy, the hydrogen aspects. You're are you sort of plugging into the jer to the grid to get that? Are you sort of generating it on site? How are you getting access to those feedstocks? And how are you manage, how are you managing, managing that? Because it's a critical aspect both of the CapEx requirements for these projects, but also the resilience of these projects once they're operational to continue operating, knowing there's a secure line of feedstock availability.

SPEAKER_01 18:34

100%. Um, spot on, and this is a crucial success factor of this project. I mean, number one, there is a lot of wind. And it sounds funny when I say it like this, but that's actually true. The Uckermark, that's the part of where the project is, there is a lot of wind, and our partner Anatruk is one of the largest, if not the largest, renewable electricity producer. They're using wind farms. So one is we are having wind farms, we are having local electricity production, which then will be used in order to produce green hydrogen. The company Anatruc has also won, uh, I don't want to use the wrong word, whether it's Innovation Fund or whether it's IPSI, they I think it's IPSI funding for a large electrolyzer project. So there is local production of hydrogen. On top of this, and that's the beauty of that part of Germany, there runs the pipeline, which is supposed to be turned into the H2s, the hydrogen pipeline. So that hydrogen pipeline will be built, or is is built and is going to be continue to be built, um, also to connect places like Schwede, the PCK refinery over there. So there is a good infrastructure already in place, initially used for different gas, but now turned into hydrogen. There is local production of wind and therefore electricity and therefore hydrogen. It is you have to not necessarily have to, but I think you feel more comfortable when you engage with the banks and the funding institutes, that you have a portfolio of different supply sources for that. And that is indeed given over there. So that makes it a very good location for such a project.

Germany Flagship: Scope And Partners

SPEAKER_00 20:09

Does the the nature of your the the joint venture and the way that Zapor was founded with Sassa on Topso being so integral and you've got these these partnerships? How does that play into the capital raising? Is it hugely helpful having these long-standing names sort of behind you? Because there are a lot of players working on new innovative technologies to try and make synthetic fuel development more efficient or or cleaner or um however else. So just give us a sense of how those companies being involved in this the founding sort of the foundations have helped you with the capital raising.

SPEAKER_01 20:54

Yeah, I mean, uh clearly needless to say that if you have parents uh well known and respected in the industry, then obviously things are in terms of having access to funders and and banks, that becomes easier. But you don't, I mean, no one will give you 500 million because you have uh fantastic shareholders. You just haven't asked the right people. Yeah, well, maybe you can help me out line after this recording. But I think I think the truth is it starts earlier. You have, let's think about this as a chain reaction. Our shareholders get us or makes it easier for us to get in touch with partners, whether it's on the electricity producing side, whether it's on the hydrogen side, whether it's on the brown field side. So think of this partners of ours have been customers of TOPSE or customers of Sassul beforehand. And when you then suddenly work with people like, for instance, the Chinese company I was referring to, or with a company like Mueve in Spain, then then obviously there is a name, then obviously there is credibility, then obviously things. Gets easier. But I do want to underpin one point. You do not get debt funding unless your project is super rock solid. And so the question is not whether names and your shareholders are the right ones. The question is whether those names, shareholders, connections, partnerships, and all of the people and the quality of all of this gets you to better projects. And that gets you then also to funding.

SPEAKER_00 22:23

Yeah, there is sort of a narrative that ESAP's the silver bullet that's going to come along and it's sort of the gold standard and it's going to totally decarbonize and it's got this great potential to be this wonderful thing for aviation to help decarbonize. But now there's a lot more discussions around the actual reality around the CAPEX and managing the OpEx. Is are we in a situation where that can actually become a reality? Where are we at the stage yet where ESAF can become that silver bullet? Or are there things that we still need to do as an industry to allow it to fulfill that sort of romantic potential?

Funding Gap And German Grant

SPEAKER_01 23:07

Yeah. I like romantic potential a lot. Let me let me come back to this in a second. But I let me say first, let me say first, I um I'm not I wouldn't call it a silver bullet. I've never done that before. I wouldn't do it. I would say there is a world of increasing efficiency when it comes to planes, turbines, and fuel consumption. There is a world of uh maybe better trains and small distance flights on electricity batteries and maybe hydrogen, something like this. And then there is a world of bio stuff, of HIFA, alcohol to jet, and all of that. And then there is a remaining piece to be decarbonized. And this is where PTL, where synthetic fuels come in. I think it's a mosaic. It's a mosaic of at least five, six, seven different solutions ultimately to decarbonize aviation. And I do truly believe there is also an element of carbon capturing, of carbon capturing and then storing the carbon. So I I can certainly say neither we, and hopefully not too many people, are too romantic to believe that PTL will sort this all out. Um, but PTL is clearly a lever you have to have in this equation, because neither the biofeedstocks, and that is something people tend to forget, there is not enough biofeedstock available to let HIFA do the whole decarbonization of aviation. There is not enough of any of the other, as I said earlier, you know, flying on batteries and all of this, that's fine for very short distances. I don't think we truly expect that in the next 20, 30 years there will be an intercontinental flight on batteries. So therefore, PTL has a role to play. Inevitably, PTL will become of utmost importance if we are serious about net zero for aviation by 2050. Now, is that romantic? I like that word. Is that romantic? Um look, I mean, if you go back in time in the year 2000, and that's an example I gave recently, and I look into surprised faces because people have forgotten, which is fine. This is why maybe we need to look back in order to then learn from that and look forward. In the year 2000, the solar industry started to really gain momentum. And if you were a private individual where I come from, you got a subsidy when you produced using solar panels on your roof. You got a subsidy, you got money from the from the grid if you injected those solar electrons into the grid. And that subsidy, that that factor was 15, 1.5, 15 times the European average production cost. Yeah, exactly. Wow. Now the volume was obviously Mickey Mouse, and it really doesn't make any difference. But what it did do, it brought us onto the learning curve. It started the journey, it started the learning, the synergies, the scaling, the everything. Now, for various reasons, let's not go there. You know, all of this came to an end in Europe and then it went into China. But this is a factor of 15, and that's only 25 years ago. If I now talk to people, in particular to very um very influential people, and they they spread doubts, concerns, and and maybe even angst, yeah, about you know, PTL costs and all of this, obviously it's not very common that these people look back and see is it not the absolute normal cost curve we see in all of these transitions? And I'm not here to say, and and and please don't, I mean, whoever listens to this, I am not to say that PTL anytime soon will come to the cost of conventional. And it will not come even to the cost of biosuff anytime soon. But it will definitely come down. When we look at our work in China with our Chinese company there, I mean that's that's such a different world. And and I think we should not we should not ignore that the cost decrease potential in PTL is significant. And it will only start, and it will start as sooner as we as we get under this learning curve. Yeah.

SPEAKER_00 27:11

Do you think do you think aviation, though, the problem with this the price curve coming down is that aviation is so sort of the the budgets of airlines, the their finances are so tightly constrained and they're so worried about the price compared to the energy markets in the 2000s where there was potentially slightly more room for wiggle room for solar to actually get a foothold and then the cost curve could take effect.

SPEAKER_01 27:39

Yeah.

SPEAKER_00 27:40

Or would you just dispute that?

SPEAKER_01 27:42

No, no, I think there is an element of that. I think, Oscar, the the problem is that there is concern who actually pays for the cost of SAF. Whether it's e-Suff, whether it's SAFRO. And my simple model, and I um let me oversimplify it. Yeah, I mean, ultimately in the entire ecosystem, in the entire industry of aviation, there is only one party paying for all of this. Whether it's the plane, the crews, the the airports, uh, the fuel, it is the passenger. And the passenger is paying for every single item, and the passenger ultimately also will be paying for SUF. Um, he pays, she pays for fuels. Why wouldn't he or she pay for SUF? Now, the problem with SUF is, and I I admit that's a that's a challenge. The airlines, most of them, in most of the times, they don't have the balance sheet. Just uh kind of say, okay, we we will sort this out, you know, who we who we get reimbursed by the by the passenger. There is an element of level playing field. There is an element of an airline needing to have an environment where they can pass on the cost. And they certainly cannot pass on the cost if there is no level playing field. Airline A does it, airline B doesn't, so therefore, that's a problem. I get that. So the conversation we should be having and the discussion in the market and all the people claiming to play a role in thought leadership, they should be spending more time and discussing how this level playing field gets established so that the cost of SAF ultimately, like every other cost element in aviation, can get passed to the customer and the polluter space principle applies also for SUF. So I would think, in summary, I think it is clearly something where drama about the cost and you know those big numbers who have been circulated about the cost of ESUF, they have created a lot of distraction in reality. I mean, consider every cost aspect of aviation, you know, the cost of a plane, the cost of an airport, the cost of hydrogen infrastructure. I mean, never ever has anyone has asked a single passenger to pay for this. It was always the valid assumption that ultimately the passengers shoulder these costs and aviation has been growing ever since.

SPEAKER_00 29:57

You mentioned leveling the playing field and making sure there's sort of transparency on that. Who does that? Government, industry, how do you get there?

Power, Hydrogen, And CO2 Supply

SPEAKER_01 30:07

Yeah, it is clearly. I mean, I'm looking at IATA, looking at Airlines for Europe. I mean, there are so I mean well-organized bodies out there approaching policymakers, European Union. I have a lot of sympathy for um the example which is used often. Yeah, if you if you leave, say, from Schrippel in Amsterdam and you fly long distance, you fly long haul, uh, that is obviously a disadvantage if you have to use SAF as if we or if you would basically stop somewhere, say, in Istanbul or in the Middle East, and then you continue the journey with not using SAF. I mean, that's a very, very obvious, clear example. But at the same time, I mean, that is as as clear and obvious that is, as shocking it is that this has not been solved by today. You could easily look into the technology available and say SUF is only applicable as long as the aircraft is within the European Union airspace or the UK airspace for that matter. Or you could say, or you could say the SUF quote, the the penetration of SUF is relevant for the end destination of that ticket and not where the plane just stops. And I'm sure there are like many, many other ways of solving this. So, yes, I understand the concern of European airlines, and there is, and I'm completely with uh you know, with the European Commission also articulating this very clearly, this exercise of decarbonizing aviation must not lead to a significant shift of competitiveness for European players. I mean, that that would be wrong and in no one's interest. But at the same time, that could be overcome if, and I mentioned it earlier, you know, the associations, the bodies, the strong voices in the market, if if if there was, or would have been more willingness to solve this instead of creating drama and fear and concern about the high cost, I think uh yeah, that that would have been good, and that's still something we should we should be doing together.

SPEAKER_00 32:10

Doesn't that also sort of feed into what we were talking about earlier in terms of speed? Because you're talking about global alignment that's already it takes long enough to get Europe aligned with its 20 or so members. If you're working across the globe with the different jurisdictions, EASA can't tell the UAE what it's got to do in terms of its SAF policy. There's an element of collaboration, shared identity, shared, shared sort of movement and how they're going to push this forward. But that just again slows things up, which you don't want to be sitting there waiting for the right policy that's set in place that means you can get financing. You want to keep things moving forward because you don't have an endless balance sheet from money that you've received. So that's that's difficult to manage and a big problem if you are gonna promote SAF with whilst managing this competitive angle.

SPEAKER_01 33:07

Yeah, absolutely. But uh but 100%. I mean, I'm I'm not here um saying people have not started or have not done enough or have not uh considered this, and I do also recognize it does take a lot of time. But let me let me say something about the cost and the real concern in the beginning. Now, in 2035, we are looking at 5% ESUF penetration in Europe in 2035. So that's that's that's a lot of many years from now. And that then the 5% penetration lasts until 2039. So let's say that's from 10 years from now up to 15 years from now. That's the time window we are looking at. Those 5% of ESUF penetration will have an impact on the passenger on the European air ticket of less than what a cost of coffee is at the airport, or certainly less than a sandwich at the airport. We are talking about five, six, seven euros for an intra-European travel. And if you then say, let's make it a trip intercontinental, let's say North America or something like that, yeah, then well, maybe we're looking at 40, 50, 50 euros uh per ticket. That is what? Probably the amount of an extra piece of luggage or a you know emergency exit seat or half a day of a rented car. So why do I say this? I I think perfection is the enemy of good. I don't think it's it would be harmful if we start this journey, if we if we get onto the learning curve, as I said earlier, if we get more commitment across the entire ecosystem. And then we have until 2035, until 2039, and even then the costs are not as prohibitive as if people could not fly anymore. I would think from a pragmatic point of view, we would be in a much better shape because also in the next 10, 15, 20 years, the cost will come down, as I said. So it is more a question of who is interested in getting started and taking and using the momentum and then learning how to innovate and scale and bring the costs down, and who is more interested in not even getting started? And and and that is something where policymakers, EU refuel, I mean, those instruments are of utmost importance to be to be very clearly guiding the way.

SPEAKER_00 35:30

I want to dial in on a European-based bit of policy that came in earlier this year in the sustainable transport investment plan. And that has sort of been billed as the a great piece of legislation to help accelerate synthetic fuels development in in Europe. Do you just want to sort of, for those that aren't aware, aren't potentially aren't in Europe and across this, what it is and what the the the step is?

Capital Raising And Bankability

SPEAKER_01 36:02

Yeah, I mean let me let me just say it has been a significant step forward. Policy commitment, when displayed so clearly and so unwaveringly, is is 100% helpful. We we it will unlock financial support, it will unlock willingness of projects being funded, it will unlock uh more willingness to discuss between off-takers and us, the producers, the developers. Um, it will certainly have an impact. After people have seen that the words of aviation, synthetic fuel, all of these words have been explicitly mentioned. It was almost like a wake-up call. We have, and I can say this, after the STIP got out, we have started talking to players who told me earlier, Jan, we will not be talking to you. We truly believe this will not go anywhere. And suddenly the same people, nice people, good people, nothing wrong about the individuals, right? But those people then suddenly started calling and say, let's talk. So that is exactly the momentum we needed, and we need more of this. But the STIP clearly has unlocked a lot of potential, a lot of willingness to look differently into this. Um, and there are barriers, even, in fact, I mean, now we see more financial instruments and support mechanisms coming out of policymakers, um, you know, the innovation tanks, think tanks, so to speak, yeah, which is which is fantastic. Very much, very much needed. Yeah.

SPEAKER_00 37:35

Um, one of the the key elements of the the STIP is the the idea of a double-sided auction, which sounds fancy and quite complicated, but in reality it's it's quite a neat solution for a very real problem that synthetic fuels had. Do you just want to explain that aspect of it slightly more?

Is E‑SAF A Silver Bullet

SPEAKER_01 37:58

Yeah, yeah, happy to do that. And I and I you know I can safely say this is clearly something which will make a difference. We're working on this, we as Safra have been invited also to give um input, and uh, there was a small group of people very, very transparently, there is nothing happening behind the scenes or so, yeah. Don't get me wrong, but but it is it is so we get this. I I Oscar, what I meant to say is we have to get this right. We absolutely have to get this right. And it's complex, and we better put our efforts into this so that we make it work. What is the double-sided option? Let's let's start by saying we all need to recognize, and we whether we like it or not, I mean, whoever tells you differently is not it's not entirely truthful, the first couple of tons and barrels coming out of those eSuff plants will be more expensive than those barrels coming out of plants in five years from now. There is no doubt about that. There is learning, there is innovation, there is scaling, there is tons of things. So therefore, we have a potentially a first mover disadvantage. What does that mean? I need to find funding for my plant, so therefore, I'm approaching an airline, a self-supplying airline, or I'm approaching a jet fuel supplier and say, dear friends, I need a 10-year offtake agreement. And they say, Jan, we'd love to give you a one, two, probably three-year agreement, but we all believe the cost will come down. Why would we want to lock in our cost for 10 years? And I I totally recognize this. And then I say, Well, hang on, I need 10 years, otherwise the banks don't fund my project. So that is that is me as a as a producer with the off-takers. Then the double-sided auction looks at this and says, Okay, we understand both sides, we have different needs. Jan needs 10-year security for his banking. However, the self-supplying airlines or the jet fuel suppliers, they say I can maximum lock-in costs for two years, maybe three years, but then I want to benefit from learnings, from scale, from all of that. And therefore, double-sided auction is now doing the following: there is a state-funded, and state-funded can be many states. So there is there is public money funding an entity who basically takes that exposure. There is a middle midstream person you can say, I have a contract with that person, that that double-sided midstreamer gives me a 10-year off-take agreement, it's a binding contract, and that takes that volume and sells it on into via auctions into two, three, four-year tranches to the customer, and they can cope with that. So the exposure of prices coming down, cost coming down, is taken over by this midstream company. But that is, again, well funded. It's a European slash European member state funded or a combination of those member states. That is probably a, I'm not saying the only way, there is contract for difference, very similar, very similar thinking, different mechanism. But that is a very, very powerful way of getting me into a position of getting funding, as well as getting the airlines into a position of securing for at least the first years uh enough enough e-suff. Yeah. That is that is how it works. And again, it's currently designed. It is in place, it has been working for other parts of the energy transition, but for the e-suf market, for the soft market, it is currently set up and and kind of fine-tuned as we speak.

SPEAKER_00 41:18

Isn't the the competitiveness of this, of the auction aspect of this, one of the the critical aspects of making this work? If you don't have enough critical mass of sort of buy-in and interest, it it sort of crumbles beneath itself. So there's got to be a strong level of buy-in across multiple aspects of industry to make this actually work to the potential it's designed to.

SPEAKER_01 41:43

Yes. Yes, absolutely. I mean, the the it is an auction for various reasons. In particular, and I like this a lot, and it's and I'm glad that we discussed this. The the auction is there to not fund non-competitive projects. There is no way, and it's not good use of taxpayers' money, because that is what it's ultimately is, right? I mean, if the member states fund it, it's taxpayers' money, they should not be using that money to fund projects which are not competitive, not good enough, which are whatever, you know, hobby horsing of some companies. So you need to win as a producer, you need to win against other producers. You need to be able to say, I can product, I can produce the product for X cost, and this is how you win because your X cost is below the other cost. And then at the same time on the on the on the on the off-taker side, you know, you need to bid, you need to auction. I'm able to pay this amount of money, and then you get the product whilst others who are willing to pay less. That is how it is maximized the the utilization of public money, which I think is perfectly in line with what we what we aim to accomplish here.

SPEAKER_00 42:50

With the the STIP coming in this year, and then ESAF submandates coming into play in 2030 with a scale up over the decades to follow. How does the STIP help your understanding and your expectation of whether we're going to meet the submandated production levels for ESAF specifically? Do you think there's enough time for it to make a tangible difference? Because there is a concern that none of these projects have reached FID, there's a funding gap issue, and they've still got to be constructed, which is a multi-year process.

Cost Curves And Learning Effects

SPEAKER_01 43:28

Yeah. Look, I mean, none of us have a crystal ball. I can only refer to the projects I'm having under my under my leadership here in Southra. The the Concrete Chemicals Project, the project in Germany is aimed to start producing in 2030. That's our target. We we we look at our timelines. I think we are we are well on track for that. The project in China clearly, clearly is on track to produce by 2030. Um and the way I say it, I actually mean it. And and the other projects will come one or two years later. Now, assume. Assuming that there is another group of three, four other sufferers out there, who am I to say that we can't make the 2030 deadline? I I honestly don't know this, and quite frankly, no one, I don't think anyone knows, but it is it is just reasonable to think in scenarios. So, yes, there is a scenario in which the market will not see the full 600,000 tons of e-suff, uh the 1.2% of 50 million tons. So I absolutely recognize this. Um, I would I would strongly advise, and I think Europe, the Commission has done an excellent job, an absolute excellent job to say the mandate is there to stay, guys. We want no one to give up the the efforts needs to be put, need to be put in. We are even willing to help. I mean, the German government, and I'm not saying this because I happen to have the German accent, yeah, but I mean the German government found 2 billion euro, which they now put into the double-side auction. How can I possibly say, let's think about plan B or plan C at this stage? We are in the year early of 26. Yes, there is a risk that it won't be enough. I am absolutely certain the market will find a way of looking into this. Who has signed up an off-take agreement? That that party has done more for bringing the whole ESAF world into being than the parties who have not signed any off-take agreement. Who has managed to get funding but is just delayed by one year in this process, or maybe projects coming on stream in 31 or 32. I mean, that is not Europe's biggest problem, if we need to sort out how we bridge a gap of one or two years. But it would be an even bigger gap, and it probably would be a prohibitively big gap if we now loosen and you know let go the effort and the ambition. I would I would strongly suggest, yes, we don't know how the future will look like, but we are in a certainly better shape if we keep focusing on establishing an e-sof industry by 2030. And if it does take longer, then so be it. Again, here perfection is the enemy of good, and I don't think we would be well served by giving up any earlier.

SPEAKER_00 46:10

We've talked about a lot of serious matters during this this podcast, and I want to end with a nice, easy question to finish off. Which round of funding or stage of funding do you think is the hardest to get? Not just in the I realize you've got more funding rounds to come. Which one do you think where's where's the difficulty?

SPEAKER_01 46:32

Oscar, help me to understand why is this an easy question? Um I I really believe if you I wish I can answer this. No, but I I think they are all difficult. Let's let's be very clear. They they're all difficult. It depends if you can showcase the quality of your project, the quality of your portfolio, whether you raise money in the project itself or on the top co you find, you know, you find someone for the cap table. I think it all depends on the quality of your of your project. I think it is if you if you have a dream in the very beginning and that dream is only put on PowerPoint, I think it is incredibly difficult. You can't even, I can tell you, you it is difficult to find the right people. Hiring, finding the best talents out there. These are the people you want in your company, these are the people you need to bring it to light. Now, again, with with the shareholders I have, I have people from those yeah, this is really great. I can only imagine how difficult that is. Assuming you have the people, then you kind of shape the story, then you have the first project, then you need a little bit of funding, but I think then from there you grow and you need more funding. The truth is, it is it is gonna be an uphill journey throughout the entire race time. And then if you if you go to a to FID, I think I I only believe that it's then you feel like at least one victory left. I'm not sure. It won't get easier after that. Uh I'm not sure. I I I try to I try to smile when I answer your question, but I don't think it's an easy, it's an easy question.

SPEAKER_00 48:09

I think I was being um mildly sarcastic and teeing it up that way, but I think you're absolutely right. I think um it's mildly trivial to say any of this is easy. It's an unbelievably difficult challenge developing a staff project, and and anyone even attempting it in my book deserves the utmost respect. So um utmost respect to you and and anyone else attempting this. Yan, that was um that was fantastic and and great fun. Thanks so much for being so generous with your time.

SPEAKER_01 48:37

Thank you so much, Moscow.