Iris Warnaar, SkyNRG and Mark Kelly, ICF: SAF Market Outlook 2026

For the third year running, Oscar sits down to unpack the 2026 SAF Market Outlook report once again with Mark Kelly (ICF) and this year with Iris Warnaar (SkyNRG).

The headline numbers: SAF demand is forecast to reach 12.8 million tonnes by 2030 (3.6% of jet fuel) and climb past 190 million tonnes by 2050, though US policy headwinds have pulled the near-term forecast down from last year's projections. On supply, 2030 capacity now stands at 18.5 million tonnes, creating a brief surplus before the market tightens again — and Asia has overtaken every other region to lead the global pipeline, largely to feed European demand.

The conversation digs into the HEFA feedstock constraint that still hasn't gone away, genuine, if modest, progress on eSAF and alcohol-to-jet and China's evolving role as both supplier and its own energy security case study. 

The episode closes with the third section of the report, a proper stress-test of the energy security argument that's dominated SAF conversations all year: real driver of investment, or narrative running ahead of the economics? Iris brings the optimism, Mark brings the risk register, and between them the picture that emerges is "positive but uneven" — with plenty left to sort out before the 2027 report rolls around.

If you have not already read the full report you can find it here: https://skynrg.com/2026-saf-market-outlook/

Transcript

Welcome And Annual Outlook Setup

SPEAKER_00 0:09

Hello and welcome back to another episode of the SAF podcast. And this week, I'm delighted we're having our, I believe, third annual podcast. This is the only episode of the podcast, which is an annual event. And I'm delighted this week to be joined by Iris Warner from Skarner G and Mark Kelly from ICF. And we are going to be taking a deep dive into their 2026 Market Outlook report, which I'm sure 96% of the people listening to this will have already read. But we're going to do a little bit behind the scenes and also do an overview for the 4% that haven't read it. So Iris, Mark, thanks so much for joining us. Mark, you've been on before, so I'm gonna uh we don't need to do your introduction in such details. We'll start with Eris because you are the latest Scar Energy represented here.

Iris Warner On Motivation And Role

SPEAKER_00 1:11

So Iris, how are you to begin with?

SPEAKER_01 1:14

I'm very well, thank you, Oscar. Thanks for having me on the pod. My um my very first podcaster debut, so very exciting. Um yeah, and keen to share my insights with you all. Uh a little bit about me. I mean, I've been at Sky Energy for almost two years now, and that my background is actually in environmental economics, but I think probably what's more interesting is that I'm Dutch Australian, which means I've sort of spent my whole life flying back and forth across the world to try and stay connected with family and friends. So I think uh, you know, my my work in my work in the SAF industry is really motivated by a need to uh to atone for my sins. Um it's possibly, you know, I every time I sort of sat at that, sat working on the uh on the report, you know, late at night thinking, oh, you know, should I just go to bed? I think no, no, no. I I need to atone. I need to make up for the sins of myself and of my father. So uh so here we are. Um yeah, I think maybe what did I do before? Background is environmental economics, but I worked at BCG as a strategy consultant before this. So we both strategy work, but I also spent some time in uh the private equity team. So my expertise is both in sort of market research and due diligence, but also in fundraising, um, which is something that I do a bit of at Sky Energy as well.

SPEAKER_00 2:38

And how did you end up being involved in the report? Because I read at the end of the report and the people involved in the report, and it's quite a long list of people at Sky Energy. But this is your first time being were you the lead of the report for Sky Energy? Sort of having a more central role. So how did you do you end up taking that on?

SPEAKER_01 2:59

It's kind of funny because yes, I was uh I was the project manager for for the report this year, at least from the Sky Energy side. I think Mark took the lead um on the ICF side. Uh, but I was definitely the least experienced of all the members on the team. So I was very lucky to to work with um you know a bunch of senior analysts, but also directors and experts from uh across the organization who have done this many times before. So was able to piggyback a little bit off their expertise. Um why did they choose me to lead it? I'm not sure. Maybe because they thought that I could could could spin a good yarn. Um to be honest, I think market intelligence, it's a it's it's a core part of what a strategy team does. So I think it just made a lot of sense.

SPEAKER_00 3:44

Yeah. Awesome. And Mark, it's great to have you back. Have you been? Thanks for having me back, Oscar. Pleasure. So for those that haven't maybe haven't listened to our episode a year ago when you made your debut on this podcast, do you want to explain everyone to everyone briefly about your background on how you ended up being involved in the rapport?

Mark Kelly On Modeling SAF Markets

SPEAKER_02 4:09

Yeah, of course. So uh my name is Mark Kelly. I'm a manager in ICF sustainable aviation team. Um, so the sustainable aviation team is a team that sits within the aviation team in ICF, and it's a team of specialists who focus almost exclusively on aviation decarbonisation. So my background is a physicist. So I joined ICF from Trinity College Dublin, where I was working as a postdoctoral researcher on SAF. And so this was kind of a natural transition over to the industry. And so, you know, within my role, the main focus is on SAF. So I combine you know technical, commercial, policy sides of the market. I model a range of different uh things such as feed stocks, uh production capacity, supply and demand, alongside policies and regulations that shape the market. Um, that involves building financial models for SAF, looking at project costs, revenue streams, cash flows, investor returns. And so where this kind of all comes together is it allows us to um to test different markets and policy conditions and then to help design mechanisms that can help improve the economics of uh SAF facilities and try to you know uh get the first of a kind advanced SAF facilities online by helping them to you know strengthen their bankability and overall economics. So, you know, we we use this work, most of my role is is using this as an input for clients on strategy, investments, commercial decisions, as well as policy design and implementation. And so, similar last year, I I led the ICF side on the market outlook, having the privilege to work with the Sky Energy team on this. And so, kind of what we what we've been leading on in terms of this market outlook, and I'm sure we're going to get into it, is we're able to bring uh our SAF demand modeling uh into this piece of work and then combine that with Sky Energy's uh detailed outlook of the the landscape in terms of supply coming online so that we can we can present this overall holistic view of the market.

What The Market Outlook Measures

SPEAKER_00 6:14

Awesome. So as you outlined there, Mark, there's three major segments to the to the um outlook. There's the demand side, as you mentioned, and the supply side. And then there's over the past two years, there's been the third special segment, which is sort of up to a bit of market demand in um interpretation. Last year was the tipping point, and this year I think you very rightfully tapped into something that I think everyone in the SAF space has been thinking about in terms of the energy security argument for SAF. And we're gonna get into all of those uh pieces. So let's Mark, I'm gonna come back to you because the demand side starts

Bottom Up SAF Demand Forecasting

SPEAKER_00 7:05

first. So explain the demand side outlook for SAF that you're gonna get that you outline in the report and potentially how it's changed and adjusted since the report last year and the work you did on that.

SPEAKER_02 7:20

Yeah, absolutely. So on the demand side, what we do is we're trying to build up um a bottom-up approach to modeling what are the likely uh magnitudes of SAF demand coming onto the market over the next you know, out to 2050. Um, so we take a bottom-up approach, so we start with our jet fuel model. So, what we do is we have an internal jet fuel forecasting model, and that's a country by country level uh pairing. And so that looks at jet fuel consumption at the country level, and then it bases on you know historical passenger and cargo movements between country pairings, and then forecasts that out to 2050, considering things such as GDP increases, um fleet renewal efficiency improvements, etc. And what that does is then that gives us a jet fuel uh consumption forecast on the country level by a domestic and international split. So the next step then is we look at what uh types of policies are out there in terms of SAF that will that will uh generate demand, and you know, due to kind of the inherent uncertainty in uh predicting policy development over a multi-decade time frame, and then also realizing the fact that you know some policies and and commitments don't carry the same level of certainty. So, what we do is we take a scenario-based approach. So we we look at each country, we have a database of all the staff policies globally, and we we categorize these policies into different kinds of buckets, and then we that lets us convert uh that policy into a demand of SAF, whether that's a percentage of the Jet fuel for that country or region, or whether that's an absolute magnitude, for example, uh airline commitments. So I'm not going to go through each scenario, but just to give you the like the high-level result of our central scenario. So, in our central scenario, um we see that demand has increased uh from 2.1 million tons in 2025 to about 3 million tons in 2026, which is 0.9% of the global jet fuel consumption. Uh, and by 2030, we forecast that to increase to 12.8 million tons, which represents 3.6% of jet fuel demand. And then by 2050, we have this increasing to uh over 190 million tons, it equates to about 42 percent uh of jet fuel uplift in 2050. So if if we compare that to last year, last year uh we projected by 2030 there will be 15.5 million tons. So this year there has been a slight downward revision, and that's primarily due to uh the policy changes we're seeing in the United States. Maybe we can get into this a bit more later. But what we're seeing is overall, you know, there has been some um welcomed uh developments on the state level, but on the federal level, there has been a bit of headwinds for SAF economics, particularly um when it's when it's weighed up against renewable diesel. And so all that combined, we we do see a shorter-term uh downward revision in the US. But that's been somewhat counteracted by continual policy developments and uh more certainty of policies, particularly in Asia. So you know it's been a slight word downward revision, but we don't really see it as a broad retreat um from SAF demand. And so you know the the overall story, if I had to sum it up, it it's been positive but uh uneven. So you know it's the market's becoming more policy-backed, but diverse geographically, um, and it's a significant portion of that demand uh still needs to be converted into uh concrete policy.

SPEAKER_00 11:14

And how are you a lot of what you can do in the modeling side is driven by policies and mandates and sort of fixed government stuff. What

Voluntary Demand And Policy Signals

SPEAKER_00 11:25

about the modeling the voluntary side? Because I think that's one side in the US, they're a lot they're actually a lot stronger on the voluntary market comparatively to other markets. So, how do you go about modeling that and sort of looking at how that that's actually shaped up in over the last year?

SPEAKER_02 11:44

Yeah, like it it's a very it's a very complex thing to do to try and model the voluntary demands, but what we what we try to do is look at policies that stimulate that demand. Um, so for example, in the US, it's it it there's um due to the economics, uh the volunt so if we zoom out, voluntary demand is mostly a large driver of it is economics. So if if you can minimize the cost premium of SAF over JET, you will you know inadvertently stimulate additional voluntary demand. So we're able to look at you know what policies are there that are that are working in this way. So if we look at the US, we have uh you know the stackable credits, whether it's state-level tax incentives or production incentives, or it's if it's LCFS schemes, or whether it's the federal level uh inflation reduction act. If we look at Japan, Japan has the production incentive. Um, even in the EU, we have the FEITS mechanism, which is trying to stimulate uh additional demand on top of mandated levels, as well as trying to soften the cost exposure to airlines. But all to say, um we we try to size up you know what has the aviation that sorry the airlines committed to in terms of those voluntary targets. We then look at the different regions that are trying to generate that uh additional voluntary demand, and we then try to convert that into you know a realistic um estimate on how much of that can actually be converted into a demand. And that's again just to finish on this, that's where we take the scenario-based approach where we can kind of toggle the different uh demand assumptions within each scenario.

SPEAKER_00 13:28

Awesome. Eris

Supply Pipeline And 2030 Overcapacity

SPEAKER_00 13:30

coming over to you, you guys sort of lead on the supply side of segments of the outlook. Give us a summary of what the supply and the production side of the markets looking like. Do you think there's enough supply to support Mark's predictions and projections on the demand side?

SPEAKER_01 13:53

Uh the short answer is yes, but I'll also give you a long answer. Um so I think I think I think overall, actually, if we just look at 2030 for now, because predicting things beyond 2035 is is difficult. Developers don't even announce their projects that far out. So we really the most credible number to look at is 2030 or perhaps 2031 or 32. Um, the 2030 figure has actually remained relatively stable compared to last year. So there were some new projects added to the pipeline, there was some that we that we took out for for whatever reason. Um, but overall we increased from 18.1 million tons in 2030, expected to be online, uh, to 18.5 million tons. So that's it, it's an increase of 0.4 million tons. Now, I mean, if we overlay that onto the demand picture, I think that Mark just just told us about, you know, there we see 12.8 million tons of demand in 2030 under the current trend scenario. So actually, what we uh are predicting at this point, if you compare those two, there's actually temporary overcapacity in the market that doesn't sort of resolve itself until after post-2030. Now, there's a few caveats there. Obviously, uh our 2030 forecast is what we expect could come online. It's not all online yet. Um if if producer margins are challenged, you might expect some of those projects uh to be delayed until there's enough demand online. Um, or perhaps you know, we can't we we could see cancellations, although we didn't really see any this public cancellations uh this year, which which was a good sign. Um I think it's also worth noting that a lot of the capacity in the pipeline, right? It's it's actually quite flexible capacity. So the a lot of the projects have the ability to um switch their product slate between renewable diesel production um or SAF. So that can change, sort of increase or decrease the outlook by 30 to 60 percent. So that means that's likely to uh absorb a little bit of overcapacity because a lot of those producers will switch towards renewable diesel production. Um so that's the overall outlook. I think mostly what we still see is a lot of focus on Heifer pathway and also a rise in co-processing. Um that's driven mostly by the oil majors and miners. Um, but I think what we always like to look at, uh what we find really interesting are those advanced pathways and how much progress are we making in alcohol to jet and bioft and ESAF. And there I think um to start with ESAF, uh, we did see significant improvement uh since last year. So I think that is a really good news story. I think off the top of my head, it increased by about 0.8 million tons, um, mostly in Europe, but there's also a couple couple projects um developing in China and in the US as well. Um so we see some progress there, though uh no commercial scale FIDs yet in Europe. So that is definitely something we are all watching out for and that needs to happen soon if we if we are hoping to meet the the 2030 mandate. Um on the advanced biopathways, I think um we saw a really significant milestone um with uh Lanzer Jets Freedom, Pines Facility um reaching sort of commercial operations. That's that's um a wonderful sign that the alcohol to jet pathway can can work. But I think on the flip side, we saw sort of limited project, uh limited progress elsewhere in the pipeline along the alcohol to jet um technology pathway. And I think you know, part of that is those the the changes in the the economics in the US. I think a lot of those large-scale projects are based in the US. We've seen the incentives sort of uh supporting these projects decrease somewhat and and uh the economics for, for instance, road transport um become more favorable, and that's why we we've seen a little bit of less progress there and then by OFT, so the Fisher Trups pathway, a little bit of progress as well, but not really material. So I'm telling you all of this because I think what we introduced last year was this heifer tipping point analysis, right? Which says that by 2030, we really expect the heifer feed stocks to become significantly constrained. And we re-looked at it again this year, and you know, we had to look at all these different feedstocks trends and so, okay, well, maybe long term there's gonna be more feedstocks available, but at the same time, more competition from road. And all that is to say that that can 2030 constraint is still in place, didn't change from last year, which means that getting those advanced pathways online and at a commercial scale is gonna be super important in order to actually be able to meet demand post-2030. And that's where we would like to see more progress, to be honest, than that we've seen in the last year. Steps have been taken, it's positive, but it's it's not enough.

Asia Leads New Capacity And Exports

SPEAKER_00 19:05

Yeah. And how have you seen the global balance of supply shift? Because lots of people talk about the monster of China that can, you know, decides to snap its finger, just take everything take over all production globally and sort it all out by itself, is what it seems like. So, how have you seen the supply if there has been around the world?

SPEAKER_01 19:30

Yeah, so the I think this was the first year where Asia overtook all the other regions in terms of contributing the greatest share of capacity to the pipeline. I think in previous years, uh, US had been a major um supply center, but I think we had to revise the outlook down there a little bit. I think also in relation to what Mark said before around um the production incentives weakening at a federal level. And on the flip side, in Asia, we see more and more projects being added to the pipeline and then really positioning themselves as a major exporter into Europe. Um, the Europe outlook actually also increased somewhat. So it's not that it's all Asia, but I think in Europe it was mostly ESAF, really, where we saw the progress. Um I think it should it is worth mentioning, right? Asia, lots of capacity in the pipeline, but it's really depending on offtakes from Europe. Um, and it's a question whether it can actually secure those long-term offtakes to get those facilities built as well, especially where you know Europe is becoming more interested in in SAF also as sort of a strategic energy security play and asset. And then the question is, you know, does it make sense to be importing all of that from Asia and how all the policy around that develop um going forward?

SPEAKER_00 20:53

I think there's there's an interesting dynamic in China because you mentioned the long-term off-take piece, but only six producers in China are allowed to export at the moment on the whitelist. And they've got they uh they've had hundreds of applications that the Chinese government haven't acknowledged and haven't approved. So the capacity build-out in no way reflects the amount that's being currently exported. So there is there presumably must be in the water a huge demand shift across Asia and China. Everyone keeps talking about these mystic mandates that may or may not appear at some point. So the potential there is so much more vast than is currently being exported, and the potent the current reliance on European demand is absolutely true, but may not be the case forever. But it has the potential to do a a lot of rebalancing on both the demand and the supply side.

SPEAKER_01 21:57

Yeah, I mean, I think personally. Export building all this capacity just to export to Europe is not a sustainable model. I think we highlight in the report that Asia also has a fuel security problem, right? It's got lots of jet fuel refining capacity, but it's fully dependent on the Middle East for its supply of crude oil. If they want to actually establish a resilient fuel supply chain using SAF, well, it doesn't make sense to then be exporting all of their SAF to Europe, right? So they're going to need to create local demand if they actually want to enhance their own fuel security. And I'm hopeful that countries like China come out with sort of ambitious binding mandates to sort of to absorb all of that capacity that's in the pipeline. It would be a real shame if that capacity is not realized because the demand picture does not meet the supply.

SPEAKER_00 22:55

Yeah.

How Asia Demand Gets Modeled

SPEAKER_00 22:56

And Mark, coming back to you on the on the demand side, and the we've already spoken about the issues of working out voluntary demand and how policy is the big factor. How have you found being able to actually predict and project the demand side in Asia? Because it, as we've just spoken about, it is such an influential market in this space.

SPEAKER_02 23:20

Yeah, absolutely. Except for so China would be the one to put a caveat on in that. Just building on your previous discussion there, it adds a bit more context when you view it in a more uh holistic view. Um, this has been the policy or the industrial strategy of China in regards to other industries. You can build the capacity and then act as somewhat reactionary to um where that is getting imported to. So if policies negatively impact the economics of you import them into a certain region, you can then pivot and use it uh as another use case. And so we we are seeing that. So, for example, um the the used cooking oil rebates um that was uh retracted by China in response to the investigation by the EU on anti-dumping and and counterveilling duties. So I expect China to kind of hold that position where it's almost reactionary to whatever happens in Europe. Um, like the capacity in China is enough to meet EU demand almost. Um, so like that's just a put it in into scale. The thing that will be constraining it is access to eligible feed stocks. Um that's the big one. In terms of other uh countries uh in Asia, so we are seeing quite public um advancements in those policies. Uh for example, Indonesia, I think last month or two months ago, the minister declared a decree on um mandatory staff uplift in two of their main airports. Um in uh South Korea, you know, we've seen advancements in India. So it's the numbers have been out there for the past maybe one, maybe two, three years, and we covered them the same as in last year. So a lot of our estimates are are quite similar to last year. However, we're more confident now because while the numbers are still the same, we are actually seeing some of the policies being developed through the pipeline.

unknown 25:25

Yeah.

SPEAKER_00 25:26

That's an interesting sort of point.

Cutting The Report And Building Story

SPEAKER_00 25:29

How has the the process this year been different or the say different to last year? Because you're using you know similar models and refining things as opposed to, you know, so has it changed? And if it has hasn't changed that much, does that mean it's easier?

SPEAKER_02 25:52

We we hoped it would be easier uh at the start of this year, uh, but it yeah, it wasn't. When you when you get a bunch of nerds into a room, the the kind of the work just expands. So uh yeah, like we we use similar tools, but we we kind of improved our methodologies and you know our coverage and the the depth of analysis we're doing. So you know, in the report it's whatever number of pages it is, but the amount of work that that you know, the size of the report it could have been is is uh orders of magnitudes greater. Um so yes, the same tools being used, but it give us time and an opportunity to kind of improve those tools, improve the methodology, making sure we're looking at things in a more holistic view. Um Erist uh touched on it there, for example, in the tipping points, so able to look at you know what other dynamics are happening in other industries that will impact uh availability of feed stocks, etc. Um, so yeah, it not easier.

SPEAKER_00 26:53

And and as you you said it there, it could have been so much longer, and you know, how do you decide what to keep, what to cut to make it as um you know word efficient as possible so that people aren't sitting there for six hours feeling like they're reading a novel or a non-fiction book, and it's actually uh something you can sort of condense and and understand in a you know a lunch break as opposed to a you know a full day reading marathon.

SPEAKER_02 27:28

It it's always the maybe I'll take a stab at this first, Eris might have a different answer. It's always the hardest part of any project is trying to cut out all the interesting things you want to say, and it forces you to you know condense it into like the most concise thing that you can say. And so that's where you know graphs and tables become really important. How much information can you kind of layer into that graph to save you a section?

SPEAKER_00 27:53

That is such a consultant answer.

SPEAKER_01 28:00

Mark and I are both consultants just by training. So what did you expect?

SPEAKER_00 28:05

I mean, it's I mean, it's just the classic the more detail you can put in a graph, the better, so that you know we can understand it, but it you know, us members reading it.

SPEAKER_01 28:14

Yeah, sort of bamboozle you with facts. Um, and I think I mean one thing that um I tried really to do this year, and Mark, I wasn't part of the process last year, so you can comment on whether this is new or not, but to really start with more of a storyline-led, hypothesis-led approach, right? So we kind of knew the story we wanted to tell, and then were able to prioritize, I think, the analysis and the data um we showed based on that. I think that always helps to stop the the nerves going too deep and running in all different directions. Uh, because we we all love to do analysis, but it helps keep it efficient. But for sure, I mean, every year we have to kill some of our darlings, and uh that's never fun. But we keep them for our internal, uh, internal purposes. I mean, I think at the end of the day, ICF and Sky Energy also do this because it's super helpful research for us and our own strategy and uh development and our own work. So whatever doesn't go into the report for public consumption, we still have access to.

SPEAKER_00 29:18

Yeah. I mean, it fundamentally at starts, I remember hearing this last year as an internal exercise, anyway. And then you thought, well, might as well give it to the public. So actually, you're doing sort of a bit of public good by publishing it in the first place.

Optimism Versus Risks Beyond HEFA

SPEAKER_01 29:33

Well, that's that's a thought.

SPEAKER_00 29:36

Um so when you when you finished the report, you published it, apart from relief at finishing it and it being done for another year. How did it make you feel about the trajectory that the global SAF industry is on? How do you reflect on that? Let's start, let's start with you, Eris.

SPEAKER_01 30:00

Well, I mean, anyone who knows will knows me will call me an optimist. So I I take quite a an optimistic perspective. I think um what we tried really to bring across this year, and what I think is positive for the industry as a whole, is that uh the um the strategic rationale for SAF really is broader than just decarbonization alone. And I keep repeating that every time people ask me. Um, I mean, at Sky Energy, we are very much a sustainability-focused company. So that's that's what motivates me and that what motivates all of us, but it's not what motivates everyone. And we need to be pragmatic and realize that. And the more people that we can convince that SAF is a good positive thing, whether they be, you know, on the left end of the spectrum or the right end of the spectrum, I think that's a it's a positive thing for the resilience of the industry as a whole. And I think that's you know what has come across strongly in the report this year. That's what already has been coming across strongly. I mean, we spoke about the business case in the US declining somewhat, but I think you know the flip side of that is that the 45Z credit was extended by a Republican government because of the uh strong support from the agricultural lobby and sort of the you know the economic benefits that it could bring. Um and I think these developments and seeing these trends are really, really positive, the the long-term trajectory of the industry. Now, I have my gripes around you know some pathways not progressing fast enough. Um, but these I think are challenges that as long as we stay on top of them, are definitely, you know, we can overcome them as long as we collaborate uh in the right way. So I think overall, um, if I take a long-term perspective, I'm I'm I'm quite optimistic and positive that Mark, maybe maybe you uh have a different view.

SPEAKER_00 31:53

Well, Mark, I'm expecting you to say, you know, I'm slightly pessimistic, had to revise down my projection, and you know, the US is is single-handedly tanking this on the demand side, so we need to tank. Or am I wrong?

SPEAKER_02 32:09

Maybe I'll disappoint you then. I think it it's it's it's relatively easy to be pessimistic and to pick holes and flaws and things, not to say we shouldn't. Um, so you know, when we throughout most of our projects, I've been struggling with this. You know, I'm optimistic in one regard, but quite apprehensive in the other. So, you know, I'm optimistic there has been real measurable progress. Like, you know, SAF supply in 2025 doubled again over two million tons was supplied. Um, the mandates were met comfortably in terms of volume uh supplied. I'll come to the the negative side of that, but in terms of the volume that was supplied, you know, it it was met comfortably. So we've moved beyond you know a voluntary market into more of a compliance-driven market. Um the big one that I am very optimistic about, and Iris has mentioned there, is you know, policy momentum, it's it's continuing to broaden. So SAF, we're no longer seeing SAF as only um only a sustainability policy. You know, it's now an industrial strategy policy, it's an agricultural policy, it's an energy security policy. So that's the the broadening the the strategic rationale for for SAF kind of gives me confidence that it'll endure, um, even if in the face of uh governments that are not do not hold sustainability as their number one priority. Um also encouraged from what I spoke about previously in that there is more policy conversion, so not just converting you know uh talk into policy, it's that the policies that are being developed are becoming more sophisticated. So you know that there's been greater recognition for a lot of things that the industry has been saying for a couple of years now is that the mandate creates the demand, but it's not enough to make first of a kind facilities investable, and that's why we're seeing you know more attention for revenue certainty mechanisms and de-risking mechanisms in the in Europe primarily. Yeah. If I go to the flip side now, I I you know the mandates have exposed some of the issues around price and transparency and the way the costs are passed through the airlines. Some of these costs um are associated to a risk premia that's associated with a new compliance market. You know, it's the first year of the mandate. Um, you know, fuel suppliers have to weigh up both the the volatility and price in a relatively illiquid market. Um also noting that a lot of the the fuel suppliers will sign uh year-long uh supply agreements at a fixed price. So therefore there is volatility in the prices, which we've seen in 2025 that they have to cover. On top of that is then you know weighing up what what is the alternative cost of non-compliance? What about if the SAFI provided does not receive, you know, the isn't eligible, for example. So there is a part of that, but you know, it remains unclear if that is the the driving factor of this or if there is some um control issues that's allowing the the suppliers to pass through those high cost airlines. Yeah, again, the flip side, I'm confident that you know people are looking into this on the commission level, for example. The second thing I'm I'm quite concerned about, and I might finish in this one, is um Iris has also mentioned this, you know, we're still very dependent on HEFA and the feedstock constraints we're seeing, you know, that's not going away. Um we're also seeing increased competition from other sectors. Uh, for example, in the US, you know, the incentive stack is now much more heavily in favor of renewable diesel. So that's going to pull feedstock and and pull the the production slate of flexible uh production facilities to the renewable diesel as opposed to the SAF. So commercial development of non-HEFASAF is beginning. No, Ares has mentioned a few facilities, but not at the rate that we require to reach our targets, and so that is the one apprehension is how quickly can we develop policies to allow that skill and beyond HEFA to make to make the SAF industry a more sustainable and scalable industry?

SPEAKER_00 36:41

How how do you balance your apprehension versus your optimism? Are you more optimistic versus your apprehension? Is it sort of a 50-50 like this is act they these are serious problems? I mean, they are serious problems that you are referring to, but are you still more on the optimistic side? Just these things need to be sorted to create vast acceleration.

SPEAKER_02 37:03

It it's a bit of a challenging one because you know the nature of my work means I have to look at the the risk associated with everything. So inherently, a lot of my work is thinking about the downside and the potential downsides. Yeah, but like if we zoom out, this is a rapidly scaling industry, you know. It it's personally I got into this line of work because of my passion for sustainability. I think it's pretty cool seeing um a renewable industry scale this quickly, uh, and the buy-in from you know across the stakeholder supply chain. So I am I am very optimistic, and it's because of that optimism is why I'm apprehensive. I wanted to be able to scale uh sustainably, to ensure that there's buy-in, but also ensure that it can scale beyond just the immediate TEFA pathways.

SPEAKER_00 37:54

That's that's a brilliant, brilliant answer.

Stakeholder Alignment And Mandate Pushback

SPEAKER_00 37:57

I'm now gonna read you guys something from the 2025 report. At the end of the report, it says governments, corporates, investors, and regulators each have distinct roles to play, but their actions must be aligned and simultaneous. How do you reflect on that a year on? Are we seeing more alignment and those stakeholders acting simultaneously, or are we still experiencing that as a bit of a roadblock to acceleration? Has it improved? Eris, maybe I'll come to you first because you didn't write it, so you weren't involved in the writing it, and I'll get Mark's reflections afterwards.

SPEAKER_01 38:38

I was gonna say maybe Mark should take this on, but uh no, I can I can offer a few comments. I think in terms of alignment, and I sort of want to echo something that Mark mentioned just before, that uh at least at the European level, the European Commission has really been listening to industry, um, hearing out our concerns and acting on those. I think um, you know, Project SkyPower has done a lot of work in um really clarifying some of the challenges and developing first-of-a-kind ESAF facilities, and we saw those directly addressed, at least in part, uh in the STIP which came out at the end of last year. So I really want to acknowledge that, right, that that there is movement. And I think Mark, you know, he's closer to the UK side of things, but I think the RCM also, you know, does a lot of um good work in in addressing some of the off-take challenges more for those advanced bioprojects. So I think that's really positive um momentum. I think also more on sort of the the corporate side, I think some really positive uh developments on the SBTI side, recognition, I think, of book and claim, which then I think takes some of the um the breaks off the development of the corporate market. So I think you know, those are really good, aligned, simultaneous movements in in the same direction. I think from a developer's perspective, we always want to see policy come into place more quickly. Um, because you know we just want to get going and we are often weighing on sort of policy certainty. But I think overall, these are all really like the right steps in the right direction. And I think the other thing, which has also been really positive, is the the European Commission has been just really consistent in um its messaging around policy and the fact that the mandates really are here to stay. And that's one of the most important signals they could be sending out there from developer and an investment perspective. So I I think they are taking their role very seriously there. Um thinking, did I miss any? Are investors moving in the right direction? Well, yes, I think there is a lot of um, definitely a lot of appetite from investors at the same time.

SPEAKER_00 40:55

They are sort of you've got loads of investors now, so what you should think of them. You've got loads of them.

SPEAKER_01 41:01

No, exactly. And I mean, we speak to the market all the time, right? We're developing other projects, so we've got a finger on the pulse around uh if the appetite is there, and I'm pretty confident in saying the appetite is there for the right de-risked projects. Um that's no easy feat, but it's doable.

SPEAKER_00 41:19

It it's doable. Uh Mark, I'll come to you and then I'll come back to you, Iris, um, on certain aspects. Mark, how are you reflecting on the alignment and synchronicity of stakeholders across the industry?

SPEAKER_02 41:34

Yeah, I very similar to what Iris said. Um, you know, I think the pieces are falling into place. Um like over the past year we've seen extensive policy developments, consultations, market engagements. Um so I I'm I'm quite confident now that you know governments, regulators, corporates, investors, they're all aware of um of the upsides, the downsides, what each side needs and what each side what the the goals of each side is. So I'm quite confident in that the knowledge sharing and engagement has has continued to develop. Um the UK, for example, has released quite a few consultations in the past year. Um so it's it's quite encouraging to see that level of engagement. The the key thing comes back to is that each of those actors have their own goals and they're not exactly aligned, um, which isn't an issue. This is the same in every industry, but where it becomes a problem or becomes an issue is in the word simultaneous. So you know, different actors it's hard for them to act simultaneously because the environment in which they are acting in is different to what their goal may be, or there's some roadblocks preventing them from wanting to act simultaneously. Um so in short, I'm I'm quite encouraged um that it's improving, but again, it's a simultaneous angle. I think there's there's much better alignment about what needs to happen, but then converting that you know into decisions, mechanisms, progress, that's that's the tricky bit.

SPEAKER_00 43:15

On the alignment piece, I'm gonna slightly push back on there being mandate alignment across stakeholders because there is a lot of conversation and various high-profile figures, whether it's from airlines or from oil and gas companies, have been putting pressure on mandates in the sense that they're not going to be met, particularly. I know that there's um a consultation out right now with the um UK government about advanced feed stocks and whether we're going to meet that aspect. And there's been criticism from industry around the mandates in Europe and the rate that they scale up, which has been slightly undermining the certainty around. Those mandates. Yes, the commission's come out and said they're not going to move, but still there are those signals that go out to industry that isn't necessarily, you know, productive for ensuring that they remain, you know, fixed and certain. It just raises the slight question. You at all concerned around that alignment aspect?

SPEAKER_02 44:21

I think that's always going to happen. Um, when you have this is this is what I mean in terms of different environments in which they act. So if without getting into too many particulars, um different actors have to act on behalf of the role in which they are taking. So if airlines are facing high charges, they have to the representative for those airlines have to push back at the root cause of what's causing those increases. Uh same with um obligated fuel suppliers. If they see that they might have to pay high penalties in a couple of years' time, it is in their interest to push back on those to ensure that the penalties aren't faced by them and they're not hit on the bottom line. So, in that regard, that that's my answer to that one. In terms of alignment, I think what I'm referencing is that there is widespread alignment on the fact that continuing down the path of non-decarbonisation is going to hurt everyone. Um, how can airlines continue to grow and make profits if uh there's climate deterioration, if there's other things that are coming into their into their uh lines of work that results in impacts and cost? You know, we've seen the fluctuations in jet fuel price caused by uh the over reliance on on importing jet fuel and fossil supply chains that has had magnitude, like orders of magnitude difference on their price and on their profits compared to a 2% blend off of another jet. So I I I think that the overall not to not to diminish the fact that this is you know they operate on slim profits, so like any increase is going to have an impact, but I think just putting everything in that wider viewpoint, I think what I mean as well is that it's encouraging that the governments and the regulators are aware of these issues and that they are actively trying to resolve them. So, for example, trying to work out is there anything that can be done to prevent this unfair pricing pass through or lack of pricing transparency and documentation pass through, how can we improve all these things to ensure you know airlines, for example, can claim mechanisms that allow them to reduce that cost premium? For example, the the feats mechanism. So there's a lot of work ongoing. All the sides understand where the other side is coming from. It's just it's that inherent difficulty of trying to make a policy that ultimately is going to impact someone.

SPEAKER_00 46:56

Arius, what do you have any additional reflections on that, or has Mark covered it all?

SPEAKER_01 47:04

I think Mark has covered it pretty well. Look, I'm not here to to to you know throw bars at other sides, but I think I just like to point out. No, I think all I was saying is um, you know, we publish the market outlook for a reason. Facts are facts. Um it's it's pretty clear what is in the pipeline, right? And what is possible. Um I think that that should speak for itself.

SPEAKER_00 47:31

Yeah. I think that's that's a really interesting point that it's it's not just it doesn't just act as a market outlook about what's going on, it's uh it's uh an opportunity to people to reflect on the trajectory that the industry could go on with the right buying, because there are still those that aren't necessarily as bought in as others. You've got some fantastic partners who are fully bought in on your DSL1 project and other projects that you're working on, and yeah, if it can if others can read the outlook and go, okay, well, we need to actually take a more serious look at this, then that's a massive win for the industry as well.

SPEAKER_01 48:12

Exactly. Exactly. And and I mean, we write it, so at the end of the day, we're obviously able to give it the spin that we want, but it is it's it's a fact-led argument always, right? And I think anyone who says that there's not enough capacity in the pipeline or this goal is not achievable, I mean, show me the facts that you're basing that off, and then we can have a conversation. But I think um, you know, we know what we believe, and I think it's a pretty substantiated argument.

Energy Security Argument Put To Test

SPEAKER_00 48:43

Yeah. I want to come to the final section, the the special feature section on um energy security. And it's been a wide conversation. I think I've touched on it every single episode of the podcast this year, um, certainly since February. Um I just want uh is it is the energy security argument that convincing? Because if I'm playing devil's advocate, because the quantities of staff we're talking about for the next few years is so dramatic much lower than the others fuel, the fuel that uh you know Europe needs, for example, does it have the potential to be that significant to make a real energy security difference over the of course over the sort of looking the very long term, but you know, lots of these people are fairly short to medium term thinkers, so can it make that much difference, you know? Convince me. Iris, do you want to do you want to take that one to begin with and then we'll go to Mark?

SPEAKER_01 49:51

Again, short answer yes, I do think it can make a very big difference. And to to substantiate that the energy security argument is already landing with government, right? And we're seeing very real progress. I mean, uh talking from the Australian perspective, uh, for example, I think in the the most recent budget, um, the government announced um that it would come out with a uh a SAF mandate, really, with the underlying rationale being that that could help uh improve energy resilience in the future, because obviously Australia's got a massive sort of energy security problem from that perspective. Um, we're seeing, you know, through our work in Sweden that there is more, you know, indicative commitment from the government to potentially uh participate in sort of a double-sided auction, really also coming from the fuel security angle. Um, and and I can give you more examples, right? Like this is a very real topic of conversation that is absolutely driving policy. I think your question, though, also comes from okay, well, what impact can this actually have on fuel security? Um, and it won't be an overnight impact, obviously. I mean, even just developing a facility takes a significant amount of time. So it's not like we're gonna wake up tomorrow and all of a sudden our problems will be solved. But, you know, if you're um Europe, for instance, and you have the choice between building a fossil refinery or a SAF refinery, then it doesn't really make a lot of sense to be building a fossil fuel refinery. It's not gonna be as competitive, um, but it's also gonna be really expensive. I mean, then you again have all that capex investment, right? Which is part of the reason that SAF is more expensive in the first place, is because you have to build a whole new factory rather than producing from these fully depreciated assets. Um, so it'll be a journey and it will take time. But I am confident that you know, over a 20-year time horizon, it can actually make a material difference.

SPEAKER_00 51:53

Yeah. Mark, what do you think about the energy security being a net net positive for developing SAF?

SPEAKER_02 52:01

Um, it depends between whether it then whether the narrative is important or whether the narrative will result in project development. So that's two different questions, um, which will two different answers. But to kind of go back and take a step back, I think the energy security narrative, it's important, but you're right, it can be exaggerated if it's presented too simplistically. So, you know, uh what we're seeing a lot is over-exaggeration in terms of the impact that SAF can have for energy security, energy resilience. SAF is, you know, you say um it comprises a small percentage of your total jet fuel, so it's not going to insulate aviation from you know the full impact of every oil market shock in the near future, but it's just diversification always helps. So if you can have a greater share of your pool that is coming from different resources and it's not tied into one roadblock that we see, then you're inherently going to dampen uh impacts on other things. What it's more important for instead of installation from price shocks, is guaranteed access. So in a scenario where let's say importation of fossil jet is restricted, if you have uh domestic production capabilities there, you're guaranteeing access to a certain um volume or a certain uh production capacity. Yeah, the the other thing I I kind of want to zoom in on is we see the reason I see energy security as being quite important is that the current challenges we're seeing, I believe will only get worse for two reasons. One is due to elasticity, so in previous um shock uh pricing shocks, the the percentage of the economy or the GDP impact of uh the oil on so the percentage GDP that's linked to oil was much larger. So it took smaller uh changes in prices to result in an impact on the market and on demand. If we are seeing a continual decrease in that GDP share of oil, which we've already seen from the 1980s and it's continuing to decrease, then the elasticity will mean that there'll have to theoretically there'll have to be a bigger price uh change to result in that same uh impact on demand. So that's one thing is you know increased volatility. The second thing then is looking at jet fuel capacities and the shifting of jet fuel capacities. So you know we're seeing um we're seeing a concentration of refineries uh and that and we're seeing that in the face of continual closure of European refineries, and so if this SAF can provide an uh uh a potential solution or a lever that you can you know dampen that impact, then just to to finish on is does so if if we say that it's a strong narrative, does that narrative then result in project development? And I think that's the important one, and it depends. So you know project the best answer ever. Uh policy development, but I will convince you policy development, uh it ultimately responds to economics, um not narratives, and so the broader narrative is helpful for investors, but if it doesn't impact economics, then it's not gonna strengthen the investment case. So if that narrative is then taken on board uh and policy is developed that then helps shape the economics, if the policy re continues to reward the cheapest available SAF on the market, for example, HEFA, you're gonna result in a system where you're swapping one dependency for another. So you're probably gonna result in import a reliance on either imported HEFASAF or imported waste oils. So it's important that that strategic narrative is then taken on board by regulators and by by policymakers to sculpt a policy that will result in uh SAF coming online that is going to improve the energy security picture.

SPEAKER_00 56:30

Awesome. Before we

2027 Outlook Timing And Closing

SPEAKER_00 56:32

end, before we end, when do you guys start working on the market outlook for 2027?

SPEAKER_02 56:40

Hopefully not too soon.

SPEAKER_00 56:44

And Eris, are you gonna be work? Do you know if you're gonna be working on it for 2027? You guys have got a revolving door, it seems like of people that are leaving this kind of thing.

SPEAKER_01 56:54

Who knows? I I I don't know. It's there's a good chance we will be. To be honest, we usually kick it off around the start of the year. So come January, I'm sure we'll get into a room again and work out who's best placed.

SPEAKER_00 57:09

So you've got a good few months of getting away from well, you don't mark. You've you've got a lot of report writing left to do. But you know, before you have to go around the market outlook, merry go round again. You've got a you've got a few months. My evenings get a bit less market outlooky.

SPEAKER_01 57:26

Well, we need some stuff to write about first, Oscar.

unknown 57:30

True.

SPEAKER_00 57:33

So that's the shout out to anyone working on this. Get work, get cracking over the next few months and give give Iris and Mark something to write about come 2027. But it's been it's been fascinating getting into the the depths of it all with you both. Thanks so much for coming on, Eris, for your for your first time. And Mark, it's great to have you back. That was um brilliant, brilliant discussion.

SPEAKER_02 57:55

Thanks, Oscar. Pleasure to be back.