Everybody Wants SAF. Who Will Produce It? Philippe Lacamp on Sustainable Aviation Fuel

Philippe Lacamp
We had come to a point where everybody was agreeing that we needed SAF, but somebody else can invest in it. We have 25 years and something in the region of 2,000 facilities required to be built to enable us to reach the target of net zero 2050. Does it mean that flying is going to be more expensive? Yeah, it does. But that’s the cost of the externality.

Mansur Philipp Gharabaghi
Flying is one of the hardest sectors to decarbonize. For long-haul aviation, batteries and hydrogen won’t replace fossil jet fuel anytime soon. That means one technology has become central to aviation’s climate ambitions: Sustainable Aviation Fuel, or SAF. My guest today is Philippe Lacamp, former CEO of SkyNRG, one of the pioneers in sustainable aviation fuel. We talk about what it takes to build a new fuel industry, why SAF is expensive, and why the biggest challenge today is producing enough of it.

Mansur Philipp Gharabaghi
I’m Mansur Philipp Gharabaghi, and this is Climate Forward. Philippe Lacamp, welcome to the Climate Forward podcast. It’s a pleasure to have you.

Mansur Philipp Gharabaghi
It’s a pleasure to be here. Philippe, you have an interesting career spanning many continents, countries, and also a few different industries and we’re going to dive into this today ending up to where you’re at the moment where you have been working on you’re the former CEO of SkyNRG one of the leading companies in sustainable aviation fuel and there’s a path that led you there and I’m super curious to go down

Philippe Lacamp
that road and explore that a little bit more. I look forward to going on that path that journey

Mansur Philipp Gharabaghi
with you. So I’d like to start off by talking a little bit about where you come from, your career and how it started. Maybe you tell us a little bit about yourself. What is your background?

Philippe Lacamp
So I went to high school in the southeast of England, actually as a small little note of interest. A high school that claims to be the oldest school of learning in the world, founded by St. Augustine in about 800, which is quite cool. And that was in the city of Canterbury.

Philippe Lacamp
And then from there, I went up to university in Durham, where I studied history and politics, just to get a general degree. And again, I would encourage people, unless you’re very vocationally driven, just do something that you like at that stage. We’ve kind of learned over time that you’ll do well if you like what you’re doing.

Philippe Lacamp
And so I ended up graduating in the very early 90s. And there were no jobs at all in the UK at that time. A bit of a recession going on. So I ended up as a farm laborer.

Philippe Lacamp
Not exactly the career choice that my parents had in mind, having covered the fees for that university. But, you know, it teaches you a bit of humility, to be honest. And, you know, I’d come out, I’d been quite successful in the things that I’d done.

Philippe Lacamp
So it was not a bad thing. to have a little bit of a hurdle in my way. And I stumbled upon a company that had an airline and a general management process.

Philippe Lacamp
It brought in people fresh from university and then sort of had them for an entire career. And there weren’t many companies, even back in the early 90s that did that. And that was called the Swire Group, which turned out to be, I started on their management training programs, a three-year program, fully expecting to go back to the UK, you know, once the economy had recovered. And, uh, going back to the case, where was that? Oh, so yeah, sorry. I should, I should, I should be clearer. Um, so I was, I was sent out to Hong Kong where the publicly listed entity is headquartered. So I was in Hong Kong. I thought I’d be there for three years and then back to the UK to get a job in the UK and, And 29 years later, I was still thinking, wow, I think I was, I thought I was going to go back to the UK.

Philippe Lacamp
So it was a very interesting career choice, which I really stumbled into. And it led me into some very interesting areas. And of course, one specific one being sustainable aviation fuel, which we can talk some more about.

Philippe Lacamp
We’ll definitely touch upon this.

Mansur Philipp Gharabaghi
So in the Swire Group, I looked a little bit in your history. So you had a role in IT, information technology, but also in sales, international affairs. And in which part of the Swire Group did you work?

Philippe Lacamp
There are a number of key divisions. There’s property, there’s agribusiness sector, there is an aviation sector, a marine services sector, and a general industrial and trading sector. And I was seconded to the airline at that time.

Philippe Lacamp
So my first number of positions were with the airline. And as you point out, and your listeners may have picked up, I did a history and politics degree. My first job was in IT.

Philippe Lacamp
There’s very much a sort of sink or swim approach. So you learn how to learn quickly. And the principle there, which was embedded right at the start, was you don’t have to be the expert.

Philippe Lacamp
There are people who will be expert in whatever it is that you’re trying to do as a company. your role is to maximize their ability to be successful and so that that is the key theme running through all of these different roles you know there was no way i was going to be the the most knowledgeable marketeer for example and what did i know about government relations you know these are things that we had experts doing but how do you maximize that that impact so it’s really a trajectory or training trajectory to build managers literally absolutely categorically and i would say very successfully the airline you didn’t name it yet it’s Cathay Pacific yep cafe

Mansur Philipp Gharabaghi
pacific um headquartered in hong kong Cathay Pacific in hong kong in the 90s i can only imagine this was a spectacular time and you know this the podcast is a little bit about the climate so then talking about aviation may seem a little bit surprising all the time but there is a clear path that took you from aviation and maybe more with the owners of Cathay Pacific in the direction of sustainability because i know that during your time with the Swire Group you of course held many positions at Cathay Pacific but you also worked for other businesses that they owned and there was some first encounter with maybe sustainable fuel? Was it in, I’m not entirely sure, but waste management, things like this?

Philippe Lacamp
So actually, I was first focused on what was then called biofuel back in 2008 when I was in Canada. And it just became very clear to anybody who was looking at the industry that carbon was an issue. And it would continue to be an issue and not something that we could just duck. So this is one of the reasons that Cathay was one of the first airlines to have an offset program, the first airline to make an investment in the technology of sustainable fuel.

Mansur Philipp Gharabaghi
But sorry, in 2008, those were the thoughts they were having? So a year after the global financial crisis, they were already looking at how to make their business more sustainable?

Philippe Lacamp
Yep, yep, yep, completely. And perhaps I should give a little bit of background. So because Cathay Pacific was part of the Swire Group, We were under the main principles of how we behaved that emanated from the Swire Group itself.

Philippe Lacamp
Now, this is a family business that was started in 1816 in Liverpool. So it’s over 200 years old, sixth generation family running it today, which is absolutely remarkable. They’ve done an extraordinary job.

Philippe Lacamp
And part of the reason is that they have a very long term horizon. So they’re very focused on the communities in which you operate, the quality of the products that you produce, the social license to operate. These are really profoundly important principles that anybody in any of the Swire Group companies would understand and operate towards.

Philippe Lacamp
And I’ll just read, in 1989, the Swire Group came out with the first environmental policy, right? 1989, way before most people were even thinking about this as an issue. And the quote that came from the then chairman, Sir Adrian Swire, was as follows.

Philippe Lacamp
We should always be ahead of legislation rather than reacting to it. Even if the environmentally clean way of doing something is more expensive and appears to be uneconomic, we should always, regardless of legislation, have a close look at the feasibility of adopting such a practice, both from the point of view of general public good and enlightened self-interest. Now that is a really profound way of looking at your business.

Philippe Lacamp
So even at that stage, we were being encouraged to check our supply chains. Who out there providing services and products to us is behaving in a way that we would want them to behave? So way before change of custody or supply chain examinations were taking place, the group was already looking okay is this is this the right thing to do and so that leads you very quickly when you’re running an airline you very quickly focus on what are the key impacts that you’ve got as an airline and clearly emissions is one noise is another one right so they’re they’re particular there’s a whole range of different issues but if you’re going to pick one as a major one fuel and fuel emissions and CO2 emissions are clearly right at the top of your priority list to tackle. And so that led us very early on to be part of the first sustainable aviation fuel users group, where there were some other leading airlines who were part of these discussions, the market-based mechanism discussions that were then had, leading, as I said, up until Cathay being the first airline in the world to invest in the technology of a sustainable aviation fuel rather than just signing up an offtake.

Philippe Lacamp
So 2008 biofuel in Canada? Yeah, so that’s when I started thinking about it because Canada was quite progressive. So there’s a lot of people just actively discussing.

Philippe Lacamp
And in which role was that? So this was, I was running Canada for the airline. So we had two key operations in Vancouver and Toronto at that time.

Philippe Lacamp
So as what was then called the country manager, so I was responsible for everything, whether it be the financial performance through to the operational metrics, the engineering quality, all of that fed through to the country manager and the country manager is the key liaison point with HQ. Okay.

Mansur Philipp Gharabaghi
So the countries operate quite independently.

Philippe Lacamp
Yeah, yeah. So as you would expect, you’ve got anyone who’s working in a sort of headquarters and satellite office environment. You have certain expertise locally that you need, but you obviously you have a core resource in the center as well.

Philippe Lacamp
So, you know, many of the main principles, for example, the aircraft utilization, I could make a bid for additional capacity, but it would need to be thoroughly vetted by our headquarters, the planning, the revenue teams. But it’s the responsibility for the country manager to look at and develop opportunities. Okay, clear.

Mansur Philipp Gharabaghi
So at that time, Canada, there was a lot of talk about biofuels or more interest in that. And how did you come in touch with this topic?

Philippe Lacamp
So it was just one that sparked my interest. there was the beginnings of some very early adopters were looking at things like environmental P&Ls and and things like that so looking at that and understanding how proactive the group wanted to be as i quoted that environmental policy that led itself to looking at the Swire Group as a whole and saying okay where and where are the main impacts in the group how can we mitigate how can we reduce how can we offset how can we inset uh to reduce our overall carbon footprint and that if you remember that terminology at that time was it was all about the carbon footprint you know how can you reduce your carbon footprint then that morphed into net zero and Cathay and and Swire were very much at the forefront of of uh the thinking behind that that moving towards net zero and and how can you do it in a way that you know helps you run better businesses of course And one of the great principles in aviation, which is why actually the sustainability principles are so in tune with aviation. And a lot of people think, well, no, this is just a burden.

Philippe Lacamp
It’s not at all because it’s about efficiency. You know, the less fuel you burn, the better, whether that is on an environmental aspect or a financial aspect. So you can drive things.

Philippe Lacamp
And in the early days, I mean, when I was running the sustainable development team for the group, you know, this was about how do you make this commercially real? Because if it’s only a cost, clearly that’s not sustainable itself. So this is about energy efficiency.

Philippe Lacamp
It’s about fuel efficiency. It’s about reducing particulate. If you reduce particulate, your maintenance costs go down, for example.

Philippe Lacamp
So there’s a lot of intrinsically interwoven elements here, which allow you to speak the language of sustainability in a way that actually is relevant to an engineer or an aircraft operator or so.

Mansur Philipp Gharabaghi
I think this is in any way a topic that’s often overlooked when we talk about sustainability. It’s often about, you know, it means I have to cut back. I have to, I can do less.

Mansur Philipp Gharabaghi
I’m more limited. But if you look at it in the right places, it means you can do more. It’s like you said, right?

Mansur Philipp Gharabaghi
Having less particulate is not just means it’s better for the air and for the environment, but there’s maybe a hidden. Better for the engine too.

Philippe Lacamp
Yeah. Yeah. Yeah.

Philippe Lacamp
And it’s one of those ways where you can engage people who might otherwise be quite challenging to engage on a purely environmental or sustainability related level. And that’s one of the challenges I know that we have as a group here. And you see this through your podcasts.

Philippe Lacamp
You know, the audience tends to be people who are interested and already part of that discussion. And we really need to be reaching out to people who are not yet part of the discussion so that it becomes much more mainstream in its application.

Mansur Philipp Gharabaghi
This was your first sort of encounter or experience with biofuels as country manager in Canada. How did that then, was this just an interesting presentation you saw or you looked into this or did that then develop into something more in the company where Cathay Pacific said, you know, we would be interested in pursuing. this path a little bit more?

Philippe Lacamp
So it was a bit early. It was more intellectual interest. I wrote a paper for the chairman of the group at that time, just suggesting that there were ways that we could reduce the carbon footprint of the group by 50%.

Philippe Lacamp
And there were plenty of ways that we could do that. He was very receptive to the paper and determined at that time. He said, look, I really appreciate the thinking behind it, but I don’t yet see the business case.

Philippe Lacamp
Fast forward two years, so I moved into a compliance role, and I got a call by the chairman. Sorry, how does that work? You start in IT, then you go to sales.

Philippe Lacamp
Fair question, fair question. So the group has a rotational management principle, and so those people who are regarded as part of the general management cohort are open to being rotated around the same company in different positions, across the group into different companies within the group, or in fact from a headquarters group perspective as well. So every three to five years, you would anticipate being moved either through the job position or the geography in which you’re operating.

Mansur Philipp Gharabaghi
Wow. This is, I mean, you know, it may sound fun at first, but it also means you change place of living quite often.

Philippe Lacamp
Yeah.

Mansur Philipp Gharabaghi
And maybe in very drastically ways.

Philippe Lacamp
Yeah, correct. And it’s not for everybody, but for people who like it, it is absolutely amazing. I mean, it’s an opportunity, you know, to experience different cultures, different peoples, different cuisines.

Philippe Lacamp
I mean, you name it, you know. And so, you know, we have a couple of kids and yeah, if you ask them where they’re from, they will struggle to tell you. But I think they’ve benefited and they would tell you that they feel that they’ve benefited from being open to, you know, this change and being able to engage with people and make friends quite easily as a result of the moves.

Philippe Lacamp
not not easy and if you as i said if you like a sense of community and an established um place then it’s then it’s not right for you but the group is very smart in its recruitment and obviously part of that recruitment you’ve got to pick people who are going to be able to adapt and enjoy the the moving and and and i did mention this earlier but one of the key principles is you don’t become the expert. And for a lot of people, that’s hard. You have a career of 30 years, you expect to be the expert of whatever field it is you’ve been in for 30 years.

Philippe Lacamp
That obviously doesn’t apply to somebody like me. I’ve hopefully developed some capabilities in management. And that’s my expertise, as opposed to the technical knowledge that you would have as an expert in the field.

Mansur Philipp Gharabaghi
Yeah, I was just about to say, because this is the expertise that you develop, right? managing people irrespectable of their tasks or their specific skills. Now let’s then jump back 2008, not the right time yet. You wrote this paper for the chairman of the group. Fast forward two years, 2010, and then there’s been a change of momentum.

Philippe Lacamp
So he gives me a call and he says, look, are you still interested in that sustainability stuff? What was to that effect? And I said, yes, actually, I am.

Philippe Lacamp
I can see the imperative for this now more than ever. And he said, well, I get it. And we need to do something about it.

Philippe Lacamp
And so that was when I moved into the sustainable development of the group, which allowed me an overview over all the divisions. And we were able to focus in on the key climate impacting areas. And now we’re not with Cathay Pacific anymore.

Philippe Lacamp
Now you’re back at the Swire Group. Correct. So this is an overview from the headquarters.

Philippe Lacamp
Cathay Pacific is now one of the operating divisions that reports into the chairman of Swire Pacific. And we saw very quickly that there were three main areas of impact for the group. One, obviously, was fuels and emissions footprint.

Philippe Lacamp
The second was water use because we’re a very large bottler for Coca-Cola. We had tea estates in a number of countries in the world and biomaterials to replace PET because obviously as a bottler, there was a significant volume of PET. So within those areas, that allowed us to then focus on some of the clean technologies that were being developed.

Philippe Lacamp
And again, I come back to the fact that I was very fortunate that I was working for a group and a company with principals that said, yes, we’ve got to learn about this. so let’s find these interesting technologies and let’s we’ll commit some capital not a huge amount of capital we’ll commit some capital understanding that it is totally at risk and that of course is is really important as you start to try and develop these novel technologies and it gives you a front row seat you get a chance to look and see and i’ll give you an example which links us back to aviation was Fulcrum BioEnergy which was one of the one of the absolute front runners looking at using municipal solid waste so your trash your everyday trash and converting that in through Fischer–Tropsch technology so high pressure and high heat into liquid fuel. Really quite remarkable in terms of the technology step, extremely challenging, and as we know, unfortunately, it hasn’t worked out totally. But that is where we need to go.

Philippe Lacamp
As an industry, if you’re going to get the volumes of sustainable fuel that you need to reach the industry target, which is to be net zero by 2050, that’s 25 years from now, then you need to be able to handle these vast waste streams which are being produced. And I would argue their highest value use is to displace fossil jet fuel.

Mansur Philipp Gharabaghi
Yeah, I couldn’t agree more. If we talk about jet fuel, it’s one of the most energy intense or energy, how do you say it, with the highest energy content density per kilogram of the materials we have. But I can imagine municipal waste as a starting material or as a raw material is problematic because it’s completely unpredictable in terms of composition.

Philippe Lacamp
And highly contaminated. So a lot of learning took place and I think that’s a step that will come in the future. There are other pathways, of course, which in SkyNRG we were all looking at.

Philippe Lacamp
So we have three different technologies that are being developed at the same time. Some people will look at that and say, you’re crazy to do three. And we would argue, not at all.

Philippe Lacamp
This is a platform that we don’t know what the win is going to be. It’s going to need all of this in some shape or form. We’ve started with HEFA, the waste fats and oils, which everybody would be familiar with from your listeners in terms of things like biodiesel.

Philippe Lacamp
So the same commodity input, the same feedstock input. Which was what you probably encountered in 2008. Totally, totally.

Philippe Lacamp
There was nothing else, which is why the Fulcrum development was so exciting, because it took an enormous step forward. I mean, that’s, you know, back to the future three, the flux capacitor. I mean, that’s the kind of technology we’re looking at.

Philippe Lacamp
And quite honestly, that’s the only way I could understand it, because it’s kind of magic. And we’re going to see that with power-to-liquid, right? This conversion of renewable electricity through an electrolyzer, green hydrogen production, combined with biogenic CO2 into a liquid fuel.

Philippe Lacamp
I mean, absolutely incredible. And the only way we can get to the scale that we need as an industry.

Mansur Philipp Gharabaghi
Yeah, is with combining all three pathways.

Philippe Lacamp
And we will touch upon this a little bit later,

Mansur Philipp Gharabaghi
not still when we talk about the capacities that are available and how can we match this with the demand that you see specifically in aviation and maybe some competing areas with road transport. But, okay, so Fulcrum BioEnergy is one of the, I don’t know that, but I would assume one of the first companies, maybe definitely globally the first company to look into municipal waste to kerosene pathways. And from that on, I mean, you worked there, but you also went back to Cathay Pacific. Was that part of the regular management rotation? Or would you have liked to stay a little bit longer and drive the development of this technology there?

Philippe Lacamp
So I was quite fortunate. I spent five years in the sustainability role, and during that time, I was able to benefit from some extraordinary partnerships. Boeing, as a starter, you know, were a real leader in this space.

Philippe Lacamp
Imperium Renewables, which was a biodiesel facility that produced the first volumes of sustainable aviation fuel back in 2008. There’s a name that will come back with SkyNRG. I’m sure we’ll touch on those guys.

Philippe Lacamp
you know, remarkable, remarkable partnerships. And then, of course, SkyNRG, who even at that time were very much the pioneers of trying to educate people. You know, this is what sustainable aviation fuel is.

Philippe Lacamp
It’s not going to gunk up your engine at 40,000 feet. It’s, you know, it can be developed. We need to replace fossil jet.

Philippe Lacamp
This is the solution for the future. And so, you know, again, I was very lucky at that point to be introduced to some of these really key leading thinkers in this space who were particularly with Boeing, you know, actively looking at analyzing all these different pathways, understanding that we needed to be developing at a significant scale.

Mansur Philipp Gharabaghi
Yeah, one thing I want to touch upon because you mentioned it, won’t gunk up your engines and so on and so forth, the approval process to get biodiesel approved to use in airplanes, that’s also something that was not there yet, right? So we’re talking about engine producers, we’re talking about airlines, we’re talking about plane producers and the fuel producers who all need to work together to understand how can we make that happen.

Philippe Lacamp
Totally. And don’t forget the pilots who, as commanders of their flight, have a level of authority that could have said, no, I’m not flying with it. um so yeah this is you know it really required well let me let me take one step back aviation is intensely regulated for a good reason and i think we can all agree that as a mode of transportation it is it is absolutely remarkable with the safety record that it has so it is understandable that the hurdle for sustainable fuels alternative fuels is very high the challenge we have is that it is actually higher than that for fossil jet fuel and i hope that your listeners know that you know crude oil is very very different around the world around different areas where it is produced um and so you know you’re not starting with a homogenous feedstock with fossil jet fuel right that is a different processes are required so we have no problem with sustainable fuels being held to a very high standard, but we would argue that it needs to be the same as, as opposed to more than the existing fossil jet regulations.

Philippe Lacamp
And that will happen. I mean, I think we’ve already seen significant adoption. I mean, the challenge we have is the volumes to be produced.

Philippe Lacamp
It is fully accepted as an alternative fuel. It’s been proven on over half a million flights. I mean, you know, there’s no concerns about it now.

Philippe Lacamp
The only challenge, and you alluded to that with the road transportation, is the levels at which you can blend. So, you know, obviously, ultimately, you want to be flying on 100% sustainable aviation fuel, and that is indeed what is part of the grand challenge in the United States, is 100% replacement of fossil jet fuel. And in order to do that, obviously, you’ve got to develop a significant capacity.

Mansur Philipp Gharabaghi
But why is this a problem? Or why is this a challenge to fly on 100% sustainable aviation fuel

Philippe Lacamp
as compared to kerosene? So it’s not a challenge per se. There are certain elements, I mean, interestingly, I don’t want to get too technical, but it doesn’t have any aromatics.

Philippe Lacamp
The aromatics are very important for the seals, the existing seals on an aircraft engine. So there are elements where if you’re flying on 100%, SAF is actually too clean. It’s probably the easiest way to think of it, which is probably a good problem to have.

Philippe Lacamp
And Boeing and the leading engine manufacturers and Airbus too are well progressed in looking at what are the tweaks that are required to find 100% SAF. We’ve already seen 100% SAF flights taking place already. So this is just, again, it’s a bit of a proving out process.

Philippe Lacamp
and so at the moment we’re at a position where you know we’re starting with low percentage blends as people just gaining confidence and ultimately the new you know the next generation of aircraft

Mansur Philipp Gharabaghi
will be able to fly 100% but i like this area of or i like this point because it also shows again that replacing one material with another is not always that straightforward although you would assume that the chemical composition is, right? You’re moving carbon chains or hydrocarbon chains. So, you know, but there is apparently more in fossil fuel that’s handy to, I don’t know, lubricate or keep your gaskets happy.

Mansur Philipp Gharabaghi
If those are aromatics, then getting rid of them is on the one hand great. So we don’t have those as tailpipe exhausts, but at the same time, it may have an impact on the lifespan or the, I don’t know, service intervals or even the longevity of your engines. So I think that’s an interesting aspect or aspect from the technical perspective because it’s not always one plus one is two.

Philippe Lacamp
Yeah, and I can tell you, you know, from a Cathay perspective, running SAF through the engines was a delight for our maintenance crews because they were finding that there was far less requirement when they were doing their engine washing, the engine washing intervals became longer where they’ve been able to use blends of SAF. So, you know, again, this is back to our point, you know, in terms of sustainability principles, this is not a burden. This is actually going to be a benefit. The challenge is getting it to the right price point and the right volumes.

Mansur Philipp Gharabaghi
Before we dive into this, there are still some steps because we’re still in your role at Cathay Pacific. You just returned back from Fulcrum BioEnergy. And now, I think you already before that were…

Mansur Philipp Gharabaghi
No, after this, you entered into the risk management area. Is that correct? This is something, again, quite a big pivot in terms of the responsibilities you’re overseeing.

Mansur Philipp Gharabaghi
Again, was it one of these natural rotations or is this something where you can also express interest?

Philippe Lacamp
So you can definitely express interest. And obviously, the longer you have been in the company, the more you can actually suggest that there are areas that you would like to go into. When you start your career, it’s very much, you know, you can’t really guide it that much.

Philippe Lacamp
And you probably shouldn’t because the companies, you know, the people who know that there are certain requirements to be met. And that is an example for me was when I moved into the compliance side. initially so I came out of Canada and went into the compliance role it was a very specific timing to be in that role and through that we developed a risk framework at that stage and that gave me a level of experience where then we fast forward a decade when they’re looking to build a chief risk officer role and and you know upgrade our risk frameworks I become quite a natural choice because I have that experience.

Philippe Lacamp
So you start to build elements of exposure to certain areas which then lead on to, in this case, as you’ve suggested, when I moved into the chief risk officer role.

Mansur Philipp Gharabaghi
And you held this position for a few years and was sustainable aviation fuel also a factor there? Because, of course, going into this area is a risk, can be a risk.

Philippe Lacamp
Sure, absolutely. I mean, there are two distinct risk registers for an airline. One is the corporate risk register obviously, is the operational register.

Philippe Lacamp
So you’ll find certain aspects of those will feed up into the central corporate risk register, fuel contamination being obviously a very significant one. And so, yeah, there was definitely overlap. One of the other aspects for us was a compliance factor.

Philippe Lacamp
As you look at the European Union, you can start to see these blending mandates. What do we need to do about it? How do we mitigate the risk of not being able to access the supply volumes that we require?

Philippe Lacamp
Does that mean we should be engaging early in offtake agreements? Are we going to trust that actually the market will work this out and we can just rely on spot price for SAF? All of these kinds of discussions were part of that risk role because fuel makes up anywhere between 25% and 45% of the operating costs of an airline, depending on the price of fuel at that given time.

Philippe Lacamp
But it is the most significant cost that any airline will have.

Mansur Philipp Gharabaghi
And now we need to take a step back because we jumped over one part I wanted to touch upon to build the bridge towards your next role because after your chief risk officer role, you made another step to a really interesting area of the aviation industry. But in 2008, between 2008 and 2010, you mentioned Imperium Renewables and Boeing. So you were still based in Canada at that time?

Philippe Lacamp
No, so I jumped around a bit too much. So when I was in the sustainability role, so that’s 2010 to 2015, that was when I met John Plaza at Imperium Renewables, Darrin Morgan at Boeing, who subsequently obviously reached out when SkyNRG was looking to build the C-suite team. They reached out to me and asked if I would be interested. This was a very natural progression for me. I was very lucky to be asked to join, knowing already the quality of the team that was in place and the pioneering work that had been done.

Mansur Philipp Gharabaghi
But why did you want to move away from the board role in Cathay Pacific? Why this change?

Philippe Lacamp
I think it was a confluence of factors, as tends to be the case with these types of decisions. We had the pandemic ongoing in Hong Kong at the time, which was quite restrictive in terms of movement. But also we had come to a point where everybody was agreeing that we needed SAF.

Philippe Lacamp
but they weren’t doing anything about it or they were doing little about it there was a general consensus yes yes yes we do saf is the solution but somebody else can invest in it um and so when the opportunity came up uh with with uh Theye and Maarten van Dijk uh to to join the team and and help bring a little bit of structure from the corporate world to what was really still this you know this exciting, vibrant startup environment in order for us to be able to get funding to grow the company to actually produce SAF. That was very compelling. So it was a decision that I was very happy to take.

Mansur Philipp Gharabaghi
So but to be clear, the reason why SkyNRG asked for your support was to help them to go through the funding rounds to make sure the company has the necessary capital to develop factories and to then also take the next step secure the funding to actually build the facilities correct correct absolutely i mean the strategy was

Philippe Lacamp
very clear and they had they had got in place and so it required a capital injection to be able to actually to to to start to deliver on that and you know it’s it’s a it’s a rare success story i mean it’s unfortunate that it’s a rare success story but it is a rare success story and you can see that by the very few numbers of projects reaching FID. Yeah, final investment decision. Yeah, the final investment decision, absolutely.

Mansur Philipp Gharabaghi
And I think it’s important for the listeners to understand what are the volumes or the sums we’re talking about here. I mean, the reason why external capital is needed to develop a plant is because the costs are so high to go there. And maybe you can share some of the numbers that, I mean, what does it cost to build a soft plant?

Philippe Lacamp
Yeah, look, we’ll talk ballpark. I won’t give specifics about a particular project. But, you know, if you look globally at facilities that are producing, let’s say, 100,000 to 150,000 tons, you’re looking at somewhere around 800 to a billion euros.

Mansur Philipp Gharabaghi
I mean, this is, right, we need to let this number resonate.

Philippe Lacamp
And if you put it in context with the oil and gas world, you know, you’d be building something five or six times that size for that money because it’s become much more cookie cutter. and that is you know the pathway that the SAF industry has now got to go down is okay how do we now start to get these economies of scale so that we can indeed start to bring this price into a price point where it is more readily acceptable and really enable people like Macquarie to step in and finance these significant capital intensive projects so that we can get the volumes that are required to meet the targets that aviation has set itself.

Mansur Philipp Gharabaghi
Before we talk a little bit more about the specifics of SAF and SAF legislation and how this alternative fuel could develop around the world, I think it’s important to also discuss a little bit what is it actually, what SAF. I mean, it’s an alternative fuel. There are a few ways to make it. But at the end, you always want to have hydrocarbon chains that are as similar as possible to what you’re putting into your airplanes at the moment to kerosene what is it Jet A-1 that you’re using but how do you make it and the second question is

Philippe Lacamp
if you can make it why isn’t everyone anyway using it so we can make it but the volumes are very small for the reasons that we’ve just discussed so not everybody can use it everybody understands you can use it and one of the most important principles around sustainable aviation fuel is that it is a drop-in fuel and what does drop-in mean it means that you can mix it like you can mix two different bottles of water whether it’s spa and evian you can mix those together you still have water this is the same principle with with jet fuel right we have a different starting feedstock but we end up with a chemically similar product that can be mixed together and has all the properties you require to fly a 350 ton aircraft you know 14 hours in the sky um so yeah so it’s it’s now it’s now about building the capacity and that’s where these significant capital sums are going to

Mansur Philipp Gharabaghi
be required and there are different technologies i think the most you mentioned already the HEFA pathway which is turning vegetable oil or waste oil into sustainable aviation fuel which is very similar I think in technology in terms of the cracking that you would do with crude oil a little bit more refined people will definitely argue I’m oversimplifying things here but this is the technology we have at hand already it’s used for biodiesel that’s used in cars and it’s proven but still the cost of one ton of SAF is significantly higher than one ton of fossil-based kerosene and why is that is it only because the technology is more complex and limited in scale or are there other factors also the main cost and this will be true of of any of the pathways is the

Philippe Lacamp
feedstock costs. So actually the feedstocks that are dedicated to aviation fuel are just simply that much more expensive than crude oil. And so where you’re competing with the feedstock costs being significantly lower, regardless of how much economies of scale you have in your technology, in your processes, you’re simply going to be more expensive. Scale is important and ultimately access to feedstock is going to be what drives that key price point. We have an alcohol-to-jet pathway, which is where you take an ethanol, a second-generation ethanol, so you’re using, again, waste materials, whether it be agricultural waste residues, renewable natural gas, these kinds of feedstocks that produce a synthetic gas, a synthesis gas, which then obviously goes through and can be converted into liquid fuel and then as the as i mentioned the uh the power-to-liquid which is a little bit of the holy grail uh renewable electricity green hydrogen biogenic co2 into liquid fuel so expensive uh small scale and and clearly those are areas where you’ve got to be prioritizing the use of renewable electricity and there’s going to be some debate over that.

Philippe Lacamp
Do you prioritize taking coal-fired power plants offline through replacement by renewable electricity or do you really find a solution for the hardest industry to abate, which of course is aviation? And that’s a discussion which will take place over the coming months and years. I think one important aspect is also,

Mansur Philipp Gharabaghi
One important aspect I want to mention is also that when people think back the first appearance of biodiesel, I remember in that time suddenly we had shortages of rice, of soybeans, or prices rose significantly because suddenly virgin feedstock, fresh oil, was being used to create fuels. And that’s a significant difference today when we look at sustainable aviation fuel, particularly at SkyNRG, right? The approach is really to ensure that no displacement effects happen in the sourcing of the raw materials. And why is that so important?

Philippe Lacamp
Yeah, so this is an absolute key principle. The listeners need to understand, actually, that SkyNRG not only is a pioneer in the industry, but is an absolute pioneer in its focus on sustainability. And so, you know, any feedstock that could be utilized for food or feed in some way is absolutely off limits.

Philippe Lacamp
So this is really focusing on waste, true waste materials. And if we look at the waste oil and fats, you know, these are residues that would just be incinerated. So, you know, there is an extra cost in cleaning these up.

Philippe Lacamp
There’s an extra cost in the processing. But, you know, we always believe that is the only sustainability solution for that level of feedstocks. You just don’t want to get into the use of virgin oils.

Philippe Lacamp
There are competition elements of that in terms of food for people. It’s just, it’s a non-starter for us. So it actually makes it much easier as a company to focus, you know, you know where you’re focusing, right?

Philippe Lacamp
So that’s a very, very important principle.

Mansur Philipp Gharabaghi
But it also makes it challenging because you’re competing for a very, very limited feedstock, right? Yeah, that is correct. And we’re talking now about the HEFA or I don’t know, is it first generation?

Mansur Philipp Gharabaghi
I don’t know if that’s the right term, but it’s the technology we have at the moment that’s proven that produces sustainable aviation fuel. And maybe it’s important to say that at the moment, and I want to touch upon this, there’s been a lot of political developments around this topic. sustainable aviation fuel use.

Mansur Philipp Gharabaghi
Well, SkyNRG has pioneered this with corporates, but also airlines who on a voluntary basis have purchased SAF. Over the past years, we’ve seen a major shift in legislation because people simply became aware this has such a major or can have such a major impact. And I think also the realization we’re simply not going to stop flying.

Mansur Philipp Gharabaghi
And I know that you’ve been in the midst of these developments especially during your time at SkyNRG. Can you share a little bit what have been the political developments and resulting in legislation around SAF?

Philippe Lacamp
So I think the most obvious obviously is the blending mandate, which was very good for one compelling investment reason in that it gave certainty to investors. So one of the challenges in a voluntary market aspect, as you point out, is some people may, some people may not. You know, things get difficult.

Philippe Lacamp
Okay, we’re going to drop it. It’s too expensive. We won’t do it.

Philippe Lacamp
That is a really hard investment argument. Yeah, and maybe we need to mention

Mansur Philipp Gharabaghi
there’s a significant price difference, right?

Philippe Lacamp
Yeah, there is a significant price difference.

Mansur Philipp Gharabaghi
So in an airline industry where margins are anyway, not huge, if that’s 40% of your cost, it makes a difference.

Philippe Lacamp
It does. And of course, it’s not as binary as it’s made out to be. And a significant portion of that is passed through to us, the traveling passenger.

Philippe Lacamp
And, you know, does it mean that flying is going to be more expensive? Yeah, it does. But that’s the cost of the externality.

Philippe Lacamp
And this is something that I was thinking about back in 2008. It was like, well, where is the price of what you’re doing? You know, the use of the commons is a really important principle.

Philippe Lacamp
you know you can’t just you can’t just emit for nothing there needs to be something in that and of course you know that takes me back to the Swire principles of that social license to operate right and the care for the community it’s like well how do we how do we get this balance right you want to provide aviation but you’ve got some negatives here how do we offset those how do we work our way through to a sustainable solution um so yes aviation really needed to have a clear mandate around the blending of fuel and so that that creates a market because it allows it allows that economies of scale it allows that that that improvement of supply chains the efficiencies that you can generate it allows all of that to get work and we saw you know we’ve seen multiple multiple uh renewable energy scenarios whether it’s wind farm solar panels you name it you know you create a market driver with certain of these mechanisms and then at some point those are able to drop away um and um specifically around what we call e-SAF so this is the synthetic pathway the power-to-liquid pathway that we’ve touched on a couple of times you know that will remain very expensive for some time to come so it does need to have a mandated approach and i think we’re all very much in support of that it will be challenging but it needs to it needs to take place if if we are indeed as an industry going to reach these

Mansur Philipp Gharabaghi
these challenging 2050 targets yeah because i think it’s otherwise there’s such a dramatic first mover disadvantage, it will not happen if you don’t create a level playing field. With Europe being so vocal about SAF and with your experience moving around so many different regions in the world, how do you think other areas of this world may react or will approach this? There’s a mandate in Europe.

Mansur Philipp Gharabaghi
I know there’s an incentive scheme or has been an incentive scheme in the US. I don’t know the current state of that. How do you think other regions, maybe even particularly China, which is a market that we don’t have so much in focus here often, will react or lead?

Philippe Lacamp
Yeah, sure. Let’s look at China. I mean, what does China do?

Philippe Lacamp
China publishes its five-year plans. It’s very open about the investment targets that it’s making. And we’ve seen that, again, in the world of solar.

Philippe Lacamp
We’ve seen that in electric vehicles. There is no doubt that China sees two things. One is domestic imperative.

Philippe Lacamp
You know, it doesn’t have the resources for, you know, significant volumes of fossil jet fuel. Oil, yeah. And so it’s always taken a very pragmatic approach about that.

Philippe Lacamp
It’s like, well, we need to be producing energy in order to lift our population out of poverty into the middle class. And obviously there’s all sorts of impacts that come from that. And I think China sees an opportunity in the SAF space. One area where they differ very, very significantly from the other two markets that we’ve just mentioned, Europe and the US, is in the permitting. You know, in China, permits will not be an issue. Now, there’s good and bad to that. But when you look at the length of time it takes in Europe to permit a facility, you can have everything else in place. You can have the money in place the people in place the technology in place the construction you can have everything ready to go and you can fall at the permit because you have an objection a generic objection to the use of land for renewable fuel right um so the challenge is there if you’ve if you’re taking two three four years to work through these permitting processes china can be building a facility in 18 months from start to finish um and and what we’re seeing is this to adopt newer technologies. And we saw this with rail, right, in China. You know, it took them, what, a decade to build more high-speed rail than the rest of the world had put together.

Philippe Lacamp
And we can see that, you know, the scale of opportunity within the domestic market in China. I mean, it’s only barely scratched the surface in terms of its domestic aviation. And so to to enable that development to take place you’re going to need fuels so let’s get ahead let’s look at the power-to-liquid pathways let’s look at the alcohol-to-jet let’s develop develop develop build capacity now ultimately of course there’s going to be some questions at this stage well okay take your HEFA process we all know there are some challenges around the provenance of used cooking oils again one of the reasons that you know SkyNRG has been so focused on on the sustainability criteria um um but you’re going to see that that level of development i think um china will simply be pushing ahead and uh and leading in terms of the the volume production

Mansur Philipp Gharabaghi
certainly in the in the coming five to ten years i would imagine and do we then run the danger of having the same scenarios with battery technology that you know europe and the rest of the world is sleeping a little bit at the steering wheel while we’re being overtaken?

Philippe Lacamp
I would like to think that the mechanisms are in place to enable Europe to develop this industry sector because we need it all, quite honestly. And so this is where it’s a slightly nuanced argument because we’re not looking at being left behind. It’s more a case of we’re not developing the capacities that we need so it it’s a volume game you know people often ask me well you know who are the main competitors to SkyNRG well honestly not really anybody because we need it all and as we said we’re looking at a hundred thousand ton facilities whereas oil and gas have a million ton facilities and so you know that’s that’s where we’ve got to get to and so i think that’s we’re almost in the luxury position if you like yeah of not having to worry about that competitive landscape but i will say it there is an imperative that we develop in the time frame

Mansur Philipp Gharabaghi
that has been mapped out and and maybe to put this into perspective today what not even two percent of the global fuel consumption aviation comes from sustainable aviation fuel demanded in europe has a certain blending amount that’s required that’ll grow there’s a level of e-SAF that you mentioned earlier that will kick in in the mandate somewhere in the 2030s um are we going to keep up with the mandate with the development of facilities especially when you’re talking about these very

Philippe Lacamp
long permitting times or are we going to fall behind i’ll answer your question in a roundabout way we have 25 years left and something in the region of 2 000 facilities required to be built to enable us to reach the target of net zero 2050. I think you can draw your own conclusions from that. Now, hopefully what’s going to happen is there’s going to be some major breakthroughs in capacity production. There’s going to be some easing of permitting. There’s going to be a development of an industry sector, which is absolutely essential for aviation to reduce its emissions footprint. I mean, as we know, if nothing is done, aviation will grow from somewhere in the region of three to three and a half percent of global emissions to 20 percent of global emissions by 2050 that is clearly an unsustainable position um so i would i would anticipate uh solutions being found and being an imperative to develop those capacities now maybe to slowly come to a closing

Mansur Philipp Gharabaghi
um so you’ve been at SkyNRG for a few years and in this time the most significant to investments or capital injections that the company has ever seen have fallen. Please share a little bit about who has invested and with maybe what, if you can, and I mean, that’s been publicly known, so you can name the entities. You already did mention both of them.

Mansur Philipp Gharabaghi
When did they invest? With what perspective? And yeah, maybe let’s touch this first.

Philippe Lacamp
Yeah, so it takes some quite enlightened thinking to invest in this sector. and we’ve talked about Macquarie’s role initially, taking on significant levels of risk. Having moved the first facility here in the Netherlands, in Delfzijl, to a whisker away from FID, that has made us more attractive to others who, when we were going for our first round of funding, saw this as not fitting the parameters of their investment criteria and fully understandable you know we we don’t have any issue with that at all the good news for us was that the this the development and advances that were made uh with Macquarie on board allowed us to be successful in a second round of funding and APG obviously then stepping up um with a very long-term horizon um and and again understanding the nature of the platform business So looking to develop these three technology pathways and helping SkyNRG become a significant producer of SAF.

Mansur Philipp Gharabaghi
And the second part of the investment process that I want to touch is the building of the factories. Because the investments into SkyNRG are meant to fuel the development pipeline, finance the project development. because I know that even the first development steps can cost in the double-digit millions.

Mansur Philipp Gharabaghi
It’s very expensive. That’s long before you even take an investment decision. And then building the plant, you already mentioned 800 million to 1 billion euros or dollars for whatever difference that makes it.

Mansur Philipp Gharabaghi
Take your break. Who pays that? Which entities are willing to take a risk not on the HEFA, because that’s technology that works.

Mansur Philipp Gharabaghi
But who would be willing to invest in a brand new technology like e-SAF? Who gives you a billion dollars to say, good luck, let’s hope it works out?

Philippe Lacamp
Yeah, it’s a good question, and we’ll find out is the answer. I think generally speaking, if you look at these types of facilities generically, you’re looking ideally to get that kind of 30-70 split between the project financing versus the lender element, so the debt portion being around 70%. And that reflects generally the maturity of the technology, right, where you’ve got that split.

Philippe Lacamp
So the experience with the HEFA facility has been a very good one. I think there is an increasing awareness and an understanding now through various of the players, particularly the infrastructure funds who are looking at this sector, understanding the scale of this sector, how big it’s going to be and when is it the right moment for them to enter this particular sector. I would hope that the maturity of the alcohol-to-jet, the power-to-liquid, these more novel pathways, they’re continuing to be de-risked.

Philippe Lacamp
And I mean, we’re still a number of years away from seeing the large scale facilities in place. And I think that gives an opportunity for a number of these potential investors to learn more, understand more, and be more comfortable with the types of risks. And I mean, you touched on a very interesting one, which of course is the incentive structure in the states.

Philippe Lacamp
We would count that as a policy risk, right? You can’t say, you can’t guarantee that those incentives are going to be in place when they’re split between federal and state. However, we will get an opportunity to see, so despite the rhetoric, what actually happens.

Philippe Lacamp
And I think we will see that those incentives will stay because there is an imperative to develop this particular sector, both from a domestic perspective as well as an overseas perspective. So I think we’re going to see a development in this sector in the coming months and years, which will give people greater comfort.

Mansur Philipp Gharabaghi
Now, there’s a million other things I want to touch upon, but looking at time, I slowly would like to round this off. And I could talk for hours, for example, also at the, you know, what would you think are the four or three necessary environmental variables that have to be in place to make sure that a company like SkyNRG and hopefully many others can be successful. And then the risk factor, because we also know that, you know, you mentioned municipal waste.

Mansur Philipp Gharabaghi
I know that this, for example, is a trajectory or a pathway that has not always worked out. There’s been a startup in the US that has failed at turning this into a reality. But I want to focus on you to close off.

Mansur Philipp Gharabaghi
So more or less, not more or less, but you’ve completed what SkyNRG has hired you to do for them. And I know that you’ve stepped down as CEO. Please tell us a little bit how the company, who took over.

Mansur Philipp Gharabaghi
And then I would like to hear, if you can, a little bit about where you’re headed.

Philippe Lacamp
Sure, delighted to. So yes, indeed, as you said, we got to a very good point with SkyNRG. And it was delighted that one of the original founders, Maarten van Dijk, was able to step up as the CEO.

Philippe Lacamp
Perfect timing, you know, to deliver on the strategy that he had developed with SkyNRG over the years. and I think now the focus is on construction of the first facility and then the pipeline of projects to come behind that. It was ideal time for him to step into that role and he’s doing a great job with that and we’re looking forward to the groundbreaking of the first facility, we hope soon.

Philippe Lacamp
And as for me, I’m still very much focused in the sustainability realm. One thing that I had looked at when I was in the sustainable development role at Swire was water treatment and water treatment technologies. And I’ve got an opportunity in the States to go and run a water company, both industrial and municipal water and wastewater treatments.

Philippe Lacamp
So again, some really interesting technologies, some novel technologies indeed in this place, in an area which is quite frankly essential for us as a worldwide community to ensure that everybody has access to a clean water supply. So something I’m excited about and that will kick off in the new year. Wow, that sounds very exciting.

Mansur Philipp Gharabaghi
Can you tell us who the owner of that company is or is that not publicly?

Philippe Lacamp
and you don’t have to rather nicely for me this is it’s a it’s a development within the Swire Group so I will be going back to Swire for the development of the water division I think that’s

Mansur Philipp Gharabaghi
lovely to come full circle and to close off and round off our conversation Philippe it’s been a pleasure having you here it was very interesting to hear about your personal journey but also your professional journey around the world and in the sustainability area thanks for sharing your story i found it very inspiring and i wish you all the best for your new

Philippe Lacamp
endeavor in the next year thanks, Mansur and i would just like to thank you and of course your listeners uh who are taking this extremely important topic so seriously as i said at the beginning we’ve got to make sure this message gets out and that people are indeed addressing the big climate challenges we’ve got. I see them as actually exciting opportunities. I’ve seen some really smart people in my time. So there’s no doubt that the talent is out there. And I’m delighted that you’re able to have some discussions with some of these outstanding individuals to help us all find solutions to these challenges. Thank you very much. Thank you.

Mansur Philipp Gharabaghi
That was Philippe Lacamp, former CEO of SkyNRG. The biggest challenge for sustainable aviation fuel is no longer proving that it works. It’s the scale.

Mansur Philipp Gharabaghi
Building an entirely new fuel industry means billions of euros of investment, new production facilities, reliable feedstocks and long-term political commitment. None of that happens overnight. We know SAF works.

Mansur Philipp Gharabaghi
The question now is whether we can build enough of it quickly enough. If you enjoyed this conversation, follow Climate Forward on your favorite podcast app. And if you’re already listening regularly, thank you for being part of this community.