The SAF Podcast

The SAF Podcast: Breakthrough Energy - SAF discovery, development and deployment

• SAF Investor • Season 3 • Episode 4

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This episode of the SAF Podcast welcomes Julia Reinaud from Breakthrough Energy to discuss how sustainable aviation fuel fits into Europe's renewable energy landscape. Julia shares insights from her extensive background in climate policy and energy innovation, explaining Breakthrough Energy's mission, since its founding in 2015 on the back of the UN Climate Change Conference in Paris, to accelerate the clean energy transition through its network of investment vehicles, policy efforts, and philanthropic initiatives.

The conversation explores the critical challenges facing the SAF industry, particularly for e-SAF (synthetic fuels) development in Europe. Julia highlights Project SkyPower, an initiative bringing together over 50 organizations to unlock final investment decisions for commercial-scale e-SAF projects. She discusses the importance of bankable offtake agreements, regulatory certainty, and innovative financial mechanisms to bridge the "green premium" gap.

Julia offers valuable perspective on how public-private partnerships can drive progress, citing Breakthrough Energy's collaboration with the European Investment Bank and European Commission. She emphasizes the urgent timeline for meeting 2030 mandates, noting that Europe needs 600 kilotons of e-SAF annually but only has 300 kilotons of capacity on track to be operational by then.

This episode provides crucial insights into policy alignment challenges, technology development pathways, and the systemic changes needed to scale sustainable aviation fuels and meet ambitious climate targets in Europe and beyond.

If you enjoyed this episode, check out our previous discussion with Matteo Mirolo during his time at Transport and Environment: https://www.buzzsprout.com/2202964/episodes/13415579

Oscar:

Hello and welcome to another episode of the SAF podcast. This week I'm delighted to be joined by Julia Renaud from Breakthrough Energy, and today we're going to be doing a lot of discussing around European policy how SAF fits into other renewable industry developments and looking at how policy, because one of the big issues around SAF development is getting the policy structure right to suit producers, and Julia and Breakthrough Energy have great exposure to this as well as in other markets, so it would give a great overview about how SAF fits into the overall renewable developments in Europe. Julia, thanks so much for joining us. How are you?

Julia:

Very well. Thank you so much, Oscar, for inviting me.

Oscar:

No, absolute pleasure, Absolute pleasure. So before we get into the detail, do you just want to take us through your background, how you ended up at Breakthrough Energy, because you've got quite an interesting route to where you're currently at.

Julia:

Yeah, thanks for the great question. So I'm an economist by background and I started my career at the International Energy Agency, where I was working on climate policy. So I've always worked on climate, on energy, on innovation and all these topics that are critical for the energy transition. And after working at the International Energy Agency and finishing my PhD, I then spent 10 years in climate philanthropy, on the one hand, working on decarbonizing heavy industry in China, india and in the US and Europe, and then working for the European Climate Foundation, working on really, how can we dive deep into trying to influence the policies that matter in Europe in order to accelerate Europe's energy transition? So, after working 10 years in climate philanthropy, I joined Breakthrough Energy at its earliest start in 2018.

Oscar:

Breakthrough Energy. You're based in Paris and Breakthrough Energy is Bill Gates's sort of brainchild, and it started after the Paris Climate Agreement in Paris. Was it 2018?

Julia:

2015. So it's coming up to 10 years of breakthrough energy.

Oscar:

Now Do you just want to explain? I think lots of people will be familiar with breakthrough energy, but do you just want to explain a bit about your mandate and what breakthrough energy is trying to do and the different arms it has?

Julia:

Of course. Thanks, oscar. I mean great question because it was established in 2015 by our founder, bill Gates, but since then, breakthrough Energy has evolved and is a network of investment vehicles, policy efforts and philanthropic initiatives, all with the mission to accelerate the clean energy transition to build a net zero future. I think what's really critical here is the energy innovation aspects, and essentially we look at green premiums so the cost difference between emitting and non-emitting technologies, to identify where and what kind of energy innovation is most needed. Overall, I think we're trying to do a few key things. First is supply innovation we invest in new generation of innovators and technologies that will help us along the journey of the energy transition, but we also support them through philanthropic initiatives, and I'll get to that. Second is really drawing in others. Our DNA is that we think that, of course, we cannot do it alone, and so we need a network of partners from the public, private and philanthropic sectors who are willing to work with us on our journey. And then, third is reducing the green premium.

Julia:

As Bill Gates has always said in his book and also in the work that we do, we need to make sure that these technologies and solutions become affordable and scale so that the entire world can adopt them.

Julia:

To do this, we focus on how technology policy and markets can work together to accelerate that transition.

Julia:

And essentially, when we're looking at breakthrough, as we think about where do we need to play a role in the energy transition, we think about different stages of innovation and we think about discovery, development and deployment. For our discovery program we support over 100 fellows across four cohorts across more than 13 countries, and here we focus on supporting with grants these first time entrepreneurs that are really working on very early stage technologies, working on very early stage technologies. Then comes development, and here are Breakthrough Energy Ventures investment team backs over 120 companies across 12 countries. And then comes our deployment vehicle, which is our catalyst program, which really focuses on these first of a kind demonstration and commercial scale high impact technologies. But that's just on the capital side, right, technology capital. But then we we think about not just technology capital but these partnerships, as I've mentioned, and the policy work and that's where I work, which is in the philanthropic. And then the policy side is how do we make sure we've got the right markets and the right policies that enable the transition and the scaling up of these technologies?

Oscar:

Do you have to, as part of your contract, mention Bill Gates' book every time you talk about breakthrough energy.

Julia:

I mean, it's a great book. Honestly, I can say that my whole family's read it. You know, as people ask about what you do, I say you know, read how to Avoid a Climate Disaster.

Oscar:

You don't have to explain what you do, you just give them a book. You just give them a book, you know. But then, yeah, yeah. So if we're talking about transport, and then within transport, aviation, how are you sort of, on Breakthrough Energy, looking at balancing sort of the longer term developments in terms of hydrogen and battery and electric technologies and alongside the more short-term developments within SAF and then within SAF, the longer term ESAF developments in power to liquid versus the shorter term heather and biofuels sectors? Within your role, how are you sort of looking across those spaces, because there's such development going across all of them? How do you have the time to sort of balance them all and sort of look at creating a policy that can encourage all of them respectively?

Julia:

Well, that's a very big question and a great question, oscar. I think first and foremost just about breakthrough energy. We focus on what we call the five grand challenges, and so that's transportation, that's industry, that's buildings, energy and agriculture and food. So, just as sort of a scene setter, we focus on all of these grand challenges and then our teams and we focus on impact and how we measure. Impact is half a gigaton of CO2 emissions at scale, so we really focus on those technologies and those solutions that have a major impact. Then again, as we're looking at the aviation sector today, it's about 2.5 percent of global CO2 emissions and we are definitely seeing several emission abatement solutions that are emerging, saf being one of them, but also looking at zero emission fleets, right. But when we think about how do we decarbonize the sector, we also look at the timeframes right, as I was mentioning, what is sort of earlier stage versus what is ready for deployment. If we think about sustainable aviation fuels, they're currently considered the only viable option for mid to long haul flights, so that means sort of above 2,500 kilometers. So they are having a major impact on what are the decarbonization options. And then also in terms of SAF production routes, we're also focusing on those, but we're also focusing on those that are sustainable, scalable and have the potential to reach these zero green premiums that we've talked about in the long run. So that allows us really to focus on a breadth of SAF portfolios, but still with this impact on what is scalable and what has the we also focus on the new technologies that can produce these ultra cheap feedstocks in order to produce these green fuels, as well as the technologies that need that. We need to turn these feedstocks into aviation fuel.

Julia:

The staff space, but particularly here, looking at esaf, so synthetic fuels is the home to some of the highest green premiums in the energy transition. According to project sky power, which is an initiative that I'm hoping to talk to you about, which is very much focused on these synthetic fuels, in 2030, esap will be 60 times more expensive than fossil jet fuel, even after carbon pricing, and that's much higher than we see to other crucial emerging technologies and their premiums, like green steel or green cement, which are more in the 30 to 70% range you asked about within the aviation sector, how do we balance the long-term sustainability solutions, like hydrogen batteries, and the shorter-term solutions like SAF? Zero emissions aircraft, including electric and hydrogen fuel planes are clearly the ultimate goal, rather than relying on carbon-containing fuels that are difficult to produce sustainably. We're very optimistic about accelerating the pace of innovation and have invested in a number of companies in this space, like Art Aerospace, zero Avia, and we expect these aircrafts to play a key role in decarbonizing regional and short-haul aviation, depending on the progress we make on these propulsion systems.

Julia:

But as bullish as we are on these zero-emission aircrafts, we believe that SAF is crucial and unavoidable for two reasons. First, we'll need a lot of SAF to decarbonize the airplanes of today, which will still be flying in 2050, and meet our regulatory requirements and industry targets. But second, we also think that some key aviation segments will continue to rely on liquid fuels permanently, and so including ultra emitting long haul flights, and that's where SAF really plays that role, in addition, of course, to everything related to flying less, you know, reducing travel. But that's a little bit how we're looking at. This is in terms of what can be done over the long term, what needs to be done immediately, and what are the issues today with SAF and how do we unlock final investment decisions in that area.

Oscar:

In terms of SAF. What you mentioned Project SkyPower and initiatives like that are it's that came about late in 2024. What are sort of the big perspective shifts, if any, that you've seen sort of recently in terms of SAF? Have there been any? Has there been sort of a sea change? Obviously, we've had mandates come in in Europe and the UK this year. Has there been sort of a change of perspective?

Julia:

That's a very interesting question. I mean, as you've mentioned, looking at it from a regulatory and sort of market opportunity perspective. The introduction of refuel EU aviation in Europe and then the UK mandates, is certainly a turning point for the EU SAF industry, creating a demand signal, which is what is key. These mandates, which are also critical, but I'd caution here in terms of where I think it's very important for us to spend time, which is whilst there's a project pipeline, whilst two-thirds of the synthetic fuel SAF projects have been announced in Europe, none of these or with the exception of Inerratech that announced its final investment decision, none of these have actually reached final investment decision in Europe. And that's where I think, whilst we're introducing these SAF mandates and e-SAF mandates starting in 2030 for the e-SAF mandates we're recognizing that we need to really double down on what is preventing these final investment decisions.

Julia:

And this is where Project Sky Power comes in. Alongside a number of other philanthropists, we've worked with the entire value chain of the e-SAF sector, going from producers of e-SAF all the way down to off-takers and including EPC companies and financial institutions and banks, including off-takers, to really double down on how do we create this pipeline of leadership that we have in Europe for having announced these Power to Liquids projects to final investment decisions, and what are the needed changes and pillars that we need to really double down on in order to be able to see these first final investment decisions made, so that we don't have announcements without actual shovels in the ground to meet the EU mandates and the UK mandates?

Oscar:

Anne, you mentioned offtakes and do you guys look at the demand side of the equation? I know you've mentioned sort of as part of your three Ds, the discovery and the development side. That's a big aspect of what you're doing. Are you looking at sort of almost sort of the fourth D, the demand side of the equation as well, because the more people you speak to, the more critical that is when you're talking about getting to FID.

Julia:

A hundred percent. I mean the D is part of, or the demand side is part of all of the Ds, right? I mean, I remember this motto from the US innovation agency ARPA-E that says if it works, will it matter. The point being is, if you develop a technology and a solution without there being demand for it, then what's the point, right? How will you create a market? So I think for us, demand is absolutely key. Now, how do we work around the demand side aspects? If I think about how we've been working on this is that we work closely with airlines that are serious about their climate commitments and who want to be a first mover in SAF. But even the most forward-looking airlines struggle to convince their board to commit to the binding long-term offtake agreements that these first-of-a-kind projects need to reach FID, knowing that this is an industry that usually buys fuels on the spot markets and almost, you know, know at best one two years ahead.

Julia:

Our catalyst team I mentioned here. This is our our capital deployment uh program team working on um. First of a kind. Saf is a big part of their portfolio. Synthetic fuels is a part of their portfolio and it's not just providing capital to these projects in the form of grants. Our Catalyst team has worked closely with. One of their projects that they've supported in the US is from Infiniium, which is a power to liquids project, and here they work closely with Infiniium and major scope one and scope three offtakers to two landmark bankable offtake agreements that are a blueprint for the rest of the industry to follow. Here in 2023, they announced an off-take deal with American Airlines as well as Citi for their scope three SAF certificates, but last year they also worked and supported on creating a second long-term off-take deal with International Airlines Group.

Julia:

So one of the key but it's also important for us to sort of take the state of where are the airlines today. You know, one of the key challenges that they have and, as we're working with them, is to really address this first mover disadvantage that these companies could face. The airline industry has high volumes but also razor thin margins, often close to the price of what I'd call a cafe and a croissant in the airport, to be honest. Per passenger and if an airline is the first to sign an offtake agreement with the first ESAF plant, remember these premium six to eight times they risk locking in high fuel price that a competitor buys from fuel from the third or fourth ESAF plant, which would have a lower production cost.

Julia:

So we need to make sure we find a mechanism to lift this barrier. So we've been working as part of this and Project SkyPower as to what that barrier solution or offtake solution could be. Bottom line is, everything that we're doing is very much focused both on the supply but equally on the demand side, and then we're looking at on the demand side seeing what is it that we can do, either because it's a first of a kind project or because we believe that it's important to be able to unlock investments in the entire industry so that we actually see the SAF being uptaken by a lot more of the airlines.

Oscar:

I mean airline margins must be pretty healthy because those coffees and those croissants in the airports are pretty expensive. Um, you've mentioned a couple of um off-take agreements and you said kind of the? Um, the buzzword that's going around, bankable off-take agreements and off-taking not all, all offtake agreements are equal. Um, so you mentioned the Infineon one with American Airlines, city and IAG. Um, do you think there's sort of enough sort of bankable offtake agreements for producers to get to FID? Do Airlines have capacity to get there to show enough demand because, as you said, there's a lot of reliance on the spot market and voluntary to get us through at least the first few years of the mandates as they ramp up?

Julia:

I mean, in order to have these final investment decisions and ESAF producers actually starting to have these shovels in the ground, I think we need two aspects right. We need binding multi-year offtake contracts with reputable companies, and then the second is we need the regulatory certainty that the blending mandates will continue, and you need then, in addition to that, you know, accelerated permitting. You need to make sure that you have affordable energy prices when you're talking about synthetic fuels. So the point is that we need an ecosystem that is very much there to be able to see a business case in a favorable environment when it comes to offtake agreements, again here, when we talk about bankable offtake agreements, I think we're looking at 10 years plus, so that they are actually alongside sort of the timeframes that the banks would need in order to see foreseeable revenues as they're providing loans to these projects. I definitely also think that, when it comes to synthetic fuels, these examples that I've shared are only the beginning of what we're hoping, then, to create a blueprint for the industry. For sure, there's much more HEFA offtake contracts, also given the lower price premium, but when it comes to synfuels, certainly seeing a movement towards what are these blueprints right for these offtake agreements comes to who is making the offtake agreement. I think, coming back to this first mover disadvantage, I think we need to be more creative when it comes to how do we combine a syndicate of offtakers, be able to be the counterpart party of these offtake agreements.

Julia:

The second is, I think, if you look at what has been done in trying to help the hydrogen sector in Europe, look at what has been done in trying to help the hydrogen sector in Europe, there's this initiative called H2 Global where essentially you have the German government that put, if my memory serves me well, something like 800 million euros into a foundation that is capitalized and that plays the role of a market intermediary. What it does is auctions for buying hydrogen for about a space of 10 years, which is the bank sort of the offtake contracts that are necessary. But what that intermediary does is then auctions the hydrogen to those who are wanting to offtake it and buy it for one, two, three years. Details are definitely worth checking, but essentially then they use this funding from the German government to balance out then what is the price volatility.

Julia:

You could very well imagine a similar capitalized intermediary in the SAF space to be able to sort of take on both the fact that the airlines and off-takers perhaps don't have those 10-year appetite, although again, we are seeing some foreseeable movers right American Airlines, citi for their scope 3, iag. I mean definitely that we need to encourage, but I do think, thinking within this context of before we have very much cheaper ESAF, how do we play that role in helping de-risk and in helping unlock these final investment decisions?

Oscar:

It's very similar to a thing that's being discussed in the UK around the revenue certainty mechanism.

Julia:

The revenue certainty mechanism.

Oscar:

Giving both sort of the structure and the consistency for offtakers, but also giving that certainty to the investors. They can producers can guarantee a certain price over the long term, in which point could encourage more investment and encourage longer term offtake and simplified offtaking agreements, which I think only serves all three of those parties respectively.

Julia:

Fully agree, and I think that's the sort of interesting part from a public policy perspective, which is, how do you think of supporting an industry that is basically where solar and wind were 20 years ago? How do you create these types of industries where you're setting the right mark, you're setting the market conditions right, which are the mandates, but then how do you create these types of industries where you're setting the market conditions, which are the mandates, but then how do you help de-risk these investments? Again, coming back to the ESAF, which is where Project SkyPower is focused, is what are the targeted instruments that we need in order to help de-risk? If I think of again our Catalyst program here in Europe, we have a partnership with the European Investment Bank and the European Commission and it's solely targeted on how do we unlock the investments and final investment decisions in these first-of-a-kind projects, first-of-a-kind demonstration scale or first-of-a-kind commercial scale scale.

Julia:

And we announced, not a week ago, funding for Ineritech. Ineritech is and that's within the context of the EU Catalyst Partnership which is a Frankfurt-based company and with a 70 million grant and venture debt funding from both Catalyst and the EIB. We provide the grant, the European Investment Bank provides its venture debt funding from both Catalyst and the EIB. We provide the grant, the European Investment Bank provides its venture debt. We will be able to support a large demonstration plant that will become the first and the largest ESAF production facility in Europe and also be able to prove a new modular ESAF production concept based on a novel reactor design that could see a quicker pathway to market. Here again, it's sort of a combination right. We need to make sure we have bankable offtake, we need to make sure that we have the regulatory certainty, we need to make sure that we have the right type of financial vehicles and we need again.

Julia:

That's where our teams at the Catalyst and the EIB are so central is because it's not just about providing the funding, it's also about how do you make sure that these companies that have been developing technologies are set for this industrial scale right, and industrialization. And that's where the teams really come in as well in terms of, okay, what are your contracts? What do they look like? You know, how do you have the right teams in place? And so my colleague, mario Fernandez, and the Catalyst team have created this blueprint for what is called the 12 keys to scaling, and that's really sort of serving as a blueprint. Again, it's not just on the financing side. It's not how do you create a first of a kind, that is, project finance, ready for being then the second of a kind, but it's also then, what is the type of support that you provide to the company, and how do you make sure, then, that it has the right and potential offtake contracts and many, multiple other things that they work on?

Oscar:

I think you're speaking to an excellent example of where public-private partnerships are really valuable, particularly in this emerging space and in SAF, and where, potentially, the European Union and you know other places in the world are leading the SAF charge, because they're looking creatively at this, adjusting lender risk and using the public finances and private finances together, along with policy discussions, to really come up with a whole ecosystem approach to the solution, rather than looking at it in a siloed fashion.

Julia:

I could not agree more, and that's why Project SkyPower has, you know, ceos from from 14 companies that are playing the role of sort of in the steering committee, but we're working with over 50 organizations from across the value chain and including in the think tank and in the policy space that are all working towards this common goal, which is how do you unlock these first commercial scale ESAP projects and what is then required, what is required to de-risk, what is required on the policy side is required on the on um, on on the offtake side, and sort of how do we avoid this situation where everyone is pointing to each other and sort of saying, well, you need to take action, no, you need to take action and really have more of this collective action, um, and and perhaps more of this orchestration of how do we unlock. And again, this could be replicated in so many other sectors, not just in the ESAF space.

Oscar:

Do you think there's still work to be done on making private-public partnerships sort of better like fulfilling these growing climate solutions, whether it's SAF or other sectors more to gain momentum? Because, as we've said a couple of times, there's no project in Europe that's reached FID yet and we've got 2030 with ESAF mandates. That's a lot of what Project Sky Power is going on about. What needs to sort of change to speed that process up.

Julia:

Well, I mean I mentioned at the beginning sort of part of our DNA is this partnership and ecosystem, part of Breakthrough Energy's DNA, and so very much. We are a strong believer in public-private partnerships. I mentioned I've been with Breakthrough for seven years and two of the big sort of endeavors part of my role has been the public-private partnerships we have with the European Commission and the European Investment Bank. The first is around Breakthrough Energy Ventures Europe, which is the venture capital arm that we have both with the European Commission via the EIB and our Breakthrough Energy Ventures team. And then the second is this EU Catalyst Partnership where we've committed alongside to mobilize up to a billion dollars for these first of a kind projects and what it requires is really thinking about capital differently. Right, we're looking at longer timeframes when we're thinking about our hard to abate sectors or the energy innovation. We're not talking about a five-year return. We're talking more about hardware sort of deep tech development cycles which are 10 year or more. And then the second is everyone needs to consider what type of risk they can play they, they risk appetite they have, and then what type of financial vehicles or what type of guarantee could the public sector or philanthropists provide and in order to be able to mobilize the capital that we need. So, you know, we're thinking about how do we unlock this wave of final investment decisions across a range of sectors.

Julia:

There's definitely a need for public-private partnerships and, as part of that, the dialogues for policymakers to understand what is the technology edge, what are the challenges that these companies are facing when it comes to actually investing in Europe. Is it a demand challenge? Is it a regulatory permitting challenge? Is it hey, there's double taxation, or is it more? I need some financing that is de-risked in order to attract the banks, in order to attract more equity providers. And then there's really this notion of collective action. Right, it's not going to be one. It's systemic change that we need. You know, we need low cost, cheap, baseload, clean energy. We need, then a whole load of more sort of actions. You need the grid, you need then the power supply, you need these factories to be built. So it's really within that context, I think, that the systemic change is absolutely critical. And within that realm, yes, yes comes public-private partnerships, but I'd even include that to public, private and philanthropic partnerships, which is a lot of what we're doing at Breakthrough Energy.

Oscar:

So we've got three D's, four P's. They're just slowly growing. You mentioned sort of this sort of vast systemic change that we're looking at and you're actively working on, but shaping policy to encompass this is. If you're just looking at SAF policy, it's a whole minefield. With aviation You've got sort of EU ETS, you've got refuel EU, you've got specific nuances among them and potential areas even within those two areas of policy where potentially they clash and they don't necessarily marry up. I mean, airlines have sort of spoken about the balancing mechanism, not necessarily lining up with EU ETS, eu ETS. So there's definitely work on the policy side as well to sort of make their absolute alignment in terms of creating a strong demand signal there?

Julia:

isn't there Absolutely. And I'll give you as sort of one example, which is, you know, in Europe we have the carbon markets, and we also have the carbon market then for intra-EU flights, and there is this mechanism whereby airlines, as they take off from Europe, are able to have SAF allowances, so essentially the equivalent, then, of an allowance that you can sell on the carbon market. Those SAF allowances are provided on an annual basis, ex post. The challenge is that that doesn't meet the requirement, then, of having these bankable support mechanisms right, especially because it's first-come, first-served. So, whilst it might be generous because it's up to, I think, 80, 90 percent, depending on where you are, in terms of the cost premium to that SAF allowances covers that it's not aligned with the time horizon that these companies need in order for there to be to covering the premium right. So that's just one example, and that's the multiplicity indeed, of what you're saying in terms of what type of mechanisms do we have and who is the obligated party? Is it the fuel supplier, is it the airline, is it the airport, is it so?

Julia:

But I think there's really a need to sort of take a hard look, and this is what we've done with Project SkyPower, with that ecosystem, in terms of what are the instruments, what are the mandates, and then sort of put that in French, as we say, put it sort of flat, and then really think about what are we trying to solve for? And we're ultimately trying to solve for the fact that Europe is ambitious in terms of its mandate. We need to make sure that we have the 600 kilotons of SAF in order to meet that mandate. And then we need to double down again on what are the challenges here, why isn't there enough supply? And then build that up and then thinking where's the best use of public support and targeted public intervention.

Julia:

So I see a shift, an appetite for having these types of dialogues, also for rethinking public policy. I mean, it's not a surprise that you know, part of the President von der Leyen's commission agenda is about simplification, I expect, and then the sustainable transport investment plan. I do expect, and we are seeing, I think, some changes like that, with an effort to streamline, simplify, not necessarily scale back or I hope, not scaling back on the ambition that we have. But really, how do we help? How do we help make Europe competitive? How do we help European companies become global competitors in a way again where it's important for the climate, but it's also important for Europe's competitiveness to be able to sustain and to see these projects.

Oscar:

So I'm just going to add another layer of complexity over an already complex situation is that we spoke about Europe as in isolation. But aviation is a global industry, it has global ramifications and the biofuel space is global and probably the most noticeable bit of policy that came out of 2024 was the bit of policy that came out of 2024 was the anti-dumping of Chinese yuko into Europe. But so there's also an element of European policy balancing sort of global markets in terms of, you know, getting access to feedstock for heifer, but also in terms of, if we're talking about ESAF, making sure it's green ESAF and, if you're, you know getting feedstocks from importing feedstocks to Europe, that they align with what the European Commission demands from them in terms of transparency. So it's a very, very finely balanced scenario, globally as well as sort of regionally, if you're talking Europe.

Julia:

I mean I think you definitely raise the point around more of an industrial policy type of approach that includes, indeed, trade as part of the instruments that are on the table. You know, I think, all of the solutions that we have around SAF and around sorry, I think that all of the solutions we have on the table related to SAF face a set of limitations to scale right. We don't have a silver bullet for clean fuels, for biofuels this is around the availability and integrity of sustainable biomass feedstocks. For synthetic fuels, it's the ability to scale up clean power, hydrogen and carbon capture. But so, strategically, our best bet is to support many of the solutions, both on bio SAF, on synthetic SAF, and then really thinking around how do we double down on supporting the solutions that will have the lower green premium so that these SAF solutions can be adopted faster?

Oscar:

And this goes into sort of the work you're doing on discovery with your fellows and doing that research into new pathways, new technologies that can produce SAF in a more efficient manner, because there's a big trend I mean it seems I've mentioned it most weeks on this podcast now that lots of people are taking old technology and looking to find efficiencies in it to simplify the production process, to either lower the capex requirements or lower the opex requirements, or which in turn have massive ramifications when you're talking about the green premium of SAF as well. So that's sort of a big early stage aspect of what Breakthrough Energy is doing as well.

Julia:

You mentioned the discovery and the development phase, where Breakthrough Energy has been supporting a lot of the entrepreneurs and the innovators. On the venture side, we've invested in companies that focus on producing the ultra cheap feedstock. We need to produce SAF with zero green premiums or near zero green premiums. Give you two examples One of them is Viridos, which is a US-based company that works to produce biocrude from microalgae, so a potential new feedstock for the mature heifer production process. And another example of this is our venture company, coloma, that's focusing on geologic hydrogen, which could crack the code of producing ultra-cheap synthetic SAF at scale, replacing here, in this case, the electric hydrogen in the ESAP production route. So there are sort of bets that our teams have been making, indeed, but again with this focus on scale and reducing the premiums.

Oscar:

So we've spoken about just now, fellows, and sort of the discovery development. We've spoken about the struggle to get to FID, potentially hopefully narrowing and shallowing out the, the valley of death, as people sort of refer to it as, which sounds terrifying, if you ask me. And so where do you? Do you think we're on track to meet production targets, mandated targets, when you look at 2030 and beyond, or do you think there's, there's room to go? And it's sort of you know, because these projects do take four or five years to actually to get constructed, to get once got to fid. That's not the end of the story.

Julia:

There's still a long way to go I'd say that this year and next year are critical years in terms of meeting the 2030 targets. Again, if we look at sort of refuel eu aviation regulation, it mandates 600 kilotons per annum of esaf in europe, but we only have a capacity of 300 kilotons per annum. That is currently on track to be operational by 2030. And in so many more sectors do we find these same challenges? Which is 2030, this is the year or next year maximum where we need to see these final investment decisions taken. I think this is absolutely critical that we double down this year and I think this is absolutely critical that we double down this year, knowing, of course, that it's also not a positive macro economy environment in which we need to see these decisions unfold, you know, and these investments decisions unfold. But I am optimistic that you know, the more we focus on what are the challenges and what are the solutions for scaling the solutions, I am optimistic that we can make progress. The question is at what pace can we make that progress? Also sort of more optimistic now that we have a startup and scale-up sort of strategy and commissioner in the European Commission. But again, how fast can we go in terms of understanding what are the right tools and remedies for scaling up in Europe. And equally, as I've mentioned, sort of how fast can you go from the multiplicity of instruments that we have today to support SAF around the SAF allowances or, you know, the Innovation Fund or many others and how quickly and targeted can we be in order to unlock these final investment decisions? Others, and how quickly and targeted can we be in order to unlock these final investment decisions.

Julia:

What we've been working on these past months at Breakthrough from our Europe team is working with Clean Tech for Europe on a clean tech reality check. You should check it out if you haven't seen them. And one of the first areas that we looked at is essentially what we're trying to do is provide real-time metrics and tools for policymakers to have a look to see whether or not we're on track or off track. The first clean tech reality check was around hydrogen and its end uses. Right, europe has major ambitions 10 million tons of domestic production, 10 million tons of imports of green hydrogen. Are we or are we not on track? And we looked at it, looking at three end uses. First is, of course, well, where we're capable of saying is it green, is it orange or is it a red light when it's green. We essentially looked at it from the perspective of is there actually a market? Is there demand? Oscar, you're saying sort of remember the point where you said around the fourth D being about demand, we actually always start as is there a demand for this, especially from a public policy perspective, to see whether or not it's setting the right markets.

Julia:

But what we found is where there's a sort of green light, where there's been quite a lot of progress in hydrogen use, is in the refinery sector, where there's a carbon market, where there's a quota and there's compensation, right, where we're sort of ready for takeoff but we're still waiting for takeoff, is in the synthetic SAF fuel space. Right, where you have the mandates, where there's a penalty for non-compliance and still you need to buy up the, you still need to buy the SAF. That is still. We still have the challenges that we talked about for SAF and final investment decisions. The third sector where it's sort of sinking before we sail is in the shipping sector, because you don't have the same type of mandates. You have a penalty but then, once you pay the penalty, you don't have any buying obligations of the low carbon fuels for the shipping sector.

Julia:

So why I say that is you asked us about? You asked me about 2030. Are we on track or not? I think right now, what governments actually don't have is these metrics, real-time metrics to say are we on track or off track? Targets do not mean final investment decisions, do not mean shovel in the ground. So that's the effort that we've been doing with Clean Tech for Europe and with analysis from systemic and breakthrough energy, where we're trying to provide these real-time metrics to basically saying what are the premiums, how much investment decisions have been made, what is an action plan to address these challenges? But not looking at it from the public policy perspective. First and foremost is looking at whether there's demand and then looking at the bottlenecks for getting technology and competitiveness leadership in Europe.

Oscar:

So, just to end with, what are you most excited for for the year ahead?

Julia:

What sort of this is a fantastic question and particularly, of course, relevant at the beginning of the year, as you sort of think about what is on the wish list. Honestly, what I'm really hopeful for is that we actually see real, tangible impacts, and that means more investment decisions. That means having these blueprint offtake contracts that are becoming more the industry sort of blueprint, as opposed to being a few great cases keen to see also more collective action, and what I'm hopeful for, I think the project sky power model that we've done is definitely one where I think it's it's key to think more in terms of value chains and systemic change, having the entire value chain and stakeholders and companies and public policy and philanthropists together in order to accelerate the transition. So I'm keen to see how many final investments decisions.

Julia:

How do we, at a year where there's going to be quite a lot of an investment package that's proposed for sustainable transport, but also the clean industrial deal, how do we actually have a deal and sort of broker deals with, with, with, with the leading companies that are willing to invest in the transition and then also, you know, from the perspective of working with super exciting entrepreneurs and companies, just also excited to see them bringing this technology and closer to market and so thinking about how do they, you know, how can they succeed in Europe and how can they grow in Europe. So you know, I work in very much sort of quite mission I mean very mission oriented and you know, a cause that I think is very important to fight for and a cause that I think is very important to fight for, which is climate change, and so excited to see how we can make the strides that we need in order to be able to see more investments and seeing these green premiums go down.

Oscar:

We've mentioned Project SkyPower quite a lot, so I'm going to put the sort of report mission statement that came out and the announcement in the podcast description, which I think everyone should read and check out. It's a very powerful movement and hopefully will really accelerate ESAF development. Julia, thanks so much for joining us. It's a big year in the space.

Julia:

Thank you so much, Oscar. Very pleased to have joined the SAF Investor Podcast. Thanks again for inviting me.