Page 8 - World Airnews September 2020 Edition

CLIMATE
CHANGE

A CLEANER AVIATION FUEL ALL OTHERS

OPPORTUNITY FOLLOW

By Jesper Starn and Kati Pohjanpalo

the focus is on “where we get the best trac- over the past five years. Neste is now expand-

tion” among airlines that are the most focused ing the Singapore facility, and the company’s

even years after featuring astronaut on sustainability, according to Vanacker. capacity is set to increase to almost 4.5 million
SBuzz Aldrin in its adverti sements, The big hurdle is the expense. Renewable tons in 2022 from about 3 million tons now.

Neste Oyj is once again gazing at the sky. aviation fuel can cost as much as three times Vanacker is considering expanding the

The Finnish company, whose bet on re- more than kerosene, Vanacker said. While Rotterdam site or building a new facility in
newable fuels made it the best-performing some governments are forcing airlines to Finland or the US as the Singapore facility is

large-cap in Finland over the past decade, use more and more bio fuel, kerosene is still soon fully in use.
has set its sights on a new market to con- exempt from tax due to a decade-old inter- Neste’s renewable business has displaced

quer: aviation fuel. national agreement, meaning there are few traditional fossil fuels as the refiner’s profit

The market is attractive, with the use of jet incentives to move to renewable fuel. engine. The renewable unit accounted for

fuel growing 2% to 3% per year, despite more “At the end, the customer has to have the just about 20% of revenue last year, but

fuel-efficient planes, and as airlines seek ways willingness to pay,” Vanacker said. almost 70% of adjusted operating income,

to meet requirements to cut and offset emis- But there’s really no alternative in the while oil products brought in almost 70% of

sions, Chief Executive Officer Peter Vanacker longer term. the company’s revenue, but generated only

said in an interview at Neste’s seaside head- “Electrification is still far away in aviation a quarter of its adjusted profit.

quarters in Espoo, Finland, recently. About - I don’t see it in 2040, 2050,” he said. “And Last quarter, renewable margins fell from

300 million tons of aviation fuel is consumed if it will come, it will be in short distances, exceptionally strong levels in the prior

annually around the world, Vanacker said. and then the question is, is it better to fly quarters on higher feedstock prices and
“We have 100,000 tons of capacity or to take the train?” lower prices from new markets, alarming The BesT Never resT

available in that particular quality that the Neste has been making renewable fuel, analysts. Vanacker sought to allay fears the

aviation industry needs, the supply chain is which it first called biodiesel, for more than margin decline is to stay.

set up - all that is ready,” he’s said. “Now it’s ten years and is these days using waste and “We’re running a very good business, we The Gulfstream G650ER recently achieved the fastest
TM

about negotiating the sales contracts. We residues from the food industry to produce always try to do the best for our investors longest-range business jet flight in history—flying from

are already selling renewable jet fuel, but the it, including used cooking oil and slaughter- to make sure that we get good margins out

volumes are at the early stages still small.” house waste. of our products,” Vanacker said. “This is a Singapore to Tucson, Arizona, 44 minutes quicker than the

Neste has about 15 memorandums of After completing its Rotterdam and Singa- growing market; we want to have a strong previous record. With an industry-leading 100-plus world

understanding with airlines and airports, and a pore refineries in the early years of this de- position as the No. 1 on a global basis, in

TM
number of sales negotiations ongoing, he said. cade, the product became profitable in 2013, those markets.” Q speed records for the Gulfstream G650 and G650ER, you

As its team is still small and being ramped up, propelling a share gain of more than 500% Article courtesy: https://www.bloomberg. simply can’t go farther faster.
com
World Airnews | September 2019 World Airnews | September 2019
— 6 — — 7 —