The SAF Podcast
The SAF Podcast: Honeywell & Latin America - The heart and soul of SAF refining
This week The SAF Podcast ventures to the land of salsa dancing, ethanol production, rainforests and the Andes as Oscar is delighted to be joined to Jose Fernandes, President - Latin America, Honeywell.
Jose explains to us the different verticals Honeywell operates in, especially Honeywell UOP and their SAF technology licensing business, and how they are working to their target of reaching net zero operations by 2035. We discuss the projects they are currently involved in in the Latin America region alongside biofuel producer and Oil and Gas giant, Petrobras.
We also dive into what makes Latin America such a great place to produce SAF, with a rich agricultural landscape generating an abundance of potential feedstock and already mature HVO and Ethanol markets to use as a platform. With strong ties to the US and other international investment markets, Jose is confident that alongside the available domestic investment and incoming policy certainty that is currently being finalised, the financial and policy landscape are fast making Latin America an attractive proposition for SAF production. We also touch on the role of Oil and Gas and the critical relationship between licensors and Oil & Gas to drive global production.
We also discuss Honeywell's recently announced Unicracking technology working with Biomass and how they can claim for it to have a 3-5% higher yield whilst also reducing costs.
This is a great insight into a world leading SAF technology licensor who are at the heart of global production with 50 licenses sold and an expert insight into why Latin America could become the soul of the industry,
If you like this episode do check out our previous discussion with Oskar Meijerink, SkyNRG here: https://www.buzzsprout.com/2202964/14996727-the-saf-podcast-skynrg-s-journey-from-procurement-to-production.mp3?download=true
Host and Producer: Oscar Henderson, SAF Investor
This week The SAF Podcast ventures to the land of salsa dancing, ethanol production, rainforests and the Andes as Oscar is delighted to be joined to Jose Fernandes, President - Latin America, Honeywell.
Jose explains to us the different verticals Honeywell operates in, especially Honeywell UOP and their SAF technology licensing business, and how they are working to their target of reaching net zero operations by 2035. We discuss the projects they are currently involved in in the Latin America region alongside biofuel producer and Oil and Gas giant, Petrobras.
We also dive into what makes Latin America such a great place to produce SAF, with a rich agricultural landscape generating an abundance of potential feedstock and already mature HVO and Ethanol markets to use as a platform. With strong ties to the US and other international investment markets, Jose is confident that alongside the available domestic investment and incoming policy certainty that is currently being finalised, the financial and policy landscape are fast making Latin America an attractive proposition for SAF production. We also touch on the role of Oil and Gas and the critical relationship between licensors and Oil & Gas to drive global production.
We also discuss Honeywell's recently announced Unicracking technology working with Biomass and how they can claim for it to have a 3-5% higher yield whilst also reducing costs.
This is a great insight into a world leading SAF technology licensor who are at the heart of global production with 50 licenses sold and an expert insight into why Latin America could become the soul of the industry,
If you like this episode do check out our previous discussion with Oskar Meijerink, SkyNRG here: https://www.buzzsprout.com/2202964/14996727-the-saf-podcast-skynrg-s-journey-from-procurement-to-production.mp3?download=true
Host and Producer: Oscar Henderson, SAF Investor
Hola, bom dia, and welcome to the latest episode of the SAF podcast. I apologize, I can't do more of it in Portuguese, but that's the extent of my language abilities. We're delighted this week to be joined by Jose Fernandez from Honeywell.
Speaker 2:Jose? How are you? Hi, Oscar, I'm doing very good. Thank you for inviting me to the podcast. I really appreciate it. It's a great opportunity to share a little bit more about this very important topic.
Speaker 1:Fantastic. Well, it's great to have you and we really appreciate you giving up your time. I know you've had a busy week, so we really do appreciate it. Before we get into Honeywell, I just thought we'd get a bit more about your background, maybe a bit before Honeywell how you came to Honeywell and what you're doing now, and after that, we'll get into Honeywell itself.
Speaker 2:Sure, no, that would be great. I'll try to summarize, because I have 36 years of experience in American companies, throughout all my career. So I started in 88 in a company called Rommenhaus. It was one of the largest specialty chemical companies in the world, although the name goes to the German Orangines. In fact, the company was headquartered in Philadelphia and I have been working there for 24 years out of those 36. I developed my career through finance primarily. My background is finance, but also I went through marketing supply chain and ended up being the president of the Brazilian operations and head of certain businesses like coatings and construction chemicals for a period of time when Dow Chemical came and acquired Roman House globally in 2009. So by that time I made the transition to Dow Chemical and I stayed there for another couple of years. By early 2011, I joined Dover Corporation as the president for Latin America region, leading all the businesses and opportunities that we have across different countries, but primarily in Brazil, where we were, by that time, investing a lot of money in the country.
Speaker 2:So I stayed there for roughly eight years and then I joined Honeywell, where I'm right now. So I joined Honeywell as the global vice president for the Honeywell performance materials and technology. That now is broken down into two different business units. One of them is the Energy and Sustainability Solutions business group and the other one is the Industrial Automation.
Speaker 2:So by that time, when I joined the company, my main goal was, my major objective was to turn the business around in Latin America, which I believe that I successfully did. And then I was invited by late last year to become the president for the entire region, for all the business groups in the region. So not only I directly also manage energy and sustainability solutions portfolio, but also I oversee the industrial automation, building automation in our IARO technology group in Latin America, everything underpinned by our software solution forge package, and we are connected enterprises. So this is just to give you a little bit of a flavor of my 36 years of different roles in different sectors, companies, and it's great to be here talking about a little bit more of those Honeywell technologies to you.
Speaker 1:Honeywell's a fascinating company. I mean it's, it's huge, it's got you know. It does aircraft engines, it's doing future flight technologies, it's working hard on sort of automation, as well as looking at SAF, refining biofuels, future energy solutions as well through Honeywell UOP. Do you just want to explain Honeywell UOP specifically, because not everyone will necessarily know the total difference between the two.
Speaker 2:Yeah, no, that is a great question. Honeywell UOP has been established for more than a century, developing cutting edge technologies, primarily for the oil and gas industry, but also moving quickly into the chemical areas, or segments, if you will. Honeywell UOP it's a division of what I just mentioned to you, the Honeywell Energy and Sustainability Solutions larger portfolio, and it's one of the world's most recognized licensors of fuel production solutions as we speak. As I said, we have been around for more than a century and we have been developing technologies and business solutions to lead the oil and gas products that are offering to consumer and B2B segments nowadays. Right now, we license more than 70 different processes around the world, more than 300 different catalysts and attributes, and more than 6,000 refineries around the world have been benefited from all those solutions.
Speaker 2:One important thing to mention that, with all that that Honeywell UOP had developed across decades, we saw the sustainability market as a coming venue for developing new things and helping the world to address the most difficult and challenge issues that we have to face from now on.
Speaker 2:One of them is to reduce CO2 emissions moving forward. So, based on all that technology that UOP has for centuries in the very large number of patents and PhDs, number of patents and PhDs, engineering, chemistries, around our operations and businesses. We have pulled all this team together more than a decade ago and started developing specific solutions to address the CO2 emissions around the world, and probably we're going to talk a little bit more about that, but in a nutshell, our portfolio goes from renewable fuels to carbon capture, from hydrogen being blue or green to plastic circularity, so on and so forth. So we have developed a very broader range of solutions that help our customers addressing their current challenge, and it's a pleasure having Honeywell WOP as part of our overall portfolio here in Latin America. We are going to go through your technologies part of our overall portfolio here in Latin America.
Speaker 1:We are going to go through your technologies. I'm not going to get you to list all 70 because I think we might be here a while and that might be slightly unfair, so we'll stick with the major SAF related ones. You've got three now, recently four, from what I can understand different pathways specifically for saf. Do you just want to go? Let's just go through each one quickly. So you've got the um. Do you want to take us through the ecofining right of the process? To begin with is the first one, because that's the most well-known, most popular and the one that's being used around the world the most at the moment, from what I understand.
Speaker 2:That's correct, oscar. So let's start with Ecofining. Ecofining is our brand name for the heifer route. That is, in a nutshell, the conversion of vegetable oils or animal fats or greases into salve. So we hydrocrete those type of lipids chemically and then they become a feedstock that further in their process, will become either a green diesel, a 100% renewable diesel or a sustainable aviation fuel known as SAF. This is the most common route that have been around for more than a decade and where we have signed dozens of licenses around the world. So this is the most common one. Then, based on that technology and also on the availability of feedstocks, not only in Latin America but across the world, uop started looking for new venues of producing stuff.
Speaker 2:The second one that we are starting to see some traction is what we call the ethanol project, where we transform the ethanol into ethane and ethane into a feedstock that is going to be read to be produced into the SAF process. It's a very straightforward process. It's a process. That specific process consists of three different processes that we have been selling around the world for two, three decades. What we did is based on our experience. We just line up all those different solutions, using ethanol as the main feedstock in that process and going through all this process to produce salve. I'm not going to get into much details to not get boring, but it's pretty much straightforward. So we go from ethanol to ethane. From ethane you process a major oligomerization and then you have the hydration back there in the process and you produce site.
Speaker 2:So this is the second route that we have developed and, as I said, we are seeing a lot of good traction on that technology.
Speaker 2:The other one that has been developed for a while is the E-methane or the E-fuse, where you use E-methane produced from biogas and then using green hydrogen in the process. Hydrogen in the process you can produce E-fuels, internally speaking, one of them E-sulf or sulf, just by using CO2 and hydrogen in that process. That is a third route, and one of the most new technologies or solutions that we have just launched, as we speak by this week, is one technology that transform biomass being general leaves waste, organic waste, wood waste or any type of biomass that exists. We have developed a process where we crack the products, molecules, down to carbon and, in a very high-level explanation, we transform those carbons. We upgrade them into fuels, in this case in sap. So it's a brand-new technology that we just launched to take advantage of the large quantities of biomass that are available around the world. So these pretty much are the four routes that UOP have developed specifically for the renewable fuel market.
Speaker 1:Well, congratulations on the Unicracking announcement. We are recording this on the 26th of April, so this is very fresh news. Still, one of the things that interested me about that I'm going to dwell on this for a second is the claim that it's 3% to 5% high yield and marks a significant cost reduction in the process and the production of SAF from biomass. So I suppose my question is how does that happen? How does that work?
Speaker 2:Now this is a really good question, oscar. Well, we were able to deliver those type of outcomes and outputs to our customers, given decades of experiencing that type of technology. The technology for itself is not new for us. We have dominated that technology for years and customers use that type of technology in different applications and customers use that type of technology in different applications. What we have done was to adapt that specific process and technology to a different feedstock.
Speaker 2:So that was the largest part of the work, if you will, where our engineers, our thousands of PhDs that we have in the United States, developing new processes and solutions, put all those brains together to come up with the best way of cracking down all those biomass, for example, into the carbon itself, and how to pull them together and upgrade them to a fuel. So that was where we spent the majority of our time is to bring together those knowledge around how to crack that down and by using a different stock rather than fossil fuel or fossil petroleum or fossil crude oil, and then moving from that step on in the entire process, so that that is the reason why we could bring some really good advantage to our customers if they try to to move into that path so you're the president and in charge of South America, so I want to focus more on the South American and the Latin American activities you've got going on.
Speaker 1:So currently you've got two projects underway looking at SAF production. You've got one in Paraguay and one in Sao Paulo, I believe the Sao Paulo one with Petrobras and the Paraguay one with ECB Group, which is a biofuels producer in Brazil. Do you just want to talk me through both of those, the sort of stages of production and how that sort of how those projects are going?
Speaker 2:No, definitely. Yes, you're right. So those are the two first licenses that we have granted to customers in Latin America, more precisely here in South America. One of them is the Essential Energy Holding Group. This is an Argentinian group, but the decision of that group was to build up this plant in Uruguay. So this is one of the projects. The second project that was licensed by us was the ECB group that now is called BE8 group. They are owned by his founder, Erasmo Batistella, and he's one of the largest biodiesel producers in Brazil. Very also decided to build a very large plant in South America, but primarily to supply HVO, a hydro-treated vegetable oil, green, through 100% renewable diesel, green diesel. But his decision was to put this plant, or to build up this plant, in Paraguay. So those were the first two projects that were licensed in Latin America. So those projects are moving ahead.
Speaker 2:We expected now that the essential energy project comes along faster.
Speaker 2:At this point in time we are just in the final conversations and discussions.
Speaker 2:To us, Honeywell UOP and the Sustainability Technology Solutions Division not only supply the license and teach how to do it, but also we provide engineering for those plants and also we sell a modular plant for that specific application modular plant for that specific application.
Speaker 2:What that means is that by selling the modular plant we sell the heart of that new industrial complex and then the customer has to hire an EPC that will build all the peripherals around that hurt to make that come through as an entire industrial complex. So we are right now working with Essential Energy to close this agreement to sell the modular equipment so they can expedite their process of bringing their plant up to production earlier than expected. So we are on that stage with them. In the case of DE8, they are also moving ahead but because their original plan was to manufacture only HVO, we were requested to re-engineering that plant to manufacture both HVO and SAF, giving the SAF demand in the work. So we did that and now they are just reassessing again all what's needed to put this plant together and start building up the plant. So these are the stages that we are in the execution of those projects with those two different companies.
Speaker 1:And when do you expect them to come online and start producing SAF?
Speaker 2:Well, that is a really good question. That depends on a lot of different things, one of them being the permits to allow them to start executing that production or to turn on by sometime early mid-2027. And essential energy may be one year later from that time.
Speaker 1:And are you looking at any other? Looking at any other licensing agreements for production in South America? Those are up and running, and then you're going to look further.
Speaker 2:No, I think my direct answer would be no, oscar. In fact, we closed an additional two licenses back in late December. One of them we closed with Petrobras. Petrobras made a very thorough assessment of the technologies available in the world to produce both HVO and SAF and we were selected to become the technology partner for Petrobras in Brazil. So we are right now. We not only sold the license to Petrobras but also we are running their schedule A the engineering part of the process as we speak, and they are going to use use the engineering studies and analysis to build up this plant in the coast of Sao Paulo, close to Santos, where they already have a refinery there in the city of Cubatão. So that is moving along.
Speaker 2:The other one that also we closed back late December was with Acelin Renovavis. Acelin is one company owned by Mobadala Capital. It's one of the serving funds from the Abu Dhabi. So they also have been assessing the different technologies available in the market for that specific application and they selected Honeywell UOP for being the licensor of that technology as we speak. We are also working on their engineering studies to put this plant up and running sometime in the short future.
Speaker 2:They own one of the refineries that Petrobras put on sale two years ago, three years ago. They own the Matarita Refinery in Bahia and they are planning to build up this specific unit in that complex, in that industrial complex in Bahia, to supply uh, although their plant is going to be able to either produce hvo or south, it seems that they are moving towards more selling more sap than hdo. But they have the same flexibility like any other plant that you have a license, same flexibility like any other plant that you have a license in the region right now. So those are two other licenses granted by the end of last year. As we speak, we are also working with another four or five different companies, primarily in Brazil, that are looking for licensing this technology. Unfortunately, because of NDA, I'm not able to disclose who those companies are, but we are very confident that we may be able to close at least two or three new licenses still this year. A lot of interest is also from customers in Chile, in Argentina, on moving on that same path.
Speaker 1:So would you disclose who those companies are? We promised that every single listener would sign an NDA and then you'd be able to tell us. Would that work? And then you'd be able to tell us all the companies you're working with. Or should we not go there?
Speaker 2:No, probably we should not go there, Oscar, because also that would require an agreement from the other party.
Speaker 1:From what you were just saying. You're involved in so many different projects in Latin America and there's a lot of excitement around the world and interest about how big this South America could become as a SAF production market. What are the benefits of producing SAF in South America and also what are the challenges that you face when you're looking at producing SAF?
Speaker 2:Yeah. So that is a really good question, Oscar. I think one of the major advantages that companies have for producing SAF in Latin America, especially in the southern part of Latin America, is definitely the availability of feedstocks. As you know, Brazil is one of the largest agricultural producers in the world. We play a very major role in the agricultural sector. So we have a lot of great technologies to develop production in Brazil, in Argentina, in Paraguay. So this is definitely an area where the agricultural sector would help us a lot. So a lot of fields to extract production even though not even touching let's say not even touching the Amazon. So that is a lot of land in very, very huge productions in the southern part of Brazil, if you will.
Speaker 2:The second portion is the availability of greases and animal fats. So also Brazil, Argentina, Paraguay combined are one of the largest protein producers in the world. So the availability of greases and fats are quite high in the world. So the availability of grease and fats are quite high in the region and this is a very good way of investing in that type of product to become a renewable fuel. The third one would be the biomass available in the region. So, as you know, the poop and paper industry in Latin America is quite strong, primarily in Brazil, in Argentina and Chile. So the quantity of biomass waste produced by that specific industry is huge, what makes the entire region a very nice spot to produce SAF.
Speaker 2:And moving the SAF directly from those different countries in the region to put a SAF or HVO plant in Latin America, the challenges are that this is still not a regulated market. Pretty much the customers that we are talking to. They are looking for manufacturing in the region and export 100% of their material to either Europe or to the United States, where the demand is picking up. So, as you know, the United States is incentivizing the construction of their new industry in the United States, pretty much through the IRA, and Europe is mandating CO2 emissions reduction in those partner countries. So right now there is a huge demand requested for those different regions and the production should be exported.
Speaker 2:But as we move along the aviation segment, the aviation industry will also require a SAF. So, for example, when an airplane is coming from London to Brazil, it needs to refuel itself again to get back to London, right? So one way of doing that is to have local production. So we strongly believe that, as time goes by, part of the production. The majority of the production in the beginning is going to be exported, but then, as time goes by, part of their production is going to be consumed locally, Not necessary for our local users, but for foreign users that are required to use that material to get back to their origin. So that is going to be.
Speaker 2:I think this is one of the challenges that we have. This is not a regulated market, so we hope that now, with the new bill that Brazil is passing, called Fuze of the Future, we start creating their demand internally. That will help accelerate that process in Latin America and also, I think, generally speaking, not only the traditional oil and gas companies are really looking for this new type of technology. All of them are definitely. You see all these big and known names around the world going to sustainability, aviation fuel or HBO, so on and so forth but also they have called attention for different segments.
Speaker 2:For example, sugarcane meals are a major ethanol producer, for example, in Brazil.
Speaker 2:So they produce a lot of ethanol because this is part of our energy matrix in Brazil.
Speaker 2:So they produce a lot of ethanol because this is part of our energy matrix in Brazil and they sell that ethanol.
Speaker 2:Now they are considering well, how much would cost or what would be the value of my feedstock if I produce safi rather than ethanol to the local market?
Speaker 2:So they start thinking about that.
Speaker 2:But they are not used to have very complex operations, because when you are building a SAF plant, you are pretty much building a big refinery.
Speaker 2:We are talking about billions of dollars, or at least a very high-end millions of dollars, so it's a lot of investment involved on those type of projects. So one thing that you have been dealing with is first teach them that you need to really put more money upfront capex in order to benefit from the value that their feedstocks could worth, as well as you need to work with them to securely finance or equity to those type of projects. Honeywell UOP comes strong as well, because we have a very good organization that knows exactly how to walk away or to walk around all those major challenges that those customers face and help them setting up those bridges with the right partners to either fund their project as an equity partner or to get the correct institution financial institutions to finance those type of projects, Because this is a completely different deal for some of those companies that are willing to enter into this new industry. So I would say that those would be the major challenges regulatory and financial structuring or investment structuring to move those plants ahead.
Speaker 1:That was a fantastic answer. You mentioned that all the oil and gas people are sort of working with you are interested, and you've got people like the sugar cane mills also expressing interest. Are they all coming to you and saying, look, we're looking at SAF and you guys, the technology, you're involved in this. Or are you going out to them and initiating contact, saying you could use this as a diversified revenue stream to make a more valuable product? Or, you know, in the case of oil and gas, say, look, we're looking at a more green economy, you can look at your decarbonisation efforts through these technologies for these renewables. Who's making first contact?
Speaker 2:It depends. It would be both ways, oscar. We have had situations where we had approached some of the companies, showing them the technology, the demand that is up there, talking to them, teaching them on that specific opportunity. Likewise, we have been approached by a lot of different companies. Every time that I go to an event and talk about SAF or provide an interview to someone, it's almost instantaneous that I get back emails through my LinkedIn account or directly to Honeywell's email or whatever, but they always find a way to reach me and introduce themselves on the interests of talking about that.
Speaker 2:But also we have a lot of different customers that already know us but have not been working on that specific segment that also approach us directly, being the UOP management team in Latin America or either in the United States, and then they address them back to the region. So that goes both ways. But I could say to you, oscar, that two-thirds or more probably three-fourths of the opportunities are started by our customers. They are giving after us to learn more about their technology. They have seen our success not only in Latin America but across the world. We sold more than 50 licenses for producing HVO and SAF in the world. We are by far the number one licensor of that type of technology in our office and we have been approached by them to learn more about the technology. How much the capex would look like for putting up this type of opportunity?
Speaker 1:You've mentioned the issues around conversations around financing and the cost of building production, the amount of capex required up front to get a refinery constructed. How involved in those sorts of conversations are you and Honeywell once you've sort of agreed to do a licensing agreement, or do the conversations happen before you even signed the licensing agreement?
Speaker 2:uh, well, that is a really good, uh good, question, oscar, and we, as hanuel, we are quite involved on supporting our customers in all those venues, starting by the CAPEX. We are very involved in explaining to them all the investments required to put these plants up and running and what are the peripherals that are required to make that happen, even more for those companies that have not used it to refine crude oil in the past. So, yes, we help and we support them very thoroughly during their process. Also, as the project moves along, they need to start structuring their investment. That could be through equity or finance, and also this is an area that we closely participate with them.
Speaker 2:Sometimes we introduce them to equity firms that are interesting on funding projects based on Honeywell's UOP technology, as well, as we introduce them to financial institutions, well, as we introduce them to financial institutions that are willing to grant finance to those types of investments. Those financial institutions could be private banks, but also, on the majority of them, are ECAs, like the Export-Import Bank in the United States, for example, or the UKF in the UK, or the ECA in Spain, all over the world. So we help them to structure those finance, as well as we work with some of the equity funds that are interested in funding those type of projects. So we walk hand-to-hand with them throughout the entire project to assure that they can benefit from our knowledge, our expertise, not only the technical side of the project but also in the execution side of the project.
Speaker 1:Do you think there's enough investment options in Latin America when you look at sort of venture capital, sort of public incentives, blended finance options, when you're looking at project finance, equity debt, all those different stages of finance required in building a project and all those different methodologies of getting to of FID and building a project and all those different methodologies of getting to of fid and getting a production built, do you think there's enough in south america, or is it necessary to go to the us, to europe, to the sort of more established south markets and look for financing there?
Speaker 2:yeah, yeah, that is a very interesting question, oscar.
Speaker 2:I would say that, uh, there, there are a lot of funds available for those type of projects in latin america.
Speaker 2:Nevertheless, probably the financial institutions on the equity funds that are established in Latin America, primarily in Brazil, they are not so comfortable on moving on finance or putting equity in those types of projects, just because they don't understand that industry, because it's a completely new industry that is being formed.
Speaker 2:So this is more on the radar of those international institutions, like I mentioned some of them. So, but answer your question, yes, I think as they start seeing projects come along, those offtake agreements being executed, I think they will be more, will be more comfortable on supporting those projects locally. What I can tell you is that the Brazilian National Development Bank is really looking for funding those types of projects even more now with the new Fuels of Future Bill that is coming along. So they are already getting prepared to be one of the key participants in their process, if you will, and we see more and more interest from those different institutions. So, answering your question, I would say that, yes, that is a lot of available money for those type of projects. What happens right now is that they don't understand that specific segment well enough to really go and put a stake there.
Speaker 1:With that, I think, do you see, that licensing technology is the faster route to getting to the levels of production that aviation needs for SAF? Because you've got a load of startups and in order for them to get through the venture capital startup phase, they need a new technology, a way of doing something that's different in order to attract the VCs. Then they get stuck in the valley of death so-called valley of death because the later stage investment, it's an unknown risk in terms of that technology. But with your century of refining and technology licensing history, do you think that's the way to get more projects built quicker?
Speaker 2:yes, I, I think it's uh. The way that those projects are structured is uh, is just a question of um, what the company that are interested on moving forward with those opportunities want to to do? Yes, license. It's critical in that process Because even if you want to build their project and want to talk to institutions, if you don't even have a license for that, so what we are going to talk about right.
Speaker 2:So in financial institutions usually they want or the equity funds, they really want to see that you are serious about that opportunity. They do not expect that you come to them and say, okay, I want to line up everything here before I really move forward. No, they want to see that you are serious about that project. And that was the reason why Essential Energy and BE8. Now they move ahead with their license because they want to show the market that they were not playing around. So they are spending a lot of good money because that is not for free and to get those Schedule A engineering plans you have to spend a very considerable amount of money. So when the financial institutions see that you are spending that money, money upfront, without knowing that you have made a decision on FID, yes, then they start talking to you. So it's really important that customers select the licensor as well as start making the Scalaway Engineering plans designs in order to be able to move the needle up to either to the offtakers as well as to secure feedstocks.
Speaker 1:So I've got two more questions for you because you've been very generous with your time. One we mentioned at the beginning that Honeywell's got numerous different business arms looking at numerous different aspects of it. Business arms, looking at numerous different aspects of it, but one of the big aspects of it is the engine manufacturing and you're working on developing engines that can cope with SAF beyond the 50% blend limit and enable more SAF and less jet a fuel to be used by aircraft, because obviously at the moment it's only 50% because of various different issues that we don't need to go into now. How does that relationship work? Are you working with the people on the engine side and are they sort of working with you in terms of how they can get up the capacity of their engines for processing SAF?
Speaker 2:Yeah, that is a really good question, oscar, and, as I quickly mentioned, so in Honeywell we address all our solutions and product development in our three megatrends. Product development in our three megatrends. Our portfolio and our investments on research are fully focused on three major megatrends Automation, energy transition, as we have been talking to now, and the future of aviation. Future of aviation is an important component on Honeywell's portfolio and we have been very successful not only on addressing the needs and requests from our global airline customers with the aviation and mechanic equipment to their aircraft, but also with engines. We do not participate in the long-range engineering aircrafts, but we participated quite well in the business jets segment. In that way we sell engines for different business jet manufacturers across the world, being Embraer one of them in Brazil. So they are a very important customer of ours and they have tested last year our technology.
Speaker 2:Saf is our licensed technology. The product was not manufactured by us, obviously. It was manufactured by one of our customers that licensed our technology and they tested this in our engines. The test was excellent. The performance of the engine was outstanding, beat all the required metrics and in fact, was even a little bit better than the current kerosene that is used to run those engines so that worked very well. Also, I would like to remember our audience here that also we run that same type of test with the big engines. We run that test in an alliance with United Airlines in the United States and that flight went very, very well and they run the engine 100% safe. The engine 100% safe. So the technology is proven and this is one of the easiest way of decarbonizing the aviation industry.
Speaker 2:Answer your question, oscar. Yes, we have been working very closely with the engine team in Phoenix in order to assure that the new generation of engines are aligned with the new fields that are coming up. Also try to increase that technology that you just mentioned, the 50% to higher range. So we work together as one Honeywell the Aero Technologies team, along with the energy and sustainability solutions team. They work together to come up with the best solution for that specific industry. We got involved with the when the test is out in Latin America, like in this case at Embraer, case at Embraer but much more to support their tested operations locally rather than for the full development of the technology behind the scenes.
Speaker 1:My final question is put yourself 10 years in the future. What do you think the SAF production and SAF industry in South America will look then in 2035? Are we gonna? How many sort of what's it gonna look like in your eyes?
Speaker 2:Well, now, that is a unloaded question.
Speaker 1:It's a small question, it's not that big.
Speaker 2:So obviously I'm not that smart to answer that question, but I can give you some of my thoughts on that if you will.
Speaker 2:So it's an interesting question, oscar. I think even if you put all that route that Hanwha has been, even if you put all that routes that Honeywell has been developing and innovating along the last few years to find the ways to produce more safe, more renewable fuels to help accelerate this industry decarbonization, carbonization still that is not even going to scratch half of that demand, like by 2035, 2004, even 2050. Probably by that time we will reach I don't know, it's just a guess, it's my guess, jose's guess, it's not Hanwell's number, but I would guess that would be around 15, 20, who knows 25% of the total demand required. If you put all the technologies working together to produce the SAF, using a lot of biomass that we have a bunch of good availability in any place in the world, using all that feedstock availability that I mentioned to you in Latin America, if you put everything to work together all these financial institutions, government working, rowing in the same way, in the same direction, probably 15 to 25% range would be my magic number, josé's magic number.
Speaker 2:I don't have any study to support that answer, but it's just my guess as I walk into the market every day and see what is going on and see what's being developed. But it's a very hard question to be answered at this point in time. I'm sure that in the upcoming years we are gonna have different technologies popping up and probably one of them could really help accelerating that production. So, like we just did, like we just announced this week, the new technology to crack down biomass into SAF. So this is a reality right now and we may create something different in one or two years from now that could be completely transformational and could really accelerate that production to decarbonize that industry. I do not foresee electrification on the big aircrafts being a reality at this point in time. It may be probably in 10, 20, 30, or not 10, 20, 30, 40 years from now, and I don't know if I'm going to be here to see that happen.
Speaker 2:I hope so when that happens, but yes, that may be a reality sometime in the future as we continue developing new, lighter batteries, long-range batteries, so on and so forth, but I don't foresee this as a solution for the short term. Even more for the larger aircraft, If you're talking about the EVs, all that stuff. Yes, for city mobility yes, that is going to be a reality.
Speaker 2:We are going to see more and more of that in five, two, three, four, five, 10 years. But for the larger long-range aircraft, I'm not seeing that as we speak, but anything could happen in the coming years where companies like ours developing a solution that is really a cutting-edge, breakthrough initiative that really transformed their complete industry that really transform their complete and they're completely industry.
Speaker 1:Well, hopefully, you're proved wrong and SAF is produced at a much greater level and electrification is on the way, and it's all. It's all cherry, but um. So fingers crossed. We can, you can be proved wrong, but um.
Speaker 2:I would hope so, as well I would hope so, yeah, yeah, we are supporting all our customers in all uh all ways that we can in order to make this a reality. We are honeywell is fully committed to the world's decarbonization with the different uh solutions that we have brought to customers, not only in the energy transition, but also helping the hard-to-abate industry to decarbonize by capturing or sequestrating carbon from the atmosphere in the hydrogen path as well in the energy storage systems. So we are fully committed with that. We, as Honeywell, we committed to be net zero by 2035. And we are working towards that path. We are close to that and we will continue developing solutions that will accelerate the process for all the customers and partners.
Speaker 1:And on that note, Jose, thank you so much. You've been very generous with your time and that's been a fascinating discussion about what's going on in South America and what Honeywell's got going on around the world in their pursuit of decarbonization efforts. So thank you very much.
Speaker 2:Thank you for the opportunity, oscar, very happy to be here to share a little bit more about what Honeywell is doing to help the world to address the most challenging issues that we face, and count on us to continue supporting this initiative, because it's with a lot of education that helps the entire world moving towards the same direction.
Speaker 1:Perfect, thank you.