SUSTAINABLE AVIATION BIOFUEL STATUS 2017 ......3.2 The feedstock is available in Norway 3 4....

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SUSTAINABLE AVIATION BIOFUEL STATUS 2017 Intended for Public Document type Report (short version) Date May 2017

Transcript of SUSTAINABLE AVIATION BIOFUEL STATUS 2017 ......3.2 The feedstock is available in Norway 3 4....

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SUSTAINABLE

AVIATION BIOFUEL STATUS 2017

Intended for

Public

Document type

Report (short version)

Date

May 2017

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Status 2017

Aviation Biofuel

CONTENTS

1. Background 1 1.1 Purpose and process 1 2. Summary 1 3. Applicable feedstock 2 3.1 Sustainable aviation biofuel production in Norway based on

forest residues and pulp wood 2 3.2 The feedstock is available in Norway 3 4. Production costs 4 4.1 Sustainable aviation biofuel production costs equal 7-25

NOK/litre in 2017 4 4.2 Production costs are high compared to fossil aviation biofuel

in 2017, however several products can be derived from the

process 5 4.3 Production costs can be reduced by implementing selected

measures 6 5. Policy instruments 6 5.1 Aviation biofuel demand is expected to increase 6 5.2 Policy instruments on feedstock will be of limited importance

on the short term 7 5.3 Existing policy instruments are not sufficient to provide

enough aviation biofuel 7 5.4 A market must be created 8 5.5 Coherence between policy instruments 10 5.6 Conclusion and recommendation 11

TABLE OF FIGURES

Figure 1: The forest resources can and should be used for various purposes .. 2 Figure 2: Total estimated sustainable forest feedstock available for aviation

biofuel production in Norway. ................................................................... 3 Figure 3: Cost of production per litre aviation biofuel, expressed for 5

production technologies ........................................................................... 4 Figure 4: Technology map describing technology and status for selected

aviation biofuel production technologies. ................................................... 5 Figure 5: Possible cost reductions towards 2030, from forest resources ......... 6 Figure 6: Description of the Nox fund alternative. The arrows represent

cashflows between the actors. .................................................................. 9 Figure 7: Description of a fund solution were the fund is responsible for

aviation biofuel purchase. The arrows represent cashflows between the actors.

........................................................................................................... 10 Figure 8: Selected policy instruments ....................................................... 11 Figure 9: Example of a general time schedule towards the first delivery of

sustainable aviation biofuel ..................................................................... 12

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1. BACKGROUND

The Norwegian aviation sector with Avinor in lead has for a long period of time worked on sus-

tainable aviation fuel. In 2013, a study involving several disciplines was accomplished, resulting

in a report written by Ramboll. During the autumn of 2016 an update of the study was request-

ed. This is the short version of the updated report on sustainable aviation biofuel.

Avinor targets a share of 30% sustainable aviation biofuel on all Avinor airports by 2030, corre-

sponding to 400 mill. litres of biofuel. The main focus in this updated study has been identifying

relevant policy instruments necessary to obtain the target share.

1.1 Purpose and process

The project’s purpose has been to update the report from 2013 with emphasis on the following

topics:

1. Sustainable feedstock supply and new certified biofuel production technologies, opening

up for new value chains

2. Policy instrument study measuring what it takes to implement sustainable aviation biofuel

at Norwegian airports

The entire production chain, from feedstock extraction to end use, is included in the study.

The study is produced by Ramboll, with Sintef and Vista Analyse as collaborating partners. Con-

clusions outlined in the report are solely the responsibility of Ramboll. The project steering com-

mittee has included representatives for Avinor, SAS, Norwegian and the Federation of Norwegian

Aviation Industries (NHO Luftfart). Frequent meetings have been held with the steering commit-

tee throughout the project period. Workshops and meetings have been carried out with selected

stakeholders, including, in addition to other potential biofuel suppliers, research institutions, en-

vironmental institutions and the authorities.

2. SUMMARY

A share of 30% sustainable aviation biofuel (400 mill. litres) at all Avinor airports by 2030 is ob-

tainable by using public policy instruments. Today, aviation biofuels are only produced in smaller

amounts and abroad, but up to 300-500 mill. litres could be produced sustainably in Norway in

the longer term by using forest residuals and unused pulp wood as feedstock. While existing poli-

cy instruments are not sufficient to stimulate aviation biofuel production, government regulations

do give guidance on how to promote both the production and use of these fuels, and thus there is

an existing and untapped potential to stimulate more use. The current tax on carbon dioxide

equals 1,1 NOK/litre fuel for domestic flights, corresponding to approximately 430 NOK/kg carbon

dioxide, and is too low to cover the additional cost of producing aviation biofuel. Neither EU emis-

sion quotas adopted by flights in the EEA nor the coming international regulations on aviation

emissions will be sufficient to introduce aviation biofuel production.

A domestic aviation biofuel market does not currently exist and must be created. The report out-

lines two alternative procedures to achieve this; namely by implementing a blending requirement

or through a fund. An aviation biofuel blending requirement will create a market, but also add

extensive extra cost to airlines. A requirement only taking effect in Norway could induce a “cli-

mate leakage” where airlines as far as possible refuel in countries not imposing a blending re-

quirement. The blending requirement will eventually increase production, however initially in-

creasing aviation biofuel imports are expected. A fund could be arranged by uniting the income

from the tax on carbon dioxide and the air passenger tax and use it to buy as much aviation bio-

fuel as possible, thus contributing to increased production. The fund could be organised in differ-

ent ways. One option is an arrangement similar to the current NOx fund, where the tax income

from member airlines is designated to cover extra costs imposed by aviation biofuel purchase.

Another option is to make the fund responsible for aviation biofuel purchase on behalf of the

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member airlines. Thus, airlines would not face increased costs for fuel purchase and the risk of

«climate leakages» would be avoided. The funding should be phased out gradually, and aviation

biofuel deliveries would over time occur solely on commercial terms. Both blending requirements

and fund should call for sustainable aviation biofuel which could stimulate Norwegian production.

The following chapters describe the status of relevant biofuel production value chains both na-

tionally and internationally. Accordingly, policy instruments for the entire value chain are consid-

ered.

3. APPLICABLE FEEDSTOCK

In a 10 year perspective, the forest is considered the most applicable feedstock for aviation bio-

fuel production in Norway and is thus considered in this report. The ocean (algae) also provides a

considerable potential in the longer term.

3.1 Sustainable aviation biofuel production in Norway based on forest residues and pulp

wood

A sustainable biofuel represents sustainable feedstock cultivation and extraction as well as a sus-

tainable production value chain. Norwegian forestry demonstrates sustainable cultivation and use

as wood is being used for several purposes (Figure 1). However, we see a potential for increased

sustainability by exploiting twigs and treetops which are currently not being utilised but left in the

forest after logging. Further, the ongoing change in pulpwood market conditions resulting in Nor-

wegian paper plant closures has led to increasing pulpwood exports.

Figure 1: The forest resources can and should be used for various purposes

We see two obvious feedstock value chains for sustainable bio jet fuel production:

Forest residues including twigs and treetops and other waste fractions from the forest in-

dustry not currently exploited

Current pulpwood exports

Characteristics of a sustainable forestry

Forest feedstock resources for bio jet fuel production must fulfill a set of assumptions to be con-

sidered sustainable:

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Logging within sustainable volumes (sustained yield)

Sufficient forest protection ensuring biological diversity

Fulfillment of the EU sustainability criteria

3.2 The feedstock is available in Norway

The sustainable forest feedstock potential amounts to 13 TWh if logging is kept at its present rate

and by utilising pulpwood currently exported or not utilised. If logging increases to the maximum

sustainable volume (sustained yield) the resource potential increases to 22 TWh (Figure 2). This

amounts to approximately 600 and 1000 mill.litres of biofuel production per year, of which up to

half of the fuel can be dedicated to sustainable aviation biofuel.

Figure 2: Total estimated sustainable forest feedstock available for aviation biofuel production in Nor-way.

Figure 2 expresses forest feedstock in terms of energy content and represent fractions available

for aviation biofuel production. The forest feedstock is divided into three categories, namely twigs

and tops, pulpwood fractions currently not utilised and pulpwood currently exported. Forest

feedstock applied for other purposes like building material, energy supply etc. are not represent-

ed in the figure.

Figure 2 expresses that logging at present rate and utilisation of residuals like twigs and tops

(see Figure 1) corresponds to the production of up to 300 mill. litres of aviation biofuel. Logging

increased to the maximum sustainable volume including utilisation of residuals like twigs and

tops corresponds to the production of up to 500 mill. liter aviation biofuel. Figure 2 illustrates the

production potential, however there are currently no technologies available producing sustainable

aviation biofuel from forest feedstock in a commercial scale. To reach the target of 400 mill. litres

of sustainable aviation biofuel within 2030, sustainable aviation biofuel imports are relevant and

probably necessary.

Commercial production of aviation biofuel today is based on the HEFA technology (see Figure 4).

Total production volumes and import availability vary with the market mechanisms. The certifica-

tion of HEFA+ (HVO biodiesel, see Figure 4) for use in aviation corresponds to a potential in-

crease of approx. 3 600 mill. litres aviation biofuel in the world, which is expected to be available

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for imports to Norway. The aviation sector is expecting HEFA+ to be certified for aviation biofuel

during 2017, however this is uncertain.

4. PRODUCTION COSTS

4.1 Sustainable aviation biofuel production costs equal 7-25 NOK/litre in 2017

The average cost of producing sustainable aviation biofuel is presented in Figure 3. The cost of

production is 7-25 NOK per litre, compared to 4-5 NOK/litre conventional fossil aviation biofuel,

sold at approximately 6 NOK/litre. The aviation biofuel cost depends on the production value

chain (the feedstock used and the production technology). Further, the cost depends on the feed-

stock utilisation (liter biofuel produced per kg. feedstock input) and the final product portfolio

(fraction of aviation biofuel in the biocrude mixture).

Figure 3: Cost of production per litre aviation biofuel, expressed for 5 production technologies

Figure 3 illustrates the average cost of production including investment costs (CAPEX), operating

costs (OPEX), feedstock costs (Feedstock) and income from bi-products (biodiesel, biochemicals,

heat energy etc) sales (SALES). The reference cost for fossil aviation biofuel is expressed as a

dotted grey and horizontal line. The reference cost will vary depending on contracts. Here, a

2016 cost is applied.

The lower production costs (7-14 NOK/liter) is achieved by the only technology that is currently

considered commercial. The technology is called HEFA and utilises oil crops and animal fats as

feedstock. This technology is not considered relevant for production in Norway. However, HEFA

imports are considered relevant in order to achieve target volumes of aviation biofuels in Norway.

Technologies for producing aviation biofuels from forest feedstock are still not commercial due to

higher costs (15-25 NOK/liter). These technologies are considered relevant for production in

Norway. Besides the HEFA, Fischer-Tropsch and Alcohol-to-jet via isobuthanol represents tech-

nologies close to commercial production, the two former being able to utilise forest feedstock

(Figure 4).

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Figure 4: Technology map describing technology and status for selected aviation biofuel production technologies.

4.2 Production costs are high compared to fossil aviation biofuel in 2017, however several

products can be derived from the process

A considerable amount of production costs are associated with feedstock. For some technologies,

feedstock costs constitute up to 50 % of total costs (blue colour, Figure 3). The high cost can be

attributed to feedstock extraction and utilisation (2 TWh feedstock typically amounts to 1 TWh

biofuel).

The low utilisation does not mean resources are wasted. Parts of the feedstock not utilised for

fuel may be utilised for other products and purposes, like biochemicals and energy. Most produc-

tion plants produce other fuel products, chemicals and energy in addition to aviation biofuel, and

bi-product sales can increase production plant incomes. Bi-products will in some cases replace

other fossil products and thus increase sustainability, while sales income reduces the aviation

biofuel production cost (black colour, Figure 3). Income could be larger than outlined in Figure 3

and partly depend on the production process and how it is operated.

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4.3 Production costs can be reduced by implementing selected measures

Figure 5 pictures actions necessary to bridge the gap between current sustainable avioation bio-

fuel production costs and fossil aviation fuel prices (fossil fuel costs being slightly lower), when

the production is based on forest feedstock.

Figure 5: Possible cost reductions towards 2030, from forest resources

Biofuel production technologies are expected to become increasingly effective with further test-

ing, development and scale advantages. The expected rate of learning is assumed to be around

8%, which implies an 8% reduction in production costs each time the production is doubled. Fur-

ther, by increasing coordination, planning and by improving logistics, feedstock costs could be

reduced by 10%. The last action to reduce production costs is to implement financial instru-

ments, e.g. funding from a CO2 fund.

5. POLICY INSTRUMENTS

Stratas Advisors (2016) expect the global biodiesel demand to double between 2015 and 2035

due to a strong increase in demand in most of the world. On the longer term, demand is ex-

pected to turn towards certified products providing a substantial reduction in greenhouse gas

emissions by i.a. utilising sustainable feedstock. Fulfillment of the EU sustainability criteria should

be required when introducing sustainable aviation biofuel in Norway.

Production of sustainable aviation biofuel based on forest feedstock in general requires consider-

ably higher crude oil prices than what is currently the case in order to be profitable. In order to

increase the production, long-term policies are necessary, contributing to reducing risk induced

by low crude oil prices.

5.1 Aviation biofuel demand is expected to increase

Today, biofuel production plants fitted to produce aviation biofuel exist in Sweden, Finland, UK

and the US. Several airlines around the world are showing interest for aviation biofuels, and test

flights using biofuel blends in conventional aviation fuel has been accomplished amongst them.

Except for the EU/EEA, few or no incentives exist for utilising aviation biofuel. Such incentives are

however expected to evolve in the years to come as a result of a program initiated by ICAO on

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«the Carbon Offsetting and Reduction Scheme for International Aviation» (CORSIA). The program

intends to compensate for emission increases above 2019 and 2020 average level. Incentives like

CORSIA are, however, not expected to impact sustainable aviation biofuel production in the Nor-

wegian aviation sector. Established actors in the production value chain will respond to an even-

tual increase in aviation biofuel demand and adapt. Sustainable aviation biofuel production plants

will be established by professional industrial actors who will prepare the other actors in the value

chains with their needs, and strive to ensure the lowest possible feedstock cost.

5.2 Policy instruments on feedstock will be of limited importance on the short term

The Norwegian public support system directed towards forestry and agriculture is well-

established. Norwegian forestry consists of established value chains that use developed and ma-

ture technology. Despite this, feedstock costs are high. In this short version of the report, two

actions dedicated to reduce feedstock costs are outlined.

Infrastructure and logistics

Norwegian forestry consists of established value chains that use developed and mature technolo-

gy. The value chain actors will probably respond to increasing demand and adapt. Sustainable

aviation biofuel production plants will be established by professional industrial actors who will

prepare the other actors in the value chains with their needs, and strive to ensure the lowest

possible feedstock cost. Still, the value chain will need considerable financial support. A strong

governmental initiative on infrastructure and logistics, contributing to decrease the feedstock

costs, is inevitable if aviation biofuel production based on forestry resources shall be established

in Norway.

Forestry in a climate perspective

Forestry as an instrument to reduce climate impacts1 comprises actions to increase the carbon

storage of the forest and actions to increase the utilisation of the forest feedstock. The former

include measures such as forest fertilisation2 and forestation in new areas. The Environmental

Agency (Miljødirektoratet) considers forest fertilsiation to be an environmental measure, and

fertilisation has shown a documented increase in forest growth on the long-term. Area available

for forest fertilisation is large; however the Environmental Agency has restricted the available

area in terms of environmental concerns. As far as we know, there exists one pilot project con-

cerning forestation in new areas. Both measures are interesting in connection with an aviation

biofuel production initiative.

The forestry value chains are built upon the assumption that resources extracted have several

fields of application, saw timber being the most valuable (see Figure 1). In general, increasing

forestry implies increasing amounts of available fractions including saw timber but also other

fractions like twigs and tops that could be used as feedstock for biofuel production. Measures

promoting forestry and use of forest products for building material and other purposes like biofuel

production are expected to be positive both in terms of increased amount of available feedstock

and greenhouse gas reductions in the entire value chain. The measure could also turn out to re-

duce aviation biofuel costs if the forestry agent obtains higher prices for saw timber and other

fractions not dedicated to aviation biofuel production.

As an example, the use of wood as a building material will promote carbon storage and replace

other and more carbon intensive materials to the benefit of the environment. The authorities can

stimulate the use of wood as a building material by setting restrictions to the greenhouse gas

emissions related to a building in a life cycle perspective.

5.3 Existing policy instruments are not sufficient to provide enough aviation biofuel

Currently the Norwegian blending requirement on biofuels in road transport is targeted to 20% in

2020. Establishing a similar blending requirement in the aviation sector equal to 1% in 2019 and

gradually increasing to 30% in 2030 is proposed by the government and is currently evaluated by

1 Norwegian forestry in general is not certified sustainable – see characteristics of a sustainable forestry in ch. 3.1 2 Provided a use of natural fertilisation and not chemical based

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the Norwegian Parliament. In the EU, a blending requirement on aviation biofuel is also consid-

ered.

The state subsidy regulations within the EU/EEA prohibits the use of financial support to biofuel

production designated to fulfill a blending requirement. One exception can be made if the support

is designated to sustainable biofuel that is too expensive to be launched with a blending require-

ment alone. Enova3 and Innovation Norway4 (IN) do not currently support production of biofuel

dedicated to fulfill blending requirements. Our study shows that the extra cost of producing sus-

tainable aviation biofuel can be large, which could open up for financial support even with a

blending requirement.

Some of the actors considering establishing production of sustainable biofuel in Norway including

aviation biofuel, consider producing a semi-finished product or a biocrude, that must be delivered

to a refinery where it can be processed into end products like aviation biofuel. Today, no refiner-

ies have the capacity to receive and process these products and there exists, as far as we know,

no plans to build such capacity. Enova and IN interpret the current regulations that prohibit fi-

nancial support for production of biocrude. If financial support is made available, up to 45% of

the investment costs could be supported, at least for those parts of the production facility not

producing to sectors with a blending requirement.

Today, Enova and IN provide programs to support new technology. One requirement is that the

technology is Norwegian, meaning that the rights and the competence is in Norway and stays in

Norway. Pilot and demonstration plants can be supported even with a blending requirement. Ac-

tors considering establishing production of a biocrude in Norway base the production on interna-

tionally owned technology that could be tested and developed in Norway.

Our conclusions are that within the current regulations, support schemes and practices it will be

challenging to support the production of sustainable aviation biofuel and biocrude in Norway, and

support development of international technology for aviation biofuel production. However, such

support could be implemented, and to our understanding Enova and IN currently evaluate possi-

bilities to support the production of sustainable biofuel production. Still, the probability for such

support to trigger production volumes in the size of Avinor’s target volume of 400 mill.litres is

considered to be small.

5.4 A market must be created

A general consideration of costs show that the current CO2-tax being 1.1 NOK/liter fuel for do-

mestic flights is too small to bridge the gap between sustainable aviation biofuel and fossil avia-

tion fuel and hence too small for aviation biofuel production realisation in Norway. Neither the EU

climate quota system nor the coming CORSIA regulations will provide sufficient incentives to

make sustainable aviation biofuels competitive with fossil aviation fuels. An aviation biofuel

blending requirement will create a market, but also add extensive extra cost to airlines. A re-

quirement only taking effect in Norway could induce a “climate leakage” where airlines as far as

possible will refuel in countries not imposing the blending requirement.

One alternative is a fund. A fund could be arranged by uniting the income from the tax on carbon

dioxide and the air passenger tax and use it to buy as much aviation biofuel as possible, thus

contributing to increased production. The fund can be financed by member airlines, of which

could be exempted from the tax on carbon dioxide and the air passenger tax as a compensation

for their payments to the fund. The funding should be phased out gradually, making aviation

biofuel deliveries occur on commercial terms at length. The fund could form part of the expected

carbon dioxide fund being established by the Norwegian parliament in order to finance actions

toward greenhouse gas emission reductions in the transport sector. Alternatively, the fund could

be an independent aviation biofuel fund driven after the principles and the NOx fund.

3 Enova SF is owned by the Norwegian Ministry of Petroleum and Energy and contributes to reduced greenhouse gas emissions,

development of energy and climate technology and a strengthened security of supply. 4 Innovation Norway is the Norwegian Governments most important instrument for innovation and development of Norwegian entre-

prises and industry.

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There are different ways to implement the fund. Below, two different models are described.

1. «The NOx fund alternative»

The airlines pay taxes to the Government by following the current practice, but can become a

member of the fund, hence tax proceeds go to the fund. The fund can offer member airlines sup-

port after application to cover extra costs of blending sustainable aviation biofuel into fossil

aviation fuel. Member airlines decide how large the fund becomes by application, which means

that the fund size increase with increasing number of airlines becoming a member of the fund.

Figure 6: Description of the Nox fund alternative. The arrows represent cashflows between the actors.

A fund solution controlled by the airlines could have a limited effect when it comes to triggering

production if the future demand for aviation biofuels is unpredictable.

2. The fund is responsible for aviation biofuel purchase

In this case, taxes are payed to the fund as in the former alternative, but the fund is now re-

sponsible for purchasing aviation biofuel on the behalf of the member airlines. The fund can call

for tenders on the delivery of a given volume of aviation biofuel in Norway 3-4 years into the

future, giving potential suppliers time to build production capacity or provide the biofuel in the

market. The contract (volume and price) should have a certain length in order to provide the

suppliers sufficient security of investment.

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Figure 7: Description of a fund solution were the fund is responsible for aviation biofuel purchase. The arrows represent cashflows between the actors.

The fund can contribute to keeping costs down by announcing a Call for Tenders. The fund can

obtain scale advantages and better agreements compared to airlines purchasing aviation biofuels

separately.

5.5 Coherence between policy instruments

Aviation biofuel production is complex and integrated in several value chains, and the production

will be characterised by a close interaction with both fossil and bio based value chains. Several

different policy instruments from different sectors will contribute directly and indirectly towards

biofuel production, and could be implemented and stepped up in various parts of the value chain.

Figure 8 below illustrates necessary instruments in the various parts of the value chain. Selected

policy instruments are listed for feedstock, processing and technology, and market.

Effective processing from feedstock to fuel is necessary, and calls for research and securing ac-

cess to refining capacity. Further, it is important to ensure sales of bi-products from the produc-

tion like biodiesel, biochemicals and heat, in order to achieve profitability. The market is the cen-

tre of focus in this short version of the report, however it is important to understand that several

actions must be taken at the same time and market and end use in itself are not enough in order

to create sustainable aviation biofuel production in Norway.

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Figure 8: Selected policy instruments

5.6 Conclusion and recommendation

In order to reach the target volume of 30% aviation biofuel within 2030 there is a need to estab-

lish dedicated policy instruments triggering production. Two different funding models have been

outlined in this report.

The funding models possess different advantages and disadvantages. Both models will satisfy the

requirements of the current government subsidy regulations but will have to be reported to and

approved by the EFTA. Airlines becoming members of the fund should be members for a period of

several years, as the timespan between establishing the fund until the first delivery of sustaina-

ble aviation fuel is expected to take some years. The timespan should be wide enough to let the

fund build sufficient capital. The tender competition should be executed early, providing enough

time for suppliers to enter into supply agreement at minimum three years before the delivery. It

is assumed that the suppliers will need approximately five years to develop their respective pro-

duction. It could be practical to coordinate the fuel purchase through the fund, thus being able to

procure the target volume through competition on long-term contracts.

A long-term contract between a supplier and the fund, providing a specified fuel volume at a set-

tled price over a period of time will remove the market risk placed upon the supplier. The supplier

still holds the production risk, i.e. the risk related to supplying the contracted volumes at the

contracted conditions . A supplier investing billions in a new production plant will consider this an

extensive risk. A solution as outlined above, where the market risk is placed upon the fund and

the production risk is placed upon the supplier, illustrates an appropriate distribution of risk.

When preparing for the tender competition it is of key importance to develop suitable tender

evaluation criteria including the evaluation of sustainability and documentation of sustainability

over time. This could favor Norwegian suppliers basing their production on sustainable forestry

feedstock such as twigs and tops, and pulpwood exported or not being used for other purposes.

Both security of on-time delivery and fulfilment of fuel quality requirements must be document-

ed. These relations and others should be further investigated.

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The average extra cost of sustainable aviation biofuel should decrease with time. One objective

could be to reduce the NOK/liter for each tender competition accomplished, in accordance with

expected cost reductions in production. Eventual cost increases for fossil fuels and taxes on car-

bon dioxide could also contribute.

Figure 9: Example of a general time schedule towards the first delivery of sustainable aviation biofuel

A blending requirement and a fund represent two alternative instruments to create a market for

sustainable aviation biofuel. A fund solution as outlined in this report will finance 100 % of the

extra costs designated to introducing sustainable aviation biofuel, and will conflict with govern-

ment subsidy regulations if a blending requirement on sustainable aviation biofuel is put in force

simultaneously. However, if cost of production is sufficiently high, the conflict between a blending

requirement and a fund will be cease to be an issue.

Local value creation has not been assessed as part of this study. However, the proposed action is

expected to influence local employment in a positive manner. After the relinquishment of Norwe-

gian paper and pulp industries it is important to utilise local resources in the best possible way,

both concerning natural resources and local industrial competence.

Year 0-2

•Investigation considering organisation, funding and public procurement

•Public procurement design

•EFTA process

Year 2-3

•Execution of first tender competition

•Contract formation

Year 3-6

•Construction of sustainable aviation biofuel production plant

•First delivery of sustainable aviation biofuel

•Execution of second tender competition