Energy conglomerate Bangchak Corporation Plc expects it will be 5-7 years before it generates enough revenue to recoup its investment in sustainable aviation fuel (SAF), though some prospective customers have postponed plans to legally require aircraft operators to use this biofuel.
President Chaiwat Kovavisarach said he remains upbeat about the return on investment, even after reports that some countries in East Asia adjusted the timeline to enforce SAF usage.
The aviation industry is promoting mixing SAF with jet fuel because SAF produces up to 80% fewer greenhouse gas emissions than conventional fuel, according to media reports citing various forecasts.
Bangchak adjusted its estimated payback period to 5-7 years, extended from 3-5 years in a previous feasibility study, in response to changes in the SAF market.
"We are confident we have an opportunity to make a profit," said Mr Chaiwat.
The company's 10-billion-baht SAF factory is scheduled to open on April 25 for a test run, with used cooking oil as a raw material.
Demand for SAF is projected to soar after 2030 because the aviation industry will not find other clean fuels by that time, or be able to shift to battery-powered aircraft on a commercial scale, according to Bangchak. In 2030, the number of air travellers is expected to tally 12 billion, up from 6 billion in 2024.
"If the aviation industry does nothing to achieve carbon neutrality, it will be branded as a very dirty industry," he said.
According to the International Civil Aviation Organisation and the International Air Transport Association, the EU requires airlines to mix 2% SAF with jet fuel by 2030. SAF proportions of 10% apply in the UK and the US in 2030.
Bangchak plans to start commercial production of SAF in the middle of this year, amounting to half of its full capacity of 1 million litres a day. The capacity of 1 million litres is calculated from an estimate that Thailand will use 5% SAF mixed with conventional oil, based on actual jet fuel supply of 20 million litres a day in 2019.
Bangchak partners with food and beverage operators to buy used cooking oil, and it already signed contracts to sell SAF to its customers.
As of April 3, the ex-refinery price of SAF was 48 baht a litre, compared with 21-22 baht a litre for conventional oil, meaning the government subsidies may be needed, said Mr Chaiwat.
