Cargolux secured over 70,000 tonnes of e-fuel supply through an agreement with Norsk e-fuel in January. But the process of making this product is still in its infancy. Reducing its cost by scaling production is the crux of the issue for CEO Richard Forson.
Have you tested Norsk’s e-fuel?
E-fuels are not readily available on the market yet for testing. Together with other airlines, we have predominantly been using the first generation of sustainable aviation fuels.
From an EU perspective, as of 2025, there is a requirement for producers to start blending sustainable aviation fuel (SAF) into the fuel that they sell to airlines, and through the years going up to 2050, the amount of e-fuels as a percentage of SAF that is being used increases as well. There is a significant portion of SAF (50% of the total requirement of 70%) that will have to be made up of e-fuels.
What about the cost of having more e-fuels in the SAF blend?
As the blend increases over time, fuel will become more and more expensive. The big issue is who is actually going to bear these costs at the end of the day. Airlines alone cannot bear the cost. Worldwide, we consume 360m tonnes of jet fuel per year. In the EU, we consume between 60m and 65m tonnes. To have a chance to get to a lower cost of SAF, we will have to have production facilities that can produce at the same scale as current fossil jet fuel refiners.
The other most important thing is feedstock, the materials or inputs that you need in order to produce sustainable aviation fuel. There is a limit to how much used cooking oil and animal fats (tallow) are going to be available for the current Hydrotreated Esters and Fatty Acids (HEFA) technology used to produce current SAF volumes. For e-fuels, you need a supply of electricity on a significant scale. In addition to that, it needs to be renewable and at a cost that is affordable. If not, the cost of fuel will become prohibitive if the cost of input increases continuously.
Can you give me an estimation of what portion of your clients would start using Norsk’s e-fuel?
At the current price that is being estimated, I would say there would probably be a significant pushback by our customers. If I have to buy and pass on the cost to the customer at the end of the day, it would really depend on each customer, and probably on each manufacturer, whether they are prepared to pay the kind of costs in order to compensate for the use of e-fuels.
What are Cargolux’s fossil-free fuel ambitions?
The agreement with Norsk is only a small part of the total strategy. One of the biggest levers is our fleet renewal, which we commenced by placing an order for the 777-8 freighter, which means going from a four-engine aircraft to a two-engine aircraft, which in turn means lower fuel consumption per flight. And then satisfying EU requirements in terms of SAF usage that is going to become mandatory from 2025 and, at the same time, looking at the amount of voluntary SAF that we will be purchasing over and above what is required, by regulation, in order to reach carbon neutrality by 2050. 2050 is obviously a very long time from now. We are making certain assumptions today, but whether those assumptions are realised is obviously dependent on what actually takes place and what will be available at a future point in time. There is a significant cost attached based on current assumptions. And hopefully, the cost assumptions will go down and not increase. I cannot make any kind of guarantee today.
Do you think e-fuel prices can go down to a level where you can use them the same way as fossil fuels right now?
I think it really depends on the scale of production. If you get the scale, then obviously, your cost should be a lot more efficient than if you were producing in small quantities.
At this stage, it’s how you get all your feedstock into one location to be able to put up a significant refinery at the end of the day. It’s also the whole question of whether existing refineries that currently process crude can be converted into producing SAF using different feedstocks other than crude.
