Cosmo Energy Holdings plans to launch Japan’s first domestic production in April of sustainable aviation fuel. This will be a major step towards the country’s goal of replacing 10% of jet fuel by a cleaner alternative. However, cost-cutting is still a challenge. Cosmo, Japan’s third largest refiner, will produce SAF at its Sakai refinery, located in western Japan.
General manager of new business developments, Takeshi Takada said: “Our goal is for SAF to reach 300,000 kilolitres in 2030, through domestic production and imported.”
As Japan fights climate change, it is aligned with global efforts to reduce carbon dioxide (CO2) from airplanes. A company official stated that 300,000 barrels (1.89 million kl) would be enough for 10 per cent of Cosmo Jet’s sales.
Takada revealed that Cosmo will produce 30,000 kl SAF per year at Sakai. The company will then supply 150,000 kl via its Sakaide site, located in western Japan, using bioethanol, and import another 120,000 kl through Bangchak of Thailand and other Asian suppliers.
He said that the refiner wants to build expertise and customer relations by launching sales and production ahead of competitors. This is despite challenges with reducing costs, securing materials, and locking in customers.
Sakai’s project, which aims for a production of 24,000 kl by fiscal 2025 (after accounting for site maintenance), has already secured the majority customers, such as Japan Airlines (JAL), ANA, and DHL. Cosmo’s next objective is to begin SAF production in Sakaide by 2029. A final investment decision should be made in fiscal 2026. Both projects have received government subsidies covering approximately half of capital expenses.
Cosmo declined to disclose Sakai’s production costs or SAF pricing, but the company anticipates making a profit through subsidies. SAF costs three to five times as much as conventional jet fuel. Takada says that while higher production volumes could lower distribution costs but significant cost reductions will be unlikely due to raw materials constraints.
Takada said: “Japan’s subvention scheme is at a middle level by global standards… Countries would compete to offer attractive schemes for SAF deployment to maintain hub airport status.”
Recently, the Sakaide Plant and three other projects received part of 340 Billion Yen (USD2.3 billion) from the government over five years to help support local SAF production. Eneos has a 400,000 kl facility located in Wakayama. Idemitsu Kosan has a 250,000 kl factory in Yamaguchi. Taiyo Oil is working on 200,000 kl in Okinawa.
Idemitsu also secured a separate subvention for a 100,000-kl project at its Chiba refinery, near Tokyo. These projects are crucial to boost domestic production and meet Japan’s estimated SAF requirement of 1.7million kl by 2020.
