Tokyo: Cosmo Energy Holdings is set to begin Japan’s first domestic production of sustainable aviation fuel (SAF) in April, a crucial step towards the nation’s goal of replacing 10% of conventional jet fuel with this cleaner alternative by 2030, reports Reuters.
Cosmo Energy, the country’s third-largest oil refiner, will produce SAF from used cooking oil at its Sakai refinery in western Japan.
“Our goal is to increase SAF supply to 300,000 kiloliters by 2030 through both domestic production and imports,” stated Takeshi Takada, general manager of new business development at Cosmo Energy.
Japanese refineries are mandated to supply SAF equivalent to 10% of their aviation fuel sales by 2030, aligning with Japan’s efforts to combat climate change and reduce carbon dioxide emissions from air travel.
A company official confirmed that 300,000 kiloliters would be sufficient to meet 10% of Cosmo’s jet fuel sales.
Cosmo Energy plans to produce 30,000 kiloliters of SAF annually at Sakai, source 150,000 kiloliters from its Sakaide site using bioethanol, and import 120,000 kiloliters from Thailand’s Bangchak and other Asian suppliers, according to Takada.
The refiner aims to establish expertise and customer relationships by launching production and sales before competitors, despite ongoing challenges in reducing costs, securing raw materials, and finalizing purchase agreements.
The Sakai project, targeting production of 24,000 kiloliters in fiscal year 2025 after accounting for site maintenance, has already secured major customers, including Japan Airlines, ANA, and DHL.
Cosmo’s next goal is to initiate SAF production at Sakaide by around 2029, with a final investment decision expected in fiscal year 2026. Both projects have received government subsidies, covering approximately half of their capital expenditures.
Cosmo declined to disclose production costs or SAF prices for the Sakai facility but anticipates profitability with government subsidies. It is estimated that SAF costs three to five times more than traditional jet fuel.
While increased production volume could potentially reduce distribution costs, significant cost reductions are unlikely due to raw material constraints, which constitute a large portion of expenses, Takada explained.
“Japan’s subsidy program is at a moderate level compared to global standards. Countries will compete to offer attractive subsidy schemes for SAF deployment to maintain hub airport status,” Takada said.
Recently, the Sakaide plant and three other projects received part of 340 billion yen in government subsidies over five years to support domestic SAF production.
These projects include Eneos’ 400,000 kiloliter facility in Wakayama, Idemitsu Kosan’s 250,000 kiloliter plant in Yamaguchi, and Taiyo Oil’s 200,000 kiloliter project in Okinawa, all currently in the design phase.
Idemitsu has also received a separate subsidy for a 100,000 kiloliter project at its Chiba refinery near Tokyo.
These projects are crucial for boosting domestic SAF production and meeting Japan’s estimated SAF demand of 1.7 million kiloliters by 2030.
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