Vrije Universiteit Brussel

Repository of Documents Describing Policy Instruments Regulating Aviation Biofuels inSelected Jurisdictions.Kalimo, Harri; Mateo, Eleanor; Sedefov, Filip; Söebech, Olöf

Publication date:2018

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Citation for published version (APA):Kalimo, H., Mateo, E., Sedefov, F., & Söebech, O. (2018). Repository of Documents Describing PolicyInstruments Regulating Aviation Biofuels in Selected Jurisdictions. The Legal and Policy Framework for AviationBiofuels, Task 8.1.1 Comparative Benchmarking. Production of fully synthetic paraffinic jet fuel from wood andother biomass (BFSJ 612).

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D8.1.1 Repository of Documents Describing Policy Instruments Regulating Aviation Biofuels

in Selected Jurisdictions WP 8 Dissemination

1 July 2018 REPORT V.1

T8.1. – The Legal and Policy Framework for Aviation Biofuels Task 8.1.1 Comparative Benchmarking Biological Fully Synthetic Jet (BFSJ) grant n°612763 Authors: VUB (Filip Sedefov, Ólöf Söebech, Eleanor Mateo, Harri Kalimo)

BFSJ 612763Biological Fully Synthetic Jet

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Table of Contents Abstract .......................................................................................................................................... 6

1. Introduction ............................................................................................................................ 6 1.1. Methods of Data Collection ............................................................................................. 6 1.2. Highlights ........................................................................................................................ 7

2. Nordic Aviation ....................................................................................................................... 9

3. Denmark ............................................................................................................................... 10 3.1. Policy Environment ........................................................................................................ 10 3.2. Other relevant policies .................................................................................................. 11 3.3. Laws .............................................................................................................................. 11 3.4. National Studies ............................................................................................................ 12 3.5. Stakeholders ................................................................................................................. 12

3.5.1. Producers / Technology / Companies ........................................................................... 12 3.5.2. Too look out for: Maabjerg Energy Centre ................................................................... 13 3.5.3. Networks ...................................................................................................................... 13 3.5.4. R&D /Academia ............................................................................................................ 13 3.5.5. Policy ............................................................................................................................ 13 3.5.6. Industry/End users ....................................................................................................... 14

3.6. National data - biojet demand ....................................................................................... 14 3.7. Feedstock ...................................................................................................................... 14

4. Finland .................................................................................................................................. 15 4.1. Policy Environment ........................................................................................................ 15 4.2. Other relevant policies .................................................................................................. 15 4.3. Laws .............................................................................................................................. 16 4.4. National Studies ............................................................................................................ 16 4.5. Stakeholders ................................................................................................................. 17

4.5.1. Producers / Technology / Companies ........................................................................... 17 4.5.2. To look out for: Neste ................................................................................................... 18 4.5.3. R&D /Academia ............................................................................................................ 18 4.5.4. Policy ............................................................................................................................ 19 4.5.5. Industry/End users ....................................................................................................... 19

4.6. National data - Biojet demand ....................................................................................... 20 4.7. Feedstock ...................................................................................................................... 20 4.8. Other ............................................................................................................................. 20

5. Norway ................................................................................................................................. 21 5.1. Policy Environment ........................................................................................................ 21 5.2. Other policy measures for biofuels ................................................................................ 21 5.3. Laws .............................................................................................................................. 22 5.4. National Studies ............................................................................................................ 22 5.5. Stakeholders ................................................................................................................. 23

5.5.1. Producers / Technology / Companies ........................................................................... 23 5.5.2. To look out for Gardermoen Biohub ............................................................................ 24 5.5.3. R&D / Academia ........................................................................................................... 24 5.5.4. Policy ............................................................................................................................ 25 5.5.5. Funding ......................................................................................................................... 25 5.5.6. Industry/End users ....................................................................................................... 25

5.6. National data - biojet demand ....................................................................................... 26 5.7. Feedstock ...................................................................................................................... 26

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6. Sweden ................................................................................................................................. 27 6.1. Policy Environment ........................................................................................................ 27 6.2. Other policy measures for biofuels ................................................................................ 28 6.3. Laws .............................................................................................................................. 28 6.4. National Studies ............................................................................................................ 29 6.5. Stakeholders ................................................................................................................. 30

6.5.1. Producers / Technology / Companies ........................................................................... 30 6.5.2. Networks ...................................................................................................................... 30 6.5.3. To look out for: The Fly Green Fund ............................................................................. 31 6.5.4. R&D / Academia ........................................................................................................... 31 6.5.5. Policy ............................................................................................................................ 32 6.5.6. Funding ......................................................................................................................... 32 6.5.7. Industry/End users ....................................................................................................... 32

6.6. National data - biojet demand ....................................................................................... 34 6.7. Feedstock ...................................................................................................................... 34

7. Indonesia .............................................................................................................................. 35 7.1. Policy Environment ........................................................................................................ 35 7.2. Other Relevant Policies .................................................................................................. 35 7.3. Laws .............................................................................................................................. 36 7.4. Stakeholders ................................................................................................................. 38

7.4.1. Producers / Technology / Companies ........................................................................... 38 7.4.2. To look out for: ............................................................................................................. 39 7.4.3. Networks ...................................................................................................................... 39 7.4.4. R&D / Academia ........................................................................................................... 40 7.4.5. Policy ............................................................................................................................ 40 7.4.6. End-Users ...................................................................................................................... 41

7.5. National Data – biojet Demand ...................................................................................... 42 7.6. Feedstock ...................................................................................................................... 43 7.7. Other ............................................................................................................................. 45

8. Germany ............................................................................................................................... 45 8.1. Policy Environment ........................................................................................................ 45 8.2. Other relevant policies .................................................................................................. 46 8.3. Laws .............................................................................................................................. 47 8.4. Relevant Studies ............................................................................................................ 48 8.5. Stakeholders ................................................................................................................. 49

8.5.1. Producers/Technology/Companies .............................................................................. 49 8.5.2. Too look out for: JatroSolutions ................................................................................... 50 8.5.3. Networks ...................................................................................................................... 50 8.5.4. R&D / Academia ........................................................................................................... 51 8.5.5. Policy ............................................................................................................................ 52 8.5.6. Funding ......................................................................................................................... 53 8.5.7. End users ...................................................................................................................... 53

8.6. Other Projects and initiatives ........................................................................................ 54 8.7. National data - biojet demand ....................................................................................... 56 8.8. Feedstock ...................................................................................................................... 56

9. Brazil ..................................................................................................................................... 56 9.1. Policy Environment ........................................................................................................ 56 9.2. Other relevant policies .................................................................................................. 57 9.3. Laws .............................................................................................................................. 58 9.4. National studies ............................................................................................................ 59

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9.5. Stakeholders ................................................................................................................. 59 9.5.1. Producers / Technology / Companies / Associations ................................................... 59 9.5.2. To Look Out for ............................................................................................................. 60 9.5.3. Networks ...................................................................................................................... 60 9.5.4. Policy ............................................................................................................................ 61 9.5.5. R&D / Academia ........................................................................................................... 61

9.6. Other Projects / Initiatives ............................................................................................. 61 9.7. Feedstock, pathways and sustainability ......................................................................... 62

9.7.1. Feedstock ...................................................................................................................... 62 9.7.2. Pathways ...................................................................................................................... 63 9.7.3. Sustainability ................................................................................................................ 63

10. Mexico .............................................................................................................................. 63 10.1. Policy Environment .................................................................................................... 63 10.2. Other relevant policies ............................................................................................... 64 10.3. Laws .......................................................................................................................... 64 10.4. Stakeholders .............................................................................................................. 65

10.4.1. To look out for .............................................................................................................. 65 10.4.2. R&D / Academia ........................................................................................................... 65 10.4.3. Policy ............................................................................................................................ 66 10.4.4. Funding ......................................................................................................................... 66 10.4.5. Industry /End Users ...................................................................................................... 67

10.5. Feedstock, pathways, sustainability ........................................................................... 67

11. United States .................................................................................................................... 68 11.1. Policy Environment .................................................................................................... 68 11.2. Laws .......................................................................................................................... 70 11.3. Stakeholders .............................................................................................................. 70

11.3.1. Producers/Technology/Companies .............................................................................. 71 11.3.2. To Look Out For ............................................................................................................ 71 11.3.3. Networks ...................................................................................................................... 71 11.3.4. R&D / Academia ........................................................................................................... 74 11.3.5. Policy ............................................................................................................................ 74 11.3.6. Funding ......................................................................................................................... 74 11.3.7. End Users ...................................................................................................................... 77

11.4. Projects / Programmes /Initiatives ............................................................................. 77 11.5. Other Partnerships .................................................................................................... 78

12. Japan ................................................................................................................................. 78 12.1. Policy Environment .................................................................................................... 78

12.1.1. Other relevant policies ................................................................................................. 79 12.1.2. Laws .............................................................................................................................. 80

12.2. National Studies ........................................................................................................ 81 12.3. Stakeholders .............................................................................................................. 81

12.3.1. Producers / Technology / Companies ........................................................................... 81 12.3.2. To Look Out For ............................................................................................................ 82 12.3.3. Networks ...................................................................................................................... 83 12.3.4. R&D / Academia ........................................................................................................... 83 12.3.5. Policy ............................................................................................................................ 84 12.3.6. End Users ...................................................................................................................... 84

12.4. National Data ............................................................................................................ 84 12.4.1. Feedstock ...................................................................................................................... 85

13. Country sheets .................................................................................................................. 86

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13.1. Denmark .................................................................................................................... 86 13.2. Finland ....................................................................................................................... 89 13.3. Norway ...................................................................................................................... 91 13.4. Sweden ...................................................................................................................... 93 13.5. Indonesia ................................................................................................................... 96 13.6. Germany .................................................................................................................... 99 13.7. Brazil ....................................................................................................................... 102 13.8. Mexico ..................................................................................................................... 104 13.9. USA .......................................................................................................................... 106 13.10. Japan ....................................................................................................................... 109

References ................................................................................................................................. 112 Table of Tables TABLE 2-1. HIGHLIGHTS OF IDENTIFIED DEVELOPMENTS ..................................................................................................... 7 TABLE 8-1 INDONESIAN BIODIESEL MANDATORY TARGET AS STATED IN REGULATION 12/2015: ............................................. 36 TABLE 12-1 ESSENTIAL ELEMENTS IN DEVELOPING SOLUTIONS FOR DEPLOYMENT OF BIOFUELS IN AVIATION ................................ 69 TABLE 12-2 OFFTAKE AGREEMENTS FOR AVIATION BIOFUEL IN THE UNITED STATES ................................................................ 76 TABLE 13-1 INAF'S ROADMAP FOR RAW MATERIAL, PRODUCTION TECHNOLOGY AND TECHNOLOGY DEVELOPMENT ..................... 85

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Abstract This document provides an overview of the alternative fuels for aviation environment in selected jurisdictions. After an initial scan of policy developments, regulatory instruments, stakeholders and initiatives, ten countries where activities and innovation are taking place were selected for further analysis. These are: Brazil, Japan, Denmark, Finland, Germany, Indonesia, Mexico, Norway, Sweden and the USA. The countries presented can be considered front runners; states that are creating the groundwork that may help the market development of alternative sustainable fuels for the aviation industry and will help further assess the bottlenecks and barriers to market access.

1. Introduction This study is conducted as a part of the European FP7 funded project titled Production of fully synthetic paraffinic jet fuel from wood and other biomass: BFSJ. Within Work Package 8, task T 8.1 The legal and Policy framework for aviation biofuels, is split into three parts:

• T8.1.1 Comparative Benchmarking, • T8.1.2 EU internal analysis, and • T8.1.3 EU external and international analysis

These three tasks are further broken down into seven deliverables

• D8.1.1 repository of documents describing policy instruments regulating aviation biofuels in selected jurisdictions

• D8.1.2 an initial benchmarking analysis of the most innovative policy instruments on aviation biofuels in selected jurisdictions

• D8.1.3 an instrumental overview of innovative instruments on sustainable aviation biofuels policies in the EU

• D8.1.4 analysis of the coherence of the sustainability criteria of aviation biofuels with key areas of EU economic law in view of the functioning of the EU internal market

• D8.1.5 EU external trade and investment policy influences on aviation biofuels • D8.1.6 an assessment of the impacts of selected international law and treaties on aviation

biofuels • D8.17 A comparative analysis between the EU and selected other internal markets regarding

the key barriers and solutions to the free movement of sustainable biofuels This document consists of an overview of the policy environment and aims to identify innovative instruments and initiatives in selected jurisdictions. Each country profile highlights the most relevant policy documents, legal documents, national studies and stakeholders.

1.1. Methods of Data Collection The data on innovative policy instruments and initiatives on aviation biofuels for this deliverable was gathered through desk research, expert interviews, national policy documents, laws and studies analysis, review of scientific publications and participation in several on-topic conferences. Initially, the first step for selecting countries to give specific focus, approximately 300 documents related to the production and use of alternative fuels in aviation were scanned and categorised. This initial scanning led to the selection of the ten front runner jurisdictions to be further zoomed in on.

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While developing the country profiles for each of these ten jurisdictions, national legal documents, scholarly articles, national and regional studies were relied upon. Furthermore, participation in several related project events such as the final conference of the CoreJet fuel project and the EU sustainable energy week, allowed for further information collection. Importantly, the IES conducted 14 semi-structured expert interviews with government officials, civil society representatives, industry representatives and scientists who provided important input into the developments in particular areas and on particular subjects. After the interviews, more detailed follow-up research was conducted on material provided by the interviewees and on academic literature. The present report is the result of our research based on this mixture of sources. The aim of this document is to set out an overview of the policy environment, initiatives, and market developments in the selected countries, which will then inform the analysis of the remaining BSFJ project’s WP8 deliverables. The overview provides insights on how existing and related policies interact with the technological and natural resource capacity of each country, highlighting the feedstock and related technologies that are being advanced and supported. The initiatives described in the document also provide information on how the market responds to the policy environment and the current solutions being looked into in order to overcome bottlenecks for the full commercialization of alternative aviation fuels. The overview further identifies actors and groups that are shaping the development of alternative aviation fuels and the extent of their success and / or contributions. The country sheets, in particular, provide a snap shot of the key challenges and opportunities for the promotion of alternative aviation fuels, based on each countries’ policy and legal framework and industry profile (i.e., available feedstock, technology, demand and supply for alternative aviation fuels, etc.).

1.2. Highlights The table below (table 1.) summarizes the key developments taking place in the selected jurisdictions relative to the promotion of alternative aviation fuels. Table 1-1. Highlights of Identified Developments

Country Development Denmark Denmark recently implemented the Danish Industry

Agreement for Sustainable Biomass, which includes voluntary sustainability criteria for biomass that are applicable only for liquid biofuels, which go beyond the binding rules of the Renewable Energy Directive.

Finland Finnish company, Neste, is developing the capacity to

produce sustainable jet fuels at an industrial scale at its Porvoo refinery, with possibility to expand production at its Rotterdam and Singapore refineries.

Norway Norway recently introduced a mandatory 1% sustainable

aviation fuel drop-in requirement from 2019, to be increased to 30% by 2030. The government is also considering landing fee reductions for flights using a blend of sustainable aviation fuels. Oslo airport offers all airplanes landing and taking off a SAF blend

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Sweden Swedavia, a wholly state-owned company, procured 250 t. of biojet, which corresponds to the amount used for its employees’ business travel. Swedavia also funds 50% of extra costs for airlines flying on biojet. Stockholm Arlanda airport offers all airplanes landing and taking off a SAF blend

Indonesia Indonesia imposed an increasing blending mandate for

alternative aviation fuel for the target years 2018, 2020 and 2025.

Germany Together with Lufthansa, the German government funded,

through various ministries, several initiatives and R&D projects including research towards commercial production of algae-based jet fuel, innovative production and processing of microalgae, and construction of demonstration plant for the production of alternative jet fuel from sugars.

Brazil The Brazilian government is pushing for the adoption of

the RenovaBio programme which, among other things, would include a National Biojetfuel Act aimed at integrating the biojet value chain and providing proper incentives and funding.

Mexico The government funds CEMIE Bio – Biojet Cluster, a

collaboration among 17 different institutions, to undertake core research on the production of aviation biofuels in Mexico, which meets the Roundtable on Sustainable Biomaterials’ sustainability standards

USA The US deployed huge funding for private sector

partnerships, various initiatives and several R&D projects and programmes to support the development and production of advanced biofuels feedstock and the development of commercial-scale bio refineries.

Japan Japan is considering introducing a mandate for a yet to-be-

determined amount of alternative aviation fuel for the period 2020-2022.

Most countries do not have a separate strategic document, or policy initiatives specifically addressing aviation biofuels. In the majority of cases, aviation biofuels constitute an integral part of the national biofuel policy and fall under instruments with a broader scope such as the European Renewable Energy Directive (RED). Nonetheless, the country overview, described in this report, does indicate that there are differences to be found with regards to the use of innovative policy measures and less formal initiatives for promoting the uptake of sustainable aviation biofuels. A general observation is that the discussion on this topic is increasingly gaining importance and high-level attention.

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2. Nordic Aviation In the Nordic countries, as in the rest of Europe, most sustainable aviation fuel programs and initiatives are at a pilot or demonstration scale. On a political level, the general focus appears to be decarbonizing road transport and building heating. The hope is that the transition to sustainable road and heating will create an overcapacity of the industry that will then spill over to aviation and maritime transport. Currently there exist no specific policies or regulations targeting aviation biofuels in any of the Nordic countries. They do have ambitious targets set in RED, whereof Sweden and Finland already reached their goals and even surpassed them and there is a culture for using biomass, straw and solid waste (especially in Denmark) for energy and heat production. Another strength of these nations is high-level technology industry, and finance for R&D made available for the bio-economy in general. There are therefore, many opportunities and start up innovative initiatives that could make the region a leader in the field in the future, given that there is enough political support and prioritization to facilitate the move from ideas/pilots to full scale production. The Nordic countries have a tradition and history of cross-country collaboration, and this includes energy management. There are Nordic bodies such as the Nordic Council of Ministers – the official forum for cooperation between governments of the Nordic Countries.1 There are several agencies under the Nordic Council of ministers such as Nordforsk,2 a funding agency that facilitates collaboration, as well as Nordic Energy Research, a platform for cooperative energy research and policy development.3 Another initiative worth mentioning is the Nordic Top-level Research Initiative, a major Nordic venture for climate, energy and the environment. “The Top-level Research Initiative (TRI) is the largest joint Nordic research and innovation initiative to date. The initiative aims to involve the very best agencies and institutions in the Nordic region, and promote research and innovation of the highest level, in order to make a Nordic contribution towards solving the global climate crisis.”4 In 2012, the Nordic Council of ministers produced a Nordic Environmental Action Plan for the years 2013 - 2018.5 This action plan serves as a framework for the Nordic Council of Ministers and builds on four pillars of cooperation:

• Inclusive green development • Climate change and air pollution • Biodiversity, ecosystems and ocean acidification • Health and environmentally hazardous chemicals

The pillar of climate change and air pollution, aims to reduce emissions of greenhouse gases and air pollutants in order to avoid serious climate change so as to maintain global warming below 2° Celsius. Increased energy efficiency and the use of sustainable renewable energy in all sectors are mentioned as ways to reach reduction.6 Also stated in the action plan is the fact that “Nordic countries will work to phase out subsidies to fossil fuels and introduce taxes that reflect

1 Nordic Co-Operation. Official Website. 2 Nordforsk. Official Website. 3 Nordic Energy Research. Official Website. 4 Top-Level Research Initiative (TRI). Official Website. 5 Nordic Council of Ministers (2012). Nordic Environmental Action Plan 2013-2018. Nordic Co-Operation. 6 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers.

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environmental impact. This will provide the right incentives to reduce emissions from energy and transport, including international shipping and aviation”.7 NISA – Nordic Initiative for Sustainable Aviation The Nordic Initiative for Sustainable Aviation (Nisa) is a regional body that was founded in 2014 that brought together the whole sector to push forward the market for sustainable aviation fuels. The aviation sector in the Nordic countries is organized with the creation of NISA to find sustainable solutions. The partners include:

• Airlines - SAS, Finnair, Norwegian, Icelandair, Air Greenland, Malmo Aviation and Atlantic Airways

• Airports - Copenhagen Airports, Swedavia, Avinor, Finavia and Isavia • Transport authorities of Denmark, Sweden and Finland as well as Airbus and Boeing • Organisations - Brancheforeningen Dansk Luftfart, Svenskt Flyg, Svenska Flyg-Branschen, NHO

Luftfart and IATA NISA is therefore a body that aims to facilitate dialogue and collaboration between partners along the supply chain as well as between countries, create new knowledge by conducting cross-country studies and raise awareness in the region on the opportunities offered by biojet fuels as well as on the importance of accelerating their development and commercialisation.8 In their own words, they have formed an “association to facilitate the development and uptake of sustainable aviation fuels in the region, focused on bringing together stakeholders throughout the supply chain – researchers, agriculture, technology suppliers, investors, regulators, producers and oil suppliers – to find the best and most energy efficient solutions”.9 In the fall of 2016, NISA produced a detailed report based on a two-year research process funded by the Nordic Council of Ministers that analyses the Nordic environment for aviation biofuels. It looks at strengths and opportunities in each Nordic country, pathways, technologies, stakeholders, policy environment, initiatives, and challenges and creates scenarios for the future.

3. Denmark

3.1. Policy Environment Denmark’s national binding target for renewable energy as stated in the EU Renewable Energy Directive (2009/28/EC) is 30% of gross final consumption of energy in 2020, including a 10% share of RES in energy for transportation.10 There are no specific national policies currently addressing aviation biofuels setting specific targets. Denmark does participate and agree with the international organizations in which it collaborates, such as UN Framework Convention on Climate Change (UNFCCC), ICAO and the EU.11

7 Nordic Council of Ministers (2012). Nordic Environmental Action Plan 2013-2018. Nordic Co-Operation. 8 CLEAN. Official Website. Project Nisa. 9 Green Air Online (2013). Nordic aviation sector joins with Boeing and Airbus to launch a regional sustainable biofuels initiative. 8 November 2013. 10 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016. 11 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers.

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“The Danish Minister of Climate and Energy was working on establishing a partnership with the aviation sector in Denmark. The Partnership was to be hosted jointly by the Danish Energy Agency and the Danish Transport Authority. It would include industry representatives like the association Danish Aviation, the major airports and major airlines. Because of a Danish parliamentary election in June 2015 the work on the partnership has been put on hold”12

3.2. Other relevant policies Promotion of the Renewable Energy Act of 2009.13 “The act provides detailed feed-in tariffs/premium for wind, biomass, biogas and other renewable energy sourced electricity production.” The Danish energy sector recently implemented its own set of sustainability criteria for biomass, applicable only for liquid biofuels that go beyond the binding rules of the Renewable Energy Directive.14 Danish Energy Agreement for 2012-202015 There is no specific mention of aviation. In terms of biofuel for transport: since 2012, for all gasoline and diesel for transport sold in Denmark, the blending quota accounts for 5.75%. From 2020, this will be increased to 10%. The Danish Government has the target that Denmark should by 2050, have a transport sector that is completely independent of fossil fuels.

3.3. Laws Lov om CO2-kvoter [LOV 1095 28/11/2012] “The Danish Law on CO2-quotas implements the EU ETS in Denmark. The law includes aviation quotas, which determine the amount of GHG that can be released from air transport. The law is applicable to all flights stemming from, or destined to, airports within the EU, insofar as Denmark is the administrative Member State of the aircraft’s operator. Under the regulation, biofuels that are certified as sustainable are considered to be carbon neutral. Aviation for certain purposes, such as scientific progress, e.g. test flights of new technology, are exempt from this regulation.”16 Lov om Fremme af Vedvarende Energi [LBK 122 06/02/2015]. “The Danish Law on the Advancement of Renewable Energy, implements EU legislation into Danish law, and aims to promote the production of energy from renewable sources. This is done through a series of subsidies. Such subsidies could serve to misalign the distribution of available biomass in favour of electricity production. It should be noted that the government has approved subsidies for biogas used for other purposes than electricity generation, such as transportation, on par with the current subsidy-scheme. However, these subsidies are still awaiting approval by the EU and are consequently not yet in operation.”17

12 Danish Transport and Construction Agency (2016). ICAO State Action Plan on CO2 emissions from aviation Denmark of 30 June 2016. 13 International Energy Agency (IEA). Promotion of Renewable Energy Act. Policies and Measures: Denmark. 14 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016. 15 Danish Ministry of Climate, Energy and Building (2012). DK Energy Agreement & Danish Energy Agency (2012). Energy Policy in Denmark – Accelerating Green Energy towards 2020 & Bekendtgørelse af lov om bæredygtige biobrændstoffer og om reduktion af drivhusgasser fra transport [LBK 674 21/06/2011]. 16 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 17 Ibid.

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3.4. National Studies Sustainable Fuels for Aviation – An Analysis of Achievements and Opportunities In 2014, the Danish Transport Authority sponsored a study prepared for Danish Aviation. The study was conducted by the consultancy company Niras in collaboration with experts in the field. The Study: Sustainable Fuels for Aviation – An Analysis of Achievements and Opportunities, was a thorough scanning of the opportunities in Denmark, potential technologies, feedstock, supply chains and stakeholders. It served as a preparation for the Nordic NISA study mentioned above. One major outcome of the study was the realization that “Denmark possesses a certain expertise in pre-treatment technologies, but there are no companies in Denmark capable of supplying a complete pathway from feedstock to jet fuel.” Only pilot, laboratory or small-scale production have been established in Denmark. This highlighted the need for stakeholder- and cross industry collaboration along with substantial investments. Denmark’s strengths lie in having several global industry leaders within biotechnology and significant research environments established at the Danish universities. Several technologies for biofuel production for other purposes have already been developed and commercialized in Denmark.18

3.5. Stakeholders

3.5.1. Producers / Technology / Companies19 Novozymes - production of enzymes for biofuels. Haldor Topsøe - working with oil refineries and other large scale industrial and chemical processing applications (fertilizers etc.). DONG energy - the Danish national energy company DONG Inbicon / DONG - Inbicon is a research and technology development company. It develops and markets technologies for the production of industrial sugars as well as cellulosic ethanol20 Pyroneer / DONG - generating pyrolysis gas from a range of biomass feed-stocks REnescience / DONG - a technology development and marketing company that researches, develops and markets pre-treatment technologies for separating municipal solid waste (MSW) in to useable fractions DAKA Denmark A/S, part of the German SARIA Group, a biotechnology company producing a variety of products from animal by-products such as fat and waste from slaughter houses (annual production of biodiesel is 55 million t) Emmelev A/S – bio-oil and biodiesel producer basing their production on oil from rapeseeds (annual capacity of 80,000 t biodiesel) Biogasol - pre-treatment technology provider & supplier of advanced sugar extraction systems IBUS Innovation A/S pilot plant at DTU. The mini IBUS pre-treatment reactor is a versatile unit that can provide pre-treatment of biomass for R&D work in the bio refinery area.21 Tomo Liquid - develops compatible, sustainable and expandable biojet-fuels for reliable air travel using lignocellulose feedstock22

18 Wormslev, Erik et al. (2014). Sustainable Fuels for Aviation – An Analysis of Danish Achievements and Opportunities. Prepared for Danish Aviation (BDL). Niras A/S. 19 Wormslev, Erik et al. (2014). Sustainable Fuels for Aviation – An Analysis of Danish Achievements and Opportunities. Prepared for Danish Aviation (BDL). Niras A/S & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 20 Inbicon constructed a bio-refinery in Kalundborg in 2009 by. The refinery had a treatment capacity of 100 t dry feedstock per day yielding about 10 million L cellulosic ethanol per year. In 2015 the plant shut down and remains idle. 21 Ibus Innovation. Official Website – ‘about’. 22 Tomo Liquid. Official Website.

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Steeper Energy - working to commercialize HydrofactionTM through the operation of the pilot plant at Aalborg University.23 Cumulus Bio - tests and develops advanced bio- and renewable hydrocarbon products24 TK Energy ApS - designs, develops, and produces biomass and waste handling systems.

3.5.2. Too look out for: Maabjerg Energy Centre Maabjerg Energy Center (MEC) Consortium consisting of DONG Energy, Novozymes, Vestforsyning and Struer Forsyning. A concept for a large, commercial scale integrated bio refinery producing bioethanol that will act in symbiosis with other energy producers such as a bio-gas plant, a cogeneration plant and a district heating company. MEC plans to produce, among others, 80 million litres of bioethanol. In the summer of 2014, the MEC group was granted EUR 39 million in EU funding, as a condition, MEC must begin production in 2018.25

3.5.3. Networks BioRefining Alliance26 - founded in 2011 by DONG Energy, Novozymes, Haldor Topsøe and Landbrug & Fødevarer, currently has more members. The goal of strengthening the Danish position as a producer of bioenergy SNB- The Sustainable Biofuels Network - an informal network under Copenhagen Capacity (an organization for investment business development in Copenhagen)

3.5.4. R&D /Academia The Technical University of Denmark (DTU) - e.g. DTU Food, Systems Biotechnology & Biorefining and Chemical Engineering Aalborg University (AaU) - hydrothermal liquefaction (HTL) of biomass Aarhus University (AU) – e.g. development of a Danish production of sustainable fuels for aviation.

3.5.5. Policy Danish Aviation (Brancheforening Dansk Luftfart) - works as an agent for the stakeholders in the Danish aviation industry The Danish Transport and Construction Agency (Trafik- og Byggestyrelsen) - is responsible for planning and co-ordinating public transport, and is furthermore in charge of the administration of public procurement through organising tenders for the operation of railway and ferry transport services on behalf of the Danish Government27 The Ministry of Transport and Building (Transport- og Bygningsministeriet) – responsible for roads, vehicles, railways, fixed links, harbours, ferry operations, aviation, airports and postal services28 The Danish Ministry of Energy, Utilities and Climate - is responsible for national and international efforts to prevent climate change, as well as energy issues, national geological surveys in Denmark and Greenland, meteorology and buildings.29 The Danish Energy Agency (Energistyrelsen) - monitors and develops energy and supply sectors in Denmark

23 Steeper Energy. Official Website. 24 Cumulus Bio. Official Website – ‘about’. 25 Maabjerg Energy Center (MEC). Official Website. 26 BioRefining Alliance. Official Website. 27 Danish Transport, Construction and Housing Authority. Official Website – ‘about’. 28 Danish Ministry of Transport, Building, and Housing. Official Website – ‘The Ministry’. 29 Danish Ministry of Energy, Utilities and Climate. Official Website.

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3.5.6. Industry/End users Air traffic In Denmark, there is currently 15 airports with facilities for tanking jet fuel. Three airports handle the majority of traffic: Copenhagen, Billund and Aalborg. Copenhagen Airport Copenhagen Airport (CPH) is the largest airport in Scandinavia, handling around 26.6 million passengers and 0.37 million t cargo in 2015 In January 2014, CPH introduced the strategy “Expanding CPH” with the goal of 40 million passengers annually (CPH, 2014), which will further increase demand for sustainable jet fuel.30 Infrastructure at CPH airport - Fuel is delivered by sea to a small island called Gasoline Island, where fuel tanks are kept. The fuel is then transported via pipeline and distributed at the airport. The Airport is not directly involved in purchase or delivery of fuels, which are delivered directly to the airlines. In 2014, CPH achieved an “Airport Carbon Accreditation” as the first airport in Denmark. After the merger of Statoil Fuel and Retail Aviation (SFRA) and BP there are four different companies supplying fuel in CPH. Apart from supplying fuel, they operate the fuel supply chain through a number of jointly owned companies. SAS The SAS goal towards 2020 is to reduce its flight emissions per produced unit by 20% compared with 2010, whereas Thomas Cook Airlines Scandinavia set the goal to reduce emissions from aircraft operations by 20% compared with 2008. This is mainly foreseen to be achieved through efficiency measures.31

3.6. National data - biojet demand It is estimated that the demand for sustainable fuel for aviation will be about 0.6 million tonnes and 1 million tonnes in 2035 and 2050 respectively, if the goal of a fossil free energy system in 2050 is to be reached.32 According to the NISA 2016 study, this demand is estimated at: 17 million l in 2020, 274 million l in 2035 and 530 million l in 2050. The direct impact of the aviation industry in Denmark has been estimated at US$ 4,8 bill and 50,000 jobs.33 Emissions from aircraft having fuelled in Danish airports flying both domestic and international routes correspond to approx. 6 % of the total Danish CO2 emissions.

3.7. Feedstock Biomass is expected be a limited resource. Compared to the other Nordic countries the Danish wood production is limited and nationally produced wood cannot be the sole feedstock for biofuel production in Denmark. The Danish biomass balance is heavily dominated by the meat and dairy industries, as about 50 % of the total land area is used for feed production.

30 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 31 Danish Transport and Construction Agency (2016). ICAO State Action Plan on CO2 emissions from aviation Denmark of 30 June 2016. 32 The Danish demand for sustainable fuels for aviation is calculated from the projected jet fuel demands published by the Danish Energy Agency. See: Wormslev, Erik et al. (2014). Sustainable Fuels for Aviation – An Analysis of Danish Achievements and Opportunities. Prepared for Danish Aviation (BDL). Niras A/S. 33 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Denmark.

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Straw: “In 2012, 37 % of all straw was left to compost on the fields and not utilized (Denmark’s Statistik). Of the gathered straw, approx. 50 % is used for heat production and the remaining 50 % is used for animal feed and bedding. As a by-product straw does not compete with food production and does not cause ILUC effects.” Organic waste: “More than 90% of the waste produced in Denmark is currently recycled or used for waste-to-energy. The recycled biological waste fraction is used to produce cardboard and paper (cardboard and paper), compost (branches, leafs and grass), chipboard (wood) and biogas (sludge). Co-processing of sustainable oil products in existing crude oil refineries is a promising path to utilize the current infrastructure and reduce the costs of establishing complete production Pathways.

4. Finland

4.1. Policy Environment Finland has a national binding target for renewable energy stated in the EU RED to account for 38% of gross final energy consumption in 2020 and with transport targets of 20% share (EU obligation of 10%, but Finland set a higher standard). Finland reached those targets in 2014. Instruments used to reach these targets include blending obligations, and feed-in premiums for electricity from wind, biogas and forest residues (chips or hog fuel from tops, branches, thinning wood and stumps). The Finnish Government funds R&D projects, provides investment support and especially high risk and high cost such as investments in advanced biofuels plants. Other general instruments include energy taxation, tax relief, production subsidies for electricity and forest chips and investment subsidies as financial measures to implement the energy policy. 34 These are not specifically aimed at aviation, but generally apply to renewable energy. Aviation fuel used for commercial flights is exempt from excise tax in Finland. The tax for jet fuel for recreational flights is EUR 0.675/litre.35

4.2. Other relevant policies Finland’s Air Transport Strategy for years 2015-2030 The Strategy outlines future directions for air transport including aspects of environmental issues. In respect of CO2 emissions, the strategy emphasizes the importance of a global solution to reduce aviation greenhouse gas emissions. There are no specific targets mentioned in the document.36 The Finnish Bio Economy Strategy The objective of the Finnish Bio Economy Strategy is to generate new economic growth and new jobs from an increase in the bio economy business and from high added value products and services while securing the operating conditions for the nature’s ecosystems37 The objective of the Finnish

34 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016 & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 35 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 36 Nyberg, Mikael et al. (2015). Finland’s Air Transport Strategy 2015-2030. Report commissioned by the Finnish Ministry of Transport and Communications. 6 February 2015. 37 Bioeconomy. Finnish Bioeconomy Strategy.

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Bio economy Strategy is to push the bio economy output up to EUR 100 billion by 2025 and to create 100,000 new jobs. In September 2015, the government allocated EUR 300 million for projects regarding expertise and education as well as in bio economy and clean energy solution focusing, for example on piloting and demonstration in bio based value chains.38 Feed-in Tariffs for electricity from wind, biogas and wood chip39 The Energy authority provides a state subsidy for new wind power plants, new biogas power plants, wood-fuelled power plants which also produce heat for utilization and timber chip power plants. Main focus is however on electricity production, and favours electricity production over other use. These subsidies can change from year to year.

4.3. Laws The Act on the promotion of the use of sustainable fuels for transport (446/2007) “A distributor of transport fuels liable to pay tax must distribute sustainable fuels for consumption. In 2011–2014, the energy content of sustainable fuels had to account for at least 6% of the total energy content of the fuels delivered by the distributor for consumption (distribution obligation). After that, the distribution obligation rises steadily up to 20% in 2020.”40 Not relevant for aviation (except in possibly creating unfavourable market for aviation fuel). The act on sustainability of biofuels and bioliquids (393/2013) “Lays down provisions on the sustainability criteria of biofuels and bioliquids made for energy purposes other than transport. It also specifies procedures to be complied with in verifying compliance with sustainability criteria (based on EU regulations).”

4.4. National Studies Future Transport Power Sources, Finland In 2013, the Ministry of Transport and Communications published Future Transport Power Sources, Finland. The goal of the study was to explore alternative propulsion systems for the transport of the future. The study sets an ambitious vision including specific targets for aviation. These include that by 2050, bio kerosene should replace current fuels by 40 % and that Finland will have production capacity for sustainably produced biofuel, covering all domestic demand, mostly 2nd and 3rd generation. By 2020, Finland should have established a distribution infrastructure for alternative power sources. The study highlights the need to establish a collaboration network between the government administration and the business sector, tasked with actively monitoring national and international activities to promote the deployment of sustainable alternative jet fuel and with issuing proposals for measures. It urges authorities to investigate the possibility to use and allocate the auction revenue from the aviation emissions trading scheme for the reduction of emissions from aviation. The study also pointed out that Finland has national subsidy schemes specifically reserved for biofuels.41

38 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 39 Finnish Energy Authority. Official Website – ‘feed-in-tariff. 40 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 41 Rautavirta, Maria et al. (2013). Future Transport Power Sources, Finland. Report commissioned by the Finnish Ministry of Transport and Communications. 9 September 2013.

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Deployment of aviation biofuels, Finland The Ministry of Transport and Communications, Ministry of Employment and the Economy, Finavia, Finnair and Neste Oil commissioned another study, more targeted towards aviation in 2014 called Deployment of aviation biofuels, Finland. The goal of the study was to explore the different business models and to arrive at a potential business case that could enable the profitable use of sustainable jet fuel for Finland. The study found that Finland is “extremely well-positioned to be among the first in the world to start extensive, continuous use of biofuels in aviation.” The report sees a possibility of lowering the costs through the introduction of a new type of bio-kerosene (HEFA+) similar to renewable diesel produced by Neste that can replace the current method. Key actors in ensuring success for the Finnish business case are forerunner companies and the public sector committing to use flights that run on biofuels. Private air passengers would then follow and start using biofuel flights.42 State Action Plan of Finland International Aviation CO2 Emissions 2016 In 2016, Finnish Transport Safety Agency (Trafi) published the State Action Plan of Finland International Aviation CO2 Emissions 201643 The study highlights the European and international angle to aviation, “Finland still strives for a global solution to be agreed in the ICAO to ensure a level playing field for all airlines.” The study puts forward Neste as the main actor in the biofuel for aviation sector and estimates that Helsinki Airport could serve as a “biofuel hub” between Europe and Asia in the future. The study also explained how Finland supports aviation emissions trading as a tool to manage environmental impacts.

4.5. Stakeholders

4.5.1. Producers / Technology / Companies44 Air BP Finland OY – fuel distributor to Helsinki, Tampere and Vaasa Airports, no biojet. Shell – fuel distributor to Helsinki Airport. St1 - has bioethanol plants in Finland; an oil refinery in Gothenburg, Sweden; and 45 service stations in Finland, Sweden and Norway (co-owner with Shell of an aviation fuels company serving Norwegian airports). St1 has five bioethanol plants in Finland (demonstration scale), produced from waste and residues including bio-waste from households, leftover dough from bakeries, waste from beer and other beverage production and starch- and sugar containing waste from the food industry (capacity around 10–20 million l per year). UPM Lappeenranta Biorefinery - world’s first bio refinery producing wood-based diesel at commercial scale. Operations started in January 2015. The feedstock used is crude tall oil, a residue of pine wood pulp and a by-product of pulp manufacturing supplied from its own pulp mills located in Finland. The total investment is EUR 179 million (annual renewable diesel production is 100,000 tonnes/ 120 million l.)46

42 Luoma, Päivi (2014). Deployment of Aviation Biofuels, Finland. Report commissioned by Finnish Ministry of Transport and Communications. 28 November 2014. 43 Finnish Transport Safety Agency (Trafi) (2016). State Action Plan of Finland International Aviation CO2 Emissions. Trafi Publications 16/2016. 44 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 45 St1. Official Website – ‘In Brief’. 46 UPM Biofuels. Official Website & UPM Biofuels. Official Website – ‘Biorefinery’.

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Fortum’s CHP plant in Joensuu - utilizes fast pyrolysis technology and is the first of its kind in the world on an industrial scale (capacity 50,000 tonnes of bio-oil per year). Biomass and other biofuels account for about 3% of Fortum’s energy sources.47 Chempolis - technology provider. Has a bio refinery in Oulu for testing raw materials and producing sample batches of bioethanol and biochemicals. Metgen – provides enzymatic solutions for all lignin-based biomass applications48 Forchem - tall oil processing and distilling.49 Green Fuel Nordic - a biorefining company.

4.5.2. To look out for: Neste Neste Porvoo Biorefinery50 Neste, a commercial scale bio refinery and a pioneer, produces both conventional and renewable jet fuel, the only company capable of doing so in Europe at industrial scale, and one of very few companies worldwide. The Porvoo refinery produces renewable diesel, from more than ten different raw materials, but also has the capacity to produce sustainable jet fuel. Neste produces renewable jet fuel from a range of feedstocks, including waste and residues such as animal and fish fats, used cooking oil and various residues generated during vegetable oil refining (e.g. palm fatty acid distillate (PFAD), rapeseed & camelina oils and technical corn oil). These raw materials accounted for 68% of Neste's renewable inputs in 2015, a percentage that has been gradually increasing over time. Thus far, sustainable jet fuel has only been made in batches. “Neste Renewable Jet Fuel has also been tested on 1,187 scheduled Lufthansa flights between Frankfurt and Hamburg in 2011, and on one intercontinental flight between Frankfurt and Washington D.C. in the beginning of 2012.”51 KLM also made an agreement in 2016 to fly around 80 flights from Oslo to Amsterdam using Neste’s camelina oil based renewable jet fuel.52 There is plenty of room for growth as Neste’s refineries in Rotterdam and Singapore could be harnessed to produce also Neste Renewable Jet Fuel in addition to the Porvoo refinery. Also, Neste is awaiting ASTM approval for its winter grade biodiesel that could be more competitive on the market. As a part of R&D efforts (as well as CSR), Neste will donate a total of EUR 1.5 million to Finnish universities. The donation will be split between Aalto University, Åbo Akademi, Lappeenranta University of Technology, and the University of Helsinki.53

4.5.3. R&D /Academia VTT Technical Research Centre of Finland - develops advanced nextgen Biomass-to-Liquid (BtL) technologies at a commercial level. Has pilot plant for biomass fractioning, fast pyrolysis, and chemical pilots.54 Natural Resources Institute Finland - bioeconomy research.

47 Fortum. Official Website – ‘About’ & Fortum (2011). Sustainability of bioenergy - Fortum’s Position and actions. December 2011. 48 Metgen. Official Website – ‘Solutions for Pulp and Paper Industry’ 49 Forchem. Official Website – ‘Tall Oil Products’. 50 Finnish Transport Safety Agency (Trafi) (2016). State Action Plan of Finland International Aviation CO2 Emissions. Trafi Publications 16/2016. & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 51 Neste. Official Website – ‘Neste Renewable Jet Fuel’. Available 52 Good News from Finland (2016). KLM power planes with Finnish renewable jet fuel. 18 April 2016. 53 Aalto University (2016). Neste donates to Aalto University. 2 November 2016. 54 VTT. Official Website – ‘Sustainable Energy and Fuels’

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Aalto University - multidisciplinary research science and business.

4.5.4. Policy The Ministry of Transport and Communications The ministry prepares acts, decrees and decisions, participates in the EU legislation process and in international work carried out at ICAO. The Finnish Transport Safety Agency (Trafi) Trafi undertakes Statutory tasks in Finland, oversees the transport market as well as compliance with rules and regulations governing the transport system.55 The Energy Authority The Energy Authority promotes and monitors the energy market as well as promotes the reduction of emissions, energy efficiency and the use of renewable energy. It verifies the functionality of the converging electricity and gas markets, and the reasonableness of network service pricing.56

4.5.5. Industry/End users Finavia Finavia is a public limited company fully owned by the Finnish State. The Ministry of Transport and Communications is responsible for its ownership steering. Finavia maintains and develops a network of Finnish airports. Finavia also maintains an air navigation system and provides air navigation services.57 Helsinki Airport The Finnish airport network is dense: there are 24 airports, though the vast majority of traffic, both commercial and freight, is handled in Helsinki Airport. More than 80 % of Finland´s air passenger traffic and about 95% of air freight traffic passes through Helsinki Airport. A total of 20 million passengers and 167 980 tonnes of air freight went through Finnish airports in 2015.58 The Helsinki Green Hub project (Neste), aims to have constant flow of biofuels the truck fleet in Helsinki-Vantaa Airport. The refuelling trucks have been using 100% renewable NEXBTL diesel.59 “Helsinki Airport could serve as a “biofuel hub” between Europe and Asia in the future – however, this requires finding solutions to the price gap between biofuels and fossil kerosene.”60 Finnair Finnair is the national carrier and largest airline of Finland. Finnair first operated flights using biofuel in 2011 - second in the world after certification.61 The airline has flown 3 commercial demonstration flights using biofuel blends. The fuel was financed by Finnair with no external funding.

55 Finnish Transport Safety Agency (Trafi). Official Website – ‘about’ 56 Finnish Energy Authority. Official Website. 57 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 58 Ibid. 59 Neste (2015). Use of renewable diesel promotes Helsinki Airport's Green Hub project. 13 July 2015 60 Finnish Transport Safety Agency (Trafi) (2016). State Action Plan of Finland International Aviation CO2 Emissions. Trafi Publications 16/2016. 61 Ibid.

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4.6. National data - Biojet demand Around 80% of air traffic in Finland is international. Currently, CO2 emissions from the air transport sector account for approximately 6% of Finland’s total transport sector emissions.62 Altogether, Finland’s CO2 emissions reported under the EU Emissions Trading System were a total of 0.95 million tons in 2015. Emissions from domestic air transport in Finland amount to around 0.3 million tonnes.63 According to the latest IATA Country Report for Finland (2017), the aviation sector as a whole made up 2.3% of the country’s GDP and directly provided 35,000 jobs in 2014.64 It is estimated that the demand for sustainable jet fuel in Finland will be 13 million litres in 2020, 207 million litres in 2035 and 402 million litres in 2050.

4.7. Feedstock Whereas Finland’s main strength in the biofuel for aviation industry is the existing and growing refinery companies, and current logistics set up for industrial scale production of sustainable renewable jet fuel, the country is also rich in potential feedstock. These are mainly wood residuals, tall oil and waste. Wood based residuals: The largest users of wood energy are forest industry companies. In 2014, 8 million m3 of logging residues was used in energy production, which partly could be diverted towards aviation biofuel production. Other logging residues, not currently harvested from forests could also be used. Wood and wood-based residuals from Finland’s large-scale pulp and paper industry, including black liquor derived from pulp-making processes, account for 97.5% of the bioenergy produced in Finland. Tall oil and black Liquor: Currently, most tall oil is used for chemicals and renewable diesel production, and most black liquor for heat and energy production. There is competition for use of resources. Waste and residues: According to Statistics Finland, around 1 million t of animal and vegetal wastes, 2.9 million tonnes of mixed ordinary wastes and 0.7 million tonnes of sludge were generated in Finland in 2013. In Finland waste is not used for heat and power production at a large scale, thus in that case, competition for resources is lower than for instance in Denmark. Nonetheless, the feedstock streams, are used currently for biogas production and for biofuels for road transport. Long transportation distances are also seen as a limiting factor.65

4.8. Other The Innovation Funding Agency (Tekes) financed, from 2007–2012, a EUR 242 million BioRefine Programme to support the development of innovative new products, technologies and services based on biomass refining and biorefineries focusing primarily on biofuels. “Research and development resulted in technically successful piloting and demonstration and readiness for production on a commercial scale and introduction of the products to the markets, but the biggest barrier has been the economic feasibility of the concepts.”66 62 Ibid. 63 Nyberg, Mikael et al. (2015). Finland’s Air Transport Strategy 2015-2030. Report commissioned by the Finnish Ministry of Transport and Communications. 6 February 2015. 64 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Finland 65 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 66 Ibid.

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5. Norway

5.1. Policy Environment Norway has acknowledged the importance of the aviation industry for climate goals, CO2 reductions sustainability goals as well as for business development. Norway has committed to a national binding target of 67.5% share of renewable energy by 2020, thereof 10% of gross final consumption of energy for transport according to the EU RED. Norway uses a combination of instruments to reach this goal, including a quota system with a quota obligation and a certificate trading system (for electricity and heating). There are also several institutions that provide funding for research and investments for new technologies. The main source of bioenergy in Norway is from forests, hence the government invests most resources to building policies and structures around this industry.67 Out of the Nordic countries, Norway’s government and parliament is likely the most active in discussing Jet biofuel, in particular 2nd generation biofuel, which has a considerable place in the political agenda. 68 This can be linked with the active forestry industry, as well as the strong dependence on domestic air transport. In June 2017, the Norwegian Parliament decided a mandatory drop-in requirement for sustainable aviation fuel of 1% from 2019, which is to be increased to 30% in 2030.69

5.2. Other policy measures for biofuels Biofuels for Transport Standards70 The Norwegian government will promote increased use of sustainable biofuels in road traffic until 2020. The Norwegian government has set blending mandates for the proportion of biofuels used in road transport. The target was increased from 3.5 % to 5.5 % on 1 July 2015. It applies to the sum of gasoline and diesel supplied for road transport. These requirements were increased to 7 % in January 2017, and the national budget plans for further increase until 2020 (to 8.5%). The increase in the future will include advanced biofuels. Respective sub-mandates of 4% and 1.5% will be set for ethanol blending and advanced biofuels blending after double counting. 2012 Norwegian Climate Policy (2012 agreement on climate policy)71 The Norwegian Climate policy has the same blend in targets as the Biofuels for Transport Standards. The goal of increasing the mandatory sale of bio-fuels, provided that the sustainability criteria are satisfactory, with a final goal of 10%. Other goals relating to biofuels include: contributing to the development of a value chain for second generation bio-fuels and improving incentives for the use of bio-energy derived from wood, with particular emphasis on forest residues so that e.g. measures

67 “The woodchips energy scheme, a support scheme for the production of woodchips and energy from forest fuels, has had a favourable impact. In total, some 824 000 m2 lv (loose volume) woodchips were produced with support from the scheme in 2011 and some 880 000 m2 lv in 2012. Around 60-70% of the production went to domestic bioenergy generation while the remaining amount was exported.” See: Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016 68 Mosvold Larsen, Olav (2016). Jet Biofuel for aviation in Norway. Avinor Presentation. The ATM Conference Oslo – Green Aviation. 69 Airports Council International (2017). Contributions from Airports to the supply of sustainable aviation fuels (SAF’s) – Working Paper. ICAO Conference on Aviation and Alternative Fuels Mexico City, Mexico. 11-13 October 2017 70 Regjeringen.no (2016). Vil fremme bruk av avansert biodrivstoff. 06.10.2016 & International Energy Agency (IEA). Biofuels for Transport Standards. Policies and Measures: Norway & Argus Media (2016). Norway to raise biofuels mandate in 2017. 25 October 2016 71 Norwegian Ministry of the Environment (2012). Norwegian Climate Policy – Report No. 21 (2011-2012) to the Storting (white paper) Summary.

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with short CO2 payback periods are prioritised. There are no specific mentions of biofuels for aviation. National Strategy for Bioeconomy The Government launched its National Strategy for Bioeconomy in 2016. Ten ministries have collaborated in designing the Government’s strategy.72 Funding agencies, businesses, organizations and research institutions were also involved in the work.73 The strategy emphasized the role of research and the need for cooperation across sectors, industries and subject areas.74 The strategy is further premised on internalizing the costs of the negative effects on climate and environment in product prices as the most efficient way of promoting the bioeconomy.75

5.3. Laws Norwegian domestic aviation is subject to CO2 taxation amounting to NOK 1.08 per litre / NOK 423 per ton CO2 (in 2016). Biofuels are exempt from that tax.76 EU ETS is also waived for biofuels.77 Domestic aviation in Norway is also subject to a NOx-tax (NOK 21.17 per kilo NOx) and SOx-tax (NOK 0.133 per litre fuel). 78 In October 2015, the Ministry of Finance removed the road use tax for sustainable fuels. This applies to sustainable fuels that surpass the blend-in requirement (above).79 Furthermore, still at a proposal stage, in a proposal from Parliament in State budget 2016 it is suggested to provide a 25% discount in landing fees for flights on 25% biofuel in 2016 and 2017. 80 In June 2017, The Norwegian Parliament decided a mandatory drop-in requirement of 1% from 2019 which is to be increased to 30% in 203081

5.4. National Studies Utredning – Bærekraftig biodrivstoff for luftfart In 2011, Avinor (organization responsible for Air Navigation Services in Norway) and Norsk Luftfart commissioned a study to assess the possibilities for profitable and sustainable production of biofuels for aviation in Norway. The aim of the study was to help move forward Avinor’s goal is to accelerate the production plant localization and production start-up. In 2013, the study: Utredning – Bærekraftig biodrivstoff for luftfart, Norway, was published by Rambøll. The study suggested that FT

72 Research Council of Norway (2016). New national strategy on the bioeconomy launched. 73 Nordic Council of Ministers (2016). State of Play – Bioeconomy strategies and policies in the Baltic Sea region countries. Working Paper No.1 – The Baltic Sea Regional Bioeconomy Council & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 74 Research Council of Norway (2016). New national strategy on the bioeconomy launched. 75 Norwegian Ministries (2016). Familiar resources – undreamt of possibilities. The Government’s Bioeconomy Strategy. English Summary. 76 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers & International Civil Aviation Organization (ICAO) (2016). ICAO Report - State Action Plan on CO2 emissions reduction activities - Norway. 77 Mosvold Larsen, Olav (2016). Jet Biofuel for aviation in Norway. Avinor Presentation. The ATM Conference Oslo – Green Aviation. 24 May 2016 78 International Civil Aviation Organization (ICAO) (2016). ICAO Report - State Action Plan on CO2 emissions reduction activities - Norway 79 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 80 Mosvold Larsen, Olav (2016). Jet Biofuel for aviation in Norway. Avinor Presentation. The ATM Conference Oslo – Green Aviation. 24 May 2016 & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 81 Airports Council International (2017). Contributions from Airports to the supply of sustainable aviation fuels (SAF’s) – Working Paper. ICAO Conference on Aviation and Alternative Fuels Mexico City, Mexico. 11-13 October 2017

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and AtJ production of sustainable jet fuel could be competitive as early as 2020–2025, if income from by-products from the production could be found. Another key message of the study was the following: “The Norwegian aviation industry has a target of 15 % emission reduction by 2020-25. The target cannot be fulfilled without sustainable biofuels. To reach this goal, 190 – 250 million litres of renewable Jet A/1 is needed. This amount requires biomass with an energy content of 6 – 8 TWh. Biodegradable resources from agriculture, forestry, fishery, waste etc. can be utilized for biofuel production. If this quantity is to be produced using Norwegian forest products, this equals 2.7 – 3.6 million solid cubic meters.”82 Benchmark of conversion and production technologies for synthetic biofuels for aviation83 Published by SINTEF Energy research in 2012, this study also addresses the technological and economically feasible solutions for Norway in researching the most promising and suitable pathways and biomass resources for the production of renewable jet-fuel by 2020-2025. The report comes to the same conclusion that FT and AtJ are most suitable technologies for Norway’s forest biomass. Additionally, pyrolysis-to-jet fuels and fermented renewable fuels as a potential alternative biofuel are introduced. FOREST 22 (SKOG22) FOREST 22 (SKOG22) is a national strategy for forestry and wood industries. It addresses the multiple uses and technologies for the wood industry in Norway, including a section on the use of wood for energy. A government commissioned strategy, it is a broad and cohesive strategy for research, development, innovation and knowledge transfer within the forest-based value chains. Bioenergy is an important renewable energy source in Norway and represents approximately 8.5% of the total energy consumption in Norway. 84

5.5. Stakeholders

5.5.1. Producers / Technology / Companies85 Silva Green Fuel A/S - production of 2G biofuels. Aviation biofuels could be included if profitable. The production is planned to take place at Tofte. Owned by Statkraft and Södra Treklyngen - evaluating technologies for biofuel and other bioproducts production at Follum industrial area (subsidiary of Viken Skog)86 Borregaard Biorefinery – commercial scale production of biochemicals, biomaterials and biofuels from wood. Main products are speciality cellulose, lignin, vanillin and bioethanol. World’s largest manufacturer of 2nd generation bioethanol (annual production of 18–20 million litres, thereof 5–6 million litres as biofuels for road transport and the rest for biochemicals. Borregaard and Statoil have entered into an agreement to deliver 44,000 litres/month of bioethanol. Zero- an independent, non-profit environmental foundation involved in climate issues and solutions. Have been working with biofuels, acts as a hub between policy makers, politicians and businesses. Organises conferences (including the Zero Conference in 2014) on the subject and collaborates actively with Avinor. 82 Ramböll (2013). Utredning – Bærekraftig biodrivstoff for luftfart – Norway. 83 Matas Güell, Berta et al. (2012). Benchmark of conversion and production technologies for synthetic biofuels for aviation. SINTEF energy. 84 Innovation Norway (2015). SKOG22 Rapport - NASJONAL STRATEGI FOR SKOG- OG TRENÆRINGEN. 85 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 86 Viken Skog. Treklyngen er et datterselskap i Viken Skog-konsernet med ansvar for utvikling av fremtidens skogindustri.

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5.5.2. To look out for Gardermoen Biohub87 Gardermoen Biohub The Gardermoen Biohub is a collaboration between various stakeholders including Avinor, SkyNRG Nordic, Statoil, SAS, KLM, Lufthansa, Neste and Air BP. The aim of the collaborative effort is to explore the possibility of having a fully functioning supply chain for sustainable biojet at Oslo Gardermoen airport. This experiment started in January 2016 and was originally operational for a trial period of 1 year. This project is the first in the world where sustainable bio jet is delivered through existing airport infrastructure. The plan was to handle and distribute 1.25 million litres jet biofuel at Oslo Airport during 2016. The first batch of around 700,000 litres was sourced from the ITAKA project88 using Camelina oil. Neste refined the oil that was then shipped to Sweden to be blended 50% with Air BP JetA1 in Gävle. From Sweden, the fuel was transported by trucks to Oslo’s airport, dropped into the fuel farm at Gardermoen airport and distributed through the hydrant and dispenser system. Once the fuel sourced from the ITAKA project was used up, the main supplier for this initiative became the US-based Altair. Avinor aims to prolong and scale up the project over the coming years and the long-term goal is to set up a supply chain based on Norwegian forest residues.89 In August 2017, the programme was extended to Avinor’s Bergen Airport. In addition, Avinor has launched an indicative target of 30 % share of SAF from 2030.90 EU ETS and domestic taxes are waived for the fuel and premium costs shared by the project partners. The fuel is now offered to all airlines on a commercial basis. Thus far, Lufthansa, SAS and KLM have started using the fuel.

5.5.3. R&D / Academia Bionær is the Research Programme on Sustainable Innovation in Food and Bio-based Industries (under the Research Council of Norway)91 SINTEF Energy - carries out research with a broad consortium consisting of Norwegian and international industry, research institutes and universities92 Norwegian university of science and technology (NTNU) - conducts research in catalysts The Norwegian University of Life Sciences - Sustainable land based biomass resources Analyse & Strategi - Biofuel Production Plant Localization Feasibility DNV KEMA - Marine resources for Aviation Biofuels LMC International - Import of feedstocks for Sustainable Aviation Biofuels in Norway

87 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers & BP (2016). Oslo Airport first location to supply Air BP Biojet via main fuel hydrant system. 22 January 2016 & Mosvold Larsen, Olav (2016). Jet Biofuel for aviation in Norway. Avinor Presentation. The ATM Conference Oslo – Green Aviation. 24 May 2016 88 A European funded FP7 project on aviation biofuels http://www.itaka-project.eu/default.aspx 89 Harrington, Kent (2016). Norway’s Oslo Airport Now Offers Jet Biofuel to All Airlines. Aiche Chenected. 27 January 2016 & Mosvold Larsen, Olav (2016). Jet Biofuel for aviation in Norway. Avinor Presentation. The ATM Conference Oslo – Green Aviation. 24 May 2016 90 Airports Council International (2017). Contributions from Airports to the supply of sustainable aviation fuels (SAF’s) – Working Paper. ICAO Conference on Aviation and Alternative Fuels Mexico City, Mexico. 11-13 October 2017. 91 Research Council of Norway. Bærekraftig verdiskaping i mat- og biobaserte næringer (BIONÆR). 92 Sintef Energy Research. Official Website – ‘about’.

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5.5.4. Policy The Ministry of Transport and Communications -overall responsibility for the framework conditions for postal and telecommunications activities, for the civil aviation, public roads and rail transport sector, ferry services forming part of the national road system, for coastal management, the marine environment and port and sea transport policy93 Civil Aviation Authority (Luftfartstilsynet) - responsible for creating regulations for Norwegian aviation as well as for introducing and adapting national and international regulations.94

5.5.5. Funding The Research Council of Norway – The Research Council is divided into five divisions: Science, Energy, Resources and the Environment, Society and Health, Innovation and Administration. Funds broad type of research including on bioeconomy, biotechnology, energy etc. The ENERGIX-programme provides funding for research on renewable energy, efficient use of energy, energy systems and energy policy. “The programme is a key instrument in the implementation of Norway’s national RD&D strategy, Energi21, as well as for achieving other energy policy objectives”95 Innovation Norway - Innovation Norway is the Norwegian Government's instrument for innovation and development of Norwegian enterprises and industry. Companies receive support in developing their competitive advantage and to enhance innovation.96 Enova - Enova (was Transnova) provides financial support to implement energy initiatives, for businesses that want to establish plants producing biogas and biofuels should receive adequate profitability and also support "new climate technology” or energy efficient and cost saving solutions that are new or that have not yet been adopted in Norway. Focus on profitability.97

5.5.6. Industry/End users Air traffic Norway has a large network of airports and has a high amount of domestic air traffic. There are 51 airports in Norway operated with commercial air traffic. 46 of these airports are owned by the State through Avinor. The other 5 are privately owned. Oslo/ Gardermoen and Bergen/Flesland, are the largest airports. 98 Norway's oil and petroleum industry is also strongly dependent on aviation. Indeed, “of all domestic travels half is occupational, of which a quarter is carried out within the petroleum sector.”99 Avinor Avinor is the largest and most involved stakeholder in sustainable aviation fuels in Norway. Under the Ministry of Transport and Communications, it is a state-owned company and responsible for the 46 state-owned airports as well as navigation services both for civil and military aviation.100 Avinor’s main role is to facilitate infrastructure at the airports and to provide information about services to passengers. Avinor has allocated up to €10.2 million over a ten-year period (2013-2022) for measures and projects that will contribute to phase-in of jet biofuels in Norwegian aviation.101

93 Regjeringen.no. Ministry of Transport and Communications 94 Civil Aviation Authority Norway. Official Website – ‘about’. 95 Research Council of Norway. Official Website & Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016. 96 Innovation Norway. Official Website 97 Enova. Official Website. 98 International Civil Aviation Organization (ICAO) (2016). ICAO Report - State Action Plan on CO2 emissions reduction activities - Norway 99 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 100 Ibid. 101 BP (2016). Oslo Airport first location to supply Air BP Biojet via main fuel hydrant system. 22 January 2016.

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Oslo airport “The largest Norwegian airport, Oslo Airport, handled 24.7 million passengers in 2015 (Avinor Statistics 2016) and 9,062 t freight. In 2014 an expansion was initiated to accommodate up to 28 million passengers annually by 2017. The jet fuel is provided by a designated fuel train, with a capacity of 1.1 million l fuel, between the port of Oslo and Oslo Airport. Only a small part of the jet fuel delivered to Oslo Airport comes from the Mongstad refinery. Most of it is imported by tankships from foreign oil refineries, mainly from the Netherlands, the Middle East and the US.” 102 SAS & Norwegian In 2015, SAS had 45 % of the market share for domestic travel and Norwegian about 34%.103 On 11 Nov 2014 two first Norwegian demo flights on bio jet-fuel were conducted. The flights organized in connection with the Zero Emission Conference organized by Zero & Avinor. Norwegian and SAS were flying sustainable fuel based on used cooking oil fuel (blend of 45% used HEFA-SPK jet fuel and 55% fossil jet fuel) delivered by Statoil Aviation & SkyNRG. These flights with bio jet were from Bergen to Oslo and from Trondheim to Oslo.104 SAS continues to collaborate with Avinor by participating in the Gardermoen Biohub project, flying on sustainable biofuel.

5.6. National data - biojet demand The Norwegian aviation industry provides directly for a total of 80,000 jobs. Counting in direct and indirect effects, the aviation sector accounts for 4% of Norway’s GDP.105 From 2013 to 2014 the air traffic increase was 2.2%. 891,000 t (1.1 billion litres) of Jet-A1 was sold in Norway in 2014, which is an increase of 2.1% from 2013. About 50 million passengers entered or left a Norwegian airport in 2014 (Statistics Norway, 2015). It is estimated that the demand for sustainable jet fuel in Norway will be 17 million l in 2020, 271 million l in 2035 and 525 million l in 2050.106

5.7. Feedstock In Norway, forest biomass has been identified as a key source for bioenergy and biofuel production for transport.107 Around 12% of Norwegian forest areas are under public ownership, 80% private (of which the majority is owned by individuals), and 8% under other categories of ownership. This accounts for around there are around 120,000 forest-owners in Norway, complicating the market development. Currently, most of the bioenergy use in Norway is used for domestic and district heating. Carbon based products will most likely compete for the same biomass feedstock in the future. If these obstacles can be overcome, there is a high availability of wood residues that is not being used.

102 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 103 International Civil Aviation Organization (ICAO) (2016). ICAO Report - State Action Plan on CO2 emissions reduction activities - Norway 104 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 105 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Norway 106 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 107 Ramböll. 2013. Utredning – Bærekraftig biodrivstoff for luftfart, Norway

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Around 69 PJ of logging residues is technically available. Large amounts of secondary wood residuals could be diverted towards biofuel production.108 “Currently around two thirds of Norway’s bioenergy production (61.2 PJ) is based on forest resources such as firewood and wood chips, while the remaining third derives from by-products from either the forest industry or from waste used in district heating plants… The estimated sustained yield of forest biomass for bioenergy and biofuels in Norway is 17 million m3. Logging close to the sustained yield with wood chip price of EUR 5.43–7.24/kJ, means a doubling of today’s use. This represents a potential of 57.6 PJ, where 36 PJ comes from logging residues.” 109

6. Sweden

6.1. Policy Environment In Sweden, a general policy stated vision is of a climate neutral energy system by 2050. The government elected in 2014 declared that Sweden shall be a “fossil free welfare state”. Several policy measures provide incentives and tax reductions to reach that target for road transport. Aviation is excluded from most ambitions for the transport sector and there are no binding national goals specifically for renewables in aviation. Nonetheless, with the focus on ligno-cellulosic feedstock for 2nd generation biofuel production, there is the hope that the aviation industry will indirectly benefit from forest industry rest products.110 Sweden already surpassed its EU RED binding target of 49% in 2014 when the share of renewable energy reached 52.6%. That same year, the binding national target for transport of 10% was also reached. In 2015, the renewable share in transport was 23.6%.111 Bioenergy does not receive any direct subsidies as the Swedish support scheme for renewables is mainly based on general incentives and technology neutrality (e.g. the carbon tax and the green certificates). Bioenergy has benefited though, since its greenhouse gas emissions are estimated at zero. Various funding programmes are dedicated to research on hydropower, wind power, solar cells, sustainable biomass production and conversion into district heating as well as CHP plants. Bioenergy has been given high priority in the R&D portfolio. The identified key technology developments to advancing the current use of bioenergy include gasification of black liquor, fermentation of woody cellulose, and synthesis of liquid fuels via gasification.112 Currently, targets for sustainable jet use and initiatives for sustainable jet introduction are mainly driven by the aviation industry itself, by voluntary initiatives, and market mechanisms.113

108 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 109 Ibid. 110 Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden & Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016 & Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 111 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016. 112 Ibid. 113 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers.

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6.2. Other policy measures for biofuels The Swedish Government started providing tax exemptions for biofuels for transport from 2007-2013. Since 2013 the plan has been prolonged with some adjustments. A new system is expected in 2017 (due to the revision of the EU state aid regulation for energy 2014-2020 that limits Sweden’s possibilities to exempt biofuels from energy and CO2 tax). 114 Swedish Energy Agency research Programme In June 2015, the Swedish Energy Agency announced that it will invest 180 million SEK (€19.5 m) in two new research programmes funding more efficient and inexpensive processes for the production of biofuels. The focus is on biofuels that are most relevant to the conversion in the transport sector. In the short run, the need is for biofuels that can be used in current vehicles, where biofuels from lignin is the most prioritized area. In the long run, focus is on ethanol and biofuels from gasification.115 NOx charges Since 1998 the Swedish State-owned airports apply charges on aircraft NOx emissions. Aircraft that emit less NOx in the LTO cycle are charged less than aircraft with higher emissions. The charge is SEK 50 per kg NOx. These charges aim to improve local air quality, but as NOx emissions have a climate warming effect, the airport NOx charges should be regarded as a tool for the reduction of climate impact from aviation as well. 116 Fossil independent vehicle fleet by 2030 “A number of regulations and economic incentives have already been introduced to fulfil the vision of a vehicle fleet independent of fossil fuels by 2030.” This includes: support of purchase of environment-friendly vehicles through a tax exemption throughout the first five years, extra subsidy for “super environment-friendly” cars emitting less than 50 grams of CO2/km, which targets plug-in hybrids and electric vehicles, high-ratio blends of renewables into gasoline and diesel are subject to a full tax exemption, pumping stations selling more than 1.000 m3/year are required to offer a renewable fuel and a specific sub-quota for advanced biofuels.117

6.3. Laws A sustainable energy and climate policy for the environment, competitiveness and long-term stability118 The integrated energy and climate policy sets targets for 2020, including 40% reduction of greenhouse gases compared to 1990 (for sectors outside the EU-ETS), 50% share of renewable energy in gross final energy consumption (RED), at least 10% renewable energy in the transportation sector (RED) and 20% more efficient use of energy compared to 2008. Emissions from aviation are not included within the climate roadmap, thereby offering no incentives for investors or companies potentially interested in a biojet system.119

114 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016. 115 Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 116 Ibid. 117 International Energy Agency (IEA). A vehicle fleet independent of fossil fuel by 2030. Policies and Measures: Sweden 118 Swedish Government (2009). A sustainable energy and climate policy for the environment, competitiveness and long-term stability 119 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers & Fethers, Ben (2014). Aviation Biofuel Production in Sweden - An Insight into the Potential of Forestry Biomass as a Feedstock. IIIEE Theses 2014:11. Lund University

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The combination of incentive schemes, subsidies, tax exemptions and investments in biofuel infrastructure has ensured a reliable supply and availability of sustainable fuel for road transport. Furthermore, Sweden launched an action plan for renewable energy as part of the integrated climate and energy policy mentioned above. The government also adopted a comprehensive energy efficiency program with a total of EUR 156.2 million during a five-year period. Regarding the aviation fuel market, the Swedish Energy Agency and the Swedish Transport Agency have investigated introducing a renewable quota system. Thus far, it is regarded as bad for competition for the Swedish airlines and an international initiative would be preferable.120

6.4. National Studies Gröna drivmedel till flyget - Behov av långsiktiga incitament för att minska utsläppen av växthusgaser In 2015, ÅF-Infrastructure AB published a study on sustainable biofuel for aviation and the need for long-term incentives to reduce greenhouse gas emissions: Gröna drivmedel till flyget - Behov av långsiktiga incitament för att minska utsläppen av växthusgaser. The report looks at the various programmes in the Nordic countries that are either in place or being suggested. It discusses Sweden’s Karlstad airport’s biojet filling station and Norway’s lead in political ambition for sustainable biojet among the Nordic countries. The reports main recommendations for Sweden is to increase collaboration between market players, to increase awareness of biojet at political and business level, increase political leadership and a need for a clear short, medium and longer-term road map along the supply chain with effective support mechanisms and policy instruments.121 Pursuing Aviation Biofuels – A Diagnostic Analysis of the Swedish Biojet Innovation System Two Lund University master’s student’s conducted studies on aviation biofuels in 2014. Raffaele Rossi, MSc in Environmental Management and Policy published Pursuing Aviation Biofuels – A Diagnostic Analysis of the Swedish Biojet Innovation System, Sweden. In the study, Rossi identifies actors and institutions involved in the Swedish bio jet innovation process. He concludes that given stakeholders’ proactive involvement in the market penetration of aviation biofuels, that there is plenty of room for innovative progress.122 Aviation Biofuel Production in Sweden - An Insight into the Feedstock Potential of Forests The second Lund University study is written by Ben Fethers MSc in Environmental Management and Policy Study, explores the opportunities and barriers to the production of sustainable jet fuel in Sweden using forestry biomass a feedstock. It found institutional support in Sweden unfavourable and recommends specific producer incentives favouring sustainable jet fuel production over road transport or other uses.123 Förstudie för biobaserat flygbränsle för Stockholm-Arlanda Flygplats or Pilot study of Bio-jet A-1 fuel production for Stockholm-Arlanda Airport Värmeforsk (now Energiforsk) an energy research company published in 2009 a pre-study on biojet for Stockholm Arlanda airport.124 The study aimed to investigate the pre-conditions for a bio refinery

120 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 121 Höglund, Jonas; Byman Karin (2015). Gröna drivmedel till flyget - Behov av långsiktiga incitament för att minska utsläppen av växthusgaser. ÅF-Infrastructure AB 122 Rossi, Raffaele (2014). Pursuing Aviation Biofuels – A Diagnostic Analysis of the Swedish Biojet Innovation System, Sweden. IIIEE Theses 2014:23. University of Lund 123 Fethers, Ben (2014). Aviation Biofuel Production in Sweden - An Insight into the Potential of Forestry Biomass as a Feedstock. IIIEE Theses 2014:11. Lund University 124 The Study was written by Tomas Ekbom (Svebio), Carl Hjerpe, Martin Hagström and Fredrik Hermann.

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plant in conjunction with Arlanda Airport was set forward by Luftfartsveket (LFV). The conclusion of the report was that despite high investment costs, the calculations were positive. The study made use of a scenario whereby 50,000 tonnes of biojet fuel would be produced and supplied to Stockholm Arlanda airport, this enabling the airport to go carbon neutral.125 So far, the report has not had any direct follow up activities.

6.5. Stakeholders

6.5.1. Producers / Technology / Companies126 Swedish Biofuels AB – pilot scale aviation fuel production company and technology developers operational since 2011, located at the Royal Institute of Technology, KTH. Plans for demonstration scale production for aviation and road transport. The capacity of the plant will be 10,000 tonnes per year, of which half will be aviation fuel and other half for ground transport. Swedish Biofuels supplies quantities of aviation fuel from its Pilot Plant to USAF/FAA under the program of Sweden US cooperation in matters of alternative fuels.127 SunPine - commercial scale Tall oil diesel production facility (annual production capacity is 100 million l tall oil diesel). The oil is shipped to a Preem refinery in Gothenburg where it is co-processed with fossil oil into Preem ACP Evolution Diesel for road transport.128 Preem refinery – commercial scale refinery in Gothenburg. The Preem Evolution Diesel consists of up to 35% of renewable resources; 28% is tall oil diesel and the remaining 7% are RME St1 refinery – demonstration Scale refinery and ethanol plant in Gothenburg. Objective is to demonstrate the potential for production of ethanol for blending. Raw materials for ethanol in this plant are by-products from the food industry. Expected capacity of 5 million l. of ethanol/year for use as a fuel for transportation GoBiGas – demonstration scale Energy Biomass Gasification facility in Gothenburg. Using biomass and forest residues. The project is a partnership between Gothenburg Energy and E.ON. Chemrec – pilot scale gasification plant in Piteå. Gasification of black liquor to produce syngas is a technology developed by Chemrec. Chemrec has no operation today, but the pilot gasifier is operated by LTU Green Fuels. Currently, only BioDME and bioethanol is produced. The Lantmännen Agroetanol, Norrköping - Commercial scale ethanol production with the adjacent combined heat and power plant that supplies electricity and process steam to the ethanol plant. Raw materials used are wheat, rye and barley. Around 550,000 t of grain are required to produce 210 million l of ethanol. SEKAB- Biorefinery demo plant in Örnsköldsvik producing 0,2 million l. of ethanol/year. Plant mainly uses agriculture and forest residues but is able to use a range of feedstock

6.5.2. Networks The Swedish Bioenergy Association (Svebio) - an NGO advocating optimal conditions for bioenergy in Sweden and internationally. An organisation that gathers actors, suppliers, investors and customers in order to promote biojet. Work with policy measures, to find solutions to work with industry and politicians, decision makers, legislators etc. Around 300 Swedish businesses are members of Svebio.129

125 Ekbom, Thomas et al. (2009). Förstudie för biobaserat flygbränsle för Stockholm-Arlanda Flygplats. Värmeforsk Rapport. 126 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 127 Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 128 Sunpine. Official Website – ‘about’ 129 Svebio. Official Website

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6.5.3. To look out for: The Fly Green Fund Karlstad Airport became the first airport in Europe to install a fixed storage tank facility for aviation biofuel in the summer of 2014. From 2015 onwards, any aircraft departing from Karlstad Airport could purchase a biojet blend for their flight.130 In relation to this, and to promote the use and production of sustainable alternative fuels for aviation, Karlstad Airport, SkyNRG and NISA (Nordic Initiative on Sustainable Alternative Fuels) started a cooperation called the Fly Green Fund in 2015. Since then, Swedavia, Malmö Aviation, Sverigeflyg, SAS, KLM and EFS have joined as partners. As partners, these companies pay for the fund’s administrative costs and, when FGF has fuel, it fuels these partners in priority where the partners pay the cost of fossil and FGF pays the premium for the biojet. In short, the Fly Green Fund consists of several focus points and activities: - Bringing the industry and key actors together for collaboration - Making the supply chain possible and scaling down prices - Offering companies and private passengers to fly on Bio jet - Raising awareness of bio jet to policy makers and to public The stated main goal of the Fly Green fund is “to develop the Nordics into a pioneering bio jet fuel region.”131 The organization wants to kick-start the market and increase the demand for bio jet fuel, in order to increase the volumes and decrease the costs. This is to be achieved by co-funding the added cost of renewable aviation fuel compared to fossil fuel. The vision is to give organisations and individuals the opportunity to fly more sustainably using renewable aviation fuel in the Nordic countries, at a reasonable cost.132 Corporate and private customers are offered to purchase so called Bio- tickets (via online transfer) where they pay a premium on top of their flight ticket. Each buyer can choose the price they are willing to invest, and based on that, they know that they have enabled a certain per cent of their flight to be on bio jet (estimated cost of flying 100% on biojet for one hour of flight is 400 SEK per person).133 Of the additional amount, 75 % will go to cover the costs of conducting the flight with a biofuel blend, and 25 % on projects that strive to achieve biojet fuel production in the Nordic countries. The goal is to have biofuel representing 25 % of the total fuel for domestic aviation in Sweden by 2025 and on a longer term to extend the fund to the whole Nordic region.134 The Fly Green Fund is built from the grassroots and can be seen as more inclusive providing a sense of solidarity.135

6.5.4. R&D / Academia Lund University – in 2015 Lund University organised a biofuels symposium on lignin and hemicellulose valorisation. Research on sustainable jet and development is conducted. Royal Institute of Technology (KTH) - conducts technical research and hosts Swedish biofuel’s pilot plant. Received 25 million SEK in 2013 to conduct research on algae and bacteria to energy.136

130 Lane, Jim (2014). First commercial biofuels flight from Sweden, as Karlstad Airport installs biofuels storage capacity, teams with SkyNRG, British Midland. Biofuels Digest. 26 June 2014 131 Fly Green Fund. Official Website 132 Swedavia Airports. Official Website – ‘Biofuel – for a fossil-free future’ 133 Fly Green Fund. Official Website. Swishtjänst för resor med bioflygbränsle 134 Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 135 Based on expert interview with representative of Fly Green Fund 136 Royal Institute of Technology (KTH) (2013). Making fuel from bacteria - Genetically-modified cyanobacteria could be more efficient than ethanol

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Chalmers University of Technology - also conducts research on biofuels, including on Production of advanced biofuels in yeast137

6.5.5. Policy138 The Swedish Transport Agency (Transportstyrelsen) – works to provide accessibility, quality and security in rail, air, sea and road transport. The Civil Aviation and Maritime Department formulates regulations and monitor developments in the aviation market.139 Civil Aviation Administration (Luftfartsverket, LFV) - a state enterprise that operates air navigation services in Swedish air space. Services are given to both civil and military customers throughout the country. LFV develops new services and operational concepts to meet increased demands for safety, capacity and availability140 Swedish Energy Agency (Energimyndigheten) - a government agency working with national energy policy issues. The energy research programs in Sweden are mainly managed by the Swedish Energy Agency, amounting to around SEK 1,300 million (around EUR 140 million) to funding research annually.141

6.5.6. Funding Swedish Energy Agency (Energimyndigheten) - as mentioned above allocates funds in various areas of development through funding programs for research and demonstration projects142 The Swedish Transport Agency (Transportstyrelsen) – also issues grants and research support143 Vinnova - national authority that is responsible for provision of funds to research, development and innovation program to the industry sector.144 The agency promotes sustainable growth by funding needs-driven research and stimulating collaborations between companies, universities, research institutes and the public sector145 Fly Green Fund – invests in Nordic aviation biofuels projects SAS - provides financial support to research initiatives and innovative projects

6.5.7. Industry/End users Air traffic – Swedish Aviation (Svenskt Flyg) Svenskt Flyg is a member-owned organization with the purpose of working politically for the Swedish commercial airline and aviation industry. Members of Svenskt Flyg are e.g. Luftfartsverket (LFV) and Swedavia. Today there are 40 commercial air traffic airports. Out of these, 27 are owned by municipalities and 10 are state-owned by Swedavia. Three have other ownership structures. The

137 Chalmers University of Technology (2013). Production of advanced biofuels in yeast. 25 March 2013 138 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers 139 Swedish Transport Agency (Transportstyrelsen). Official Website – ‘about’ 140 Swedish Civil Aviation Administration (Luftfartsverket). Official Website – ‘about’ 141 Swedish Energy Agency (Energimyndigheten). Official Website – ‘Innovation, Research and Development’ 142 Rossi, Raffaele (2014). Pursuing Aviation Biofuels – A Diagnostic Analysis of the Swedish Biojet Innovation System, Sweden. IIIEE Theses 2014:23. University of Lund 143 Ibid. 144 Ibid. 145 Vinnova. Official Website.

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majority of traffic is handled in the four major airports of Stockholm (Arlanda and Bromma), Göteborg (Landvetter) and Malmö. 146 Swedavia Swedavia was established in 2010 as a state-owned company for airport operations.147 It is very active in setting sustainability goals and in working on reducing emission of all its airports. All of its ten airports are carbon neutral and have an Airport Carbon Accreditation. In addition to participating in the Fly Green Fund initiative, Swedavia has also recently launched three major actions to promote biojet: - In 2016, a total of 450 ton of sustainable aviation fuel was refuelled at Stockholm Arlanda Airport, Bromma Stockholm Airport and Åre Östersund Airport. Additionally, in May 2017, a small volume of sustainable fuel was refuelled at Göteborg Landvetter Airport, and Halmstad Airport. 148 - From 2016 onwards, all of Swedavia’s staff will fly using renewable aviation fuel when travelling for business purposes. By leading the way and buying green flights for business purposes, they want to show decision-makers, companies and producers that there is also a demand for fossil-free fuels in air travel and as a result contribute to large-scale production.149 Swedavia bought 250 tons of biojet through a tender process to cover its own flights at their airports.150 - The third major step Swedavia has taken to promote biofuels for aviation was to launch the Biofuel Incentive Programme, an incentive programme for airlines that use renewable fuel. The programme supports airlines by paying 50% of the extra cost for renewable fuel. The incentives are available for any airline that has flights to and from one of Swedavia’s airports.151 In 2016, Swedavia is financing this by themselves but will start looking at possibilities to apply for support for Swedish transport agency. Stockholm Arlanda and Karlstad airports Approximately 22,4 million passengers travelled to or from Stockholm/Arlanda (the largest airport) in 2014 and 23,2 million in 2015.152 “The fossil jet fuel used in Swedish airports is imported to major ports in Sweden, such as the Port of Gävle (Gävlehamn). At the Port of Gävle different producers deliver Jet-A1 which after storage and re-esterification is loaded onto the train, which is then transported by railway to Stockholm Arlanda Airport or by truck transport to the airports. Several actors are involved in the handling and transportation of jet fuel.”153 In 2014, Karlstad Airport, in collaboration with Karlstad municipality, Air BP and SkyNRG Nordic, set up a permanent storage tank for sustainable jet fuel with storage capacity of 30,000 l. The

146 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers & Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 147 Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 148 International Civil Aviation Organization (ICAO). SAAFA. 149 Swedavia Airports. Official Website – ‘Biofuel – for a fossil-free future’ 150 Based on expert interview with representative of Svebio & Swedavia Airports (2016). Swedavia now introducing financial aid for airlines that use renewable aviation fuel. Press Release. 30 March 2016 151 Swedavia Airports (2016). Swedavia now introducing financial aid for airlines that use renewable aviation fuel. Press Release. 30 March 2016 152 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers & Lindell, Annika (2015). ICAO State Action Plan on CO2 emissions reduction activities – Sweden 153 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers.aviation

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sustainable jet fuel in the tank (made from used cooking oil) was imported from North America. The blending ratio of the fuel can be between 10–45%. The sustainable jet fuel available at Karlstad Airport is imported by SkyNRG Nordic and is handled and blended by BP.154`

6.6. National data - biojet demand The Swedish aviation sector employs around 140,000 people in Sweden and contributes approximately US$ 13,7 billion to the Swedish GDP.155 In 2012, 38 million passengers arrived and departed from Swedish airports, and approximately 175,000 tons of goods were sent from the airports. In 2014, Sweden consumed about 40.5 PJ28 (930,690 tons) of jet fuel in total (Statens Energimyndighet, 2015). In a projection made by the Swedish Energy Authority, they expect the consumption of aviation fuel to be between 39.6 PJ and 43.2 PJ in 2030 (Statens Energimyndighet, 2014).” It is estimated that the demand for sustainable jet fuel in Sweden will reach 15 million litres in 2020, 232 million litres in 2035 and 450 million litres in 2050.156

6.7. Feedstock157 Forests cover over 60% of the Swedish landscape. The country has understandably invested heavily in the development of 2nd generation feedstock or biofuel production, from wood-biomass and forestry biomass accounts for roughly 85% of the bioenergy produced, most of which is heat and power. In addition to wood biomass, biofuels used in the ground transportation sector is also currently produced from grain and organic waste. For future developments, main potential has been identified in Straw, wood residues and Tall oil & black liquor. Straw: As in Denmark, the potential is substantial, but the material is competing for other uses. A large amount of the straw produced is used for feed and bedding in animal husbandry, and large volumes are left in the field to increase the amount of organic matter in the soil. There is a possibility for a more extensive production of grain and oilseed that would generate more straw that could be used for energy purposes. The realistic actual potential from straw is around 15 PJ/year, which is approximately 3% of the current biomass supply in Sweden. Wood residues: Between 54-130 PJ of logging residues are technically available. Over 86.4 PJ of secondary wood residuals was used in energy production, some of which could be diverted towards biofuel production. As in Norway, the logistics can be challenging as ownership of Sweden’s forest is 50% private owners (with over 200,000 individual owners), 25% State owned companies and 25% public owners. Additionally, around 10% of the forestland is protected for biodiversity purposes. “Every year about 27 PJ of logging residues (equivalent around to 1.5 Mt dry substance) is in Sweden used mainly for heat and energy production. The consumption of wood fibre in the Swedish forest products industry amounted 81 million m3 solid volume (excluding bark). This wood fibre was used in the pulp and paper industry (46.4 million m3), in sawmills (33.6 million m3) and in the wood-panel industry (0.8 millionm3). Of the wood fibre going to sawmills, 10.8 million m3 was generated as by-products for use in the pulp and wood-panel industries. (The Swedish forest agency, 2015). Almost all pulp and paper mill residues are utilized for plant energy and heat purposes.”158

154 Ibid. 155 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Sweden 156 Wormslev, Erik C et al. (2016). Sustainable jet fuel for aviation: Nordic perspectives on the use of advanced sustainable jet fuel for aviation. TemaNord 2016: 538. Nordic Council of Ministers. 157 Ibid. 158 Ibid.

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Tall oil and black liquor: Currently these resources are being used for other purposes: Most tall oil is used for chemicals and renewable diesel production and most black liquor is used for heat and energy production, but use may be diverted to jet fuel production.

7. Indonesia

7.1. Policy Environment Indonesia has a burgeoning biofuel industry, which had its inception from the issuance of a Presidential Instruction on Biofuel Supply and Utilization in 2006.159 The Presidential Instruction mandated government agencies to accelerate biofuel development in all stages, from “feedstock supply to commercialization of biofuel technologies and increased biofuel consumption.”160 The objective behind the mandate is the promotion of biofuels as a substitute for fossil fuel for transportation.161 The developments have largely focused, however, on palm-oil based biofuels for use in the on-road domestic sector.162 In 2008, Indonesia’s Ministry of Energy and Mineral Resources (MEMR) issued a regulation163 that provided for ambitious biofuel blending requirement over the period 2008-2025. Different biofuel blending requirements were set for the (on road) transportation sector, industrial and commercial use, and electricity generation. The blending requirements have been updated a number of times. The 2013 revision included for the first time, a blending requirement for biofuel in the aviation sector of 2%, 3% and 5% for the target years 2016, 2020 and 2025 respectively.164 However, the 2016 blending requirement for aviation fuel was lifted due to national circumstances. MEMR Regulation 12/2015 contains the third and latest revision on mandatory biofuel blending requirements, which provided for a mandatory use of 2% biofuel in air transportation by 2018.165 It appears, however, that the biofuel blending requirements are not being strictly enforced with the mandated levels not having been fully achieved in the past.166 Further, penalties for non-compliance on the blending requirements are yet to be imposed.167

7.2. Other Relevant Policies Promotion of Renewable Energy

159 International Energy Agency (IEA). Provision and Utilization of Biofuel (Presidential Instruction No. 1/2006). Policies and Measures: Indonesia 160 Kharina, Anastasia; Malins, Chris; Searle, Stephanie (2016). Biofuels Policy in Indonesia: Overview and Status Report. The International Council on Clean Transportation 161 Ibid. 162 Wright, Thom; Rahmanulloh, Arif (2017). Indonesia Biofuels Annual Report 2017. USDA Foreign Agricultural Service. 20 June 2017 163 International Energy Agency (IEA). Biofuel Supply, Utilization and Trading (Ministerial Regulation No. 32/2008). Policies and Measures: Indonesia 164 International Energey Agency (IEA). Biofuel Blending (Ministry Regulation No. 25/2013). Policies and Measures: Indonesia 165 Gielen, Dolf; Saygin, Deger; Rigter, Jasper (2017). Renewable Energy Prospects: Indonesia. International Renewable Energy Agency (Irena). 166 Kharina, Anastasia; Malins, Chris; Searle, Stephanie (2016). Biofuels Policy in Indonesia: Overview and Status Report. The International Council on Clean Transportation 167 Ibid.

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Government Regulation 79/2014 sets out Indonesia’s National Energy Policy, which includes a target for renewable energy to supply 23% of Indonesia’s energy mix by 2025.168 MEMR Regulation 2/2015 sets out the latest targets for biodiesel as follows: Table 7-1 Indonesian Biodiesel Mandatory Target as Stated in Regulation 12/2015:

Sector 2016 2020 2025 Transportation, Public Service Obligation (PSO)

20% 30% 30%

Transportation, Non-PSO

20% 30% 30%

Industry 20% 30% 30% Electricity 30% 30% 30%

Note: Public Service Obligation (PSO) refers to subsidized fuel for road vehicles. It is uniquely sold through Pertamina, an Indonesian state-owned company. Non-PSO refers to unsubsidized fuel sold through the private sector. Climate Change Commitments Indonesia is a party to the United Nations Framework Convention on Climate Change and to the Kyoto Protocol. 169 It has pledged to voluntarily reduce its GHG emissions by 26% as against business-as-usual by 2020.170 Presidential Decree 61/2011 on National Action Plan for Greenhouse Gas Emission Reduction implements the 26% target reduction, and sets up to 41% reduction once adequate international support is provided to the government.171 The energy and transport sectors are expected to contribute 5% to the overall target reduction.172 The reduction of emissions in the transportation sector is meant to be achieved through the increased use of biofuels, among others.173 With respect to carbon emissions in the air transportation sector, the National Action Plan projects the use of aviation biofuel and GSE biodiesel to contribute to 17% of the targeted emission reductions in the sector.174 Relevantly, the government recently implemented a moratorium to prevent additional plantations of palm oil.175

7.3. Laws Energy Law 2007 (Law No. 30/ 2007) This comprehensive energy legislation stresses the importance of sustainable development, environmental preservation and energy resilience in national energy management. In terms of

168 International Air Transport Association (IATA) (2015). IATA 2015 Report on Alternative Fuels. 10th Edition. December 2015 169 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 170 Ibid. 171 International Energy Agency (IEA). National Action Plan for Reducing Greenhouse Gas Emissions (RAN GRK) (Presidential Decree No. 61/2011). Policies and Measures: Indonesia 172 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 173 Ibid. 174 Directorate General of Civil Aviation (2012). Indonesia Roadmap 2012-2020 on Aviation Emissions Reduction of GHG and Capacity Building Programs. Presentation for the Aviation and Climate Seminar. 23/24 October 2012. Montreal, Canada 175 Gielen, Dolf; Saygin, Deger; Rigter, Jasper (2017). Renewable Energy Prospects: Indonesia. International Renewable Energy Agency (Irena)

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supply-side policies, it requires that more attention should be given to new and renewable energy development and that incentives should be developed for energy providers to do this.176 Promotion of Biofuels There are no measures specifically targeted to incentivize the development or use of aviation biofuel. However, there are several regulations adopted pursuant to Presidential Decree 1/2006 on the provision of facilities and incentives for developing biofuels in general, which include the following:177

- Regulation No. 1/2007 on Income Tax Facility for Capital Investment in Certain Business Sectors and / or Areas;

- Government Regulation No 8/2007 on Government Investment; - Minister of Finance Decree No. 117/PMK.06/2006 on Credit for Bio-energy Development and

Revitalization of Plantations (KPEN-RP); and - Minister of Finance Decree No. 79/PMK.05/2007 on Credit for Food and Energy Security

(KKPE). Regulation 117/2006 and MoF Regulation 79/2007 allow loans at lower interest rates compared to those provided by national banks to farmers, particularly for planting palm oil for biofuels.178

Below are government commitments on policies and incentives for supporting investments in biofuel development:179 - Nominal stamp duties - Agreement with 50 countries on the avoidance of double taxation - Relief from import duties - Investment tax allowance in the form of taxable income reduction up to 30% of the realized

investment spread over 6 years - Accelerated depreciation and amortization - Loss carried forward facility for a period of no more

than 10 years - 10% income tax on dividends, possibly lower if stipulated in the provision of an existing applicable tax treaty - Selected strategic goods exempt from value added tax

Subsidies for Biodiesel and Bioethanol for (on Road) Transportation Indonesia supports its mandatory biofuel blending requirements, among others, through biofuel subsidies. In 2013, Indonesia introduced new subsidies for transport biofuels for bioethanol and biodiesel.180 Presidential decree 61/2015 authorized Indonesia Oil Palm Estate Fund to collect levy on exports of palm oil and palm-oil based products and utilize this levy to support biodiesel subsidies.181 The Fund redistributes the levy, as subsidies, to biofuel producers selling their products domestically for the purpose of the biodiesel blending mandate.182

176 Nachmany, Michal et al. (2014). The GLOBE Climate Legislation Study - A Review of Climate Change Legislation in 66 Countries. 4th Edition. GLOBE International & Grantham Research Institute on Climate Change and the Environment 177 Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25 178 International Energy Agency (IEA). Development credits for biofuels and plantation revitalisation (MoF Regulations No. 117/2006; No. 79/2007) 179 Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25 180 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 181 Presidential Regulation No 61/2015 on Collection and use of palm oil funds 182 Kharina, Anastasia; Malins, Chris; Searle, Stephanie (2016). Biofuels Policy in Indonesia: Overview and Status Report. The International Council on Clean Transportation

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Feed-in Tariffs - MEMR 21/2016 on the Purchase of Electric Power from Biomass and Biogas Power Plants by PT Perusahaan Listrik Negara (PLN) The government has set a feed-in-tariff (FiT) applicable to biomass and biogas power projects.183 MEMR 21/2016 sets out the latest FiT mechanisms by introducing (i) simplified procedure for the sale by independent power producers intending to sell their biomass or biogas power outputs to PLN, and (ii) differentiated tariff rates, depending on the location of project as well as capacity of the power plants.184 The policy supporting the use of biomass for electricity generation potentially creates competition in the feedstock allocation between electricity generation and biofuel creation. Sustainability Criteria Indonesia does not implement sustainability criteria for biofuels in general. However, the government, in collaboration with national oil palm producers, developed a national standard on palm oil production in 2011 through Ministry of Agriculture Decree 19/Permentan/OT.140/3/2011. The regulation was revised by Ministry of Agriculture’s Regulation No.11/2015, which made it mandatory among all palm oil plantations to comply with a set of sustainability criteria through the Indonesia Sustainable Palm Oil (ISPO) certification scheme.185 The sustainability criteria includes sustainable business development and environmental management and monitoring.186 Ministry of Agriculture’s Regulation No.11/2015, however, exempts plantations supplying palm oil for biofuel production from ISPO compliance. This new rule dilutes efforts to ensure sustainable production of palm oil-based biofuels.187

7.4. Stakeholders

7.4.1. Producers / Technology / Companies Wilmar Indonesia, biggest palm oil producer in Indonesia. The company also has a R&D laboratory in Indonesia, which focuses on biotechnology, particularly on competitiveness and sustainability in the palm oil industry.188 Pertamina, state-owned oil and gas company, engaged in the upstream and downstream sectors.189 Its downstream activities include “processing of crude oil, marketing and trade of oil products, gas and petrochemicals”.190 It is the main distributor of transport fuel and has begun utilizing biofuels as a mix in several of their products since 2006.191 JJ-Lurgi Engineering provides multi-purpose technology for the “effective processing of most vegetable and animal oils and fats into quality biodiesel.”192 Its projects include the building of a

183 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries & Hadiputranto, Hadinoto & Partners (2016). Legal Updates: New Regulation on Purchase of Electric Power from Biomass and Biogas Power Plants. Global Business Guide Indonesia. 5 October 2016 184 Hadiputranto, Hadinoto & Partners (2016). Legal Updates: New Regulation on Purchase of Electric Power from Biomass and Biogas Power Plants. Global Business Guide Indonesia. 5 October 2016 185 Sardjono, Mukti (2014). Indonesian Policy on sustainable Palm oil development 186 Hadiputranto, Hadinoto & Partners (2016). Legal Updates: New Regulation on Purchase of Electric Power from Biomass and Biogas Power Plants. Global Business Guide Indonesia. 5 October 2016 187 Ibid. 188 Wilmar International. Official Website – ‘Research& Development’ 189 Pertamina. Official Website 190 Ibid. 191 Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25 & Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25. Annex: Biofuel Policies in East Asian Countries 192 JJ-Lurgi Engineering. Official website – ‘Methylester (Biodiesel) Technology’.

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biodiesel plant in Dumai Indonesia to produce biodiesel that meets the global standard eN14214 specifications.193 PT Eterindo Wahanatama Tbk, engaged in chemical industry, produces biodiesel in its Gresik, East Java plant using crude palm oil as feedstock.194 PT Molindo Raya Industrial, largest ethanol producer in Indonesia, developed biofuel from molasses.195 PT Sumiasih, manufacturer of oleo chemicals from crude palm oil.196

7.4.2. To look out for: Wilmar Indonesia has invested $ 80 million to produce “palm oil-derived aviation biofuel in a plant in Gresik, East Java” in collaboration with Elevance Renewable Sciences Inc, a US-based company.197 The operations of the biorefinery where the fuel is to be manufactured began in December 2011. However, processing of the resulting chemical components into ready-to-use aviation biofuel suitable for jets has been reported to take several years.198 Pertamina plans to invest to US$ 480 million to produce bio-aviation turbine fuel (avtur/jet fuel) and build a refinery.199 The aim is for the plant to be operational in 2018. Pertamina’s target is to produce up to 26 million litres per year of bio-aviation fuel. 200 PT Maris Sustainable Indonesia conducts research in palm waste water (POME) treatment to biogas and algae production.201 The research probes “how much algae can be produced, at what quality, and on which surface” through conversion of POME into algae.202 JababECO, the first US-Indonesia municipal waste-to-bioproducts project, was launched in April 2017.203 The project is concluded between the US company, Greenbelt Resources Corporation, and PT Jababeka Tbk, through its wholly owned subsidiary PT Jababeka Infrastruktur. The project utilises Greenbelt’s ECOsystem technology, which will process municipal food waste into a myriad of bioproducts including bioethanol. JababECO is intended to demonstrate “sustainable circular economy in action by utilising local waste resources to produce locally sold bioproducts.”204

7.4.3. Networks Indonesian Biofuels Producers Association (APROBI), comprised of 22 companies engaged in production of bioethanol and biodiesel.205 Indonesian Renewable Energy Society (METI) promotes and advocates the use of renewable energy (including biodiesel and bioethanol)206 and facilitates coordination between various associations and fora, including the Indonesia Biodiesel Forum;207

193 JJ-Lurgi Engineering (2014). Latest News – New Biodiesel Project. 194 Silviati, Anasia (2008). Indonesia: Biofuel Development. US Commercial Service – United States of America Department of Commerce. August 2008 195 Ibid. 196 Ibid. 197 Jakarta Post (2012). Wilmar to develop aviation biofuel. 11 April 2012 198 Inform (2012). Biofuels News. Inform – International News on Fats, Oils and Related Materials, Vol. 23, No.6, p 359 199 Jakarta Post (2015). Pertamina to construct bioavtur plant in 2017. 13 August 2015 200 Ibid. 201 Maris Projects. Official Website – ‘projects in Indonesia’ 202 NL Agency – Netherlands Programmes for Sustainable Biomass (2012). Indonesia – Market opportunities for Bioenergy 203 Advanced Biofuels USA (2017). US VP Pence Celebrates Greenbelt Resources and Jababeka Infrastruktur Waste-to-Resources Project MOU Signing 204 Ibid. 205 ASOSIASI Produsen Biofuel Indonesia. Official Website 206 Indonesian National Innovation System Resource Center (2013). METI (Masyarakat Energi Terbarukan Indonesia) Indonesia Renewable Energy Society (IRES) 207 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries

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Indonesia Biodiesel Forum, promotes the production and use of biodiesel in Indonesia to achieve sustainable energy supply security and economic development and is comprised of members from the government, research institutes, NGOs and the private sector.208

7.4.4. R&D / Academia Ministry of Research and Technology and its Agency for the Assessment and Application of Technology (BPPT) – a non-departmental research agency is involved in formulating research and development and implementation of renewable energy technologies.209 BPPT’s technology focus includes research on a variety of biofuel feedstocks, including biomass and palm oil. Agency for Research and Development under the MEMR focuses on energy technologies and research.210 One of the specialized research centers under the Agency is the P3TKEBTKE: Centre for Electricity and New and Renewable Energy. One of its research topics includes solid waste conversion from the palm oil industry into activated carbon nano and biofuel.211 Lemigas Indonesia, government-owned research and development agency in the oil and gas upstream and downstream industries, Lemigas undertakes R&D for the development of biodiesel plant,212 and on biodiesel process technology, (i.e. “esterification, transesterification, purification, recovery methanol) using vegetable oil as feedstock (crude palm oil, jatropha, coconut, waste cooking oil);213 Indonesian Palm Oil Research Institute (PPKS Medan), primary research institute established to support the palm oil industry in Indonesia, with research field including on Plant Breeding and Biotechnology, Engineering Technology and Socio Techno Economics.214 Indonesian Institute of Sciences (LIPI), undertakes research on development of biodiesel from crude palm oil, Jatropha and palm empty fruit bunch for the 2nd generation bioethanol;215 Bandung Institute of Technology (ITB) undertakes R & D on development of biodiesel and bioethanol, research includes technology to develop biodiesel from micro-algae using ultrafiltration technology.216

7.4.5. Policy Ministry of Energy and Mineral Resources (MEMR): the MEMR is responsible for policy making, implementation and technical policy, and oversees performance of the energy sector. 217 The MEMR is divided into 4 DGs, including a DG on Renewable Energy and Energy Efficiency.

208 Ibid. 209 Ibid. 210 Ibid. 211 Kusdiana, Dadan (2016). The experience of Indonesia on Financial Schemes to Support Bioenergy Development. Indonesian Estate Crop Fund – Palm Oil. 24 June 2016 212 Lemigas. Official website & International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 213 Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25 214 Indonesian Palm Oil Research Institute (PPKS Medan). Official Website 215 Putrasari, Yanuandri et al. (2016). Resources, policy, and research activities of biofuel in Indonesia: A review. Energy Reports, Vol. 2 (June 2016), pp. 237-245 216 Yamaguchi, Kaoru (2012). Study on Asia Potential of Biofuel Market. ERIA Research Project Report 2012, No.25 217 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries

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Aviation Biofuels and Renewable Energy Task-Force (ABRETF): Indonesia’s ABRETF was established as one of supporting elements in executing Indonesia’s National Action Plan to reduce GHG emissions from the aviation sector.218 Ministry of National Development Planning (BAPPENAS) is the agency responsible for macroeconomic planning; including economic and energy development;219 it is also responsible for integrating environmental and climate change policy into national economic planning.220 Ministry of Finance (MOF) undertakes the management of energy subsidies, setting of renewable energy tariffs, taxation of energy products, energy infrastructure and operations.221 Ministry of Transport is responsible for policies relating to all modes of transport, including air. 222 Ministry of Agriculture (MOA) is involved in the development of bioenergy via its responsibility for agricultural and plantation practices, including palm oil plantations.223 It is also involved in biofuel pilot projects.224 Ministry of Forestry (MOFy), responsible for all activities related to areas designated as forest in Indonesia and is thus involved in approving land concessions for palm oil plantations,225 also responsible for biofuel pilot projects.226 National Council on Climate Change coordinates climate change policies and measures and is comprised of the key ministries involved in climate change mitigation and adaptation measures, such as the MEMR, MOA, MOF, MOFy, BAPPENAS, etc.227 Commission VII of the Indonesian House of Representatives is the principal parliamentary body that deals with energy issues/ Reviews and approves the National Energy Policy as well as changes in the electricity and fuel subsidy regimes.228 The National Team for Biofuel Development, established by Presidential Decree No. 10/2006, has the mandate to develop a blueprint for increasing the use of biofuels.229 The team consists of representatives from several ministries and other governmental bodies, research organisations and the private sector.230

7.4.6. End-Users As an archipelago of 17,508 islands, air transportation plays a major role in connecting the islands and inland areas within Indonesia.231 The country has an extensive network of airports, with 39

218 ICAO Environment. Indonesian Aviation Biofuels and Renewable Energy Taskforce. Projects & Initiatives. 219 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 220 Ibid. 221 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 222 Ibid. 223 Ibid. 224 Ibid. 225 Ibid. 226 Ibid. 227 Ibid. 228 Ibid. 229 Ibid. 230 Ibid. 231 International Civil Aviation Organization (ICAO) (2013). Indonesia Green Aviation Initiatives for Sustainable Development: Renewable Energy for Airport Operations. Working paper for the 38th Session of the ICAO Assembly

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international airports from a total of 296.232 Angkasa Pura I and II operate 26 of the larger airports in Indonesia, which have the majority of the international flight routes. Some of the smaller airports are owned or operated separately by the provincial government or by technical executive units under the Ministry of Transportation. 233 Angkasa-Pura Angkasa-Pura I and II are fully owned state enterprises. Angkasa Pura I operates 13 airports in Central and Eastern Indonesia. Meanwhile, Angkasa-Pura II operates another 13 airports in Western Indonesia, mainly located on the Sumatra Island and the Western part of Kalimantah, including the largest airport (Soekarno-Hatta) Jakarta.234 Garuda International Garuda International is Indonesia’s flag-carrier airline, with over 40 domestic and 36 international destinations.235 Garuda International planned to carry out a feasibility study in partnership with PT Pertamina, a state-owned oil and gas company, and implement a biofuel renewable energy program in 2015. 236 The airline expected to use aviation biofuel blend in 2016, subject to the availability of crude-palm-oil based aviation biofuel being tested by PT Pertamina.237

7.5. National Data – biojet Demand The aviation sector plays an important role in Indonesia’s economy. The sector directly supports 720,000 jobs and contributed to US$ 8,3 billion gross value-added contribution to GDP in Indonesia in 2014.”238 Indonesia’s aviation industry is poised to experience further growth. The country’s booming population, fast economic growth and the increasing popularity of its domestic tourist attractions are expected to drive this growth.239 From 2004-2014, Indonesia experienced an annual average growth of 6.4% and 7.1% in passengers and freight, respectively.240 By 2034, Indonesia is further projected to have the sixth largest market for air travel with 270 million passengers expected to fly to, from and within the country, and the 5th largest domestic market.241 In the Master Plan for the Acceleration and Expansion of Indonesia's Economic Development for 2011-2025, the government earmarks US$ 12.7 billion investment for airport infrastructure alone.242 By 2019, an additional 15 more new airports are expected to be established in the country.243

232 Directorate General of Civil Aviation. Database on Indonesian Airports. Ministry of Transportation Republic of Indonesia & Indonesia Investment Coordination Board (BKPM) (2015). Investing in Indonesia’s Airport development sector - An overview of opportunities, capabilities and provisions 233 Indonesia Investment Coordination Board (BKPM) (2015). Investing in Indonesia’s Airport development sector - An overview of opportunities, capabilities and provisions 234 Ibid. 235 Garuda Indonesia. Official Website 236 Garuda Indonesia. Official Website – ‘Aviation Operations’ 237 Lane, Isabel (2014). Indonesian airline Garuda to deploy aviation biofuel blend by 2016. Biofuels Digest. 28 August 2014 238 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Indonesia 239 Indonesia Investment Coordination Board (BKPM) (2015). Investing in Indonesia’s Airport development sector - An overview of opportunities, capabilities and provisions 240 Ibid. 241 International Air Transport Association (IATA) (2014). Press Release No. 57 - New IATA Passenger Forecast Reveals Fast-Growing Markets of the Future. 16 October 2014 242 Indonesia Investment Coordination Board (BKPM) (2015). Investing in Indonesia’s Airport development sector - An overview of opportunities, capabilities and provisions 243 Ibid.

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Despite the expected growth in air traffic, Indonesia also aims to achieve emissions reduction in the air sector. Its National Action Plan for Carbon Emissions in air transportation identified a target reduction of around 16 MTCO2 in the sector by 2020, 17% of which is aimed to be achieved by the use of aviation biofuel and GSE bio-diesel.244 Given the country’s increasing biofuel blending mandate in the aviation sector, it is estimated that demand for Bioavtur will steadily increase from 95,000 KL from 2016, to 164,000 KL in 2020 and 320,000 KL by 2025. Meanwhile Pertamina projects to produce 213,000 KL by 2017, and up to 257,000 KL by 2018 until 2025. Based on these projections, it is expected that aviation biofuel production would be sufficient to meet domestic demands with excess capacity for exporting.245

7.6. Feedstock As of 2012, Indonesia’s total primary energy supply (TPES) amounted to 213.6 million tonnes of oil-equivalent (Mtoe), 25.3% is derived from bioenergy, biofuels and waste.246 Indonesia has the second-largest share of biofuels and waste in TPES after Finland.247 However, energy derived from biofuels and waste has only been minimally increasing over the years, registering a 0.7% increase per year since 2002.248 Biodiesel and Bioavtur (aviation biofuel) Feedstock Indonesia has identified several potential resources for energy plantation as well as feedstock for Biodiesel and Bioavtur (aviation biofuel). Identified feedstock include palm oil, Jatropha Curcas, Candlenut (Kemiri Sunan), Nyamplung and algae.249

Palm oil Currently, Indonesia is the “largest producer and exporter of palm oil products.”250 In 2011, Indonesia produced 23.9 million tonnes of crude palm oil.251 It is projected that oil palm area will almost double from 8.2 million ha in 2011 to 15.2 million ha by 2025.252 Meanwhile, crude palm oil production forecast for 2020 is estimated to reach up to 40.8 million tons.253 Jatropha In 2011, there were 4,100 hectare of Jatropha plantation in Indonesia.254 Planted area for Jatropha has fluctuated significantly, however, peaking in 2001 at 21,347 ha.255 PT Eco Emerald planned to establish 10,000 ha of jatropha plantation in the districts of Jayapura and Biak-Numfor in the

244 Directorate General of Civil Aviation (2012). Indonesia Roadmap 2012-2020 on Aviation Emissions Reduction of GHG and Capacity Building Programs. Presentation for the Aviation and Climate Seminar. 23/24 October 2012. Montreal, Canada 245 Widiyanto, Santandri (2017). Indonesian Aviation Biofuels and Renewable Energy Initiatives. Presentation at the ICAO Seminar on Alternative Fuels 2017, 8/9 February 2017 246 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries. 247 Ibid. 248 Ibid. 249 Gona, Yusfandri. The Indonesia Initiatives on Reducing Emissions of GHG State Action Plan in The Air Transport Sector and Aviation Biofuels Policy and Progress. Indonesia Aviation Biofuel & Renewable Energy Task Force (ABRETF). 250 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries 251 Casson, Anne; Muliastra, Yohanes I Ketut Deddy; Obidzinski, Krystof (2014). Large-scale plantations, bioenergy developments and land use change in Indonesia. Working Paper 170. Centre for International Forestry Research (CIFOR). 252 Ibid. 253 Kusdiana, Dadan (2016). The experience of Indonesia on Financial Schemes to Support Bioenergy Development. Indonesian Estate Crop Fund – Palm Oil. 24 June 2016 254 Casson, Anne; Muliastra, Yohanes I Ketut Deddy; Obidzinski, Krystof (2014). Large-scale plantations, bioenergy developments and land use change in Indonesia. Working Paper 170. Centre for International Forestry Research (CIFOR). 255 Ibid.

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province of Papua, of which around 600 ha of jatropha had been planted by the end of 2011 (EcoEmerald 2012).256 Feedstock for Bioethanol In Indonesia, it is reported that the potential of bioethanol from Molasses, cassava and sorgum are approximately 1.5 MT (sugar cane), 14 MT, and more than 3 Million kL respectively.257 Other feedstock for Bioenergy (Municipal Waste, agricultural residue and forestry residues) Municipal waste Municipal solid waste is a source of biomass energy for Indonesia. The Jakarta Development Planning Agency reports that the city of Jakarta alone produces 8000 tonnes of waste per day, with waste currently being burned by households, or collected by municipality for dumping into designated dumping grounds or landfill, or it is informally dumped. 258 Another report indicates that biomass energy from waste generation is estimated to amount to “approximately 94.84 million tons per year (except the recycle material). The specific data of municipal solid waste from 400 regencies and 98 cities are around 18 million tonnes and animal manure around 82.61 million tonnes.”259 Relevantly, the government implements incentives for electricity production based on biomass, biogas and organic waste materials. This may favour utilization of municipal waste feedstock for production of electricity rather than for development of biofuels. Forestry Residue In 2014, the potential energy from “forestry residue in Indonesia is approximately 271 MW.”260 The residue comes from the annual wood production in seven big islands in the country, particularly “Sumatra, Kalimantan, Jawa–Madura–Bali, Nusa Tenggara, Sulawesi, Maluku, and Papua.” The wood production activities included “replanting rubber wood, logging, sawn timber, plywood, and veneer.” Agriculture residues The total potential supply from agriculture residues in Indonesia comes almost mainly from rice, sugar and corn production annually, amounting to approximately 123.4 million tonnes.261 Amount of feedstock from agricultural residues are further broken down as follows: from rice production, 67.8 million tonnes; from sugar cane production, 20.1 million tonnes; from corn production, 3.8 million tonnes; from palm oil production, 8.5 million tonnes; and from coconut production 3.1 million tonnes.262 Waste cooking oil Used cooking oil also could be used to supply increasing biodiesel production targets, with the minimum potential availability from food processors estimated at 84 000 tonnes per year, while the potential collections from restaurants and food stall vendors adds another 562 364 tonnes per year (Ecofys, 2013). Currently about 120 000 tonnes of used cooking oil are collected by Indonesia’s three main collectors, and smaller collectors gather another 65 000 tonnes. The large collectors export the

256 Ibid. 257 Gona, Yusfandri. The Indonesia Initiatives on Reducing Emissions of GHG State Action Plan in The Air Transport Sector and Aviation Biofuels Policy and Progress. Indonesia Aviation Biofuel & Renewable Energy Task Force (ABRETF). 258 International Energy Agency (IEA) (2015). Indonesia 2015. Energy Policies beyond IEA countries. 259 Putrasari, Yanuandri et al. (2016). Resources, policy, and research activities of biofuel in Indonesia: A review. Energy Reports, Vol. 2 (June 2016), pp. 237-245 260 Ibid. 261 Ibid. 262 Ibid.

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oil (mainly to the EU), where most of it is already being used for biodiesel production. Small collectors are using a majority of the used cooking oil for non-energy purposes.

7.7. Other Indonesia Estate Crop Fund for Palm Oil Indonesia Estate Crop Fund (IECF) for Palm Oil implements a Grant Research Programme to fund R&D institutions from the public and private sectors to pursue long term research on palm oil, including research on biofuel technology.263 The first phase of the Grant Research Programme supported research on next-generation biofuels and torrefaction, among others.264 Indonesia and United States MOU In 2015, the Federal Aviation Administration of the United States entered into a Memorandum of Understanding with the Indonesian Directorate General of Civil Aviation, which would promote the use of sustainable aviation fuels and facilitate research cooperation on this area between the two countries. 265 The agreement is also expected to facilitate further partnership between Indonesia’s ABRETF and the US’ Commercial Aviation Alternative Fuels Initiative (CAAFI).266

8. Germany

8.1. Policy Environment Germany is Europe's largest biofuels producer. Germany started promoting the development of bioenergy very early which has led the country to have the highest level of development of bioenergy among the EU Member States.267 Germany also collaborates somewhat with the US. For instance, in 2012 they signed a development agreement to strengthen co-operation and in form or R&D, an aviation biofuels study was conducted with NASA in 2013-2014.268 Germany’s investment environment supports renewable energy deployment. “In 2011, renewable energy investments in Germany totalled USD 31.9 billion (EUR 22.9 billion); only China and the United States invested more. German renewable energy projects enjoy a relatively low cost of capital compared with other countries.”269 There is an interest from the government to invest in research and technology development. In 2016, the Federal Government spent around €876 million on research and the development and demonstration of modern technologies for the energy transition.270 Large part of the sum is going towards the renewable energy sector. 263 Kusdiana, Dadan (2016). The experience of Indonesia on Financial Schemes to Support Bioenergy Development. Indonesian Estate Crop Fund – Palm Oil. 24 June 2016 264 Ibid. 265 International Air Transport Association (IATA) (2015). IATA 2015 Report on Alternative Fuels. 10th Edition. December 2015 266 Federal Aviation Administration (2015). U.S./Indonesia Agreement on Sustainable Air Transportation and Aviation Alternative Fuels. 267 Su, Yujie et al. (2015). An overview of biofuels policies and industrialization in the major biofuel producing countries. Renewable and Sustainable Energy Reviews, Vol. 50, pp. 991 – 1003 268 United States National Aeronautics and Space Administration (NASA) (2017). NASA Study Confirms Biofuels Reduce Jet Engine Pollution & Thisdell, Dan (2012). US-Germany sign biofuel development accord. FlightGlobal. 12 September 2012 269 International Energy Agency (IEA) (2013). Energy Policies of IEA Countries: Germany – 2013 Review 270 German Federal Ministry for Economic Affairs and Energy (BMWi). 6th Energy Research Programme of the Federal Government - Research for an environmentally-friendly, reliable and affordable energy supply

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The government provided tax exemptions for biofuel production in the early 2000’s, but in 2007, the fuel excise tax exemptions were eliminated - due to high costs and overfunding for biofuels- and replaced with quota obligations and tax rebates. Tax exemptions were initially replaced by tax rebates only for pure biodiesel on the amounts exceeding the imposed quotas.271 Moving away from a purely tax-based to a purely regulatory support system, in 2009, the government set its mandatory targets at 5.25% and 6.25% in 2010. In 2015, the biofuels quota was changed and now the biofuel quotas will be determined on the basis of GHG emission reductions. Germany is the first country in the EU to propose biofuel quotas based on GHG emission savings.272 Germany has a national binding target of 18% share of renewable energy by 2020 of gross final consumption of energy according to the EU RED273. The German national action plan sets a national target and expected path of 19.6% of energy from renewable sources by 2020, and a 13.2% target for the transport sector274

8.2. Other relevant policies Germany’s “Energiewende” (plan for transition to a low carbon and nuclear free economy) includes the transport sector. Although no specific aviation policy exist, aviation is part of several policy initiatives. The Mobility and Fuels Strategy of the German Government (MFS) New pathways for energy275 In 2013, the Federal Ministry of Transport, Building and Urban Development (BMVBS) adopted a mobility and fuel strategy that also contains a section on air travel and on aviation biofuel specifically. It recognizes the importance of developing biojet markets, acknowledges the challenges that the aviation sector faces and sets out, for instance, a specific action point to develop and implement a National Development Plan for Sustainable alternative aviation fuels by the industry – a “10,000 t biokerosene programme”. The Energy Concept276 The Energy Concept of 2010 sets out specific targets and milestones to the year 2050. These include achieving a cut in greenhouse gas emissions of 40% by 2020, 55% by 2030, 70% by 2040 and between 80% and 95% in 2050. Other targets for 2050 include: To Cut primary energy consumption by 50% compared with 2008, and to ensure that energy from renewable sources accounts for 60% of gross final energy consumption or 80 % of gross electricity consumption277 The Energy Concept draws together several policy goals. The policy aims to protect the climate, increase energy efficiency, reach larger share of renewable energy sources and to ensure a future energy supply that is secure and affordable. It tries to promote the growth and competitiveness of the German industry while fulfilling ambitious climate protection targets. Additionally, the Energy

271 Sorda, Giovanni et al. (2010). An overview of biofuel policies across the world. Energy Policy 38 (11): 6977 – 6988 272 International Energy Agency (IEA) (2013). Energy Policies of IEA Countries: Germany – 2013 Review 273 Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016 274 Federal Republic of Germany. National Renewable Energy Action Plan in accordance with Directive 2009/28/EC on the promotion of the use of energy from renewable sources 275 German Federal Ministry of Transport, Building and Urban Development (BMVBS) (2013). The Mobility and Fuels Strategy of the German Government (MFS) – New pathways for energy. 276 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (2011). The Federal Government's energy concept of 2010 and the transformation of the energy system of 2011. October 2011 277 German Federal Ministry for Economic Affairs and Energy (BMWi) (2011). 6. Energieforschungsprogramm – Forschung für eine umweltschonende, zuverlässige und bezahlbare Energieversorgung

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Concept contains a wide variety of specific measures to meet these targets. Aviation is not specifically mentioned.278 National Renewable Energy Action Plan279 The National Renewable Energy Action Plan (NREAP) was prepared in 2010 in accordance with Article 4 of Directive 2009/28/EC on the Promotion of the Use of Energy from Renewable Sources. In the action plan, it is estimated that the share of renewable energies in gross final energy consumption will be 19.6% in 2020 (which is over the national target of 18%). It sets a target of 13,2% share of renewable energy in the transport sector. Sixth Energy Research Programme280 The Federal Ministry of Economics and Technology, the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, the Federal Ministry of Food, Agriculture and Consumer Protection and the Federal Ministry of Education and Research collaborated in 2011 on development of the joint "Research for an environmentally sound, reliable and affordable energy supply." The aim of the research programme is to help the federal government reach its energy related targets and to support companies in the modern energy sector. The budget for energy research (R&D) projects was between 3.4-3.5 billion EUR from 2011-2014. This was an increase of 75% when compared with the period of 2006-2009. The funds priority areas were: renewable energies, energy efficiency, energy storage, grid technologies and the integration of renewable energies into the energy supply system. No specific mention of the aviation transport sector is included. In the fall of 2016, a new Energy Research Programme was launched. It is currently being prepared following stakeholder participation. The new Energy Research Programme has a strong focus on optimising the general system of energy supply that consists of different energy technologies.281

8.3. Laws The Biofuels Quota act282 The Biofuels Quota Act sets a minimum level of biofuels that must be used in road transport in Germany. In January 2015, Germany shifted from a 6.25% energy content quota to the net reduction in energy greenhouse gas emissions. The climate protection quota, specifies the minimum net contribution that must be made by biofuels to the reduction of GHG emissions. The percentage is set at 3.5% in 2015 -2016, 4% for 2017-2019, and 6% from 2020. This means that fossil fuel suppliers need to sell the respective biofuel or renewable fuel with its fossil counterpart petrol or diesel in order to produce a fuel mix which achieves the set GHG quota mitigation for the entire fuel sector. That means also that the exact increase of biofuels depends on its specific GHG intensity: the higher the specific GHG mitigation potential the lower the required renewable fuel consumption to fulfil the quota.283

278 German Federal Ministry for Economic Affairs and Energy (BMWi) (2017). Renewable Energy Sources in Figures National and International Development, 2016 & International Energy Agency (IEA). Energy Concept. Policies and Measures: Germany 279 Federal Republic of Germany. National Renewable Energy Action Plan in accordance with Directive 2009/28/EC on the promotion of the use of energy from renewable sources 280 German Federal Ministry for Economic Affairs and Energy (BMWi) (2011). 6. Energieforschungsprogramm – Forschung für eine umweltschonende, zuverlässige und bezahlbare Energieversorgung 281 German Federal Ministry for Economic Affairs and Energy (BMWi). 6th Energy Research Programme of the Federal Government - Research for an environmentally-friendly, reliable and affordable energy supply 282 Gesetz zur Einführung einer Biokraftstoffquote durch Änderung des Bundes-Immissionsschutzgesetzes und zur Änderung energie- und stromsteuerrechtlicher Vorschriften (Biokraftstoffquotengesetz – BioKraftQuG. 2006 & German Federal Ministry for Economic Affairs and Energy (BMWi). Petroleum and Motor Fuels. Press Release 283 International Energy Agency (IEA). Search Results for Germany. IEA/IRENA policies and measures database &

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The Biofuels Sustainability Law284 Entering into force in 2011, the Biofuels Sustainability Law implements European policy at national level. “According to the law, the production of biofuels can only be considered sustainable if it leads to a saving of at least 35% on GHG emissions compared with fossil fuels. This minimum requirement is to be gradually increased, with biofuels saving a minimum of 50% GHG emissions by 2017. The law also stipulates that ecologically sensitive areas, such as wetlands, peat lands or rain forests, must not be used to produce biofuels. Biofuels must meet these sustainability standards to qualify for inclusion in the biofuel quota or to be eligible for tax concessions.” 285

8.4. Relevant Studies High Biofuel Blends in Aviation (HBBA)286 The HBBA study, conducted under the ENER/C2/2012/420-1 “High Biofuels Blends in Aviation” European Union tender, took place over several years, and was conducted by a consortium led by Lufthansa and the Bundeswehr Research Institute for Materials, Fuels and Lubricants (Wehrwissenschaftliches Institut für Werk- und Betriebsstoffe; WiWeB). It also included the Institute of Combustion Technology of the German Aerospace Center (Deutsches Zentrum für Luf- und Raumfahrt; DLR) as well as Lufthansa Technik which were involved in the measurement of emissions from bio kerosene and their effects. The study focused on the chemical and physical properties of biofuel blends, i.e. mixtures of conventional kerosene with biofuels and analysed particularly promising biofuels, according to source, production process and approval status. In concluded that biofuels based on renewable raw materials such as oil, plants, grain, algae and wood do have the potential to make air transport more climate-friendly and reduce dependency on fossil raw materials. “For the first time, the scientists have investigated biofuels on a special test rig at Lufthansa Technik in Hamburg, where a dismounted aero-engine is available especially for research purposes. Using this engine, the scientists examined and compared three different fuels: pure biofuel, a blend consisting of 50 % biofuel and 50 % conventional fuel, as well as conventional kerosene as a reference.”287 Biofuel blending reduces particle emissions from aircraft engines at cruise conditions288 The Institute of Combustion Technology of the German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt; DLR) conducted test flights with NASA in 2013 and 2014, testing the effects of alternative fuels on engine performance, emissions and aircraft-generated contrails at altitudes flown by commercial airliners.

Bacovsky, Dina et al. (2016). IEA Bioenergy Countries’ Report: Bioenergy policies and status of implementation. IEA Bioenergy. 23 September 2016 & German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany 284 International Energy Agency (IEA) (2013). Energy Policies of IEA Countries: Germany – 2013 Review 285 Ibid. 286 Zschocke, Alexander, Scheuermann Sebastian & Ortner, Jens (2017). High Biofuel Blends in Aviation (HBBA) ENER/C2/2012/ 420-1 Final Report. Deutsche Lufthansa AG & Wehrwissenschaftliches Institut für Werk- und Betriebsstoffe 287 Chemistry Views (2017). High Biofuel Blends in Aviation. 13 June 2017 & Deutsches Zentrum für Luft- und Raumfahrt (DLR) (2017). DLR and Lufthansa Technik investigate biofuels in new study. 7 June 2017 288 Moore, Richard H et. al. (2017). Biofuel blending reduces particle emissions from aircraft engines at cruise conditions. Nature 543: 411–415

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“The tests involved flying NASA's workhorse DC-8 as high as 40,000 feet while its four engines burned a 50-50 blend of aviation fuel and a renewable alternative fuel of hydro processed esters and fatty acids produced from camelina plant oil.”289 The recently published study shows that the use of alternative jet fuel blends can reduce soot emissions by up to 50% from jet fuel alone. Renewable Energy Sources in Figures National and International Development290 In 2015, the Federal Ministry for Economic Affairs and Energy (BMWi) published this overview study. It provides detailed information about the status and development of renewable energy in the fields of electricity, heat and transport. The Future of Climate-friendly Aviation – Ten percent alternative aviation fuels by 2025291 In 2012, AIREG - Aviation Initiative for Renewable Energy in Germany e.V. published an information document from the industry perspective. It gives an overview of the key issues, policy goals, industry goals (of 1.5% increase of CO2 fuel efficiency per year). It looks at fuel feedstock, production methods, market situation and future scenarios.

8.5. Stakeholders

8.5.1. Producers/Technology/Companies Leuna Demonstration plant A French company, Global Bioenergies292 has developed a demonstration plant in Leuna, Germany, in partnership with Fraunhofer Center for Chemical-Biotechnological Processes CBP.293 The construction of the plant was completed in November 2016. It directly ferments gaseous hydrocarbons – and has the possibility to produce alternative jet fuel from sugars.294 Global Bioenergies received EUR 5.7 million as a grant for the demo plant from the German Federal Ministry of Education and Research (BMBF) within the “BioEconomy Cluster” framework. “The plant is designed for an isobutene production capacity of up to 100 tons per year. Isobutene, a gaseous hydrocarbon, can be used for the fabrication of plastics, elastomers as well as drop-in fuels for gasoline (isooctane) and jetfuel (isododecane).”295 Sunfire power to liquid Demonstration plant

289 United States National Aeronautics and Space Administration (NASA) (2017). NASA Study Confirms Biofuels Reduce Jet Engine Pollution 290 German Federal Ministry for Economic Affairs and Energy (BMWi) (2017). Renewable Energy Sources in Figures National and International Development, 2016 291 Aviation Initiative for Renewable Energy in Germany e.V. (AIREG) (2012). The future of climate-friendly aviation: Ten percent alternative aviation fuels by 2025 292 “financed in part by the German federal ministry for research (BMBF) through a grant of €5.7m, and also through a €4.4m loan obtained from a consortium of French banks (Société Générale, BNP-Paribas, CM-CIC and BPI).” See: Global Bioenergies (2016). The construction of the Leuna demo plant is completed. Press Release. 14 November 2016 293 Fraunhofer Center for Chemical-Biotechnological Processes CBP (2014). Global Bioenergies and Fraunhofer CBP take the next step towards the set-up of the Leuna industrial pilot. Global Bioenergies Press Release 294 Lane, Jim (2015). Global Bioenergies, Aireg partner to advance jet fuel from isobutene. Biofuels Digest. 13 September 2015 295 International Air Transport Association (IATA) (2015). IATA 2015 Report on Alternative Fuels. 10th Edition. December 2015

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In November 2014, Sunfire, a Dresden based clean tech firm, opened the world’s first power-to-liquid (PtL) demonstrator in Dresden. The production capacity of the new rig is one barrel of fuel per day.296 VERFAHRENSTECHNIK Schwedt GmbH The VTS GmbH has developed an innovative finishing process for efficient extraction and transformation of algal lipids from wet biomass. 297 In 2010, VTS refined and converted microalgae oil (produced by Biocombustibles del Chubut S.A) into biojet for the Berlin Air Show. The first flight by an airplane using 100% algal biofuels was demonstrated by EADS (Airbus).298 Airbus in Germany The French/European airplane manufacturer and aerospace industry with a large presence in Germany with the country as an industrial location. Airbus employs over 48,000 people across its 29 sites in Germany. The company invests in innovation and R&D.299

8.5.2. Too look out for: JatroSolutions JatroSolutions GmbH Founded in 2005, JatroSolutions is working on long-term breeding programme of Jatropha for conversion into alternative fuels. It is involved in several research projects, establishing a Jatropha-Demo Farm and, more specifically, research on evaluation and demonstration of a new aviation fuel from Jatropha oil. The third largest German energy company, Energie Baden-Württemberg AG (EnBW), is now a major shareholder of JatroSolutions.300 In 2014, Jathropa signed a memorandum of understanding with Lufthansa– a subsidiary of EnBW,– where JatroSolutions were to support in setting up a raw materials supply chain for biosynthetic Kerosene made out of the Jatropha plant.301

8.5.3. Networks Aviation Initiative for Renewable Energy in Germany e.V. - AIREG AIREG was founded in 2011 as a network of partners from the entire biojet value chain including researcher institutes, aviation companies and bioenergy producers. Members help fund the network. In total, 34 members are registered partners.302 AIREG’s role is to facilitate development

296 “Half of the rig cost was funded by the Federal Ministry of Education and Research. The project is also backed by Bilfinger Venture Capital.” See: International Civil Aviation Organization (ICAO). SAAFA 297 Sternberg, Kristin (2014). Report on the state of algae related research and industrial activities in Germany. Agency for Renewable Resources (FNR e.V.). Public Output report WP2A9.01 of the EnAlgae project. June 2014 298 ETIP Bioenergy. Official Website. Algal Biofuels R&D and Demonstration in Europe and globally. 299 Airbus. Official Website – ‘Airbus in Germany’ 300 German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany & Jatro Solutions. Official Website 301 Jatro Solutions (2017). Official Website – ‘News’ 302 These include AFS - Aviation Fuel Service GmbH, Airbus Group, Austrian Airlines, Aviation Fuel Projects Consulting, Bauhaus Luftfahrt e.V., Boeing International Corporation, Clean Carbon Solutions, Condor Flugdienst GmbH, Deutsche Lufthansa AG, Deutsche Post DHL, Deutsche Shell Holding GmbH, Deutsches Zentrum für Luft-und Raumfahrt (DLR), DVB Bank SE, Flughafen München GmbH, Forschungszentrum Jülich GmbH, Fraunhofer-Institut für Bauphysik, Global Bioenergies, Ineratec, ISCC System GmbH, JatroSolutions GmbH, Karlsruher Institut für Technologie (KIT), Leibniz-Institut für Katalyse e.V. (LIKAT), MTU Aero Engines AG, Neste, OMV Refining + Marketing GmbH, Petrixo Oil & Gas, Phytolutions GmbH, RWTH Aachen, Schleswig-Holstein - Ministerium für Wirtschaft, Arbeit, Verkehr und Technologie, Technische Universität Hamburg-Harburg – Institut für Umwelttechnik und Energiewirtschaft, Total Deutschland GmbH, TU Bergakademie Freiberg, TU München, and WIWeB.

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and deployment of sustainable alternative fuels in Germany. One of the main goal of the network is to raise awareness and deepen understanding of the field. The network does this by organising workshops, conferences, research projects and by providing policy support.303 “The objective of aireg - Aviation Initiative for Renewable Energy in Germany e.V. is to support the production and use of such alternative aviation fuels. aireg’s target is for biofuels to make up ten per cent of the jet fuel consumed domestically by 2025”304 Aireg’s member organisations have initiated a number of projects in order to reach this target.305 German Union for the Promotion of Oil and Protein Plants (Union zur Förderung von Oel- und Proteinpflanzen) - UFOP In 1990, the German Farmers' Association (Deutscher Bauernverband e. V.) and the German Plant Breeders' Association (Bundesverband Deutscher Pflanzenzüchter e. V.) founded UFOP. The network represents the political interests of companies, associations and institutions that are involved in the production, processing and marketing of domestic oil and protein plants.306 The Federal Association for Bioenergy (Der Bundesverband Bioenergie e.V.) – BBE An umbrella organisation of the bioenergy sector in Germany. It covers specialised sector associations and companies in different technologies in the power, heating and transport sectors and promotes the exchange between bioenergy, politics and society.307 The German Aerospace Industry Association (BDLI) The primary interest is representation of companies active in the aerospace sector in Germany. It represents over 230 companies and is the trademark owner and co-organiser of the ILA Berlin Air Show.308

8.5.4. R&D / Academia The German Aerospace Center (DLR) DLR conducts research and development activities in the fields of aerospace, energy, transport and security. The center was amongst other involved in the High Biofuels Blends in Aviation and the research project: Climate Impact of Alternative Fuels - ECLIF309 Fraunhofer UMSICH & Fraunhofer ICT310 Fraunhofer UMSICHT (Institute for Environmental, Safety, and Energy Technology) and Fraunhofer ICT (Institute for Chemical Technology) are involved in several research projects. These include a study on the catalytic condensation of alcohols and the cross-condensation of alcohols and ketones, like acetone, in the gas-phase as a new pathway towards biofuels, a study on Alternative fuels research project with focus on algae to jetfuel - Establishing of the value chain from algae to jetfuel, and a study on Synthetic fuel production from CO2 and H2O using renewable energy.

303 German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany 304 Aviation Initiative for Renewable Energy in Germany e.V. (AIREG). Official Website – ‘Who we are’ 305 International Air Transport Association (IATA) (2015). IATA 2015 Report on Alternative Fuels. 10th Edition. December 2015. 306 Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP). Official Website. 307 Bundesverband Bioenergie e.V. (BBE). Official Website 308 Bundesverband der deutschen Luft- und Raumfahrtindustrie e.V. (BDLI). Official Website. 309 Deutsches Zentrum für Luft- und Raumfahrt (DLR). Official Website & German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany 310 Fraunhofer-Institut für Umwelt-, Sicherheits- und Energietechnik UMSICHT. Official Website.

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Helmholtz Association311 The institute is collaborating widely on biofuels for aircrafts research, testing combustion process of differently designed kerosene. TU München312 Research on biofuel, from algae, waste, and other feedstocks. Processes and cost analysis. Hamburg University of Technology (TUHH)313 Involved in several research projects including burnFAIR.314 Conducted a feasibility study investigating the potential for Gas to liquid pathway for bio kerosene from bio methane and participated in alternative fuels research project (AtJ).315 The German Biomass Research Center The German Biomass Research Center conducts studies on biomass including a study on optimizing greenhouse gas (GHG) emissions from rapeseed-based biodiesel.316 The International Institute for Sustainability Analysis and Strategy IINAS An independent transdisciplinary research organization conducting material-flow and life-cycle analysis of energy, materials and transport systems. 317

8.5.5. Policy The Federal Ministry of Economics and Technology (BMWi)318 The BMWi has lead responsibility for the overall programmatic orientation of energy research. The ministry’s project funding targets issues involving non-nuclear technologies along the entire energy chain. The Federal Office of Economics and Export Control (BAFA)319 A federal agency which reports to the BMWi. BAFA implements measures to promote increasing use of renewable energies.320 The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)321 BMU is a lead ministry for renewable energy policy in Germany. Renewable energy policy is co-ordinated within the federal government with all other relevant ministries. The ministry and its agencies provide scientific support to the federal government. The Federal Ministry for Food, Agriculture and Consumer Protection (BMEL)322 The BMEL project funding focuses on technologies for the use of bioenergy. This includes solid, liquid and gaseous biofuels The Federal Ministry of Education and Research (BMBF).323

311 Helmholtz. Official Website – ‘Renewable Energies’. 312 Technical University of Munich (TUM). Official Website. 313 Hamburg University of Technology (TUHH). Official Website 314 Hamburg University of Technology (TUHH). Official Website – ‘burnFAIR Project’. Available 315 German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany 316 Deutsches Biomasseforschungszentrum (DBFZ). Official Website – ‘News’ 317 International Institute for Sustainability Analysis and Strategy (IINAS). Official Website 318 German Federal Ministry for Economic Affairs and Energy. Official Website 319 German Federal Office for Economic Affairs and Export Control. Official Website 320 International Energy Agency (IEA) (2013). Energy Policies of IEA Countries: Germany – 2013 Review 321 German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. Official Website 322 German Federal Ministry of Food and Agriculture. Official Website 323 German Federal Ministry of Education and Research. Official Website

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The BMBF is responsible for activities in the area of basic research. Its project funding focuses on photovoltaics, organic photovoltaics, bioenergy, wind energy and energy efficiency.

8.5.6. Funding Research and development projects on energy technology receive funding under the German government’s Energy Research Programme. The Federal Ministry of Economics and Technology (BMWi)324 BMWi funds applied research and development projects relating to renewable energy. Projects are eligible for funding if it contributes to the expansion of the use of renewable energy as part of the German government’s sustainability, energy and climate policies. There is also a focus on making German companies and research institutes more competitive in the international market. KfW Bankengruppe325 The Bank for Reconstruction, is owned by the federal government (80%) and the Länder (20%). It provides long-term, low-interest loans for up to 100% of the investment costs of eligible renewable energy programmes.326 The Federal Ministry of Food and Agriculture (BMEL)327 Around 400 million Euro are made available every year in order to achieve progress in BMEL research in areas of sustainable agricultural production. Creating perspectives for rural areas, food safety and a healthy diet are other funded research topics. Fachagentur nachwachsende Rohstoffe (FNR)328 A central coordinating agency in the area of renewable resources in Germany. FNR is “interested to exchange information with different actors from Research and Development, R&D-funding, public administration and policy.” FNR looks for partners for EU funded projects

8.5.7. End users Air traffic Frankfurt Airport is Germany’s biggest passenger airport, followed by Munich, Düsseldorf and Berlin airports. Frankfurt, Leipzig and Cologne/Bonn are the biggest cargo transport airports. International traffic accounts for the vast majority of air transport, or for 98% of total transport performance. Passenger numbers in Germany have increased by 3.2% annually since 2004 but CO2 emissions from German airports corresponds to an average annual growth rate of 1.4% between 2004 and 2014. 329 In 2011, Air ticket Taxes were introduced, applying to commercial airlines departing from Germany. The Federal Ministry of Finance lowers the tax rates each year depending on the annual revenues from the EU Emission Trading System. Emissions-based landing charges, looking mainly at engine emissions of nitrogen oxide (NOx) and hydrocarbons (HC), have been introduced at the airports of Frankfurt, Munich, Cologne/Bonn, Hamburg, Düsseldorf, Hannover and Stuttgart.330 324 German Federal Ministry for Economic Affairs and Energy. Official Website 325 Kreditanstalt für Wiederaufbau (KfW). Official Website 326 International Energy Agency (IEA) (2013). Energy Policies of IEA Countries: Germany – 2013 Review 327 German Federal Ministry of Food and Agriculture. Official Website 328 Fachagentur Nachwachsende Rohstoffe e.V. (FNR). Official Website 329 German Federal Ministry of Transport and Digital Infrastructure (2016). ICAO State Action Plan for Emissions Reduction – Germany 330 Ibid.

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Lufthansa Lufthansa Group is a large player in the sustainable aviation field as end user and has shown willingness to test various fuels. It has participated and continues to participate in several projects and initiatives relating to aviation biofuels. Through the BurnFAIR project, Lufthansa made 1187 flights from Frankfurt-Hamburg using 800 tonnes of biokerosene (total volume consumed: 1,557 tons of bio kerosene blend) over a 6-month period in 2011.331 In 2014, the Lufthansa Group flew one flight from Frankfurt to Berlin Tegel using a 10% blend of farnesan. The flight followed a rig test at Lufthansa Technik’s facility in Hamburg in autumn 2013 as part of the EU’s “Blending Study” project.332 Also in 2014, the group tested US based Gevo’s renewable AtJ fuel.333 In 2016, the Lufthansa Group participated in the Oslo airport biofuel scheme Gardermoen Biohub. Over a period of 1 year, Lufthansa flew around 5000 flights on jet fuel blended with biokerosene (5% blend).334 The Lufthansa Group is member of the Sustainable Aviation Fuel Users Group (SAFUG) and the Aviation Initiative for Renewable Energy in Germany (aireg e.V.).335 It has also an agreement with Jatro Solutions to set up a raw materials supply chain of biosynthetic fuel derived from the jatropha plant.336

8.6. Other Projects and initiatives337 AUFWIND - Production and utilization of algae-based fuels for aviation Alternative fuels research project with focus on algae to jetfuel, led by Institute für Pflanzenwissenschaften in participation with 12 academic and industry partners. 1,500 m. (0.37 acres) of algae photobioreactors were built in Jülich and the conversion of algae to kerosene investigated by the consortium. It is the first step from laboratory-scale research towards a commercial production of algae-fuel in Germany. Project funded by The Federal Ministry of Food and Agriculture.338 Advanced Biomass Value Advanced Biomass Value explores microalgae biomass as a new source of sustainable aviation biofuels and lubricant production. The consortium, with the AIREG member organizations TU Munich, Bauhaus Luftfahrt and Airbus and other partners, will run until 2017. Project funded by the German Federal Ministry of Education and Research BMBF. Algenflugkraft (AFK). Novel approaches for production and processing of microalgae cultivation are examined in the Bavarian research project Algenflugkraft (AFK). The project is implemented by TU Munich, Airbus, Bauhaus Luftfahrt, Clariant and conys. Project funded by the Bavarian Ministry of Economic Affairs and Media, Energy and Technology. 331 Biojet Map. Official Website – ‘Lufthansa burnFAIR Project’ 332 Sapp, Meghan (2014). Lufthansa runs Berlin to Frankfurt flight on 10% farnesan. Biofuels Digest. 16 September 2014 333 GEVO (2014). Lufthansa to evaluate Gevo’s renewable jet fuel – Lufthansa testing supported by the European Commission. 22 April 2014 334 Aviation Benefits beyond Borders (2014). Oslo to become biohub powered by SkyNRG Nordic and Avinor 335 Lufthansa Group. Sustainable Alternative Fuels. Official Website 336 Lufthansa Group (2014). Lufthansa conducts European flight using sugar-based biofuel. Biomass Magazine. 337 International Air Transport Association (IATA) (2015). IATA 2015 Report on Alternative Fuels. 10th Edition. December 2015 338 Fraunhofer-Institut für Umwelt-, Sicherheits- und Energietechnik UMSICHT (2013). Production and utilization of algae-based fuels for aviation. 28 August 2013

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OptimAL Optimizing algae for fuel, looking at algae metabolism, adaption towards challenging conditions i.e. light, temperature and nutrients stress, as well as basic understanding of green algae as a novel crop. Forschungszentrum Jülich coordinates the project with funding from the German Federal Ministry of Education and Research (BMBF). SOLAR-JET A European funded project aiming “to demonstrate a carbon-neutral path for producing aviation fuel, compatible with current infrastructure, in an economically viable way.”339 German partners include Bauhaus Luftfahrt and DLR. InnoTreib Evaluation of different pathways of biofuel provision. Both sides, the fuel production and the fuel use in aviation turbines are interlinked in an optimization environment. Project is implemented by DLR, University of Stuttgart and Hamburg University of Technology with support of the German Federal Ministry of Economics and Energy. WIP Renewable Energies The private company, with a mission to bridge the gap between research and implementation is involved in two large European funded FP7 projects: BIOREFLY340- Industrial scale demonstration biorefinery on lignin-based aviation fuel and CORE-JetFuel.341 BIOREFLY is an ongoing (2015-2018) European funded FP7 project with the aim to develop and build the first industrial pre-commercial lignin-to-jet fuel facility in Italy. CORE-Jetfuel - Coordinating research and innovation of jet and other sustainable aviation fuel was a European network of excellence project that was finalised in 2016. ALFA-BIRD - Alternative Fuels and Biofuels for Aircraft Development A European FP7 project that was concluded in 2012, led by the European Virtual Institute for Integrated Risk Management, and with several German partners. The consortium developed the whole chain for clean alternative fuels for aviation and tested 12 different blends.342 BurnFAIR The BurnFAIR project was a short term in service evaluation of bio kerosene with the aim to gain experience and generate data on the regular use of alternative fuels. For the project, Lufthansa operated four daily round flights between Hamburg and Frankfurt, for a period of 6 months, with one engine fuelled with a 50% blend of conventional jet fuel and HEFA synthetic fuel. The project was partly funded by the German Ministry of Economics and Technology.343 AIREG The Aviation Initiative for Renewable Energy in Germany is a relatively long standing initiative set up in 2011 by carriers, airports, research institutions as well as aviation industry and other partners. It is

339 Solar-Jet. Official Website – ‘Objectives’. 340 Bio Refly. Official Website. 341 Fachagentur Nachwachsende Rohstoffe e.V. (2016). Final Report Summary - CORE-JETFUEL (Coordinating research and innovation of jet and other sustainable aviation fuel). Community Research and Development Information Service (CORDIS). European Commission. 342 Alternative Fuels and Biofuels for Aircraft Development (Alfa-Bird). Project Summary and Progress to Date. Official Website 343 International Civil Aviation Organization (ICAO). BurnFAIR. Project Website.

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a stakeholder’s actions group which engages in monitoring development in SAF across their full-value chain.344

8.7. National data - biojet demand In 2016, over 2 million commercial flights took off or landed in Germany. That same year, a total of over 223 million passengers flew to or from a German airport. The country has 4 main airports. Frankfurt International Airport carried the most passengers in 2016 or over 60 million, followed by Munich airport (42 million), Düsseldorf airport (23 million) and Tegel airport Berlin (21 million). 345 According to an IATA report, airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, air navigation service providers and their respective supply chain employed 630,000 people in Germany in 2014. That same year, it is estimated that the air transport industry created a $54 billion gross value.346 The German aviation sector (AIREG) has committed to reaching a 10% share of biofuels domestically by 2025. This will require 1.1 million tons of sustainable fuel annually.347

8.8. Feedstock In 2015, Germany consumed around 2.2 million tons of biodiesel in transport fuel blends and 9,000 tons of pure vegetable oil. The primary feedstock is rapeseed from domestic sources. It is used to make rapeseed oil, which accounts for two thirds of the feedstock used in biodiesel production. The second main feedstock is used cooking fats/oils, mostly from Germany and neighbouring EU countries. Germany does import palm oil and biodiesel from palm oil. 348 “In 2015, German companies processed 13.1 million tonnes of oilseed, of which almost three fourth was rapeseed. About 62 % of this demand was covered by German rapeseed. The remainder came from other countries, mainly the EU-28. This rapeseed yielded 4.1 million tonnes of rapeseed oil, more than needed for the production of food, transport fuels or even in the oleochemical industry. About 1.1 million tonnes of rapeseed oil went to the German food industry, another 1.6 million tonnes to the engineering sector. More than 1.1 million tonnes of rapeseed oil were exported.” 349 Germany is forecasted to produce 950 million litres of bioethanol in 2017. Much of this from sugar beets.350

9. Brazil

9.1. Policy Environment Brazil was the 4th largest domestic air traffic market in 2014. Civil aviation contributed $ 32 billion to Brazilian GDP in 2009 with 684 000 people employed by the sector. As elsewhere, Brazil’s aviation

344 International Civil Aviation Organization (ICAO). AIREG. Project Website. 345 Flughafenverband (2016). ADV Monthly Traffic Report 12/2016. 346 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Germany 347 Aviation Initiative for Renewable Energy in Germany e.V. (AIREG) (2012). The future of climate-friendly aviation: Ten percent alternative aviation fuels by 2025 348 Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) (2017). Supply report 2016/2017 - European and world demand for biomass for the purpose of biofuel production in relation to supply in the food and feedstuff markets. 349 Ibid. 350 Flach, Bob et al. (2016). EU Biofuels Annual 2016. USDA Foreign Agriculture Service.

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industry is quasi-exclusively powered by petroleum-based jet fuel. In 2011, Brazilian demand for jet fuel was 7 million cubic meters (2.8% of global demand). Approximately 75% of this demand was met through production in Brazilian refineries while the rest was imported.351 Aviation fuel consumption in Brazil is predicted to grow by 5% annually and, due to increased use of renewable fuels for other modes of transport, aviation is expected to account for up to 12% of total transportation sector emissions by 2020. Brazil Action Plan on the reduction of GHG Emissions from Aviation352 Brazil views the development of alternative fuels for aviation as a strategic element in its energy policy as it will help decrease fossil fuel dependence as well as reduce GHG emissions.

9.2. Other relevant policies Brazil’s nationally determined contribution (NDC) under the UNFCCC is set out in the form of an absolute target to reduce its GHG emissions by 43% below 2005 levels by 2030. Brazil is South America’s largest renewable energy market. The country’s medium-term energy policy is contained in its Ten-year Energy Expansion Plans (PDEE), which are updated on a yearly basis. The National Energy Plan 2030 (PNE) from 2007 contains a longer-term integrated energy strategy. The National Council for Energy Policy (CNPE) is in charge of setting energy policy.353 Brazil has a long history of promoting biofuels production and use for the transport sector. This has been done namely with an objective of increasing energy security by decreasing energy imports. In particular, Brazil has been a pioneer in the development of support instruments for biofuels.354 ProAlcool programme (Decree 76593, 1975) The programme promotes the production and use of bioethanol for transport. The main purpose of this has been to ensure energy security in the country. However, it has also contributed to improving harvesting techniques and transport infrastructure, modernizing Brazilian agriculture and helping unlock its bio-based fuels potential. The programme is mostly geared towards introducing biofuels in road transport. National Energy Plan 2030 (PNE) According to the plan, the aim is to reach a yearly production of 66 billion litres for bioethanol and 18.5 billion litres for biodiesel by 2030. ProRenova programme From 2014, the programme provides financing support for new sugarcane plantations, implemented by Brazil’s National Bank for Social and Economic Development (BNDES). RenovaBio & BioFuture Platform Renewable Fuel Programme of the Ministry of Mines and Energy (MME) to increase the participation of Brazil in the global decarbonisation effort with a set of public policies “guaranteeing tranquillity, stability and predictability” to investors in the sector. There are a number of policies and actions that are currently being set up, connected to the RenovaBio and BioFuture Platform action plans (see above).355 351 Boeing, Embraer, FAPESP & UNICAMP (2013). Flightpath to Aviation Biofuels in Brazil: Action Plan. June 2013. 352 See: National Civil Aviation Agency Brazil (ANAC). Brazil’s Action Plan on the reduction of Greenhouse Gas Emissions from aviation. 353 International Renewable Energy Agency (IRENA) (2015). Renewable Energy Policy Brief: Brazil. June 2015 354 Ibid. 355 Scorza, Petro (2017). RenovaBio and SAFs: Brazil’s policy under construction. Presented at ICAO Seminar on Alternative

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- Integration of green airports, airline associations and jet fuel suppliers to build a sustainable aviation fuel culture

- Specific production regulation: simple rules with clear details for production sites, rules for by-products and certification

- Quality certification: network of certified labs to guarantee FFP quality assurance - Sustainability certification: ensure sustainability throughout the value chain and efforts to meet

social and environmental standards according to RSB - Incentives: financial incentives for unit produced (identical to RINs or Bioticket models) and

distinct state taxation for blending - Funding: structure financing packages to support the implementation of integrated value chains - R&D: promote R&D programs to support field productivity and process innovation - Integration with biomass value chain: integration and optimisation of regional biomass and

logistics to ensure the stability of regional supply chains. - National Biojetfuel Act: establishment of official national biojet fuel policy and legislation.

Biofuture platform (2017) The platform was launched at COP22 by Brazil and 20 countries, it aims to catalyse multilateral projects for advanced bioeconomy solutions.

9.3. Laws Law 12.187/2009 established the NPCC or National Policy on Climate Change, which aims to expand the use of renewable energies. Law 9478 (1997) established the general principles of Brazil’s national energy policy, including those governing the use of renewables. Law 12490 (2011) The law aims to complement the 1997 law on renewables and to secure the national supply of biofuels and ensure their international competitiveness given their key role in Brazil’s overall energy policy. Promotion of biofuels Several laws exist to support biofuel development, although these do not target the aviation sector. Blending mandates exist for bioethanol and biodiesel. Such blending mandates do not currently apply to aviation biofuels. It is not immediately clear whether blends used for aviation can be counted towards fulfilling the mandate. - Law 8723 (1993): established a 22% blending mandate for bioethanol. - Law 10696 (2003): allow the Brazilian government to increase the bioethanol blending mandate

to 25% (E25) or to decrease it to 20% (E20) depending on the market conditions. CIME Resolution 1 of 2013 set the blending requirements 25%. This was increased to 27% (E27) in 2015 for regular gasoline.356

- Law 11097 (2005): set out a 2% blending mandate for biodiesel. CNPE Resolution 2 increased this to 4% by 2009 and law 13033 (2014) to 7% in 2014.

Fuels 2017. 356 International Renewable Energy Agency (IRENA) (2015). Renewable Energy Policy Brief: Brazil. June 2015.

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Fiscal incentives are provided in the form of reduced taxes for bioethanol and, more broadly reduced Industrial Products Tax for flex-fuel vehicles. There exist export tax credits for both bioethanol (decree 7633, 2014) and biodiesel (decree 7768, 2012).

9.4. National studies Flightpath to Aviation Biofuels in Brazil – Action Plan A Study by Boeing, Embraer and FAPESP (research foundation) in 2011 with report in 2013 on how Brazil can contribute to keeping emissions from aviation in check. The study aimed to evaluate the technological, economic and sustainability challenges and opportunities related to the development and commercialization of biojet fuels in Brazil. It was coordinated by UNICAMP. The project held eight workshops across Brazil as well as two regional outreach workshops (together with EPFL and 4CDM) with stakeholders representing the entire aviation biofuel supply chain (industry, agriculture, government, NGOs and academia). The study assesses feedstock production and delivery, conversion technologies, fuel delivery logistics, sustainability and other policies. The roadmap that was established through this project lays out pathways to establish a new biofuels industry to replace petroleum jet fuels, namely by including recommendations regarding: enable R&D for sustainable feedstocks; create incentives to assist conversion and scaling up; stimulate interactions between stakeholders (both private and public); and create a national strategy (embodied in the final 2013 report).357 Sustainable Aviation Biofuels for Brazil study A study on the sustainability criteria for the production of feedstocks in Brazil. This study was carried out according to the principles and criteria of the Bonsucro and RSB sustainability standards. Study on the introduction of biojet fuels in aviation in Brazil A study carried out in 2010 by the Centre for Strategic Studies in Management in Science, Technology and Innovation (CGEE).

9.5. Stakeholders358

9.5.1. Producers / Technology / Companies / Associations - Amyris: aviation biofuel producer that has supplied demonstration batches for several flights

and produces sugarcane biojet. - Solazyme: aviation biofuel producer in cooperation with Honeywell UOP. - Azul Linhas Aéreas Brasileiras: Brazilian Airline that has run several demonstration flights. - GOL: Brazilian airlines that has conducted a number of biofuel-powered flights. - Ceres Sementes do Brasil: US biomass producer with activities in Brazil. - Nidera Sementes: Brazilian biomass producer (vegetable and oil seeds). - Sky Energy (SKYNRG): aviation biofuel logistics active in Brazil.

357 Boeing, Embraer, FAPESP & UNICAMP (2013). Flightpath to Aviation Biofuels in Brazil: Action Plan. June 2013 358 Additional links: The new Brazilian biofuels policy, RenovaBio, contains explicit reference to aviation biofuels. Flávia Marinho, Ana (2017). Cresce uso de biocombustíveis na aviação nacional. Canal – Jornal da Bioenergia. 3 October 2017 Jornal do Comércio (2017). Pesquisa incentiva os biocombustíveis para reduzir o impacto ambiental no transporte. 24 August 2017. Vicente, Marcos (2017). Evento reúne cientistas, representantes do setor energético e de governo para definição dos novos rumos dos biocombustíveis no Brasil. Empresa Brasileira de Pesquisa Agropecuária. 21 August 2017 Scorza, Petro (2017). RenovaBio and SAFs: Brazil’s policy under construction. Presented at ICAO Seminar on Alternative Fuels 2017.

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- Transpetro: largest oil and gas transportation company in Brazil. - Associação Brasileira das Indústrias de Óleos Vegetais (Abiove): Brazilian vegetable oil

association. - Associação Brasileira de Empresas Aéreas (ABEAR): Brazilian airline association. - União Brasileira do Biodiesel e Bioquerosene (UBRABIO): Brazilian biofuel association. - União da Indústria de Cana-de-Açúcar (UNICA): sugarcane association.

9.5.2. To Look Out for RenovaBio policy from 2017 is set to expand Brazilian biofuels policy. In June 2017, Brazil and Germany launched an initiative spanning over 5 years aiming to construct a pilot-plant in Brazil to develop biojet.

9.5.3. Networks ABRABA The Brazilian Alliance for Aviation Biofuels was formed in May 2010. It has the objective of promoting public and private initiatives aimed at the development, certification and commercial production of sustainable biofuels for aviation. In particular, it aims to join Brazilian stakeholders in order to “discuss the various aspects of developing sustainable aeronautical biofuels driven by the growing demand to meet the requirements for reducing GHG emissions in aviation as well as to provide support to Brazil’s energy security”.359 PBB The Brazilian Biojet fuel Platform, created in 2013, is an open, collaborative platform to bring together key stakeholders to promote the implementation of a highly integrated biojet fuel renewable value chain, spanning from R&D to end-use. It aims to fill the gaps identified by the Sustainable Alternative Biojet fuel study, which was the outcome of SABB. It comprises a governance body with an Advisory Board and Steering Committee who are in charge of elaborating a Roadmap. The Initiative intends to be a multi feedstock, multi process platform, integrating the existing initiatives for feedstock R&D as well as already established production chains (e.g. those developed by Amyris, Solazyme, etc.).360 UBRABIO Founded in 2007, the Brazilian Biodiesel and Biojetfuel Union is a national private non-profit trade association, which acts as an interlocutor to mobilise and unite resources and knowledge with the aim of developing the Brazilian biofuels sector. It described its objectives as “stimulating production, marketing, research and preparing projects and proposals, in particular, for a new regulatory framework for the National Program for Production and use of Biodiesel (PNPB) and for the Brazilian Platform for Biojetfuel (PBB). Bonsucro Bonsucro was established in 2008 as the Better Sugar Cane Initiative and is a multi-stakeholder organization, which aims at promoting sustainable sugar cane by reducing the environmental and social impacts of sugarcane production while recognizing the need to economic viability. Bonsucro is one of the major sustainability standard setting organisations for sugar cane products in the world.

359 ABRABA. Official Website. 360 See: Brazilian Biojetfuel Platform. Official Website.

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9.5.4. Policy - Agencia Paulista de Tecnologia dos Agronegocios (APTA): coordinates all agriculture research

in the Sao Paulo state with the objective of generating and transferring scientific and technological knowledge to agribusinesses.

- Banco Nacional de Desenvolvimento Econômico e Social (BNDES): funding for bioenergy projects.

- Embrapa Agrobiologia, Embrapa Soja: Brazilian agricultural research corporation which is state-owned and affiliated with the Ministry of Agriculture.

- Financiadora de Estudos e Projetos (FINEP): funding for R&D. - Ministério da Ciência, Tecnologia e Inovação (MCTI): sience, technology and innovation

ministry that provides R&D funding. - Ministério do Desenvolvimento Agrário (MDA): agricultural development ministry. - Secretaria de Aviação Civil da Presidência da República (SAC): aviation authority.

9.5.5. R&D / Academia - Instituto Agronômico de Pernambuco (IPA) - Instituto Agronômico do Paraná (IAPAR) - Instituto Alberto Luiz Coimbra de Pós-Graduação e Pesquisa de Engenharia da Universidade

Federal do Rio de Janeiro (COPPE/UFRJ) - Instituto Brasil Ambiente - Instituto de Logística e Supply Chain (ILOS) - Instituto de Pesquisas Tecnológicas (IPT) - Universidade de Brasília (UnB) - Escola Superior de Agricultura “Luiz de Queiroz” (ESALQ)/Universidade de São Paulo (USP)

9.6. Other Projects / Initiatives Brazilian BiojetFuel Platform361 The Brazilian Biojetfuel Platform was created in 2013. The Platform involves the following partners: Curcas, Amyris, Boeing, RSB Services, GE, UFRJ, IICA, Byogy, Bioeca, GOL, ABEAR7 and UBRABIO. According to a report delivered to the aviation governmental authorities, the Brazilian Biojetfuel Platform represents a general agreement on the high-level conclusions derived from the outcomes of the parallel works carried out by different organizations or corporations in the frame of the study, particularly the SAB study funded by Boeing, Embraer, and FAPESP. The stakeholders involved are committed to undertake collaborative actions to promote the implementation of a multi feedstock and multi process biojet fuel value chain in Brazil. SABB Earlier, in 2011, the Sustainable Aviation Fuels for Brazil (SABB) project sought to carry out a comprehensive assessment of the challenges and opportunities for implementing an aviation biofuels industry in Brazil, taking into account technological, economic and sustainability aspects. The SABB projected resulted in a Sustainable Aviation Fuels for Brazil Action Plan. The objectives of this project were to develop a roadmap identifying gaps and barriers related to production, transportation and use of biofuels for aviation, to create a basis for a research and

361 See: National Civil Aviation Agency Brazil (ANAC). Brazil’s Action Plan on the reduction of Greenhouse Gas Emissions from aviation

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commercialisation agenda to overcome such barriers, and to establish the foundation to launch a new and innovative industry in Brazil.362 The 2013 SABB study emphasizes the fact that R&D programmes need to be created having defined objectives that take into consideration aviation biofuels goals and the large number of pathways to be considered. Minas Gerais Biojet fuel Platform (BioQav))363 In March 2014, the State Department of Economic Development of Minas Gerais together stakeholders from across the biojet fuel value chain (Amyris, Azul, Boeing, Embraer, Gol, RSB, Solazyme and UFMG) launched the Plataforma Mineira de Bioquerosene. The initiative, which adopts a Farm-to-Fly approach, seeks to integrate actors from the full aviation biofuels supply chain in order to help stimulate the development of a sustainable aviation fuels market. To this point, in March 2014, another set of important players – BE-Basic, SkyNRG and KLM – joined this initiative.364 Amyris Brazilian company Amyris is an important player in the biotechnology sector and has partnered with French company Total to develop renewable diesel and jet fuels. It has provided batches of renewable jet fuel for several demonstration flights. The technology developed by the company uses sugarcane and is based on the SIP (synthetic iso-paraffin) pathway.

9.7. Feedstock, pathways and sustainability

9.7.1. Feedstock Feedstocks for aviation biofuels are readily available in Brazil, in terms of both production quantities and source diversification. Strong government incentives for bioethanol production (through the ProAlcool programme) have developed the necessary techniques and transport infrastructure for agricultural-based biofuels (i.e. sugarcane). The most promising potential feedstocks for initial development of jet biofuel in Brazil are plants that contain sugars and starches. For longer term feedstocks, these are plant oils, lignocelluloses, municipal solid wastes and industrial waste residues.365 Brazil is the world’s largest producer of sugarcane, second largest producer of soybeans and important producer of eucalyptus. As a result, it has great potential to develop a large variety of biojet supply chains with feedstocks based on plants that contain sugars, starch and oil, as well as residues (lignocellulose), municipal solid wastes and industrial waste residues. Other feedstocks such as jatropha or camelina crops have good potential, but will require additional R&D in order for them to become commercial crops, to solve harvesting problems and improve logistics (namely transport). Further alternatives include crop residues such as straw, sugarcane bagasse, forest by-products. However, for these feedstocks, there are issues related to transport and collection techniques (soil preservation) that need to be solved.366 362 Project description: International Civil Aviation Organization (ICAO). Sustainable Aviation Biofuels for Brazil (SABB). Project Website. 363 See: Brazilian State Department of Economic Development (2014). Plataforma Mineira de Bioquerosene. 17 June 2014. 364 See: BE-Basic Foundation (2014). Joint forces in the development of an aviation biokerosene value chain in the state of Minas Gerais, Brazil. 23 October 2014. 365 Boeing, Embraer, FAPESP & UNICAMP (2013). Flightpath to Aviation Biofuels in Brazil: Action Plan. June 2013 366 Ibid.

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9.7.2. Pathways The DSHC/SIP and HEFA pathways have good potential for development in Brazil as sugars are readily available. The fermentation of sugars (carbohydrates) to hydrocarbons or to lipids, generates the basis for both the DSHC/SIP and HEFA pathway processes. In the former, the obtained hydrocarbons are upgraded to jet fuel through a thermochemical process while in the latter, microbial oil provides the basis for deoxygenation. Both of these pathways are ASTM certified. Solazyme and Amyris have been the main proponents in this field, putting new installations into operation in 2012 and 2013.367 Use of lignocellulose for the Fischer-Tropsch process is plausible in the near future but costs related to this pathway are a major obstacle in Brazil.

9.7.3. Sustainability Brazil’s current bioethanol and biodiesel blending mandates do not include any land-use considerations or explicit sustainability criteria related to greenhouse gas emission reductions. According to the US Environment Protection Agency, the most common type of bioethanol in Brazil (sugarcane ethanol) achieves 61% GHG emission reductions under the US Renewable Fuel Standard rules and up to 71% under the EU Renewable Energy Directive’s rules. As regards biodiesel (produced from soybean), the EPA considers it achieves 57% reductions under RFS2 and 31% under EU RED.368 Brazil has strict laws protecting natural resources, water and biodiversity. For instance, the country’s Forest Code is among the most restrictive regulations on land-use in the world. However, many regulations and laws are complex, prone to differing interpretations and expensive to implement, which makes complying with sustainability standards very challenging, especially when the extent of Brazil’s territory and number of local, independent producers is considered. It has been stated that any action plan for the implementation of aviation biofuels in Brazil must “firmly emphasize that companies, institutions or farmers that receive any incentive or benefit from public policies that involve public funds, abide by the laws related to the sustainability processes in the whole production chain and that proof of compliance must be tied to receiving any benefits”.369 The 2013 FlightPath study carried out a sustainability assessment for the production of feedstocks in Brazil. This was done in accordance with the principles and criteria developed under the Bonsucro, RSB and ISCC standards. The study concluded that in the social sphere, the main positive impacts where high potential job creation, income generation and regional development. The study also identified the following aspects as gaps regarding compliance with sustainability requirements: great number of laws and rules, different interpretations and lack of knowledge on implementation, uneven enforcement.

10. Mexico

10.1. Policy Environment Mexico is still very much dependent on fossil fuel for its energy production and has only recently initiated the process of liberalising its energy markets. In recent years, the public authorities have undertaken new commitments to protect the environment and mitigate climate change as well as to 367 Ibid. 368 TransportPolicy. Brazil: Fuels: Biofuels. 369 Boeing, Embraer, FAPESP & UNICAMP (2013). Flightpath to Aviation Biofuels in Brazil: Action Plan. June 2013

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promote renewable energy and overall sustainability. In terms of biofuels development and production, Mexico is still in its very early stages. Therefore, and although there have been several interesting initiatives aimed at exploring the potential for aviation biofuels production, as of 2017, there are no policies specifically geared towards this sector. Plan de Vuelo The Flight Plan towards Sustainable Aviation Biofuels in Mexico was developed in 2010 by the Mexican government together with actors representing the biojet fuels supply chain (industry actors, investigators, feedstock producers, etc.). The objective of this programme was to promote collaboration of all the involved parties with the aim of developing a plan for construction biojet refineries in Mexico. It brought together many stakeholders between 2010 and 2011 over 8 months of workshops and events focusing on the following issues: sustainability, raw materials, refining, infrastructure, financing, regulation, advanced biomaterials, economic viability of aviation biofuels in Mexico as well as end-use. The last of those resulted in 36 “green flights” both domestic and international and 110,000 litres of biojet fuel supplied. The overall objective is to ensure that 15% of national jet fuel use is supplied by biojet.

10.2. Other relevant policies Programme for Sustainable and Renewable Fuels This programme is currently being developed by the Mexican government. It will serve to establish a strategic plan for sustainable fuel development in the country in accordance with 4 objectives:370 - Develop and information system for the stakeholders and the public; - Develop R&D and technology transfer; - Promote and advise farmers associations; - Implements production and commercialisation of biomass in the mid and long terms to provide

investment certainty;

and two principles: - Avoid cropping substitution on fields devoted to human consumption; - Evaluate hydric use so as not to affect other existing crop productions in the area.

It is currently unclear what the role of aviation fuels will be under the programme. Incentives for biofuels Apart from the actions undertaking under the abovementioned Flight Plan, there appears to be no specific support for the development and market uptake of biofuels for aviation in Mexico. Regarding biofuels in the broad sense, public authorities do not directly subsidise biofuels producers and consumers in the transport sector. Certain support schemes exist that promote feedstock production and research and development for biofuels. In particular, the government offers assistance in the form of “technology packages” to raw material producers that help them implement disease and plague control for crops or by offering developing dedicated machinery for harvesting specific types of feedstock, such as higuerilla.

10.3. Laws Energy Transition Act (2015)

370 Jacobo, Jorge (2017). Biofuels in Mexico. Presentation at ICAO Alternative Fuels Seminar, Montreal 2017

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This rather new piece of legislation is part of the country’s drive to reform its energy usage. It serves as a guiding instrument (or road map) with the aim of achieving specific targets in sustainable energy use, improved energy productivity and reduced greenhouse gas emissions in the energy sector.371 Law on the Promotion and Development of Bioenergy (2008) This legislation aims to encourage the use and production of bioenergy with as part of a strategy to achieve energy self-sufficiency and sustainable development, provide support to the agricultural sector and reduce pollution. The law mandates a minimum 10% ethanol blend with gasoline in certain areas of the country. This Bioenergy Law prohibits the use of corn for biofuels except during years of surplus crops (thus diverting focus to sorghum and sugar cane).

10.4. Stakeholders

10.4.1. To look out for CEMIE Bio – Biojet Cluster.372 The Biojet cluster is part of the Mexican Centre for Innovation in Bioenergy which is supported by the Ministry of Energy (SENER) and the National Council of Science and Technology (CONACYT). The cluster runs a 4-year core research and development programme that aims at developing the production of aviation biofuels in Mexico and is funded through the Energy Sustainability Fund. This project is due to receive funding of approximately 380 million Mexican pesos over its 4-year running period. It takes the form of a collaboration initiative run by the Potosinian Institute of Scientific and Technological Research (IPICYT) and involves 17 institutions in total, including stakeholders such as Boeing, Aeromexico and the Energy Ministry and aims at researching the production of biofuels that meet the sustainability criteria developed by the Roundtable on Sustainable Biomaterials (RSB). In particular, the Cluster functions according to 4 main research lines that cover the full biojet value chain: biomass production, conversion processes, lifecycle analysis (LCA) and sustainability and the market. It brings together research, raw material producers, end-users and public authorities.

10.4.2. R&D / Academia Potosinian Institute of Scientific and Technological Research (IPICYT) A multidisciplinary public research centre of the CONACYT network aimed at decentralising the scientific and technological activities in Mexico in particular with regard to biology, advanced materials, environmental sciences, etc. IPICYT is the coordinator of the Biojet Cluster project. Centre for Biological Research in the Northwest (CIBNOR) A research and training in biological sciences. Active participant in the Biojet Cluster project. Centre for Research in Food and Development (CIAD) The centre seeks to improve food and feeding conditions and ensure food availability, quality and safety. Active participant in the Biojet Cluster project. Centre for Research in Applied Chemistry (CIQA): chemistry research for industrial, social and educational purposes. Active participant in the Biojet Cluster project.

371 See: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Official Website – ‘Sustainable Energy’. Project Description 372 See: Cluster Bioturbosina. Offical Website – ‘Introduction’

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Centre for Applied Innovation in Competitive Technologies (CIATEC) The centre is a part of the CONACYT network, it conducts research in new products and improved processes. Active participant in the Biojet Cluster project. Centre for Scientific Research of Yucatan (CICY) The CICY conducts applied research in biology and materials. Active participant in the Biojet Cluster project. Masdar Institute Research and education focusing on alternative energies and the environment based in UAE. Active participant in the CEMIE-Bio Biojet Cluster project. Joint Bioenergy Institute (JBEI) Bioenergy research centre of the US Department of Energy. Active participant in the CEMIE-Bio Biojet Cluster project. Cemie-Bio – Mexican Bioenergy Innovation Center R&D for biofuels – aim to unite efforts of the academic and industrial sectors to stimulate the use of renewable energy in Mexico.

10.4.3. Policy Ministry of Communications and Transport including its Airports and Auxiliary Air Services branch The ASA operates Mexico’s airports and is the sole fuel provider at 60 of Mexico’s airports. In Mexico, the development of alternative fuels for aviation is coordinated by the Ministry of Communications and Transport, through the Airports and Auxiliary Services organisation. The latter coordinates with other federal, state and local government agencies as well as with private and academic/research organisations to promote the creation of a biojet fuel industry.373 SENER – Mexico Energy Ministry (Secretaria de Energia de Mexico) The ministry is responsible for conducting national energy policies and research on new technologies. The Unit for National Content and Support to the Supply Chain and Investment in the Energy Sector under the Ministry of Economy co-ordinates and monitors the operation of the Trust Fund for the Development of National Energy Industry Suppliers and Contractors. CONACYT – National Council of Science and Technology (Consejo Nactional de Ciencia y Tecnologia) A government entity in charge of the promotion of scientific and technological activities and setting government policies for these matters. Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA).

10.4.4. Funding Energy Sustainability Fund (FSE) The objective of Mexico’s Energy Sustainability Fund is to fund and support scientific research, innovation and technology development with a view to promoting cleaner and more efficient

373 Bio Turbosina (2012). The case for sustainable aviation biofuels in Mexico. Presentation at ICAO Aviation and Climate Change Seminar, 23-24 October 2012.

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energy. The Fund aims to allocate approximately 900 million Mexican pesos to bioenergy production between 2016 and 2020.374 ð

10.4.5. Industry /End Users Aeromexico The largest airline in Mexico. It engages in climate action on a voluntary basis. The company has conducted 29 biofuel powered flights, including the first transcontinental commercial flight ever using a 25% blend based on camelina procured by ASA. Active participant in the Biojet Cluster project. Boeing Leading aircraft manufacturer. Active participant in the Biojet Cluster project. Mexico’s Airports and Auxiliary Services (ASA) A federal government-owned corporation in charge with managing airports in Mexico. ASA is a member of the US CAAFI initiative and of the Sustainable Aviation Fuel Users Group (SAFUG). ASA further acts as a representative for Mexico in international fora that work towards the development of international strategies for limiting the impact of aviation on climate change. The ASA has also established collaboration agreements with private companies such as Boeing, UOP Honeywell.

10.5. Feedstock, pathways, sustainability Mexico has important potential for raw material/biomass production. Traditional feedstocks include maize, sugar cane and sugar beet. Because of legal restrictions (see further above), the small rather limited quantities of biofuels that have been produced use sugar cane or sugar beet as feedstock. More advanced feedstocks with good potential include jatropha seeds, camelina, higuerilla, algae as well as used vegetable oil. These sources of raw material are currently underexploited. A 2017 study on the development of a supply chain for biojet fuels in Mexico found that the most important factor for the supply chain is associated with the transportation of raw materials and products. It suggests that the best way forward is the installation of small processing facilities distributed through the supply chain and that the best production pathways include bio-synfining and the Centia process based on feedstocks such as jatropha and higuerilla.375 The Plano de Vuelo mentioned above is focused on identifying the necessary elements for implementing the HEFA pathway in Mexico. A 2010 study conducted by ASA and INIFAP (Mexican research institute for forestry and agriculture) focused specifically on the potential of jatropha for biojet production. It was found that in Mexico, jatropha did not either directly or indirectly compete with food production376 which made it a very good candidate for scaled-up biojet production. There is, however, currently no large-scale jatropha cultivation under way. Given the lack of a strong biofuels industry in Mexico, there exist no specific rules dealing with the sustainability of biofuels or biojet fuels. Some measures, such as the 2008 Law on the Promotion and Development of Bioenergy which prohibits the use of all but excess corn for bioenergy production

374 See: Mission Innovation (MI). Official Website – ‘Mexico’ 375 Garcia, S.D., Gutiérrez-Antonio, C., De Lira-Flores, J.A. and Ponce-Ortega, J.M. (2017). Optimal planning for the supply chain of biofuels for aviation in Mexico. Clean Technologies and Environmental Policy 19 (5): 1387-1402 376 See: ProyectoFSE (2016). La industria de la aviación y la bioturbosina en México

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might go some way towards limiting the impacts of crop-based biofuel production. Further, as in other countries, research on biojet fuels specifically appears to be focused on non-traditional biomass sources – i.e. advanced crops such as jatropha and camelina, used vegetable oil and algae.

11. United States

11.1. Policy Environment The Unites States does not have a national renewable energy target. However, according to the IEA, the policies that are in place are broadly supportive of renewable energy development.377 In 2013, bioenergy constituted 1.8% of total primary energy production in the US. Well over three quarters of this production was in the form of corn-based starch ethanol with biopower and biodiesel accounting for the rest. The key driver of the biofuel industry is the federal Renewable Fuel Standard (RFS), which requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels.378 Public authorities in the United States use a large variety of economic instruments to drive the development of renewable energies. These include investment tax credits, production tax credits and loan plans at the federal level as well as many drivers at the state-level such as renewable portfolio standards, renewable energy certificates, carbon markets, grants, subsidized loans, etc. Guiding Principles In the United States, there is no specific legislation concerning alternative fuels for aviation. Therefore, it is the US policy regarding alternative fuels for road transport, which also applies to those produced for use in aviation. There are, however, a number of initiatives in operation that aim to promote the development of aviation biofuels and the deployment of alternative fuels for aviation is nonetheless considered as being of utmost importance, even at the highest levels of government.379 In 2011, President Obama directed the Department of Energy (DoE) and the Department of Agriculture (USDA) to develop advanced biofuels and for commercial aviation to make use of such new fuels. Later, in 2013 civil and military aviation moved into a leadership position for advanced alternative transport fuels in the US. The development of alternative fuels for civil and military aviation is considered as being high priority in the United States, not only as a way to reduce environmental impacts, but also in terms of enhancing energy security and ensuring price stability.380 As elsewhere, in the United States it is quite broadly accepted that bio-based fuels currently constitute the sole viable replacement to fossil fuels in the aviation sector – options such as electrification or others are not considered viable. The opportunities and challenges to the development and market uptake of aviation biofuels in the US are largely similar to those in other jurisdictions. Therefore, initiatives are undertaken in consideration of the following elements:

377 See: International Energy Agency (IEA) (2014). Energy Policies of IEA Countries: The United States – 2014 Review. 378 See https://www.nrel.gov/docs/fy16osti/65255.pdf. 379 More generally, also see White House Blueprint for a Secure Energy Future (March 2011), White House National Bioeconomy Blueprint (April 2012) and President’s Climate Action Plan (June 2013) as well as the 2016 Federal Activities Report on the Bioeconomy and the 2010 National Aeronautics R&D Plan. 380 See 2016 Federal Strategy on R&D.

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- Drop-in nature: alternative aviation fuels must have characteristics identical to fossil-based kerosene, have equivalent safety performance as well as better environmental performance.

- Generally speaking, high standards set by bodies such as the FAA, EASA (EU) and implemented by bodies such as ASTM International create a barrier to entry for all but most serious fuel producers (safety, viability, stability and security of supply, etc.).

- Facilitation of group decision making by small market size with data-based decisions (important for reassuring producers).

- Distribution infrastructure is concentrated at a relatively low number of airports (i.e. significant logistics costs but possible).

- Stability and security for producers: market usually functions through multi-year off-take purchase agreements.

- Industry is characterized by systems integration and gated risk management of product and process (driven by high standard requirements of defence contractors, the military and NASA).

- R&D in aviation is well supported by both commercial and military sources.

In addition, at the annual Transportation Research Board meeting in 2006, the following conclusions were drawn: - Aviation industry has no viable sustainable options to replace oil - Replacement must be drop-in fuels because of the huge costs involved in modifying existing

infrastructure (both in terms of supply and use infrastructure). - Aviation industry is growing in importance in terms of polluting – e.g. coming to the forefront in

the environmental sustainability debate. - Qualification process for fuel suppliers took 10 years. - Aviation industry represented 10% of fuel demand. - Industry where fuel costs became the single largest expense in 2008.

Table 12-1, below, represents and adaptation of the essential elements in developing solutions for deployment of biofuels in aviation according to CAAFI. Table 11-1 Essential elements in developing solutions for deployment of biofuels in aviation

Challenge Possible solution(s) So far… - Infrastructure - Safety - Certification

- Developing drop-in fuels (only input varies, output remains the same) - Streamlining qualification and certification process – e.g. based on the experience with the FT process (see ASTM D7566 and D4054)

- In 2009 FT approved by ASTM (specification D7566 – drop-in fuel) - ASTM D4054: guidelines for the qualification of new fuels (2009) - HEFA qualified in 2011 through this new streamlined system - ATJ qualified under ASTM D7566 in 2016 - It will help qualification of new inputs – e.g., HDCJ, etc.

- Risks related to fuel development (cost, security, sustainability)

- Risk management tools – e.g. FRL developed by CAAFI providing gated risk management

- 2009: ICAO accepted CAAFI FRL process - FRL process is used to increase the readiness of various other processes, e.g. ATJ.

- Ensuring sustainability

- Establishing universally accepted emission reduction goals (GHG)

- Section 526 Energy Independence and Security Act 2007: legislated goals and constraint for government

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- Establishing systems for accurately quantifying emissions - Sharing options for sustainability certification - Accurately quantifying small particle emissions - Incorporating all of the above in a comprehensive tool designed to assess “project” benefits

purchasers + commercial airlines followed with voluntary measures. - 2009: IATA and ATAG establish calendar goals – reduction of 50% in GHG emissions by 2050 from 2005 benchmark. - PARTNER funded by FAA researches GHG reductions for a variety of processes and feedstock to quantify profess against carbon neutral growth goals. - Emergence of options for certification: GBEP, RSB, ISO, etc. - PARTNER and Air Force Research Lab are measuring PM2.5 benefits arising from biofuel use.

11.2. Laws Renewable Fuel Standard (RFS) The Renewable Fuel Standard (RFS) programme was created under the Energy Policy Act of 2005. The Energy Independence and Security Act of 2007 expanded the programme. The RFS II is a federal policy which is implemented by the US Environment Protection Agency (EPA) and which requires a certain volume of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel. California Low Carbon Fuel Standard (LCFS) A number of individual states have established legislation designed to support the development of renewable energy production and use in the transport sector. The California low carbon fuel standard (LCFS) for instance, requires producers of petroleum-based fuels to progressively reduce the carbon intensity of their products by up to 10% by 2020. Importers, refiners and wholesalers of petroleum and petroleum products can either develop their own low-carbon fuel products or otherwise buy credits from companies that do develop low-carbon alternative fuels.381 Its regulatory framework incorporates aviation fuels. The focus is carbon intensity rather than feedstock and it uses indicators such as environmental performance (e.g. GHG reduction and volumetric indicators). Farm Bill The 2012 Farm Bill includes significant support for biofuels. For instance, The Biomass Crop Assistance Program receives $38.6m per annum (2013 -17). Further, the Biorefinery, Renewable Chemical and Bio based Product Manufacturing Program received $100m in 2013 and $58m per annum in 2014-15. The Bioenergy Program for Advanced Biofuels received $20m per annum (2013-17).382 However, there is no funding for algae.

11.3. Stakeholders

381 See: International Energy Agency (IEA) (2014). Energy Policies of IEA Countries: The United States – 2014 Review. 382 See: ETIP Bioenergy. Official Website. Biofuels in the United States.

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11.3.1. Producers/Technology/Companies - Lanzatech: biofuels/aviation biofuels developer. - Altair: aviation biofuels producer – currently operates the only commercial facility in the

sector. Produces fuel from inedible agricultural fats and oils using the HEFA-SPK process developed by Honeywell UOP.

- Fulcrum Sierra Biofuels: biofuel producer operating projects for MSW-to-jet fuel. - Byogy: renewable fuels producer from sugar crops. - Gevo: produces aviation biofuel through the ATJ pathway. - Honeywell UOP: renewable fuels producer using the HEFA-SPK pathways. - SkyNRG: Dutch aviation biofuel logistics and marketing company active in the US. - GE Aviation: jet engine producer. - Pratt & Whitney: aircraft engine producer.

11.3.2. To Look Out For Altair Based in Los Angeles, Altair fuels currently possesses the only commercial scale facility that is regularly producing biojet fuels. It produces its fuel through the HEFA-SPK conversion process. Gevo Biojet fuel producer that has produced commercial batches of alternative aviation fuels through the ATJ-SPK conversion process. Illinois Clean Fuels Project This project aims at producing 30,000 barrels per day of ultra-clean diesel and jet fuel from municipal garbage without reliance on subsidies. It aims to demonstrate that renewables can directly compete with oil as a source of transportation fuels.383 Qantas Melbourne-LA initiative The Australian airline claims it will introduce regular biojet powered flights between these two cities as of 2018.

11.3.3. Networks Commercial Aviation Alternative Fuels Initiative (CAAFI) CAAFI was established as early as 2006 and today represents more than 800 members and 450 organisations from across the biojet fuel value chain. It aims to enhance energy security and environmental sustainability for aviation through the deployment of commercially viable alternative jet fuels. It enables stakeholders to build relationships, share data, identify resources and direct R&D and deployment of alternative fuels. The initiative is sponsored by the FAA together with three trade associations (AIA, A4A and ACI-NA).384 CAAFI is an advanced initiative which has been very active in promoting sustainable alternative jet fuels. Its most prominent accomplishments to date include the following:385 - Collaboration with FAA, ASTM and aircraft manufacturers to validate and establish the drop-in jet

fuel concept, followed by five alternative jet fuel approvals.

383 Illinois Clean Fuels. Official Website. 384 See: Commercial Alternative Aviation Fuels Initiative (CAAFI) (2014). CAAFI Brochure 2014. 385 See: Green Air Online (2016). CAAFI and its 10-year journey to the cutting edge of sustainable jet fuel commercialization. 26 May 2016.

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- Created and released the ASTM D4054 Users Guide, to assist entrepreneurial firms with navigating the fuel qualification process.

- Crafted the Fuel Readiness Level (FRL) evaluation framework aimed at determining at what stage of development a specific bio jet fuel pathway is situated. CAAFI received an endorsement for the use of this evaluation methodology as a best practice by the International Civil Aviation Organization.

- Created Sustainability Overview and Environmental Progression frameworks to complement CAAFI/USDA Feedstock Readiness Level.

- Published R&D Critical Challenges Position White Papers and holding multiple webinars on various topics of interest to the alternative fuel community.

- Issued Guidance for Selling Alternative Fuels to Airlines in cooperation with Airlines for America (A4A), to help producers prepare for airline offtake discussions.

- Formed a strategic alliance between airlines (via A4A) and the Defence Logistics Agency, signalling a ‘single market’ for alternative jet fuel.

- Facilitated the signing of the ‘Farm to Fly 2.0’ agreement between USDA, DOE and CAAFI sponsors to accelerate the development of feedstocks, execute various feasibility assessments and foster regional development activities in several states.

- Facilitated airline/fuel producer offtake agreements in cooperation with A4A. There are currently seven publicly communicated agreements to date.

- Expanded cooperation with international counterparts in Australia, Brazil, Spain, Germany and Indonesia.

During the next ten years of its activity, the initiative aims inter-alia to achieve the following:386 - Enable industry production of SAJF volumes that help aviation achieve carbon-neutral growth

from 2020 onward. - Enhance the efforts being undertaken in the National Jet Fuel Combustion programme, a U.S.

multi-agency and industry effort to improve the understanding of the impact of variation in fuel composition on combustion. The results of this multi-million-dollar research work will assist the industry in significantly lowering the cost and time associated with ASTM International qualification of new fuel pathways, help the industry to move in the direction of more compositionally-based fuel specifications and enable the use of fully synthetic fuels that can completely replace the use of petroleum fuels and further reduce net carbon emissions.

- Offer assistance to the commercialisation of multiple fuel production facilities associated with all existing and future ASTM approved pathways, to produce sustainable jet fuel from every form of affordable, sustainable feedstock possible.

- Maximise the impact of U.S. government agencies with support for the implementation of a national alternative jet fuel R&D strategy.

- Continue collaborating with non-U.S. entities to fully exploit the value of research, development, demonstration and deployment efforts wherever they may occur, and enable the acceleration of SAJF solutions worldwide.

- Continue to foster business development efforts leading to pilot, demonstration and full-scale production opportunities, leveraging support from other interests.

- Take advantage of the tremendous gains taking place in genetic mapping and evaluation to leverage the development of lower cost and higher production purpose-grown feedstocks for SAJF.

- Pursue advanced fuel production concepts like electro-fuels, solar fuels and tailored microbial conversion of low-cost feedstocks that are still in their infancy but represent great opportunities.

386 Ibid.

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Farm to Fly 2.0. The Farm to Fly initiative is the result of collaborated efforts by the US Department of Agriculture (USDA), the US Department of Energy (DOE), Boeing and Airlines for America to develop a commercially viable aviation biofuels industry in the United States. The original Farm to Fly initiative was established in 2010 and then extended an additional five years in 2013 under the name Farm to Fly 2.0. The programme strives to increase the US supply of renewable jet fuel with the objective of producing up to 1 billion gallons of drop-in biokerosene by 2018. The DOE, which joined the initiative in 2014 plays a particularly important role as, through its other activities related to alternative jet fuels, it is able to provide technical assistance to the initiative in terms of supporting production, certification, testing and qualification of the fuels themselves. This initiative also aims to support the US rural economy by developing the bioeconomy and creating jobs while also ensuring future energy security within the country. Sustainable Aviation Fuel Northwest (SAFN) The objective of the SAFN project was to develop sustainable and economically viable aviation biofuels in the Northwest. The programme was created by Boeing, Alaska Airlines, Portland International Airport, Seattle-Tacoma International Airport, Spokane International Airport, Washington State University and Climate Solutions. In 2011, it produced a report titled Sustainable Aviation Fuels Northwest (SAFN): Powering the Next Generation of Flight in collaboration with a group of over 40 stakeholders. The report looks at the potential for biojet fuel development in the North-western United States from a full supply-chain perspective, and provides analysis regarding conversion technologies and promising feedstocks. Recommendations for further action are formulated at the end.387 Midwest Aviation Sustainable Biofuels Initiative (MASBI) The MASBI project concluded in 2013. It connected stakeholders from across the biojet fuels value chain and aims at leveraging regional assets in an optimal manner. The initiative looked to advance biojet fuel development in a 12-state region, which is seen as particularly promising with regard to feedstock availability, technology development and sustainability. Like SAFN, MASBI the main objective was to evaluate the region’s biofuel potential and establish a support plan. The project produced its final report in 2013.388 Other Networks

- Advanced Biofuels USA - SENASA - National Biodiesel Board - Advanced Biofuels Association (ABFA) - Biofuels Producers Coordinating Council - Biotechnology Industry Organisation - Renewable Fuels Association (ethanol industry) - National Algae Association - Algal Biomass Association - Aerospace Industries Association - Airlines for America - Airports Council International-North America (ACI-NA)

387 See: Sustainable Aviation Fuels Northwest (SAFN) (2011). Sustainable Aviation Fuels Northwest: Powering the Next Generation of Flight – Report 2011 388 See: Midwest Aviation Sustainable Biofuels Initiative (MASBI) (2013). Fueling a Sustainable Future for Aviation.

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11.3.4. R&D / Academia - Energy & Environmental Research Center (EERC) - Georgia Tech ASDL - ASCENT - WSU Clean Tech - Northwest Advanced Renewables Alliance (NARA) - Sustainable Fuels Institute Michigan Technological University

11.3.5. Policy Federal Aviation Administration (FAA) The FAA has a central and somewhat overarching role in developing and supporting the initiatives and partnerships all across the value chain that are perceived as necessary to secure demand for aviation biofuels. In particular, it is involved in supporting the certification and qualification of the fuel, measuring emissions, assessing environmental sustainability and conducting techno-economic analysis, coordinating interagency, public/private, state and international partnerships. This involves running or supervising of programs and initiatives such a CAAFI, CLEEN, PARTNER, etc.

- US Department of Energy: funding and R&D (see further). - US Department of Defence: funding and procurement (see below). - US Department of Transportation: policy setting. - US Department of Agriculture (USDA National Institute of Food and Agriculture & USDA Rural

Development): funding and agricultural policy setting. - US Environment Protection Agency: operates the RFS2 standard.

11.3.6. Funding Defence Production Act (DPA) – US Department of Defence, Department of Agriculture, Department of Energy The US military is a major driver for biofuels production. They have explicitly announced goals to increase alternative fuel consumption in all equipment. The DPA Title III Programme aims to “create assured, affordable and commercially viable production capabilities and capacities for items essential for national defence”. In promoting the use of alternative fuels, the Department of defence is seeking to ensure operational and military readiness, improve battlespace effectiveness and promote flexibility with ability to use multiple, reliable fuel sources. The DPA sets out criteria for ongoing bulk fuel purchases to meet operational requirements, beyond certification and demonstration with the DOD committing to make such purchases of alternative fuels if equal or better than petroleum in terms of cost, compatibility, performance and GHG emissions.389 Through the DPA, the US Department of Defence in collaboration with the US Department of Energy and the US Department of Agriculture awarded funding to three biorefineries in 2014 (Emerald Biofuels, Fulcrum Bioenergy and Red Rock Biofuels).390 In 2011, The USDA, the US Department of Energy and the Navy executed a MOU to invest up to $510 million in partnerships with the private sector to produce advanced drop-in aviation and marine biofuels.391 389 See Strogen, Bret (2015). Drop-in alternative jet fuels: status of DOD’s RDT&E, interagency, initiatives and policies. Presentation at NDIA Joint Service Power Exposition. 25 August 2015. 390 Newes, E., Newes, Emily et al. (2017). Potential Avenues for Significant Biofuels Penetration in the US Aviation Market. National Renewable Energy Laboratory. See also Lane, Jim (2014). US Navy, DOE, USDA award $210M for 3 biorefineries and mil-spec fuels. Biofuels Digest. 19 September 2014 391 Wang, Wei-Chang et al. (2016). Review of Biojet Fuel Conversion Technologies. National Renewable Energy Laboratory

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US Department of Energy The US DOE plays an instrumental role in stimulating the market uptake of aviation biofuels in terms of demand. Through BETO, the National Laboratories, it Technology Transfer Offices and its funding initiatives, it is central to the development of sustainable alternative fuels within the US. It is, however, also relevant in its support for broader bioenergy projects through its funding programmes, such as: - The American Recovery and Reinvestment Act 2009: authorised funding for loan guarantees to

help finance projects to demonstrate the feasibility of commercially producing cellulosic ethanol as well as R&D grants for biorefinery building.392

- “DOE Biomass Program manages next-generation biofuel programmes that support R&D, demonstration and deployment of commercially viable biomass utilisation technologies through PPP’s. The objective is to create a new domestic bioenergy industry and to support the RFS II by stimulating biofuel production. This programme was expanded to include biobutanol, algae biofuels, renewable gasoline as well as biojet fuel. The program is structured around a number of IBR (or integrated biorefinery) projects which aim to demonstrate and validate cost and performance data for various biofuel conversion pathways. Once this takes place, PPP’s are formed to fund the construction and operation of pilot, demonstrations and commercial-scale biorefineries. As of 2013, over $1 billion in DOE investments have been made in 29 projects with $1.7 billion the cost shared by the private sector.”393

The US DoE is, for example, supporting RTD projects to optimise feedstock supply chains for biorefineries. Below is a selection of several funding and research projects that are either under way or planned: - LanzaTech: 4 million dollars to “design and plan a demo facility, using industrial off-gases to

produce low carbon jet and diesel fuels”. - AVAPCO: 3.7 million dollars to “help develop a demo-scale integrated bio-refinery that combines

the company’s biomass-to-ethanol process with project partner Byogy’s ATJ technology to produce renewable jet fuel from woody biomass”.

- In March 2012, $35m funding for biomass R&D was announced, with DOE providing $10m for 1-3 projects and USDA NIFA providing $25m for 5-10 projects. Projects had to address three key technical areas - feedstock development, biofuels and biobased products development and biofuels development analysis.394

- Recently, the US boosted commercial ATJ with new funding from DoE to develop two new demo facilities (see http://www.greenaironline.com/news.php?viewStory=2321).

Farm Bill The Energy Title of the Farm Bill funds a number of programmes to expand feedstock supply, finance demonstration projects and increase commercial feasibility of biofuels. - The Biorefinery Assistance programme for instance provides loan guarantees for the

development, construction, and retrofit of commercial scale biorefineries. - The Bioenergy Program for Advanced Biofuels provides direct payments to producers of

advanced biofuels made from cellulose, lignin, sugar and starch (other than ethanol derived from corn kernel starch), waste materials, sugarcane, tree crops, etc. Since 2009, almost $190 million has been allocated to biofuel producers. Most funds have, however, gone to biodiesel.395

(NREL). 392 Panoutsou, Calliope; Bauen, Ausilio & Duffield, Jim (2013). Policy regimes and funding schemes to support investment for next-generation biofuels in the USA and the EU-27. Biofuels, Bioproducts & Biorefining 7:685–701. 393 Ibid. 394 ETIP Bioenergy. Official Website. Biofuels in the United States. 395 See: Panoutsou, Calliope; Bauen, Ausilio & Duffield, Jim (2013). Policy regimes and funding schemes to support investment

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- The Biomass Crop Assistance Program (BCAP) provides financial assistance on agricultural and eligible private forest land. It allows potential producers to enrol their land into the programme and thus become eligible to receive assistance to grow specific biomass crops which comply with the sustainability criteria. Approximately $700 million have been authorised through this programme as of 2013.396

On 7 February 2014, the $900m 2014 Farm Bill was launched, including funding for Biomass Crop Assistance Program, Bioenergy Program for Advanced Biofuels, the Community Wood Energy Program, and the Rural Energy for America Program. The bill is estimated to support 1 million rural jobs in the US. On 21 October 2013, the U.S. government announced $181 million in new loan guarantees to support the development of new commercial-scale biorefineries to produce advanced biofuels, either through development of new facilities or retrofitting of existing plants. Biomass Research and Development Initiative (BRDI) This programme directs agencies to address feedstock development, biofuels and bio-based product development and impacts of biofuels production by providing the possibility for R&D and demonstration grants to universities, government agencies and private entities on a competitive basis. Since 2008, $118 million has been spent on 25 BRDI projects (as of 2013).397 Advanced Biofuel Payment Program - USDA This programme managed by the United States Department of Agriculture (USDA) is making $60 million in payments to 195 producers to support and expand production of advanced biofuels refined from sources other than corn kernel starch. Up to 2013, the US provided a cellulosic biofuels production tax credit of up to $1.01 per gallon to help get these fuels to commercial viability. The Budget Proposal for 2015 proposed to extend the tax credit to further boost the commercial development of cellulosic ethanol. National Renewable Energy Laboratory (NREL) NREL supports the clean energy innovation pipeline by accelerating the transfer of renewable energy and energy efficiency technologies into the marketplace. For example, its Innovation and Entrepreneurship Center helps connect emerging clean energy businesses with the financial community, technical expertise and with the broader clean energy ecosystem.398 The NREL has published a number of studies including on the dynamic of aviation biofuels investments as well as on the potential avenues for biofuels penetration in the US aviation market. Commercial Offtake Agreements In the US, many commercial airlines have proven their interest in investing in aviation biofuel-producing technologies to help the latter reach commercial status by singing long-term offtake agreements.399 Table 11-2 Offtake agreements for aviation biofuel in the united states

Buyer Supplier Volume (tonnes/year)

Feedstock Length Start of delivery

Agreement date

for next-generation biofuels in the USA and the EU-27. Biofuels, Bioproducts & Biorefining 7:685–701. 396 Ibid. 397 Ibid. 398 See: National Renewable Energy Laboratory (NREL). Official Website – ‘Innovation & Entrepreneurship’. 399 Newes, Emily et al. (2017). Potential Avenues for Significant Biofuels Penetration in the US Aviation Market. National Renewable Energy Laboratory.

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GE Aviation D’Arcinoff 17,000 Cellulosic biomass

10 2013

United Altair 17,000 Waste fats, oils and greases

3 2016 2013

Gulfstream Altair Unknown Waste, fats, oils and greases

3 2016 2015

Cathay Fulcrum 100,000 Waste 10 2019 2015 Fedex/Southwest Red Rock 10,000 Forest

Residues 8 2017 2014

United Fulcrum 270,000 Waste 10 2019 2015 KLM Altair Unknown UCO 3 - 2016 Lufthansa Gevo 270,000 Wood

waste (ATJ) 5 - 2016

JetBlue S.G. Preston Co.

33,500 Plant oils 10 2019 2016

Sources: IATA 2016, GE Aviation 2013, Gevo 2016, KLM 2016, Schlangenstein 2016, Gulfstream Corporation 2015.

11.3.7. End Users - Alaska Airlines - American Airlines - Delta Airlines - Southwest - United Airlines

11.4. Projects / Programmes /Initiatives Federal Alternative Jet Fuels Research and Development Strategy The strategy was elaborated by the National Science and Technology Council in 2016. Its objective is to “set out prioritized goals and objectives to address key scientific and technical challenges that inhibit the development, production, and use of economically viable [alternative jet fuels] at commercial scale”. The strategy was developed by the Alternative Jet Fuel Interagency Working Group and aims to “align Federal agency research and development efforts to contribute to the successful mobilization of Federal and non-Federal stakeholder communities towards a common effort to realize the great promise presented by [alternative jet fuels]”.400 Bioenergy Technologies Office (BETO) BETO is a section within the US DOEs Energy Efficiency and Renewable Energy Office. It works to establish partnerships with public and private stakeholders to develop and demonstrate technologies for producing cost-competitive advanced biofuels (from e.g. cellulosic biomass, algae, waste, etc.). Following the Bioenergy Technologies Office (BETO)'s successful demonstration of cost-competitive cellulosic ethanol production technologies - R&D efforts now focus on the conversion of biomass into hydrocarbon fuels and intermediates that lead to "drop-in" replacements for gasoline, 400 See: National Science and Technology Council (2016). Federal Alternative Jet Fuels Research and Development Strategy. June 2016.

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diesel, jet fuel, and other petroleum-based products. BETO recently selected several priority pathways—covering thermochemical, biochemical, and algal conversion technologies—that will guide its R&D strategy in the near term.401 FAA Center of Excellence for Alternate Jet Fuels and the Environment (ASCENT) This center was founded in 2013 by the FAA and is being led by Washington State University and the Massachusetts Institute of Technology. It is funded by the FAA, NASA, the US Department of Defense, Transport Canada and the Environmental Protection Agency. ASCENT aims at tackling some of the industry’s most pressing issues by working to create science-based solutions.402 CLEEN program CLEEN awards to Boeing, Honeywell, Pratt & Whitney, and Rolls-Royce for fuel properties and performance testing and demonstration. This testing will facilitate new fuel approval by standard setting organization ASTM International.403 Partnership for Air Transportation Noise and Emissions Reduction (PARTNER) This Center of Excellence projects on emissions measurement, sustainability analysis and tool development that improve our understanding of the environmental sustainability, and economic cost of production of alternative jet fuels.404 This programme is similar to ASCENT. Airport Cooperative Research Program (ACRP) This program provides guidance and tools to support deployment of sustainable aviation fuels. It has developed a Handbook for Analysing the Costs and Benefits of Alternative Turbine Engine Fuels at Airports as well as Guidelines for Integrating Alternative Jet Fuel into the Airport Setting.

11.5. Other Partnerships - Brazil/US bilateral (2011) - Australia/US bilateral (2011) - Germany/US – Aireg/CAAFI bilateral (2012) - Spain/US bilateral (2013) - US discussion with EC R&D Directorate.

12. Japan

12.1. Policy Environment

Japan’s policy on biofuels has been spurred mainly by two overarching objectives: (i) reduction of greenhouse gas (GHG) emissions and (ii) increase of energy security by reducing reliance on petroleum. Japan ranks as the third biggest petroleum consumer in the world, next to China and the United States. In particular, Japan’s transportation sector relies almost 100% on petroleum for energy, which the government plans to reduce to 80% by 2030.405

401 ETIP Bioenergy. Official Website. Biofuels in the United States. 402 See: Aviation Sustainability Center (ASCENT). Official Website 403 See: Federal Aviation Administration (FAA). Official Website – ‘Sustainable Alternative Jet Fuels’. 404 Ibid. 405 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015.

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In 2006, the Biomass Nippon Strategy developed by the Ministry of Agriculture, Forestry and Fisheries (MAFF) was revised to include the promotion of biomass energy as transportation fuel.406 By 2010, the government of Japan mandated an increasing use target of biofuels beginning 2011, reaching up to a use target of 500 million litres (crude oil equivalent) of biofuels by 2017.407 As the government did not indicate how this target is going to be achieved, the industry, in agreement with key government agencies, agreed to meet the 2017 target by introducing 1.940 billion litres of bio-Ethyl Tert- Butyl Ether (ETBE) – the equivalent of 500 million litres (crude oil equivalent) of biofuels.408 This target was mostly to be met through imports, primarily ethanol produced from Brazilian sugar cane.409 It has been reported that the government intends to maintain its 500 million litre (crude oil equivalent) mandate until, at least, by 2022.410 Also in 2010, Japan’s Ministry of Economy, Trade and Industry (METI) introduced through the Basic Energy Plan a 3% biofuel blending target in gasoline by 2020.411 Other targets set under the 2010 Basic Energy Plan included introducing sustainable standards for biofuels, establishing next-generation biofuel technology and promoting domestic biofuel production.412 Japan’s 2014 Strategic Energy Plan indicates the government’s policy to continue introducing biofuels “while taking into consideration international situation and the technology development trend concerning next-generation biofuels.” 413 Japan has not laid down any specific target with respect to the use of sustainable aviation biofuels (SAF). Nevertheless, the government has supported different initiatives and cooperation in order to promote SAF. These efforts include the government’s support for research on developing technologies for advanced aviation biofuels through the New Energy and Industrial Technology Development Organization (NEDO). Different government ministries have also sat as observers at the Initiative for the Next-Generation Aviation Fuels (INAF), which was established precisely to draw a roadmap for establishing supply chains for next-generation aviation biofuels by 2020.

12.1.1. Other relevant policies Japan committed to reduce its greenhouse gas emissions by (i) 6% from the 1990 levels for the period between 2008 and 2012 under the Kyoto Protocol,414 and (ii) 25% from 1990 to 2020 during the 15Th Conference of the Parties to the UNFCCC.415 Japan’s carbon emission reduction commitments were to be largely met through the exploitation of nuclear energy in generating electricity.416 However, following the Great East Japan Earthquake and Fukushima nuclear power plant accident, Japan’s nuclear power capacity was shut down and the gap in electricity supply was filled by expensive fossil fuels.417 In conjunction with efforts to diversify its energy sources and increase its energy independence, the government launched the Biomass Industrialization Strategy in 2012. The strategy intended to fully utilize biomass potential by 2020 in areas such as electricity generation, fuel for the transportation sector and greenhouse gas reduction. The strategy sets a target of using biomass resources equivalent to 26 million carbon tons per annum.418

406 Ibid. 407 Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 408 Ibid. 409 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015. 410 Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 411 http://www.maff.go.jp/e/pdf/reference6-8.pdf 412 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015. 413http://www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/4th_strategic_energy_plan.pdf 414 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015. 415 International Energy Agency (IEA) (2016). Energy Policies of IEA Countries: Japan – 2016 Review. 416 Ibid. 417 Ibid. 418 Japanese Ministry of Agriculture, Forestry and Fisheries (2013). The Guidebook for Promoting Biomass Utilization at the Community Level. References 6-8.

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12.1.2. Laws 2008 Effective Utilization of Resources from Agricultural, Forest and Marine Organism as Raw Materials for Biofuels The legislation aims to usher sustainable development and to diversify Japan’s energy sources through using biomass derived from agriculture, forestry and fishery sectors.419 Basic Act for the Promotion of Biomass Utilization The law sets out utilization targets for the year 2020 for different types of biomass, which are higher than the 2009 utilization rate (except for sewage sludge and animal waste).420 2010 Sophisticated Methods of Energy Supply Structure Act The law mandates oil refiners to produce biofuels in increasing increments from Japan’s 2011 fiscal year (at 210 million litres crude oil equivalent) to 2017 (at 500 million litres).421 Promotion of Biofuels / Incentives The government has no known incentive specifically addressed to promote sustainable aviation biofuel. However, there are several incentives in place to support biofuel production in general. In 2008, the government passed the “Law Concerning the Promotion of Biomass Resources as Raw Materials for Biofuels.” This law provides tax breaks and financial assistance to “biofuel manufacturers and farmers producing feedstock”.422 The scheme initially applied only to bioethanol producers, but has been expanded to apply to other “producers of alternative forms of bio-energy (such as bio-diesel, wood pellets, methane gas, or hydrogen gas).” The scheme extends a 50% reduction of fixed property tax for a period of 3 years to newly built biofuel facilities approved under the program by 2018.423 The law further authorizes MAFF to extend the repayment period of interest-free loans granted to farmers producing feedstock, in two-year increments for a maximum of 12 years”.424 In 2011, METI introduced the “Green Investment Tax Incentive.” The incentive scheme grants small and medium-sized businesses either a (i) “special 30 percent depreciation on the acquisition of renewable energy assets (such as facilities and vehicles); or (ii) a corporate tax reduction of 7%.425 Subsidies/Feed-in Tariffs The Biomass Industrialization Strategy introduced Feed-in Tariffs scheme for the generation of electricity through renewable resources, including biomass (using biogas and wood-derived feedstock).426 The policy supporting the use of biomass for electricity generation potentially creates competition in the feedstock allocation between electricity generation and biofuel creation, insofar as woody biomass has also been identified as one of the key raw materials for next-generation aviation fuels in Japan.

419 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015. 420 Japanese Ministry of Agriculture, Forestry and Fisheries (2013). The Guidebook for Promoting Biomass Utilization at the Community Level. References 6-8. 421 Ibid. 422 AgroChart (2016). Japan Biofuels Annual. August 2016. 423 Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 424 AgroChart (2016). Japan Biofuels Annual. August 2016. 425Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 426 Japanese Ministry of Agriculture, Forestry and Fisheries (2013). The Guidebook for Promoting Biomass Utilization at the Community Level. References 6-8.

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The government also supports the use of biofuels in the transport sector. In 2008, the government amended the “Quality Control of Gasoline and Other Fuels Act” to impose a lower gasoline tax if the fuel contains 3% bioethanol. The incentive is effective until March 2018, and METI is proposing to extend the incentives until the end of the 2018 fiscal year (i.e. 31 March 2019).427 In the same year, the government also amended the “Customs Tariff Act” and the “Temporary Measures Concerning Customs Act” to remove the 3.1 percent import tariff on bio-ETBE.428 In 2016, the government eliminated the “ten percent import tariff on bio-ethanol for the production of bio-ETBE”.429 The incentives under the Customs Tariff Act are effective until March 31, 2018 and are proposed to be extended until the end of the 2018 fiscal year.430 Sustainability Criteria The 2010 Sophisticated Methods of Energy Supply Structure Act established the sustainability standards for biofuels. The standards required that (i) bioethanols should not compete with food supply; and (ii) biofuels should reduce the greenhouse gas (GHG) emissions by at least 50 percent compared to gasoline emissions using a life cycle assessment (LCA).431 The Ministry of Environment (MOE) issued the “Life Cycle Assessment Guideline for Biofuels” in 2010.432 The same sustainability standards apply to biodiesel. Currently, METI considers that only sugar cane grown from an existing farmland in Brazil meets the sustainability criteria for first generation bioethanol.433 The METI is currently considering whether US corn-based ethanol can meet the sustainability standards. The debate is on the treatment of emissions resulting from the production of the ethanol and its by-products. The results of the assessment on the US corn-based ethanol are expected to be released by the end of 2017.434

12.2. National Studies In March 2017, METI published the “Studies for What Japan’s Future Biofuel Should be: Bioethanol.”435 The report outlines a preliminary biofuels policy for the period 2018 to 2022. For the 2020-2022 period, the changes in the biofuel policy includes introducing “10 million litres (crude oil equivalent) of second generation biofuels (potentially reducing the demand for first-generation ethanol)”, and a to-be-determined quantity of bio aviation fuel in the market.436 The changes to Japan’s biofuel policy are expected to be finalized by late 2017, which will be implemented by the 2018 fiscal year.437

12.3. Stakeholders

12.3.1. Producers / Technology / Companies Japan Biofuels Supply LLP.

427Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 428 Ibid. 429 Ibid. 430 Ibid. 431 Ibid. 432 Ibid. 433 Ibid. 434 Ibid. 435 Ibid. 436 Ibid. 437 Ibid.

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Japan Biofuels Supply LLP. procures components for biogasoline, such as bio-ETBE and bio-ethanol, and undertakes the distribution of biofuels to refineries in Japan. 438

Euglena Corporation A Japanese bioventure, which focuses on the research, development, production and marketing of microalgae, specifically the specie euglena.439 Nippon Steel & Sumikin Engineering Co., Ltd. (NSENGI) NSENGI is a company that develops ethanol conversion technology from biomass that does not compete with foodstuff (cellulose, waste materials) as raw material.440 It is also engaged in the manufacture of biofuels derived from trunks of old oil palm trees.441 Asahi Breweries Ltd. In conjunction with partner research agencies (i.e. National Agricultural Research Center for Kyushu Okinawa Region), Asahi Breweries Ltd. develops the technology to produce large quantity of bioethanol production at low costs, such as from high quality bio-mass sugarcane.442

12.3.2. To Look Out For Euglena Euglena announced its plan to commercialize jetfuel utilizing algae as feedstock by 2020 and to build a demonstration plant in Yokohoma.443 Euglena plans to use Chevron’s technology in producing 125,000 litres per year of biofuel that could be certified as jet fuel.444 Euglena is partnering with engineering company Chiyoda, ANA Holdings, Isuzu Motors and Itochu Enex, for construction, commercialization and procurement.445 It was reported that the plant's output could fuel one round trip per week between the Haneda and Osaka International Airport based on a 90-10 blend of standard and algae-based biofuel.446 The demonstration plant is expected to begin operations in 2019 and start supplying fuel for buses and airplanes by 2020.447 If the demonstration plant succeeds, it was reported that Euglena plans to mass produce its algae-based jet fuel at a new factory with 400 to 800 times the capacity of its demonstration plant.448 Japan Airlines Japan Airlines partnered with the Japan Aerospace Exploration Agency to develop “waste-based aviation jet fuel that will use hydrogen and carbon monoxide” to produce aviation biofuel.449 The plant is to be built outside Tokyo in Chiba Prefecture and is expected to be operational in time for the airline to use the fuel during the 2020 Tokyo Olympic Games.450

438 Japan Biofuels Supply LLP. Official Website. 439 Euglena. Official Website – ‘about’. 440 Nippon Steel & Sumikin Engineering. Official Website – ‘Biomass-to-ethanol Conversion’. 441 Nippon Steel & Sumikin Engineering. Official Website – ‘Palm Trunk Fuel Converter’. 442 Asakawa, Hiroyuki (2017). Company Research and Analysis Report – Itochu Enex Co., Ltd. FISCO Ltd. 443 Shoji, Yoko (2015). Euglena plans Japanese refinery for algae-derived jet fuel. NIKKEI Asian Review. December 2015. 444 Ibid. 445 Ibid. 446 Ibid. 447 NIKKEI Asian Review (2017). Algae jet fuel moves closer to market in Japan. 19 May 2017. 448 Ibid. 449 Sapp, Meghan (2016). Japan Airlines teams with space agency on aviation biofuel for 2020. Biofuels Digest. January 2016. 450 Ibid.

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12.3.3. Networks INAF Comprised of 46 organizations including industry players, government agencies and the academia, INAF was established specifically to develop a roadmap for the establishment of the entire supply chain for next-generation aviation fuels, which are hoped to be utilized by 2020 - in time for the Tokyo Olympics.451 The road map was finalized in 2015. It was developed based on available technology in Japan for the production of next-generation aviation fuels and on 6 key raw materials, which are considered to be the most feasible options in terms of raw material procurement and capability of addressing increased demand in the future.452 The roadmap clearly indicated policy incentives promoting the introduction of next-generation aviation fuels as a prerequisite to the roadmap.453 Petroleum Association of Japan An association comprised of 12 refiners and primary distributors of petroleum products in Japan.454 In 2010, PAJ targeted to “replace fossil fuels with 200 million litres of biofuels for the transportation sector by 2010.”455

12.3.4. R&D / Academia New Energy and Industrial Technology Development Organization (NEDO) NEDO undertakes research over different aspects of biofuel production. One class of projects focuses on technology for the production of next-generation biofuel derived from BTL and microalgae by 2030,456 which can also be used to substitute jet fuels in the future. 457 University of Tokyo The University is involved in biofuel research, including methods of cultivating microalgae for a more efficient biofuel extraction.458 Kumamoto University Kumamoto conducts research on biodiesel production, including in particular a method that will reduce the cost of biodiesel production through using nanosecond pulsed electric fields (PEF) to extract hydrocarbons from microalgae.”459 Advanced Industrial Science and Technology This is one of the biggest public research organization in Japan. It has worked on several projects with different partners developing technologies relating to biofuel production and next-generation

451 Initiatives for Next-Generation Aviation Fuels (INAF) (2015). Roadmap for Establishing Supply Chain for Next-Generation Aviation Fuels. July 2015. 452 Ibid. 453 Ibid. 454 Petroleum Association of Japan (PAJ). Official Website – ‘about’. 455 Stratas Advisors (2015). Japan: Biofuels Policy & Market. December 2015. 456 Asia Biomass Office. Biofuel Report Japan – Chapter 7. 457 International Civil Aviation Organization (ICAO) (2015). Japan’s Action Plan to reduce Greenhouse Gas Emissions from Aviation & Asia Biomass Office. Official Website – ‘Development Status for Bio Jet Fuel’. 458 University of Tokio (2013). Discovery of Culture Method for Efficient Biofuel Extraction from Microalgae - Progress in Jet Fuel Production from Botryococcus Braunii. Graduate School of Agricultural and Life Sciences / Faculty of Agriculture. August 2013. 459 Sapp, Meghan (2017). Japanese researchers using pulsed electric fields to extract hydrocarbons from algae. Biofuels Digest. May 2017.

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technology utilizing biomass energy (i.e. bio-jet fuel production system based on “innovative entrained flow bed gasification and anti-ASF FT synthesis”).460

12.3.5. Policy The Ministry of Economy, Trade and Industry (METI) METI is responsible for the energy policy in Japan. The Agency for Natural Resources and Energy, under the METI, is the specific body that is responsible for Japan’s comprehensive energy policies, including the promotion of environment-friendly energy policies. The Ministry of the Environment Responsible for meeting Japan’s commitment to reduce its greenhouse gas emissions. The Ministry of Agriculture, Forestry and Fisheries (MAFF) MAFF had played a leading role in developing and implementing biofuels policies in Japan. It has shifted its focus from biofuels production to generating renewable energies (e.g., heat and power) from waste generated by the livestock and forestry sectors.461

12.3.6. End Users Japan Airlines Japan Airlines is Japan’s flag carrier. In 2009, JAL conducted test flights utilizing biofuels derived from a blend of Jatropha, Camelina, and algae.462 It is also currently developing waste-based aviation fuel in conjunction with Japan Aerospace Exploration Agency. Boeing Boeing is one of the top providers of commercial jetliners to Japanese airlines.463 Boeing is one of the frontrunners of the INAF initiative in pushing for the availability of sustainable aviation biofuel by 2020. All Nippon Airways (ANA) ANA is the biggest airline company in Japan accounting for 50.3% of the market share in the country.464 ANA, in partnership with Boeing, flew the first transpacific flight using aviation biofuel in 2012.465 The airline also announced plans to use a 10% mix of aviation biofuel derived from the microalgae euglena.466

12.4. National Data Air transportation provides an important mode of connecting the main islands to the smaller islands around Japan. In this respect, the Tokyo-Sapporo route is one of the busiest routes in the world. 467 Japan’s aviation industry, comprised of the airlines, the airport, ground services and their respective

460 Asia Biomass Office. Biofuel Report Japan – Chapter 7. 461 Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 462 Hammel, Debbie (2013). Aviation Biofuel Sustainability Survey. NRDC Issue Brief. Natural Resources Defense Council. March 2013. 463 Boeing (2018). Boeing in Japan – Backgrounder. April 2018. 464 All Nippon Airways. Official Website – ‘about’. 465 Sustainable Aviation Fuel Users Group (SAFUG). Official Website – ‘recent activities’. 466 Japan Times (2015). ANA to use Euglena jet fuel made from green algae at Japan plant. December 2015. 467 Centre for Aviation (CAPA). Official Website – ‘country page: Japan’.

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supply chains, contributes $41 Billion to the country’s GDP and creates a total of 540,000 jobs. 468 Counting in also indirect effects, this translates to 1,8% of the Japanese GDP.469 It was reported that the government of Japan projects a decline in demand for jet fuel but an increase in the proportion of biofuels used in jet fuel.470

12.4.1. Feedstock INAF’s roadmap for next generation biofuels identified 6 key raw materials that (i) can be used to produce sustainable aviation biofuel, (ii) serve as feasible option in meeting the anticipated increased demand for such biofuel by 2020, and (iii) can be utilized using current available technology. These raw materials include municipal waste, microalgae, natural oils (excluding waste food oils), waste animal oil, non-edible biomass (cellulosic sugar), and woody biomass.471 The table outlines the raw materials, corresponding production technology, and state of technology for next-generation biofuels based on INAF’s roadmap:472 Table 12-1 INAF's roadmap for raw material, production technology and technology development

raw materials, corresponding production technology, and state of technology for next-generation biofuels

raw materials, corresponding production technology, and state of technology for next-generation biofuels

raw materials, corresponding production technology, and state of technology for next-generation biofuels

Municipal Waste FT synthesis The same technology has been used in the GreenSky London Project

Microalgae HEFA-SPK Research on microalgae has advanced under NEDO’s next-generation biomass energy utilization and development project.

Natural Oils HEFA-SPK Production will utilize UOP’s next-generation aviation fuel production technology under a licensing agreement

Animal Oils HEFA-SPK Non-edible biomass ATJ from isobutanol Enactment of ASTM standards

for the production technology using non-edible biomass are still under review

Woody Biomass FT-SPK Within the NEDO project, research on woody biomass is being advanced

468 International Air Transport Association (IATA) (2016). Country Report 2017 – Benefits of Aviation, Japan. 469 Ibid. 470 Iijima, Midori (2017). Japan Biofuels Annual 2017. USDA Foreign Agricultural Service. 471 Initiatives for Next-Generation Aviation Fuels (INAF) (2015). Roadmap for Establishing Supply Chain for Next-Generation Aviation Fuels. July 2015. 472 Ibid.

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13. Country sheets

13.1. Denmark

Denmark

General overview information/main focus

Denmark possesses a certain expertise in pre-treatment technologies, biotechnology and R&D. It is more interested in becoming technology partners rather than producers, joining in with other countries for the supply chain. The country has limited feedstock availability for alternative aviation fuel. Aviation is currently not a priority in the policy environment, however, Denmark participates in EU, Nordic and International networks relating to sustainable aviation.

Policy Environment

EU law has been transposed into national legislation. RED binding target for renewable energy is 30% of gross final consumption of energy in 2020, including a 10% share in energy for transportation. Denmark has a goal to have a transport sector that is completely independent of fossil fuels by 2050. Law Official sustainable aviation fuel policy/policies

- Lov om CO2-kvoter (The Danish Law on CO2-quotas) [LOV 1095 28/11/2012]. - Lov om Fremme af Vedvarende Energi (The Danish Law on the Advancement of Renewable Energy) [LBK 122 06/02/2015]. - Bekendtgørelse af lov om bæredygtige brændstoffer og om reduktion af drivhusgasser fra transport (Executive Order of the Act on Sustainable Biofuel and Reduction of Greenhouse Gases from Transport) [LBK674 21/06/2011] Bekendtgørelse om biobrændstoffers bæredygtighed [BEK. 1403 15/12/2009].

N/A

Support mechanism (incentives) /financial support schemes/Investments

Incentives not specific to aviation; government provides funding support to R&D and pilot projects

Relevant policy/policies

- Promotion of Renewable Energy Act 2009 - Danish Energy Agreement for 2012-2020 - Energy Policy in Denmark 2012

Activities

Initiatives, Projects Flights conducted

Maabjerg Energy Center (MEC), a private business partnership which undertakes to set up a commercial scale integrated bio refinery producing bioethanol.

In 2014, SAS conducted two flights using jet fuel blended with reused vegetable oils from Stockholm (Arlanda) to Sweden (Östersund), and Tromsø to Oslo Gardermoen. SAS will also buy a certain amount of alternative jet fuel at Oslo Gardermoen. SAS is the only Scandinavian airline to be taking part in Avinor’s biofuel project at Oslo.

Noteworthy events Innovation / R&D

N/A. Small start-ups, such as Tomo Liquid and Steeper Energy, work with universities on technology development, i.e. production of jet fuel from lignocellulose feedstock or commercializing Hydrofaction™.

Key Actors

Policy institutions Producers/Technology Companies/Start-ups

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- Danish Aviation (Brancheforening Dansk Luftfart) - The Danish Transport and Construction Agency (Trafik- og Byggestyrelsen - The Ministry of Transport and Building (Transport- og Bygningsministeriet) - The Danish Ministry of Energy, Utilities and Climate - The Danish Energy Agency (Energistyrelsen)

Novozymes, Haldor Topsøe, DONG energy, Inbicon / DONG, Pyroneer / DONG, REnescience / DONG, DAKA Denmark A/S, Emmelev A/S, Biogasol, IBUS Innovation A/S, Tomo Liquid, Steeper Energy, TK Energy ApS, Maabjerg Energy Center (MEC)

Finance Research

Energy Technology Development and Demonstration Program (EUDP) under the Danish Energy Agency

- Technical University of Denmark (DTU) - Aalborg University (AaU) - Aarhus University (AU).

Active end users /Business /Investors Networks/Collaborations

- SAS - Copenhagen airport

- BioRefining Alliance - The Sustainable Biofuels Network (SNB) - Nordic Initiative for Sustainable Aviation (NISA)

Documents and support information

Key studies published Key policy document links

2014. Sustainable Fuels for Aviation – An Analysis of Achievements and Opportunities Prepared by NIRAS for the Danish Aviation (Brancheforeningen Dansk luftfart) and sponsored by the Danish Transport Authority (Trafikstyrelsen) https://www.trafikstyrelsen.dk/~/media/Dokumenter/09%20Nyheder/Groen%20transport/2014/06/Report%202014.pdf 2016. ICAO State Action Plan on CO2 emissions from aviation, Denmark of 30 June 2016. By the Danish Transport and Construction Agency. https://www.ecac-ceac.org/documents/10189/50084/Denmark+-ICAO+State+Action+Plan+on+CO2+emissions+-+Denmark+2016+-+revised.pdf/32a626d5-9a0f-473a-b86a-10691e9b3569

Promotion of Renewable Energy Act 2009 http://www.iea.org/media/pams/denmark/Denmark_2009_PromotionofRenewableEnergyActextract.pdf Danish Energy Agreement for 2012-2020 https://stateofgreen.com/files/energyagreement

National data - Biojet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Denmark directly supported 50,000 jobs and contributed $4,8 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 2,3% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

It is estimated that the demand for sustainable fuel for aviation will be about 0.6 million tonnes and 1 million tonnes in 2035 and 2050 respectively (Niras 2014). According to the NISA 2016 study, this demand is estimated at: 17 million litres in 2020, 274 million litres in 2035 and 530 million litres in 2050.

Straws, possibly organic waste, to a lesser degree forest residues (small compared to other Nordic Countries). However, straws and organic waste are currently being used for other purposes as well - hence competition in resource allocation exists. Promising production pathways/methods

AtJ, HEFA, FT

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

2014 liquid biofuel production in DK: 521TJ biogasoline no data for biodiesel (2,907 TJ in 2011)

Conventional Jet Fuel: In 2012, total consumption of Jet A-1 in Denmark from all consumers amounted to approximately 37.3 PJ, equivalent to 860,000 tonnes (Danish Energy Agency,2013).

Other

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Challenges Future plans /next steps/focus

- Limited availability of feedstock, competition for use of resources among different industries; - Current industry is still at a small scale, no full-scale production of sustainable fuels for aviation; - Lack of current political interest and change of priorities from one elected government to the next (lack of political level predictability) ; - Scaling up

The current government has suspended the previous objective of 100% GHG reductions in 2050, in favour of adopting the EU target of 80–95% reductions.

To look out for

Maabjerg Energy Center (MEC) is a consortium consisting of DONG Energy, Novozymes, Vestforsyning and Struer Forsyning. The MEC is a concept for a large, commercial scale integrated biorefinery that will act in symbiosis with other energy producers such as a bio-gas plant, a cogeneration plant and a district heating company. MEC plans to produce, among others, 80 million litres of bioethanol. In the summer of 2014, the MEC group was granted EUR 39 million in EU funding, with the condition that MEC must begin production in 2018.

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13.2. Finland

Country Sheet Finland

General overview information/main focus

Finland has a manufacturer that is capable of producing aviation biofuels on a large scale. There is a strong and ambitious interest in becoming a world leader in sustainable aviation fuel production and in creating a viable business out of aviation biofuel production. Finland relies mostly on markets and businesses to create this scenario.

Policy Environment

RED binding target for renewable energy accounts for 38% of the gross final energy consumption of energy in 2020 and with transport targets of 20% share. Finland reached those targets in 2014.

Law Official sustainable aviation biofuel policy/policies

- The Act on the promotion of the use of sustainable fuels for transport (446/2007) - The act on sustainability of biofuels and bioliquids (393/2013) - Act on Aviation Emission Trading (34/2008).

N/A

Support mechanism (incentives) /financial support schemes/Investments

- Funding support to R&D; Provides business/investment support including for pilot plants and innovation projects. - Government allocated EUR 300 million under Bioeconomy Strategy for projects boosting the bioeconomy and developing clean energy solutions - Innovation Funding Agency finances the BioRefine Programme (see Initiatives).

Relevant policy/policies

- Finland’s Air Transport Strategy for years 2015-2030 - The Finnish Bioeconomy Strategy - Feed-in Tariffs for electricity from wind, biogas and wood chip - Act on Excise Duty on Liquid Fuels (Aviation fuel used for commercial flights is exempt from excise tax in Finland. The tax for jet fuel for recreational flights is EUR 0.675.)

Activities

Initiatives, Projects Flights conducted

BioRefine Programme supports the development of innovative products, technology and services relating to biomass refining.

Finnair conducted 3 flights using biofuels, which were funded internally by Finnair.

Noteworthy events Innovation / R&D

N/A. Neste company investments in research, bioeconomy, lignocellulosic raw materials, pyrolysis

Key Actors

Policy institutions Producers/Technology /start-ups

- The Ministry of Transport and Communications - The Finnish Transport Safety Agency (Trafi) - The Energy Authority

Neste, Air BP Finland OY, Shell, St1, Fortum, Chempolis, Metgen, Forchem, Green Fuel Nordic

Finance Research

- Innovation Funding Agency (Tekes) - Finnish Government - The Energy Authority - Neste

- VTT Technical Research Centre of Finland - Natural Resources Institute Finland - Aalto University

Active end users /Business /Investors Networks/Collaborations

- Finavia - Helsinki airport - Finnair

- Nordic Initiative for Sustainable Aviation (NISA)

Documents and support information

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Key studies published Key policy document links

2013. Future Transport Power Sources, Finland. By Ministry of Transport and Communications. https://www.lvm.fi/documents/20181/799435/Julkaisuja+24-2013/9337f271-8ded-4f22-975f-3caa9c9fa3b4?version=1.0 2014. Deployment of Aviation Biofuels, Finland. Commissioned by The Ministry of Transport and Communications, Ministry of Employment and the Economy, Finavia, Finnair and Neste Oil https://www.lvm.fi/documents/20181/797516/Julkaisuja+34-2014/e97dac8a-a771-4a5b-92e3-3a99110e301f?version=1.0 2016. State Action Plan of Finland International Aviation CO2 Emissions by Finnish Transport Safety Agency (Trafi)/ julkaisuja Trafi Publications 16/2016 http://www.trafi.fi/filebank/a/1467201195/64e93e85219b03b2c7b3ff96ef0224c2/21988-State_Action_Plan_Finland_2016.pdf

Finland’s Air Transport Strategy for years 2015-2030 https://www.lvm.fi/documents/20181/514467/Air+transport+strategy+Julkaisuja+3-2015/3588a3b3-c99f-4b0c-bd88-6b269e7f8067?version=1.0 The Finnish Bioeconomy Strategy http://biotalous.fi/wp-content/uploads/2014/08/The_Finnish_Bioeconomy_Strategy_110620141.pdf Feed-in Tariffs for electricity from wind, biogas and wood chip https://www.energiavirasto.fi/web/energy-authority/feed-in-tariff

National data - Biojet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Finland directly supported 35,000 jobs and contributed $3,3 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 2,3% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

It is estimated that the demand for sustainable jet fuel in Finland will be 13 million litres in 2020, 207 million litres in 2035 and 402 million litres in 2050.

Wood residual, Tall oil & black liquor (currently used for chemicals and biodiesel), waste

Promising production pathways/methods

FT (wood), HEFA (Neste), AtJ and eventually HEFA +

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

2014 Liquid biofuel production in FI: 4.13TJ Biogasoline & 12.586TJ biodiesel production

N/A

Other

Challenges Future plans /next steps/focus

- Short term project based funding, rather than programmatic or continuous funding on a sustainable basis - Lack of constant demand for sustainable aviation fuels - Long transportation distances pose challenge for logistics - Lack of new ASTM approved pathways

The share of renewable transport fuels will be raised to 40% by 2030. Finland will create new support programmes for renewable energy. Aid will be based on technology neutrality and ranking of economic priorities.

To look out for

Neste Porvoo Biorefinery (commercial scale biorefinery) – Neste, a pioneer, produces both conventional and renewable jet fuel, the only company capable of doing so in Europe at industrial scale, and one of very few companies worldwide . Thus far, sustainable jet fuel has only been made in batches. “Neste Renewable Jet Fuel has also been tested on 1,187 scheduled Lufthansa flights between Frankfurt and Hamburg in 2011, and on one intercontinental flight between Frankfurt and Washington D.C. in the beginning of 2012.” KLM also made an agreement in 2016 to fly around 80 flights from Oslo to Amsterdam using Neste’s camelina oil based renewable jet fuel. There is plenty of room for growth as Neste’s refineries in Rotterdam and Singapore could be harnessed to produce also Neste Renewable Jet Fuel in addition to the Porvoo refinery. Also, Neste is awaiting ASTM approval for its winter grade biodiesel that could be more competitive on the market.

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13.3. Norway

Country Sheet Norway

General overview information/main focus

Norway is interested in sustainable aviation fuels, particularly in starting production, refining and developing the necessary supply chains. Norway has an innovative regulatory framework relating to its energy and transport sectors. Wood biomass has the largest potential to be utilized as feedstock for biofuel production for use in the transport sector.

Policy Environment

RED binding target for renewable energy is 67.5% of the gross final consumption of energy by 2020, including a 10% share of renewable energy in the gross final consumption of energy for transport. Law Official sustainable aviation fuel policy/policies

- Norwegian domestic aviation taxes (i.e. CO2, SOx and NOx taxes). - Tax exemption for sustainable fuel - Potential reduction of landing fees for flights using sustainable jet fuel blend

Norway recently introduced a mandatory 1% sustainable aviation fuel drop-in requirement from 2019, to be increased to 30% by 2030. Support mechanism (incentives) /financial support schemes/Investments - EU ETS and domestic CO2 tax waiver for biofuels offered commercially at Oslo airport - Funding support to R&D projects and development of biofuel production facilities - Government funding towards bioeconomy and wood based and climate initiatives - Avinor (state-owned company) investment on measures and projects relating to airport infrastructure to support phase-in of sustainable jet fuel

Relevant policy/policies

- Biofuels for Transport Standards - 2012 Norwegian Climate Policy (The 2012 agreement on climate policy) - National Strategy for Bioeconomy

Activities

Initiatives, Projects Flights conducted

Gardermoen Biohub 2016 – a multi-stakeholder collaboration along the whole sustainable aviation fuel supply chain.

In 2014, SAS & Norwegian conducted two demo flights: Bergen to Oslo and from Trondheim to Oslo respectively. SAS also will also buy a certain amount of biojet fuel at Oslo Gardermoen. SAS is the only Scandinavian airline to be taking part in Avinor’s biofuel project at the Oslo airport.

Noteworthy events Innovation / R&D

2014 Zero conference with Avinor and SkyNRG Avinor pushes the research on sustainable and profitable local aviation biofuel production (i.e. marine resources for aviation biofuel, sustainable land-based biomass resources, etc.)

Key Actors

Policy institutions Producers/Technology Companies/start-ups

- The Ministry of Transport and Communications - Civil Aviation Authority (Luftfartstilsynet)

Silva Green Fuel A/S, Treklyngen, Borregaard Biorefinery, Zero

Finance Research

- The Research Council of Norway - Innovation Norway - Enova - Avinor

Bionær, SINTEF Energy, Norwegian University of Science and Technology (NTNU), The Norwegian University of Life Sciences, Analyse & Strategi, DNV KEMA, LMC International

Active end users /Business /Investors Networks/Collaborations

- Avinor - Oslo Gardermoen

- Nordic Initiative for Sustainable Aviation (NISA)

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- SAS - Norwegian

Documents and support information

Key studies published Key policy document links

2013. Utredning – Bærekraftig biodrivstoff for luftfart, Norway: https://avinor.no/globalassets/_konsern/miljo-lokal/miljo-og-samfunn/kortversjon.pdf 2015. FOREST 22 (SKOG22) . http://www.innovasjonnorge.no/contentassets/920a1e161a494a508f91b7a02344a47e/skog_22_rapport_del1.pdf 2012 Benchmark of conversion and production technologies for synthetic biofuels for aviation http://www.flygreenfund.se/wp-content/uploads/2015/05/Benchmark-of-conversion-and-production-technologies-for-synthetic-biofuels-for-aviation-Sintef-2013.pdf

Biofuels for Transport Standards: https://www.regjeringen.no/no/aktuelt/vil-fremme-bruk-av-avansert-biodrivstoff/id2514877/ & http://www.iea.org/policiesandmeasures/pams/norway/name-22822-en.php 2012 Norwegian Climate Policy https://www.regjeringen.no/contentassets/aa70cfe177d2433192570893d72b117a/en-gb/pdfs/stm201120120021000en_pdfs.pdf National Bioeconomy Strategy https://www.regjeringen.no/contentassets/32160cf211df4d3c8f3ab794f885d5be/biookonomi-eng-kortversjon_uu.pdf

National data - Biojet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Norway directly supported 80,000 jobs and contributed $12 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 4% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

It is estimated that the demand for sustainable jet fuel in Norway will be 17 million litres in 2020, 271 million litres in 2035 and 525 million litres in 2050

Wood residues / forest biomass

Promising production pathways/methods

FT & AtJ

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption 2014 Liquid biofuel production in NO: 110 TJ Biogasoline & 0 TJ biodiesel production (1.214TJ in 2013)

Conventional Jet fuel: From 2013 to 2014, the air traffic increased by 2.2%. 891,000 tonnes (1.1 billion litres) of Jet-A1 was sold in Norway in 2014.

Other

Challenges Future plans /next steps/focus

Dispersed forest ownership (80% of forest is privately owned) limits the access to sustainable quantities of biomass resources due to the need to deal with individual decision makers under varied terms (such as price).

Potential reduction of landing fees for flights using sustainable aviation fuel blend.

To look out for

Gardermoen Biohub is a collaboration between various stakeholders including Avinor, SkyNRG Nordic, Statoil, SAS, KLM, Lufthansa, Neste and Air BP. The aim of the collaborative effort is to explore the possibility of having a fully functioning supply chain for sustainable jet fuel at Oslo Gardermoen airport. This experiment started in January 2016 and will be operational for a trial period of 1 year. This project is the first in the world where sustainable bio jet is delivered through existing airport infrastructure. The plan is to handle and distribute 1.25 million litres jet biofuel at Oslo Airport during this year. Avinor hopes that by 2030, 30 % of aviation fuel in Norway will be sustainable biofuel (ca. 400 million litres.)

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13.4. Sweden

Country Sheet Sweden

General overview information/main focus

Sweden has ambitious climate and CO2 reduction goals. It has several policy instruments targeted at promoting biofuels, although these focus on road transport. PPP partnerships and innovative business models are key to Sweden's success. Bioenergy does not receive any direct subsidies as the Swedish support scheme for renewables is mainly based on general incentives and on technology neutrality.

Policy Environment

Sweden already surpassed its EU RED binding target of 49% in 2014 when the share of renewable energy against its gross energy consumption reached 52.6%. That same year, the binding national target for transport of 10% was also reached. In 2015, the share of renewable energy in the total energy consumption in transport was 23.6%. Law Official sustainable aviation fuel policy/policies

- Incentive schemes, subsidies, tax exemptions and investments targeting road transport - Act No. 1994: 1776 ((Lag om skatt på energi Energy Tax Act) - Act No. 2010:598 (Lag om hållbarhetskriterier för biodrivmedel och flytande biobränslen - Act on sustainability criteria for biofuels and bioliquids)

N/A

Support mechanism (incentives) /financial support schemes/Investments - Imposition of charges on NOx aircraft emissions; - Technology neutral tax (i.e. CO2 and energy tax) exemptions, and incentives for research, development and innovation. - Swedish Energy Agency Research Programme invested 180 million SEK in 2015 to fund R&D on efficient and inexpensive biofuel production; - Government funding, including of R&D institutions, towards energy innovation and R&D; - Private initiatives: SAS and Fly Green Fund (FGF) provide research support, FGF also shoulders premium costs of biojet fuel used by partner organizations; - Swedavia Biofuel Incentive Programme intends to support airlines using renewable jet fuel by funding 50% of the premium costs of such fuel.

Relevant policy/policies

- 2009 Sustainable Energy and Climate Policy for the Environment, Competitiveness and Long-term Stability - Climate neutral energy system by 2050 - Fossil independent vehicle fleet by 2030

Activities

Initiatives, Projects Flights conducted

- Fly Green Fund – a collaboration of stakeholders and offers people to fly on biojet. - Swedavia procures biojet for internal use and supports airlines who buy biojet. - Karlstad airport has a permanent biojet tank

In 2014, SAS conducted two flights using jet fuel with a blend of reused vegetable oils between: Stockholm Arlanda and Östersund in Sweden, and Trondheim and Oslo Gardermoen in Norway. SAS also will also buy a certain amount of biojet fuel at Oslo Gardermoen. SAS is the only Scandinavian airline to be taking part in Avinor’s biofuel project at the OSL airport.

Noteworthy events Innovation / R&D

N/A Swedish Biofuels AB is planning a demonstration plant of biofuels from ligno cellulosic fuel (AtJ) using their own technology.

Key Actors

Policy institutions Producers/Technology Companies/start-ups

- The Swedish Transport Agency (Transportstyrelsen) - Civil Aviation Administration (Luftfartsverket, LFV) - Swedish Energy Agency (Energimyndigheten)

Swedish Biofuels AB, SunPine, Preem refinery, GoBiGas, Chemrec, The Lantmännen Agroetanol, Norrköping SEKAB

Finance Research

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- Swedish Energy Agency Research Programme - Swedish Energy Agency (Energimyndigheten) - The Swedish Transport Agency (Transportstyrelsen) - Vinnova

- Lund University - Royal Institute of Technology (KTH) - Chalmers University of Technology

Active end users/Business/Investors Networks/Collaborations

- Swedish Aviation (Svenskt Flyg) - Swedavia - Stockholm Airport Arlanda - Karlstad airport - SAS

- Svebio - Fly Green Fund

Documents and support information

Key studies published Key policy document links

2015. Gröna drivmedel till flyget - Behov av långsiktiga incitament för att minska utsläppen av växthusgaser http://www.flygreenfund.se/wp-content/uploads/2015/05/Grona-drivmedel-till-flyget.pdf 2014. Aviation Biofuels – A Diagnostic Analysis of the Swedish Biojet Innovation System, Sweden. http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=4696951&fileOId=4696955 2014. Aviation Biofuel Production in Sweden - An Insight into the Feedstock Potential of Forests. http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=4697054&fileOId=4697055 2009. Förstudie för biobaserat flygbränsle för Stockholm-Arlanda Flygplats https://energiforskmedia.blob.core.windows.net/media/17972/foerstudie-foer-biobaserat-flygbraensle-foer-stockholm-arlanda-flygplats-vaermeforskrapport-1125.pdf

A sustainable energy and climate policy for the environment, competitiveness and long-term stability: http://www.government.se/contentassets/593a1cde4511404c84278704533c65ab/a-sustainable-energy-and-climate-policy-for-the-environment-competitiveness-and-long-term-stability Fossil independent vehicle fleet by 2030 http://www.iea.org/policiesandmeasures/pams/sweden/name-44937-en.php NOx charges http://www.icao.int/environmental-protection/Lists/ActionPlan/Attachments/47/Sweden_State%20Action%20Plan_30%20Jun%202015.pdf

National data - Biojet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Sweden directly supported 140,000 jobs and contributed $13,7 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 4,2% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

It is estimated that the demand for sustainable jet fuel in Sweden 15 million litres in 2020, 232 million litres in 2035 and 450 million litres in 2050.

Wood residues (straw, tall oil and black liquor)

Promising production pathways/methods

FT & AtJ

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

2014 Liquid biofuel production in SE: 5.671 TJ Biogasoline & 4.379 TJ biodiesel

Conventional Jet Fuel: In 2014 Sweden consumed about 40.5 PJ28 (930,690 t) of jet fuel in total. In a projection made by the Swedish Energy Authority, they expect the consumption of aviation fuel to be between 39.6 PJ and 43.2 PJ in 2030.

Other

Challenges Future plans /next steps/focus

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- Unfavourable institutional support create disincentives for biomass producers to support biojet production among key actors - Difficulty to reach market competitiveness creates a demotivating state of uncertainty causing investors to stay away

Currently, use targets for sustainable jet fuel and initiatives for sustainable jet fuel introduction are mainly driven by the aviation industry itself by voluntary initiatives and market mechanisms.

To look out for

Karlstad Airport, SkyNRG and NISA (Nordic Initiative on Sustainable Alternative Fuels) started a cooperation called the Fly Green Fund in 2015. Since then, Swedavia, Malmö Aviation, Sverigeflyg, SAS, KLM and EFS have joined as partners. In short, the Fly Green Fund consists of several focus points and activities: bringing the industry and key actors together for collaboration, making the supply chain possible and scaling down prices, offering companies and private passengers to fly on Bio jet, and raising awareness of bio jet to policy makers and to public. The stated main goal of the Fly Green fund is “to develop the Nordics into a pioneering bio jet fuel region.” The organization wants to kick-start the market and increase the demand for bio jet fuel, in order to increase the volumes and decrease the costs. Corporate and private customers are offered to purchase so called Bio- tickets (via online transfer) where they pay a premium on top of their flight ticket. Each buyer can choose the price they are willing to invest, and based on that, they know that they have enabled a certain per cent of their flight to be on bio jet (estimated cost of flying 100% on biojet for one hour of flight is 400 SEK per person). Of the additional amount, 75 % will go to cover the costs of conducting the flight with a biofuel blend, and 25 % on projects that strive to achieve biojet fuel production in the Nordic countries.

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13.5. Indonesia Country sheet - Indonesia

General overview information/main focus

Indonesia has an ambitious biofuels development plan, which mandates the use of biofuels in different sectors, including transportation, industry, and electricity. The country has recently included a blending requirement in the aviation sector for 2018. The current focus is on the production of palm-oil based aviation biofuel using the HEFA pathway.

Policy Environment

Indonesia wants to significantly increase the percentage of renewable energy in its total energy mix of unto 23% by 2025 as well as reduce its total GHG emissions by 26% by 2020. Indonesia targets a blending requirement of aviation biofuel of 5% by 2025.

Law Official alternative/sustainable aviation fuel policy/policies - Energy Law 2007 (Law No. 30/ 2007) - Promotion and Utilization of Biofuel (Presidential Decree 1/2006) - Biofuel Supply, Utilization, and Trading (Ministry of Energy and Mineral Resource (MEMR) Regulation 32/2008, and its amendments MEMR Regulation 25/2013 and MEMR Regulation 2/2015)

Mandatory blending requirement of 2% aviation biofuel by 2018, to increase to 3% and 5% by 2020 and 2025, respectively. Support mechanism (incentives) /financial support schemes) No specific incentives for the development of aviation biofuel, but government provides investment incentives relating to biofuel development in general in the form of investment tax allowance, accelerated depreciation and amortization, relief from import duties, possible exemptions from VAT.

Relevant policy/policies Investments

- Indonesia’s National Energy Policy (Government Regulation 79/2014) - National Action Plan for Greenhouse Gas Emission Reduction (Presidential Decree 61/2011)

Indonesia Estate Crop Fund implements Grant Research Programme to fund R&D institutions on research related to next-generation biofuels.

Activities

Initiatives, Projects Flights Conducted: - Construction of refinery for production of bio-aviation fuel by PT Pertamina - Production of ready-to-use palm oil-derived aviation biofuel in a plant in Gresik, East Java by Wilmar Indonesia in collaboration with Elevance Renewable Sciences Inc.

Noteworthy events: Innovation / R&D

Garuda International projecting to fly with blended aviation biofuel

- R&D institutions, in partnership with industry players and universities, undertake research on biofuel feedstock development, solid waste conversion to biofuel, and production of biofuel from micro-algae - Indonesia-US MOU to facilitate R&D on sustainable aviation biofuel and facilitate partnership with Indonesia’s ABRETF and US’ CAAFI.

Key Actors

Policy institutions Producers/Technology Companies/start-ups

- Ministry of Energy and Mineral Resources (MEMR) - Aviation Biofuels and Renewable Energy Task-Force (ABRETF) - Ministry of National Development Planning (BAPPENAS) - Ministry of Finance (MOF) - Ministry of Transport, - Ministry of Agriculture - Ministry of Forestry - National Council on Climate Change - Commission VII of the Indonesian House of Representatives - National Team for Biofuel Development

Wilmar Indonesia, PT Pertamina, JJ-Lurgi Engineering

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Finance Research

- Ministry of Finance - Indonesia Estate Crop Fund

- Ministry of Research and Technology and its Agency for the Assessment and Application of Technology (BPPT) - P3TKEBTKE: Centre for Electricity and New and Renewable Energy - Lemigas Indonesia - Indonesian Oil Palm Research Institute (PPKS Medan) - Indonesian Institute of Sciences (LIPI) - Bandung Institute of Technology (ITB)

Active end users /Business /Investors Networks/collaborations

Garuda International - Indonesian Biofuels Producers Association (APROBI) - Indonesian Renewable Energy Society (METI) - Indonesia Biodiesel Forum

Documents and support information

Key studies published Key policy document links

Presidential Decree 61/2011 on National Action Plan for Greenhouse Gas Emission Reduction: http://sipuu.setkab.go.id/PUUdoc/17288/PERPRES%20612011.pdf, http://unfccc.int/resource/docs/natc/idnbur1.pdf Government Regulation 79/2014 on Indonesia’s National Energy Policy: https://www.iea.org/policiesandmeasures/pams/indonesia/name-140164-en.php

National data – Bio jet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Indonesia directly supported 720,000 jobs and contributed $8,3 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 2,7% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

Given the country’s increasing biofuel blending mandate in the aviation sector, it is estimated that demand for Bioavtur (biojet fuel) will steadily increase from 95,000 KL from 2016, to 164,000 KL in 2020 and 320,000 KL by 2025.

Palm oil, Jatropha, algae, municipal waste, forestry residue and agriculture residue Promising production pathways/methods

HEFA, HPO, FT Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

Biodiesel: 2016 at 3.656 billion litres Conventional Jet Fuel: 2014 at 2.274 Million Metric tons Sustainable Aviation Fuel: Pertamina, a state-owned oil and gas company, projects to produce 213 million litres by 2017, and upto 257 million litres by 2018 until 2025.

Biodiesel: 2016: 3.008 billion litres Conventional Jet Fuel: 2015: 4 Billion litres Sustainable Aviation Fuel: See projected SAF demand for Indonesia.

Other

Challenges Future plans /next steps/focus

- Many institutional actors involved on policy formulation and implementation without necessarily one body having the accountability for delivery of policy goals pose a challenge to achievement of these goals; - Aviation biofuel competes with biofuel for land transport in terms of feedstock allocation. Industry’s current focus is on the development of palm-oil based aviation biofuel. However, palm-oil is also heavily relied on as a source of feedstock for biofuel in land transportation, which currently enjoys subsidies;

Development of Bioavtur in order to meet the 2% blending requirements in the aviation sector.

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- Potential tension between the need to expand planted area for palm oil in order to meet the projected increasing demand for palm-oil based biofuels (including alternative aviation fuel) and the policy goals to reduce GHG emissions, particularly in the forestry sector - Current policy exempting plantations supplying palm oil for biofuel production from ISPO (Indonesia Sustainable Palm Oil) compliance dilute efforts to ensure sustainable production of palm oil-based biofuels.

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13.6. Germany Country Sheet Germany

General overview information/main focus

Germany has a strong focus on biofuel production and on financing R&D projects. An organized network of stakeholders (AIREG) helps the case of aviation biofuels in Germany.

Policy Environment

Germany has a national binding target of 18% share of renewable energy by 2020 in the gross final consumption of energy according to the EU RED. The German national action plan sets a national target and expected path of 19.6% of energy from renewable sources by 2020, and a 13.2% target for the transport sector. Germany’s “Energiewende” (Energy transition) includes the transport sector. Although no specific aviation policy exist, aviation is part of several policy initiatives. Law Official sustainable aviation fuel policy/policies - The Biofuels Quota Act - The Biofuels Sustainability Law

The Mobility and Fuels Strategy of the German Government (MFS) – New pathways for energy covers the aviation sector (i.e., the strategy sets out specific action point to develop and implement National Development Plan for Sustainable alternative aviation fuels by the industry) Support mechanism (incentives /financial support schemes/Investments - Biofuels quotas based on GHG emission savings are implemented for road transport - Provides R&D funding and support - The Sixth Energy Research Programme sets a budget for R&D for modern technologies for the energy transition - The Federal Ministry of Economics and Technology (BMWi) funds applied research and development projects relating to renewable energy - The Federal Ministry of Food and Agriculture (BMEL) allocates EUR 400 million annually to fund research on sustainable agricultural production - Federal Ministry of Education and Research provides funding on research projects including on bioenergy; provided a grant for the construction of a demo plant producing alternative jet fuel from sugars - KfW Bankengruppe provides long-term, low-interest loans for up to 100% of the investment costs of eligible renewable energy programmes - Agency for Renewable Resources - Fachagentur nachwachsende Rohstoffe (FNR) looks for partners for EU funded projects

Relevant policy/policies

- The Energy Concept - National Renewable Energy Action Plan - Sixth Energy Research Programme

Activities

Initiatives, Projects Flights conducted

- Aviation Initiative for Renewable Energy in Germany e.V. (AIREG): a collaboration of 34 members from the entire biojet value chain; aims to facilitate deployment of sustainable aviation fuel in Germany - AUFWIND: the project explores the production and utilization of algae-based fuels for aviation - Advanced Biomass Value: a consortium explores microalgae biomass potential as a new source of sustainable aviation fuels - Algenflugkraft (AFK): the project explores production and processing of microalgae - OptimAL: the project studies how to optimize algae for fuel

Lufthansa has flown over 6000 flights on biojet: - In 2011, 1187 flights from Frankfurt-Hamburg under the BurnFAIR project; - In 2012, one flight from Frankfurt to Berlin Tegel using a 10% blend of farnesan; - In 2016, around 5000 flights on 5% blend of jet fuel through Oslo’s Gardermoen Biohub project

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- SOLAR-JET: aims to demonstrate carbon-neutral path for producing aviation fuel - InnoTreib: Evaluates different pathways of biofuel provision - ALFA-BIRD: Developed the whole chain for clean alternative fuels for aviation and tested 12 different blends - BurnFAIR: short term project to evaluate the use of bio kerosene and generate relevant data on the regular use of alternative fuels Noteworthy events Innovation / R&D - Alternative Aviation Fuels Pavilion at the ILA Berlin air show (biannual) - In a 2012 event, Lufthansa and Solena showcased algae based jetfuel - In 2014, AIREG demonstrated "The Future of Alternative Aviation Fuels"

- Jatropha Solutions is working on utilizing Jatropha oil to produce aviation fuels - Several projects explore potential of algae as feedstock for sustainable aviation fuel - Studies on the environmental benefit of biojet flights (DLR and NASA) (see Initiatives/Projects)

Key Actors

Policy institutions Producers/Technology Companies/start-ups

- The Federal Ministry of Economics and Technology (BMWi) - The Federal Office of Economics and Export Control (BAFA) - The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) - The Federal Ministry for Food, Agriculture and Consumer Protection (BMEL) - The Federal Ministry of Education and Research (BMBF)

Global Bioenergies, Sunfire, VERFAHRENSTECHNIK Schwedt GmbH, Airbus, JatroSolutions GmbH

Finance Research

- The Federal Ministry of Economics and Technology (BMWi) - KfW Bankengruppe - The Federal Ministry of Food and Agriculture (BMEL) - Federal Ministry of Education and Research - Agency for Renewable Resources - Fachagentur nachwachsende Rohstoffe (FNR)

- The German Aerospace Center (DLR) - Fraunhofer UMSICH & Fraunhofer ICT - Helmholtz Association - TU München - Hamburg University of Technology (TUHH) - The German Biomass Research Center - The International Institute for Sustainability Analysis and Strategy (IINAS)

Active end users /Business /Investors Networks/Collaborations

Lufthansa - Aviation Initiative for Renewable Energy in Germany e.V. (AIREG) - German Union for the Promotion of Oil and Protein Plants (UFOP) - The Federal Association for Bioenergy (BBE)

Documents and support information

Key studies published Key policy document links

High Biofuel Blends in Aviation A study conducted under the ENER/C2/2012/ 420-1 “High Biofuel Blends in Aviation” tender http://www.hbba.eu/study/index.html Biofuel blending reduces particle emissions from aircraft engines at cruise conditions https://www.nature.com/articles/nature21420.pdf Renewable Energy Sources in Figures: National and International Development, 2015

The Mobility and Fuels Strategy of the German Government (MFS) – New pathways for energy https://www.bmvi.de/SharedDocs/EN/Documents/MKS/mfs-strategy-final-en.pdf?__blob=publicationFile 2050 Energy Concept http://www.osce.org/eea/101047?download=true 6th Energy Research Programme of the Federal Government

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Published by the Federal Ministry for Economic Affairs and Energy https://www.bmwi.de/Redaktion/EN/Publikationen/renewable-energy-sources-in-figures.pdf?__blob=publicationFile&v=13 The Future of Climate-friendly Aviation: Ten percent alternative aviation fuels by 2025 Published by Aviation Initiative for Renewable Energy in Germany e.V. http://www.aireg.de/images/downloads/aireg/aireg_climate_friendly_aviation.pdf

https://www.bmwi.de/Redaktion/EN/Publikationen/research-for-an-environmentally-sound-reliable-and-affordable-energy-supply.pdf?__blob=publicationFile&v=3

National data - Biojet production and consumption data

Economic impact of the aviation industry

According to the IATA Country Report 2017, the Air Transport Sector in Germany directly supported 630,000 jobs and contributed $54 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 2,2% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock In 2014, 4.862 thousand metric tonnes of conventional kerosene jet fuel were produced in Germany and 700 thousand metric tonnes consumed. AIREG states that the industry wants to replace 10% of the German jet fuel demand with sustainable, alternative aviation fuels by 2025

Rapeseed (and other oil seeds), Used cooking oil, Jathropa, Promising production pathways/methods AtJ, Hefa

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption Bioethanol: 2015 production was over 900 million litres - Biodiesel: 2014 production was 123,354 TJ - Biogasoline: 2014 production was 23,878 TJ

Biofuels: In 2015, 2.2 million tons of biofuels consumed

Other

Challenges Future plans /next steps/focus

- Competing markets for oilseeds - Project based funding schemes with lack of continuation

Innovation and R&D is strong on the agenda

To look out for

JatroSolutions GmbH - Founded in 2005, JatroSolutions is working on long-term breeding programme of Jatropha for conversion into alternative fuels. It is involved in several research projects, establishing a Jatropha-DemoFarm and, more specifically, research on evaluation and demonstration of a new aviation fuel from Jatropha oil.

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13.7. Brazil Country Sheet Brazil

General overview information/main focus

Brazil has relatively unambitious climate goals despite great potential. Current focus is on road transport through strong bioethanol and biodiesel programmes with related incentive programmes.

Policy Environment

Brazil has a long history of promoting biofuel production and use. Brazil is part of the broad objectives set out by IATA of 1.5% fuel efficiency improvement by 2020, carbon-neutral growth from 2020 onwards and a reduction in net aviation CO2 emissions by 50% by 2050. It also subscribes to ICAO’s CORSIA scheme. Law Official aviation biofuel policy/policies

- National policy on climate change (Law 12.187/2009) - General Principles of National Energy Policy (Law 9478/1997) - Upcoming: RenovaBio (Renewable Fuel Programme)

Upcoming policies based on RenovaBio (inc. a National Biojetfuel Act). Support mechanism (incentives) /financial support schemes/Investments - Blending mandates (not currently applicable to aviation, but blends used in aviation can be counted to fulfil mandate for bioethanol/biodiesel) - fiscal incentives - financing support to feedstock plantations

Relevant policy/policies

- Brazil Action Plan on the reduction of GHG Emissions from aviation - RenovaBio (2017): bioethanol programme - National Energy Plan 2030 (PNE) - ProAlcool (1975): bioethanol programme

Activities

Initiatives, Projects Flights conducted

- Renovabio BioFuture Platform (2017) (see To Look Out For) - Brazilian Biojetfuel Platform (2013) - Minas Gerais Biojetfuel Platform (BioQav): Plataforma Mineira de Bioquerosene founded in March 2014 by Minas Gerais in collaboration with BE-Basic Foundation, KLM and SkyNRG. Covers complete value chain. - Similar biojet fuel platform initiative under way in Pernambuco. - Sustainable Aviation Fuels for Brazil (SABB) project seeking to identify challenges and opportunities for implementing aviation biofuels in Brazil.

- Green World Cup: 360+ flights with biojet fuel. - 2013: first Brazilian commercial flight. - 2012: Azul Airlines flight with drop-in renewable jet fuel produced from sugarcane by Amyris. - 2012: GOL Airlines flight with drop-in renewable jet fuel produced from inedible corn oil and UCO supplied by UOP (Honeywell). - 2010: TAM Airlines with 50% drop-in fuel from jatropha seeds produced in Brazil.

Noteworthy events Innovation / R&D

Conferences and meetings in 2017 on new Brazilian biofuels policy, which for the first time includes aviation biofuels

Key Actors

Policy institutions Producers/Technology Companies/Start-ups - MME (Mine and Energy Ministry) - State Department of Economic Development of Minas Gerais - ANAC (National Civil Aviation Agency)

Amyris, Solazyme, Curcas, Byogy, Bioeca

Finance Research

National Bank for Social and Economic Development (BNDES)

-University of Campinas (UNICAMP) - Federal University of Minas Gerais (UFMG) - Sao Paulo Research Foundation (FAPESP)

Active end users /Business /Investors Networks/Collaborations

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Embraer, GOL airlines, Azul Airlines, Boeing - Brazilian BiojetFuel Platform - Brazilian Alliance for Aviation Biofuels (ABRABA) - Brazilian Biodiesel and Biojetfuel Union (UBRABIO)

Documents and support information

Key studies published Key policy document links

June 2013. Flightpath to Aviation Biofuels in Brazil: Action Plan Outcome of the SABB project: Boeing, Embraer, FAPESP, and UNICAMP http://www.fapesp.br/publicacoes/flightpath-to-aviation-biofuels-in-brazil-action-plan.pdf - Sustainable Aviation Fuels for Brazil Study - Study on the introduction of Biojet fuels in Brazil

Action Plan for Reducing Greenhouse Gas Emissions of Brazilian Civil Aviation Prepared by the Ministry of Transport, Ports and Civil Aviation and the National Civil Aviation Agency https://www.icao.int/environmental-protection/Lists/States_Action_Plans/Attachments/10/Action_Plan_Brazil_Second_Edition.pdf

National data - Biojet production and consumption data

Economic impact of the aviation industry According to the IATA Country Report 2017, the Air Transport Sector in Brazil directly supported 670,000 jobs and contributed $20,3 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 1,4% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

Total jet fuel use/potential sustainable jet fuel demand: 7,355 million litres (2015). Represents 2.8% of global. 75% imported.

Main: Sugarcane, soybeans, eucalyptus, pine. Other (requiring R&D): jatropha, camelina, grasses Promising production pathways/methods

DSHC/SIP: fermentation of sugars to hydrocarbons or lipids, which are then thermochemically upgraded to jet fuels. HEFA: conversion of oils and fats to hydrocarbons via deoxygenation with hydrogen and cracking. FT: plausible in the near future

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

Bioethanol: 30.385 billion litres (2015) Biodiesel: 4.01 billion litres (2015)

Bioethanol: 27.4 billion litres (2016) Biodiesel: 3.8 billion litres (2016)

Other

Challenges Future plans /next steps/focus

Developing new pathways: harvesting, transport and conversion challenges.

- RenovaBio bioenergy policy - BioFuture Platform

To look out for

- RenovaBio policy from 2017 is set to expand Brazilian bioenergy and biofuels policy. - June 2017: Brazil and Germany launched an initiative spanning over 5 years aiming to construct a pilot-plant in Brazil to develop biojet. - Amyris: developed biojet fuel technology and is collaborating with Total to increase production capacity.

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13.8. Mexico

Country Sheet Mexico

General overview information/main focus Strong dependence on fossil fuel with some increase in commitments to climate protection in recent years. In the process of liberalizing energy markets, including that of fuel. Undeveloped biofuels programme.

Policy Environment

Law Official sustainable aviation fuel policy/policies

- Energy Transition Act 2015 drives energy usage reform (not specific to aviation biofuels). - Law on the Promotion and Development of Bioenergy (2007)

N/A

Relevant policy/policies Support mechanism (incentives) /financial support schemes / Investments

Plan de Vuelo 2010: encourages collaboration and information sharing between stakeholders of the biojet value chain in Mexico. Goal: 15% of demand use in 2020.

Technological support to raw material producers (e.g. pest and disease control); Funding support on R&D for the production of aviation biofuels. Ethanol blending obligations (increase planned in 2017).

Activities Initiatives, Projects Flights conducted CEMIE Bio Biojet Cluster project: research project bringing together multiple stakeholders of the bio-jet value chain (research, raw material producers, end-users and public authorities) including foreign actors (e.g. Boeing, Masdar Institute). It aims at developing the biojet value chain in Mexico (biomass extraction, transformation and use)

- April 2011: first demonstration flight with jatropha-based biojet fuel developed by UPO Honeywell. The fuel was a pure synthetic paraffinic biokerosene from jatropha seeds produced by UOP Honeywell in Texas. The blend was 27% biojet and 73% fossil. - 2011: First transatlantic commercial flight with 25% camelina blend by AeroMexico with fuel provided by ASA. - Aeromexico green flights program to Costa Rica with 25% camelina based biojet.

Noteworthy events Innovation / R&D

N/A

- Boeing, Aeromexico, Energy Ministry research initiative (2016) on sustainable aviation fuel development, coordinated through Mexico Bioenergy Innovation Center

Key Actors Policy institutions Producers/Technology Companies/start-ups

- Airports and Auxiliary Air Services branch of the Ministry of Communications and Transport. - Mexican Energy Ministry (SENER) - National Council of Science and Technology (CONACYT)

Finance Research Energy Sustainability Fund (SENER-CONACYT) - Mexican Centre for Innovation in Bioenergy Biojet Cluster

(CEMIE-Bio Biojet Cluster) - Potosinian Institute of Scientific and Technological Research (IPICYT) - Masdar Institute - Centre for Biological Research in the Northwest (CIBNOR) - Centre for Research in Food and Development (CIAD) - Centre for Research in Applied Chemistry (CIQA)

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- Centre for Applied Innovation in Competitive Technologies (CIATEC) - Centre for Scientific Research of Yucatan (CICY) - Joint Bioenergy Institute (JBEI – USA).

Active end users /Business /Investors Networks/Collaborations Aeromexico, Boeing, Mexico Airports and Auxiliary Services (ASA)

- Research Network created under the CEMIE-Bio Biojet Cluster

Documents and support information

Key studies published Key policy document links

National data - Biojet production and consumption data Economic impact of the aviation industry

According to the IATA Country Report 2017, the Air Transport Sector in Mexico directly supported 510,000 jobs and contributed $24,9 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 2,9% of the GDP. Sustainable fuel demand for aviation Key raw materials/feedstock

Total jet fuel use/potential sustainable jet fuel demand: 3 billion litres per year (2014).

Important untapped potential, including from the following feedstocks: Maize, Sugar cane, Sugar beet, Sorghum, Jatropha, Camelina, Higuerilla, Algae, UCO, waste Promising production pathways/methods HEFA, Centia, Bio-synfining, ATJ

Bioethanol/Biodiesel/Sustainable aviation fuel production Bioethanol/Biodiesel/Sustainable aviation fuel consumption

Bioethanol: none (as of 2012) Biodiesel: 6 million litres/year (2012) Sustainable aviation fuel: approximately 110,000 litres provided by ASA in 2014

Bioethanol: 17 million litres / year (2012) Biodiesel: 6 million litres / year (2012)

Other

Challenges Future plans /next steps/focus

- Insufficient raw material production - Insufficient refining infrastructure - Inexistent market and financing - High production costs - Environmental sustainability

Studying the potential for biojet value chain in Mexico.

To look out for

- Program for Sustainable and Renewable Fuels, including technology development. - CEMIE-Bio Biojet Cluster

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13.9. USA Country sheet – United States

General overview information / main focus

Supply security and reduced oil dependency has historically been at the center of US biofuel policies. Environmental standards not as prominent as in EU.

Policy Environment The Unites States does not have a national renewable energy target. However, policies in place are broadly supportive of renewable energy development. Many incentive schemes are in place to support biofuels development in general. Law Official sustainable aviation fuel policy - 2007 Energy Independence and Security Act (EISA): Renewable Fuel Standard II - Defense Production Act, Title III - Farm Bill - California Low Carbon Fuel Standard

- N/A - Strategic: Federal Alternative Jet fuels Research and Development Strategy (2016) – focus on enhancing federal level efforts to promote AJF approval at the technological level – stimulate creation of supply chains. Support mechanism (incentives)/financial support schemes/Investments - Advanced Biofuels Payment Program (USDA): grants - Farm Bill programmes (administered by USDA): loan guarantees - Rural Energy for America Program: grants - American Recovery and Reinvestment Act 2009: loan guarantees - DOE Biomass Program: public-private partnerships, cost-sharing, government guaranteed loans. - Commercial Offtake agreements

Relevant policy/policies - Vision 100-Century Aviation Reauthorisation Act 2003 - Destination 2025 (2010) - Aviation Environmental and Energy Policy Statement 2012 (FAA) - Federal Alternative Jet fuels Research and Development Strategy (2016) - Farm to Fly

Activities Initiatives, projects Flights conducted - CAAFI: Fuel Readiness Level, Feedstock Readiness Level – communicate technical development and progress from laboratory to commercial use. - ASCENT: Center of Excellence for Alternate Jet Fuels and the Environment (FAA). - DoE BETO office announced funding for the development of 2 demo-scale facilities. - LanzaTech: 4 million dollars to “design and plan a demo facility, using industrial off-gases to produce low carbon jet and diesel fuels”. - AVAPCO: 3.7 million dollars to “help develop a demo-scale integrated bio-refinery that combines the company’s biomass-to-ethanol process with project partner Byogy’s ATJ technology to produce renewable jet fuel from woody biomass”. - Farm-to-Fly - Midwest Aviation Sustainable Biofuels Initiative (MASBI): evaluation of biojet potential - Sustainable Aviation Fuels Northwast (SAFN): evaluation of biojet potential

- 2007: first 100% biofuel demo flight at Reno Stead Airport (UCO based biofuel). - 2008: Virgin Atlantic London to Amsterdam demo flight using 20% in one engine (coconut based) - 2009: Continental Airlines demo flight (algae based). - 2010: US Navy and US Airforce demo flights (camelina based). - 2011: Boeing demo flight (camelina based). - 2011: Honeywell first transatlantic demo biofuels flight (50/50 blend with camelina based). - 2011: Continental commercial flight (algae based) - 2011: Alaska Airlines (UCO) - 2011: United (algae) - As of 2018: Qantas to operate biojet powered flights between Melbourne and LA.

Noteworthy events Innovation / R&D N/A - Feedstock supply chains for bio refineries support by US

Department of Energy. - Government support through loan guarantees for development of new commercial-scale bio refineries for advanced biofuels - National Research Labs - Technology transfer offices

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- Bioenergy Technology office Key Actors

Policy institutions Producers/technology/start-ups - Environment Protection Agency - US Department of Energy - US Department of Agriculture - US Department of Defence - Federal Aviation Administration - Bioenergy Technologies Office BETO - US Department of Transportation

The National Biodiesel Board, Biofuels Producers Coordinating Council, Biotechnology Industry Organisation, , Renewable Fuels Association (the national association for the US ethanol industry), Algal Biomass Association, Red Rock Biofuels, Gevo, Altair, Swedish Biofuels, National Biodiesel Board, Advanced Biofuels Association (ABFA), Renewable Fuels Association, Algal Biomass Association, Solazyme, SkyNRG,

Finance Research - Department of Energy - US Department of Agriculture - US Department of Defense - National Renewable Energy Laboratory - Greentek (private) -Technology Transfer Offices

- Bioenergy Technology Office (BETO) - Agricultural Research Service, U.S. Department of Agriculture - National Renewable Energy Laboratory - Forest Service Research & Development - Centre of Excellence for Alternative Jet Fuels and Environment

Active end users/Business/Investors Networks/Collaborations United Airlines, Alaska Airlines, Continental Airlines, Delta Airlines, Southwest Airlines, American Airlines, Airports US military

- Commercial Aviation Alternative Fuels Initiative (CAAFI) - ASCENT (FAA, WSU, MIT, USDOD, TC, EPA) - Farm to Fly 2.0 (USDA, USDOE, Boeing, A4A). - Sustainable Aviation Fuel Northwest (SAFN) - Midwest Aviation Sustainable Biofuels Initiative (MASBI) - CLEEN - PARTNER

Documents and support information Key studies Key policy document links - Development Strategy (2016) – focus on enhancing federal level efforts to promote AJF approval at the technological level – stimulate creation of supply chains - March 2017. Alternative Aviation Fuels: Overview of Challenges, Opportunities, and Next Steps Prepared by the US Department of Energy https://www.energy.gov/sites/prod/files/2017/03/f34/alternative_aviation_fuels_report.pdf

Renewable Fuel Standard Program https://www.bmvi.de/SharedDocs/EN/Documents/MKS/mfs-strategy-final-en.pdf?__blob=publicationFile

National date – biojet production and consumption data Economic impact of aviation industry

According to the IATA Country Report 2017, the Air Transport Sector in the US directly supported 3,700,000 jobs and contributed $410 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 4% of the GDP. Demand for sustainable aviation fuel Key raw materials/feedstock Conventional jet fuel consumption/potential sustainable jet fuel demand: approx. 87 billion litres/year.

- Conventional: corn - Advanced: lignocellulose, algae, waste Promising production pathways - Fischer-Tropsch - HEFA - ATJ

Bioethanol/Biodiesel/Sustainable Aviation Fuel Production

Bioethanol/Biodiesel/Sustainable Aviation Fuel Consumption

Bioethanol (for fuel): approx. 59 billion litres/year (2016) Biodiesel: approx. 5.6 billion litres/year (2016)

Bioethanol: approx. 53 billion litres/year (2015) Biodiesel: approx. 7.5 billion litres/year (2015)

Other

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Challenges Future plans/next steps/focus - Sustainability: corn based - Level-playing field – end-use competition.

Too look out for - Swedish Biofuels (new ATJ technology) - Altair: currently on commercial producer. - Gevo - Illinois Clean Fuels Project

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13.10. Japan

General overview information/main focus The stakeholders in the Japanese Aviation sector demonstrate strong support in the development and use of sustainable aviation fuels. Promising developments include technologies for the exploitation of algae/microalgae as feedstock for SAF, establishment of a supply chain for SAF by 2020, as well as potential policy support by requiring the introduction of SAF in the market.

Policy Environment Japan has strong commitments to reduce its greenhouse gas emissions and reduce reliance on petroleum, including in the transportation sector. In the transportation sector, Japan wanted to decrease its dependency on fossil fuel from almost 100% in 2006 to 80% by 2030. The 2014 Japan Strategy Energy Plan indicates the government’s commitment to continue introducing biofuels “while taking into consideration international situation and the technology development trend concerning next-generation biofuels.” Japan supports biofuels in the transportation sector through different incentives, including lower taxes for blended gasoline and removing import taxes to Bio-ETBE. Meanwhile, there is no official policy targeted specifically to the development and use of SAF. Law Official sustainable aviation biofuel policy - 2008 Effective Utilization of Resources from Agricultural, Forest and Marine Organism as Raw Materials for Biofuels - Basic Act for the Promotion of Biomass Utilization - 2010 Sophisticated Methods of Energy Supply Structure Act

Japan’s Ministry of Economy, Trade and Industry is considering introducing a to-be-determined quantity of bio aviation fuel in the market for the period 2020-2022.

Relevant policy/policies Support mechanism (incentives) /financial support schemes/Investments

- 2014 Strategic Energy Plan - 2002 Biomass Nippon Strategy (as Amended)

No incentives specifically addressed to promote sustainable aviation fuels. However, several incentives to support biofuel production in general are in place, including fix property tax reduction for qualified biofuel facilities, extended repayment period and interest-free loans extended to farmers producing feedstock for alternative forms of bio-energy.

Activities Initiatives / Projects: Flights Conducted: - Initiative for the Next-Generation Aviation Fuels (INAF) – multi-stakeholder initiative, which drew a roadmap for the establishment of the supply chain for next-generation aviation biofuels by 2020. - Euglena : Construction of demonstration plant for the production of bio jet fuel using algae - Japan Airlines and Japan Aerospace Exploration Agency partnership involving the development of “waste-based aviation jet fuel that will use hydrogen and carbon monoxide” to produce aviation biofuel.

- 2009: JAL conducted test flights utilizing biofuels derived from a blend of Jatropha, Camelina, and algae. - 2012: All Nippon Airways, in partnership with Boeing, flew the first transpacific flight using in part used cooking oil. - Nippon Cargo Airlines also conducted a test flight using bio jet fuel.

Noteworthy events: Innovation / R&D:

N/A

- Advanced Industrial Science and Technology researches on technology for biofuel production and next-generation technology utilizing biomass energy (i.e. bio-jet fuel production system based on “innovative entrained flow bed gasification and anti-ASF FT synthesis”) - Kumamoto University conducts research on biodiesel production using nanosecond pulsed electric fields (PEF) to extract hydrocarbons from microalga - New Energy and Industrial Technology Development Organization (NEDO) undertakes research on technology for the production of next-generation biofuel derived from BTL and microalgae

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Key Actors

Policy institutions Producers/Technology Companies/start-ups - Ministry of Economy, Trade and Industry (METI) - Ministry of the Environment - Ministry of Agriculture, Forestry and Fisheries

Japan Biofuels Supply LLP, Euglena Corporation, Asahi Breweries Ltd, Nippon Steel & Sumikin Engineering Co., Ltd

Finance Research - NEDO - Kumamoto University - Advanced Industrial Science and Technology - University of Tokyo

Active end users /business /investors Networks/Collaborations Japan Airlines, All Nippon Airways, Boeing - INAF

- Petroleum Association of Japan

Documents and support information Key studies published Key policy document links “Studies for What Japan’s Future Biofuel Should be: Bioethanol.” Published by the Japan Ministry of Economy, Trade and Industry - outlines a preliminary biofuels policy for the period 2018 to 2022.

2014 Strategic Energy Plan http://www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/4th_strategic_energy_plan.pdf Biomass Policies and Assistance Measures in Japan: http://www.maff.go.jp/e/pdf/reference6-8.pdf

National data – Bio jet production and consumption data Economic impact of the aviation industry

According to the IATA Country Report 2017, the Air Transport Sector in Japan directly supported 540,000 jobs and contributed $41 Billion Gross Value to the country’s GDP in 2014. Adding indirect effects (e.g. spending by employees and foreign tourists), the Air Transport sector accounted for 1,8% of the GDP.

Sustainable fuel demand for aviation Key raw materials/feedstock Most developments focus on algae, but other feedstock being considered include Municipal waste, natural oils (excluding waste food oils), waste animal oil, non-edible biomass (cellulosic sugar), and woody biomass. Promising production pathways/methods HEFA-SPK, FT Synthesis, FT-SPK, ATJ from Isobutanol

Bioethanol/Biodiesel/Aviation biofuel production Bioethanol/Biodiesel/Aviation biofuel consumption

Biodiesel: 2016 at 16 million Litres Bioethanol: .2 million litres of bioethanol for fuel use (refinery production in Niigita Prefecture); and Biofuels Supply LLP annual production 140 million litres of ETBE, using 59 million litres of ethanol Conventional Jet Fuel: 2014 at 12 million metric tons

Biodiesel: 2016 at 11 Million litres (at national average blend rate of 0.04%) Bioethanol: 2016 consumption at 758 million litres Conventional Jet Fuel: 2016 at 5.370 Billion Litres

Other

Challenges Future plans /next steps/focus

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- Reducing costs to ensure the price competitiveness of next-generation aviation fuels, establishing markets for by-products, and developing additional technologies. - Realization of the roadmap for the establishment of the supply chain for next-generation aviation fuels also requires government support in the form of policy incentives. -Securing the supply of hydrogen for use in the production of SAF. Hydrogen is used in many processes for the production of SAF, which could compete with electric vehicles using hydrogen fuel

Establishment of the supply chain for the supply of SAF

To Look Out For - Construction of demonstration plant for the production of bio jet fuel using algae as feedstock by Euglena; - Partnership between Japan Airlines and Japan Aerospace Exploration Agency involving the development of “waste-based aviation jet fuel that will use hydrogen and carbon monoxide” to produce aviation biofuel.

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