City must take care setting usage targets and provide airlines with assurance of carbon-reduction benefits, forum speakers say
Hong Kong should be able to find sufficient sustainable aviation fuel (SAF) in the region to meet its short-term needs, but the government must exercise care in setting usage targets and regulating infrastructure facilities, according to speakers at a sustainable aviation forum.
The city, which has committed to setting an SAF usage target for flights departing from Hong Kong’s airport within this year, can learn from the experiences of other markets that have already implemented such mandates, said experts at the event in the city on Friday. Starting on January 1, suppliers in both the European Union and the UK were mandated to deliver fuel containing at least 2 per cent SAF.
Airlines have flagged alleged price gouging by dominant fuel suppliers at some European airports as a particular concern, said Grace Cheung, general manager of sustainability at Hong Kong’s flagship carrier Cathay Pacific Airways.
“What we and our peers have found with this mandate is that the suppliers have just imposed the cost burden of the SAF mandate onto the airlines, which do not have much choice,” she said. “In most European countries, the jet-fuel market is dominated by a few players. They don’t have the open-access, competitive fuel-supply system we have in Hong Kong. We started to see some price-gouging activities.”
In addition, the European regulation did not provide clear procedures for quality assurance on the carbon-reduction benefits of the SAF sold, she added.
“A lot of paper trail is behind the SAF supply chain, but there is a lack of mention of how this is regulated in Europe,” Cheung said. “So airlines have to pick up the bill, but the environmental benefits are not passed to us by the assurance agencies.”
In Hong Kong, the fuel infrastructure – such as pipelines – is regulated so that the system is open to all suppliers that share the cost of using it, said Peter Lee, general manager of sustainability at Airport Authority Hong Kong. The operator does not charge carriers additional mark-up beyond the profit it is allowed to earn for running the facilities, he added.
Liu Chun-san, undersecretary for transport and logistics, said the government would consider international and local developments, passenger affordability and the views of other stakeholders when setting the SAF usage target later this year.
In February last year, Singapore said departing flights must use fuel blends that contain at least 1 per cent SAF from 2026, rising to 3 to 5 per cent by 2030. European Union regulations require airports to supply fuel containing at least 2 per cent SAF this year, rising to 6 per cent by 2030.
Based on already announced projects in Asia-Pacific, and assuming Hong Kong will have an SAF blending uptake of up to 10 per cent or 800,000 tonnes by 2030, supply is likely to be ample for Hong Kong’s needs, with mainland China and Singapore as the main sources, Lee said.
Global SAF supply is projected to reach 12.5 million to 20.7 million tonnes in 2030, compared with between 8 million and 13.3 million tonnes this year, he noted.
In Asia-Pacific, SAF production facilities had a combined capacity of 1.37 million tonnes at the end of last year, said Ryan Chiu, senior vice-president of technology and engineering at EcoCeres, a biofuel maker spun off in 2021 from the city’s dominant piped gas supplier, Hong Kong and China Gas.
Planned facilities are expected to raise the region’s capacity to 6.86 million tonnes by 2028, he added.
Simon Ng Ka-wing, CEO of non-profit Business Environment Council, which organised the forum, who recently published a white paper on Hong Kong’s SAF strategy, said prices will fall as global uptake rises.
Currently prices are three to five times higher than conventional jet fuel, but the multiple is projected to fall to 2.3 by 2050, Lee said. Current technologies limit SAF to a maximum 50 per cent blending ratio with conventional jet fuel, he added.
Article Credit: scmp