SUSTAINABLE AVIATION FUEL TAKES FLIGHT (2025)

Issue

Sustainable Aviation Fuel (SAF) is a small percentage of global aviation fuel production. Canada currently produces very little SAF. Only a few refiners in the U.S., Europe, and Singapore are currently producing or planning to produce SAF at significant volumes. However, British Columbia has set targets for SAF mix for airlines flying to and from B.C. airports that begin in 2028. Without significant increases to global supply, those targets are no longer realistic.

Background

First, let’s address the basics of Sustainable Aviation Fuel (SAF) - what is it and why do we want it? SAF is produced by replacing fossil-carbon feedstocks with sustainable, atmosphere-carbon alternatives. These include forestry and crop residues, plant-based oils, tallows, municipal waste, industrial waste streams, and even carbon captured directly from the air. By recycling carbon already present in the environment, SAF reduces reliance on fossil fuels and lowers aviation emissions.

SAF reduces life cycle CO2 emissions by up to 80%. Due to current technological limitations, the aviation sector will be one of the most challenging transportation sectors to decarbonize. SAF represents a significant opportunity for the industry's progress toward its net-zero objectives. Moreover, Canada is a global supplier of sustainable, lower-cost feedstocks that can be readily transformed into sustainable aviation fuel.

Under British Columbia’s Renewable and Low Carbon Fuel Requirements in the Low Carbon Fuels Act, regulations require renewable fuel to comprise at least 1 percent of jet fuel starting in 2028, increasing to 2 percent in 2029 and 3 percent in 2030 and subsequent compliance periods. The regulations also include a carbon intensity (CI) reduction requirement for jet fuel that phases in at 2 percent in 2026, 4 percent in 2027, 6 percent in 2028, 8 percent in 2029 and 10 percent in 2030 and subsequent compliance periods. [1]

BC is the only jurisdiction in North America to be imposing an implementation mandate for SAF.

However, no loCal production of SAF has been established in the province or elsewhere in Canada. Several projects have been announced, with a combined potential capacity of at least 500 million litres of SAF by 2030, but none have reached the final investment decision stage. The Parkland Burnaby Refinery produced two small batches of low carbon intensity fuel in 2024 but the domestic supply of lower carbon aviation fuel does not currently exist to meet needs. Moreover, even the supply of conventional jet fuel is currently mostly imported. Global production of SAF is also fairly limited. In 2021, only 125 million litres of SAF were produced worldwide, just 0.05% of the global jet fuel market[2].

SAF is currently 2-4 times more expensive than conventional jet fuel. With jet fuel contributing over 25% of total airline operating costs, widespread SAF adoption in British Columbia is financially challenging. The global SAF market is still in its infancy, with production covering only a tiny fraction of global aviation fuel needs. However, the U.S. and Europe are moving aggressively with mandates and incentives to scale up production. If Canada does not act quickly, it risks falling behind in SAF production and relying on imports instead of developing a domestic industry.

California, a market much larger than British Columbia, with their domestic airline industry projected to reach a market size of $17.2 billion by 2025, has needed to modify timelines regarding the decarbonization of jet fuel in order to ensure the transition to low-carbon fuels is both practical and sustainable. [3]

If British Columbia proceeds with its current timeline, in advance of the creation of domestic SAF production, and ahead of its peers on the west coast of North America and throughout Canada, airlines flying to and from BC airports will be at a competitive disadvantage. At the Vancouver International Airport alone, over 26,000 direct workers help connect BC to the world. Additionally, there are approximately 2,000 workers currently engaged in construction projects. Province-wide, YVR’s operations facilitate employment for more than 126,000 people [4]– employed in tourism and hospitality, logistics, engineering and retail. The loss of even one flight route to another hub like Calgary or SeaTac can have a significant impact for workers and businesses in our province.

We believe that policy interventions are necessary and crucial to accelerate the domestic production and adoption of low carbon aviation fuels. However, the global and domestic supplies currently do not exist to meet the existing mandates.

THE CHAMBER RECOMMENDS

That the Provincial Government:

1. To avoid creating a competitive disadvantage, align Sustainable Aviation Fuel (SAF) target inclusion implementation timelines with others on the West Coast of North America, including:
   1. Incentivizing SAF adoption on a voluntary opt-in basis from 2026 to 2028.
   2. Amending the Carbon Intensity (CI) mandate to begin in 2028 with a review period every year thereafter to assess the market conditions of the availability of SAF.
2. Incentivize and support the domestic production of SAF and other low-carbon aviation fuels, working in partnership with the federal government and industry stakeholders.