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How sustainable aviation fuel will clean up the airline industry with Metafuels' Saurabh Kapoor
65 Plays5 days ago
Karthik and Alina are joined by Metafuels co-founder Saurabh Kapoor to talk all things sustainable aviation fuels. Are the current challenges and shutdowns of SAF projects just a blip? Will consumers have to bear higher prices? How can airlines make this work to their advantage? And when will SAF be commercially ready?
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Transcript
Introduction to Podcast
00:00:09
Speaker
Hello and welcome to Innovation Matters, the sustainable sustainability podcast brought to you by Lux Research. My name is Karthik Subramanian, I'm your host today.
Introduction of Guests
00:00:21
Speaker
I'm joined today by Alina Strugut, who's our Director for Anthropology ah for Global Studies. ah Alina, um um nice to meet you again. ah It's been a while since we had you on the pod, how's it going?
00:00:34
Speaker
Amazing. I'm enjoying the spring in Toronto right now. It's 18 degrees outside. So we're all heading towards doomsday in terms of sandwiches.
00:00:48
Speaker
Yeah, autumn has definitely kicked in. um Amsterdam just got colder, so i'm I'm really happy that the cold weather
Metafuels and Methanol to Jet Fuel
00:00:53
Speaker
is set in. And ah um I'm happy today ah to be joined by Saurabh Kapoor, who's the CEO of Metafuels, a methanol to jet, a sustainable aviation fuel startup. Saurabh, happy to have you on the podcast. How are things in, I believe you're based out of Switzerland? Yes, we are based in Zurich. Very happy to be here.
00:01:15
Speaker
ah So I guess we can um kick things off by just talking about, um I guess before we get into meta fuels itself, the first thing would be for maybe some of our listeners who are not aware of what methanol to jet is. Could you please explain what methanol to jet fuel technology is for sustainable aviation fuels? Yes, so there are multiple pathways to produce sustainable aviation fuel. At a high level, you can divide these pathways into two camps. One is biofuels and second is synthetic fuels.
00:01:45
Speaker
um Methanol is a feedstock you could either produce through the bio-roots or through the synthetic roots. We take this methanol as the starting point for our technology and very efficiently and selectively convert it to jet fuel. It's a catalytic chemical process and our main product is jet fuel.
Founding of Metafuels and Initial Challenges
00:02:06
Speaker
So um what was your inspiration to start Metafules? And if I'm not mistaken, top SOE and there are a lot of large oil and gas companies and companies in the petrochem space that are looking at methanol to jet as a viable pathway for SAF, but not a lot of startups. So how did you decide that, you know, I want to, I want to, you know, be part of the startup and I want to disrupt the space amongst a lot of large oil and gas and petrochemical companies?
00:02:33
Speaker
So we are three co-founders at Metafools. The idea basically came to us when we were busy working in CCS industry, basically carbon capture and storage, helping industry stakeholders develop CCS projects, make money ah with CCS. And Jetfield used to be an evening hobby of ours. Why? and Because we realized SAF is required and our hydrocarbon experience would have been very relevant for SAF. We fully understood what's happening in the market What's insufficient? What would be a dream technology? What would it look like? What should be the targets? It was just that day jobs always have a priority. You have to keep paying a bill. So we kept postponing it till COVID hit. And COVID hit, you know that was the only silver lining ah in terms of, okay, we were sitting at home ah watching Netflix for a week. And then we said, no, we can't just keep sitting like this. It's now or never. Let's pick up this hobby of ours and try to create something out of it.
00:03:29
Speaker
We did a lot of initial work in terms of understanding markets and trying to formalize what had been our thoughts. And basically everything aggregated or became concrete around methanol to jet for a couple of reasons. Methanol synthesis is a known technology and we know it's very efficient, both in terms of energy and carbon. There is scope for improvement, but you had a robust starting point.
00:03:56
Speaker
What was missing was converting methanol um selectively and efficiently to jet fuel. And we knew if we could make it work, um this would be a winning solution. Back then, as far as we could see, nobody else was doing it. So we did feel a bit lonely, but we did estimate or expect ah other companies to start picking up on this pathway as the dust settles around ah competing technologies.
00:04:23
Speaker
So we were a bit ahead, but what's happening now in terms of big corporations also trying to develop this technology sort of reinforces where we started.
Sustainable Aviation Fuel Production Process
00:04:33
Speaker
Right. And one of the, ah go ahead Alina. I'm just ah wondering for those who are new to the concept, can you explain the process of turning CO2 and green hydrogen into sustainable aviation fuel and why it's a game changer for the industry?
00:04:51
Speaker
So CO2 hydrogen into jet fuel is personally not new. What we bring to the table is a technology which is efficient and has ultra high yield. By that, what I mean is we we live in a carbon constrained world. It's counterintuitive. But what I mean by that is sustainable carbon. Carbon is a finite and ah very valuable resource. So we have to make best use of it.
00:05:17
Speaker
Similarly, as things electrify, we also have to make sure that this renewable electricity is efficiently used um because capacity needs to be installed. um what What we decided to do was um look at the whole pathway in terms of value chain and come up with a technology that best uses most efficiently these resources, carbon,
00:05:41
Speaker
um as well as the renewable electricity, which is converted to hydrogen. So that's that's the bedrock in terms of what we are trying to do. Depending on various technologies, you combine these primary molecules in different ways to come to jet fuel. For us, and the first step is ah combining CO2 and hydrogen to produce methanol. Methanol is the simplest alcohol. We take methanol as a feedstock and then process it to produce jet fuel.
00:06:10
Speaker
um Methanol molecule has one carbon. We take that carbon out and we have to basically process it in a way that what comes out is ultimately a hydrocarbon in a jet fuel range and nothing outside of it. So we do have some by-products but not much. What this means is efficient use of resources.
00:06:29
Speaker
What I wanted to kind of ask was, and and this is something that I believe we have recently seen come up ah in terms of just SAF projects um and the cancellation of SAF projects because um a lot of companies are not interested to invest the high capital necessary to build the infrastructure for sustainable aviation fuel. um Green hydrogen remains very expensive, which is also partly down to the fact that renewable energy or renewable electricity rather isn't cheap enough to produce green hydrogen.
00:06:57
Speaker
um And of course the cost of carbon capture for carbon, if you're looking at the synthetic route, is also quite high. And so I just wanted to get your take on this and what what are you seeing in terms of the prospects of SAF because I believe everyone who has been bullish about SAF may slightly start, um you know, reconsidering their stance because of this.
00:07:22
Speaker
So what we see in the market is not new in terms of what you would typically observe as behavior or patterns when new technologies have to be adopted. There is always a lot of enthusiasm at the beginning, then in a way reality sets in and people recalibrate, refocus. What it tells us is cost of production is going to be increasingly important for staff and for each of the pathways, they will
Innovations and Challenges in Cost-Effective Production
00:07:47
Speaker
be winners. So what's important is you are you are It's the most attractive or in the top two, three technologies in terms of what is the cost of production you're going to be able to achieve. Now, for us, we can do both bio-roots as well as synthetic roots, but your question is more around synthetic roots. So why I would take that in that way. um There is increasing innovation in all these aspects that you've mentioned, be it how to capture carbon,
00:08:18
Speaker
how to capture carbon and convert it, or alternatively, if you are generating hydrogen, how to how to generate hydrogen in a cost effective way. ah Third aspect is the first projects normally and in not and end up getting developed in markets with more regulatory certainty. And these markets necessarily are not the best That's the geographical locations with the perspective of where renewable electricity is most abundant and cost competitive. If you talk about large scale adoption capacity, um
00:08:57
Speaker
most most of renewable electricity investment and then also downstream conversion to hydrogen and further molecules would end up having happening in countries or geographies where you have affordable renewable electricity with high capacity.
00:09:11
Speaker
factors. So that could be in in US states like Texas, or Middle East, North Africa, parts of Asia. But the first projects don't happen there. So and the first projects are also not at scale. They are smaller scale, they are suboptimal. But we have to ah find our way through this, this Death Valley, as they say, and come out on the other side with technologies which are unable to scale.
00:09:34
Speaker
and technologies which can then be implemented for projects being developed in the right geographies where it makes sense to install. installed capacity. We look at both biomethanol and e-methanol, even though we think we are primarily an ESAF company and a large proportion of capacity ultimately would come the synthetic route, but initially one can always use a bit of biomethanol, mixing it with e-methanol to make initial projects more affordable and initial fuel also some more affordable for consumers as well as the whole value chain.
Impact on Air Travel Costs and Industry Collaboration
00:10:08
Speaker
Yeah, from the affordability perspective, I'm sure Alina, you have a lot of questions from the consumer side because um we do see a lot of air prices going up and I think I've been on the rise for some some time now. Yes, yes absolutely. like making Making clean energy affordable is... is and it It's a core goal for meta fuel. So um how will your sustainable aviation fuel impact the cost of ah air travel for consumers? And ah cant can travelers really expect to see any changes in ticket prices?
00:10:42
Speaker
ah assuming that this technology becomes widely adopted? I'll take the second question first. As you see in most markets which are mandate-driven, mandates slowly come in. One is not required to absolutely fly 100% on SAF. You mix small quantities of SAF with conventional fuel. The mandates in Europe start with around 2% and that's absolutely manageable in terms of keeping costs competitive.
00:11:11
Speaker
As quantities increase, capacities installed, cost of production will certainly come down. The value chain will mature, sizes of projects increase, and also new innovation comes, addressing key challenges on each step of the value chain. That's one aspect. So recent increases in ticket prices around flying are not necessarily because of SAF. This is more an industry phenomenon, more to do with what's happening out there, generally innovation. Now, as you ratchet up mixing SAF with kerosene and assuming traditional kerosene stays where it is, nobody knows that either, ah but at today's kerosene prices SAF has a premium
00:11:55
Speaker
cost of fuel does increase. But at the same time, what comes against that is on one side, increasing capacity, increasing innovation, ability to produce at scale. Also at the same time, aviation industry is also investing a lot in newer aircrafts, efficient aircrafts, which require less fuel. So these measures also in some way offset the slight increase in SAF costs you can expect in initial years.
00:12:23
Speaker
um I would not expect consumers to notice that, but ultimately it's important that technology capacity innovation delivers ah to keep flying affordable for everybody. And are there any current or future partnerships with airlines to adopt SAP and medical SAP?
00:12:42
Speaker
What we are doing at the moment in addition to our technology demonstration, we are developing a first capacity project. So first production facilities and as part of development activities of these projects, we naturally engage with our clients as well as the wider value chain. And we're also talking to airlines, large commercial airlines, private aviation as well.
00:13:07
Speaker
to develop offtake agreements for these first projects, but increasingly looking at it more as a longer term relationship, multi-phase projects where we start at a certain capacity, but are able to scale up, but not needing to every time develop relationships on a transactional basis. So this is something, develop a relationship, develop models which are scalable, and then deliver capacity to industry. So yes, we are talking to airlines.
00:13:35
Speaker
Yeah, I just wanted to quickly go back to the um the the point of mandates, but not exactly mandates here, but I want to talk about the ASTM approval side of methanol to jet because I believe the methanol to jet pathway has not yet received ASTM approval.
Regulatory Challenges and Support
00:13:51
Speaker
um So what are the challenges you're facing or or the methanol to jet industry is generally facing in obtaining approval? And how long do you think it will take for it to be approved?
00:14:05
Speaker
you know So for the right reasons, SAF accreditation is a tightly regulated process. You can very much imagine it's not something like a car where you say, okay, I can't start it, I just pocket by side and sort it out. ah There is a robust process in place to get any new ah fuel accredited. And the process is more around substitute fuels, synthetic fuels, is not around it's not about sustainability. It's governed by ASTM standards.
00:14:34
Speaker
which brings together all stakeholders, ah seeks their inputs to try to develop that accreditation. So for methanol to jet process, a task force was constituted early in 2023. The task force is following what's prescribed in terms of the ASTM procedure in in terms of how to go about accreditation. It involves you know providing samples, testing, writing reports,
00:15:01
Speaker
sharing reports with ah the group of stakeholders, which includes OEMs, so engine manufacturers, aircraft manufacturers, get that feedback and finalize an annex. When that annex is finalized, it basically goes through a balloting process where people ballot and can provide feedback. And once that process is completed, that annex is added to the right standard and the methanol to jet pathway becomes accredited. Then as long as you follow that pathway and your fuel from a quality control perspective is the right fuel, you are able to commercially use it. Where we stand on it is samples had been provided, testing has been done and documents have been prepared. As far as I currently understand, my expectation is MTJ pathway would be accredited around the middle of next year. And for us, this is very timely as we plan to take a final investment decision on our first production projects.
00:15:59
Speaker
around Q1, 2026. So we still have a bit of buffer between getting the final accreditation, fully understanding it, and preparing up. I'm just wondering, are there any policies or incentives that can make, that can speed up the process of making stuff more widely adopted? I'm thinking about the EU, I know like you're in Switzerland, but there is the economic area. So are there any incentives that that would just smoothen the path.
00:16:34
Speaker
I think what what needs to be done is a mix of staff-specific support but also generally the challenges clean tech industry faces. so If you take EU as an example, there is an EU mandate on mixing sustainable fuels. The mandate applies to fuel suppliers. It kicks in next year already. There are also sub mandates for synthetic fuels, but that's one part. The other part is how to support capacity building, how to make a regulatory framework clearer and more robust to be able to
00:17:11
Speaker
attract investment. So it's it's it's sort of a journey. I think the right steps have been taken. Stakeholders areed have identified and understood which areas need to be fund further improved or strengthened and work is happening there. In terms of ah capacity, I think what changes is the way industry buys fuel. So if you look at petroleum industry, you know there are established mature markets.
00:17:39
Speaker
Airlines have their procurement strategy, mix of short-term, long-term hedging. They know best how they buy, but you don't really need to establish capacity. And I mean the whole value chain to be able to produce this fuel. When you establish capacity like ah renewable generation capacity or a methanol plant or a SAF plant, these are big project investments. And to be able to invest in these investments, you are looking for, okay, what's what's the outlook for a certain number of years, not just on an year-to-year basis. So we need to have offtake agreements which go beyond the short-term buying that's practiced in the industry. So that's more an evolution in terms of how stakeholders
00:18:24
Speaker
I have to start thinking about it. The second aspect is our technology is new. We are a startup. Things are innovative. You have to build initial projects for technology to go commercial. It's that a classic chicken and egg situation. How can regulators, governments, industry generally help um innovations like ours?
00:18:44
Speaker
to to be able to be exploited through um support on building fast projects first-of-a-kind projects, where there is a slightly enhanced technical risk, but that risk doesn't extend for the entire duration of the project. But at the beginning, that risk is there. So the to the extent we could be supported through various mechanisms in getting these first projects built, that significantly helps us in our journey.
00:19:13
Speaker
In terms of just risk, and and you did mention you know the offtake agreements have to go slightly beyond the short term, so it just got me thinking in terms of innovative business models. um We know that ah for premium technologies like nuclear and and geothermal, for example, people are talking about having premium offtakers.
00:19:31
Speaker
and they're targeting these premium applications. um So what are you seeing from a business model standpoint ah that could help accelerate the offtake for Saff? Or are there any specific industries right now um that could use, um say, Emethanol, for example, or things like that that could you know offset some of the premium for the Saff? I was just trying to think along those lines.
00:19:57
Speaker
So not 100% sure like I got the question, but I will try. And if I don't answer your
Sustainability Impact of Metafuels
00:20:01
Speaker
question, please correct me. So methanol is ah what one of the largest traded commodities. So all that methanol that's produced from natural gas does need to go green. Over a certain amount of time, country to country, that target could be a bit different. In in terms of how how the wider market can help is you know different stakeholders have different pockets. There's on one side consumer, on the other side your business travel. So we do ah approach industry broadly, industry and business beyond just aviation to understand what are their sustainability targets, ah what kind of ah policies are being put in place to make the internal travel more sustainable, how are they trying to address
00:20:48
Speaker
scope three emissions and can they in any way be a part of our journey through helping off-take staff directly or through a partner airline ah to make our case easier in terms of both off-take as well as potential confidence that investors might draw from the fact that certain corporations, and you could call them as premium clients, are willing to go beyond just the minimum mandate that's in place ah to mix Saff and Kerosene and have a quicker profile in terms of reducing their own carbon footprint.
00:21:31
Speaker
um So just on that, i was I think I actually blanked out. Alina, do you want to ask the question? I just realized I blanked out.
00:21:40
Speaker
On a slightly different note, I was i was wondering what kind of measurable impact could meta fuels have on global emissions if If the technology was widely adopted, how do you see that this will affect the, um how do you think this would benefit future generations? so And is there a point where you envision SAVS completely replacing traditional fuels?
00:22:19
Speaker
Absolutely. so our our Our vision is basically to enable affordable, large-scale decarbonization of aviation. For large-scale, you really have to be the technology of choice. In the sector, we also need to be leaders in terms of cost reproduction. The impact in terms of our technology is actually objectively clearly measurable. so As more plants get built in cooperating our technology,
00:22:49
Speaker
Each plant would have its own carbon reduction measurement, ah depending on how the value chain looks like, and you can certainly add it up. What we see at the moment is the current energy systems in the world, you could reduce up to 90% of emissions associated with use of traditional jet fuel. So if you take fuel from an energy plant,
00:23:14
Speaker
you clearly can compare what would have been the emissions using traditional kerosene versus what we can provide, and that's an objective calculation. um In terms of replacement fuel, yes, at the moment ASTM blending requirements are limited to 50%, so SAFs blended 50% with jet fuel, but works going on to increase this limit and use SAF as a replacement fuel. You can call this JET-X or there are different terminologies in the market. um It's a cooperation between fuel suppliers, the value chain, as well as OEMs. The fuels have slightly different characteristics, which doesn't necessarily mean they are worse, that in many aspects also better than traditional kerosene, but so the whole industry industry needs to move on. So I would hope
00:24:07
Speaker
And very much, I can envisage that in the next 10 years, the roadway or path to replacing kerosene with 100% SAF is clearer. Certain test flights have already happened, but they're at the moment test flights. Commercially, you cannot blend more than 50% SAF into jet fuel. But that doesn't really matter because 50% blended is also a big contributor in terms of reducing the CO2 emissions.
00:24:35
Speaker
I wanted to go back to your ah point that you just mentioned about the 10-year timeline. And so um going back to our um the initial part of the podcast where we were just talking about the ah cancellations of SAF projects. So from um from a mass adoption perspective for SAF, do you see these recent project cancellations as being just a blip?
Industry Trends and Political Influence
00:24:58
Speaker
um Or do you actually think that this can impact the overall timeline to market? So if people were expecting SAF to become widely adopted in the early 2030s, now it's going to become close to the late 2030s because of this recent trend. I would expect it to be a blip. Again, these are projections so one can never say for certainty what happens.
00:25:20
Speaker
But nothing fundamental has changed over the last couple of months where you say you certainly got up and you realized it's not what you thought it would be. I have seen this before also in with my work in carbon capture and storage. Normally new technology adoption takes these kinds of parts. What's important is regulatory pressure, regulatory clarity, that mandates that have been put in place stay there because that mandate is what focuses mind.
00:25:48
Speaker
and allows companies like us, our investors, our sponsors to keep investing in developing inventory technologies and also developing projects. Now, if you are a year behind or a year later than what the or the original plan is in the big picture over the long run, it doesn't really matter.
00:26:08
Speaker
Right. Speaking begin of mandates um and not ASTM regulations, but um I believe your first pilot project that you aim for will be in Denmark. um But I believe you're also looking at other geographies. And the reason why I bring up other geographies is because we had the elections in the United States this week. um Donald Trump has been elected as president again, ah not not getting too political, of course. ah But just wanted to get your initial thoughts on what his presidency could mean for the future of Saf in the United States. Now, of course, for our podcast listeners, we will be talking about the implications of Trump's election in another podcast episode in detail across various sectors. But Saurabh, since you're here, I just wanted to get your initial take on what his presidency could mean for Saf.
00:26:57
Speaker
So the first thing is the project in Denmark is not a pilot project. It's a production project. We call them pioneer projects, first of a kind, so to not not to mix so projects. In terms of US, so we are following as well IQ what's happening. It will take a little bit of time for things to settle down and also clarity certainty around how DOE, for example, in the US, we continue to drive these policies to what extent they are adapted, modified, changed.
00:27:27
Speaker
But US approach is typically not a mandate driven approach. So that was never the case in the US. It was always around building those supports, tax incentives, tax breaks. If you look at CCS, ah CCS also had such incentives and they have been in place for quite some time, survived various administrations, various governments. Could there have been impact potentially, but over the long term, I do believe that the clean tech revolution would continue to grow.
00:27:56
Speaker
And the same is for SAF as well. SAF's also something quite international. So a lot of decarbonization is driven through ICAO. And that is not really dependent on what happens in the US. So US domestic consumption, difficult for me to say whether there's an impact or not. But in the international perspective, mandates in Europe, in Singapore, I expect them to be in place, to continue to stay in place.
00:28:24
Speaker
um Alina, I believe you also want to talk about a little bit of greenwashing, right? But like I said, it's like, wow, it's really amazing, like knowing that you started this company in 2019, and you've gotten to this point, that's like it's really exciting. i I just hope to see ah the big change in all airlines transitioning and adopting. soafs i mean We are at a turning point, environmentally, and this is absolutely an urgency. And I'm very happy to see to see you growing and trying
Saurabh Kapoor's Personal Journey
00:29:01
Speaker
to change the world. And I know it all came with, ah I was reading on the website that it all came with the birth of your child.
00:29:08
Speaker
it's Thank you very much. so yeah so we we the The idea was conceived in 2020 in terms of metafuels. It took us some time to, you know for ourselves as well, clarify our thoughts, structural thoughts in terms of how to do. We formed metafuels in 2021 and you're absolutely right. ah but and When I was an engineer, you know you're actually looking at these big engineering installations that ref find you find your power plant and you say, wow, these are These are beautiful, beautiful plants and you are totally fascinated, want to work with them, but then there comes a pivoting moment in everybody's life. Do I continue to do what I'm doing? Do I change?
00:29:46
Speaker
And I had been thinking a lot about this, changing what I was doing, which was more fossil fuel power generation. I realized the greenhouses are not just the only thing that you use in winter to grow vegetables. The other greenhouse effects as well, but the the real catalyst was, as you said, when my elder son was born, I just couldn't continue doing what I was doing.
Closing Remarks and Podcast Promotion
00:30:08
Speaker
yeah Children truly changed the world, huh? Indeed.
00:30:11
Speaker
to all our listeners who have been I would say diligently and ah um I would say worshipping our podcast and our hosts ah for our weekly content please feel free to like our content on any platform on every platform where you um follow us um on any platform where you listen to your podcasts please feel free to share our podcast with people who you think would be interested to listen and please give us a rating and please share your thoughts we really appreciate any feedback that comes in
00:30:43
Speaker
um Saurabh, thanks a lot ah once again for joining us to discuss Metafuel SAF, the future of SAF. We truly wish you good luck in the future. We hope to see more SAF adoption and reduced emissions in the aviation sector. Alina, once again, um thanks for joining us to provide your ah um ah insights on the consumer side. Thanks a lot ah to everyone and yeah, um see you all in the next one. Thank you very much.
00:31:13
Speaker
Innovation Matters is a production of Lux Research, the leading sustainable innovation research and advisory firm. You can follow this podcast on Apple Music, Spotify, or wherever you get your podcasts. If you want more, check out www.luxresearchinc dot.com slash blog for all the latest news, opinions, and articles. so