Global airlines are rushing to make sustainable aviation fuels their hot ticket to climate-friendly flying. Now, a Singapore-based developer player wants to get in on the action, ploughing billions into energising Australia’s nascent green aviation fuel industry.
Southern Asian Carbon Limited (SACL), an outfit that helps organisations develop carbon reduction strategies, has kicked off a $US2.5 billion ($3.7 billion) raise to manufacture three biofuel refineries across Australia’s east coast.
EagleHawk Capital’s Tony Newham is leading the effort and began reaching out to interested parties last week. Sources said 10 parties have already expressed interest including one of Australia’s largest superannuation funds, a large infrastructure company, ESG investors, a family office and a global bank. Global private equity is also in their sights.
In an ideal world, SACL would have between one and three partners for the plants they intend to build. The firm has set its heart on three sites – Portland, Victoria, which would be fed woodchips, Moree, NSW, which would also produce bio-methanol, and Mulgrave Queensland, which would be fed savannah grasses. Estimates are Portland and Moree will cost around $US500 million to get up and running while Mulgrave will hog the lion’s share of the funding, costing $US1.5 billion to build. This speaks to the sheer quantity of feedstock available in the Sunshine State, producing 750,000 tones of savannah grasses a year.
The Sustainable Aviation Fuels industry – or SAF – has long been hamstrung by a lack of access to feedstock such as sugar cane, cotton stalks, woodchip and grasses, aka biomass which it converts into fuel, hence SACL’s interest in Australia. Sources said all three of the refineries have committed feedstock from local growers.
Portland is forecast to generate $US363 million revenue and $US124 million in earnings annually once up and running. Moree is on track for $US282 million revenue and $US132 million earnings, while Mulgrave should do $US1.1 billion revenue and $US359 million earnings. All up, that’s annual revenue of $US1.8 billion revenue and $US615 million earnings.
Onshore opportunity
SAF is already being used by global airlines like American Airlines, British Airways and Qatar Airways and is available in key transport hubs like Los Angeles International Airport, Amsterdam Airport Schiphol and Changi Airport. SAF isn’t manufactured in Australia today but Qantas has committed to 10 per cent SAF use in its fuel mix by 2030 and 60 per cent by 2050. IFM Investors, Ampol and GrainCorp are in a tie-up to explore the establishment of an Australian renewable fuels industry, inking a memorandum of understanding in July. Meanwhile, Jet Zero Australia, a privately owned group backed by Airbus and Qantas, is working on building a plant in Townsville that would turn sugarcane and ethanol into aviation fuel.
The sector has no shortage of naysayers, arguing that it’s impossible for production capacity to reach the levels that could sustain anywhere near the current global demand for jet fuel. Others say SAF is just a buzzword airlines can use to make it appear as if they’re bringing down emissions while, at the same time, dreaming up ways to increase their overall flights (and emissions) in the long term. Federal Transport Minister Catherine King has also flagged renewable fuels as a focus, particularly in the aviation industry, but policy has lagged behind.
EagleHawk Capital is hoping to have the raise wrapped up by the end of this year.
Extracted in full from: https://www.afr.com/street-talk/singapore-outfit-seeks-3-7bn-to-power-up-australia-s-green-aviation-fuel-sector-20240902-p5k72m
