UAE Sustainable Aviation Fuel Production Facility Feasibility Study

Executive Viability Abstract

This feasibility study evaluates the commercial and technical viability of a 200,000 tonnes-per-annum (TPA) Sustainable Aviation Fuel (SAF) facility in the UAE using the HEFA pathway. The project leverages the UAE's strategic position as a global aviation hub and its commitment to the Net Zero 2050 charter, yielding a base-case IRR of 14.2% and a NPV of $215M over a 20-year lifecycle.

## Executive Feasibility Thesis The UAE represents the most critical nexus for SAF adoption globally, given the high density of wide-body aircraft operations by Emirates and Etihad. This study proposes a Sustainable Aviation Fuel (SAF) production facility located in the Khalifa Industrial Zone Abu Dhabi (KIZAD) or Jebel Ali, utilizing the Hydroprocessed Esters and Fatty Acids (HEFA) pathway. The core thesis rests on the 'SAF mandate' gap: while the UAE aims for 2% SAF by 2030 (~240,000 tonnes), domestic production is currently negligible. By securing regional feedstocks (Used Cooking Oil - UCO and Tallow), the facility can achieve a 'bankable' status through long-term off-take agreements with flag carriers seeking to meet CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) requirements. ## Technical Feasibility & Operational Specifications The facility will utilize a 200,000 TPA nameplate capacity HEFA plant. This technology is selected for its high TRL (Technology Readiness Level) of 9. **Specific Named Assumptions:** - **Local Market Size:** UAE jet fuel demand is ~11 million tonnes annually; a 2% blend target requires 220k-240k TPA of SAF. - **Expected Capacity Utilization:** 82% in Year 1 (commissioning), 95% from Year 2 onwards. - **Cost of Capital (WACC):** 8.4% (Cost of Debt: 6.0% via green bonds; Cost of Equity: 12.0%). - **Feedstock Yield:** 1.0 tonne of UCO yields approximately 0.82 tonnes of SAF and 0.10 tonnes of bio-naphtha/LPG. ## Detailed Capital Expenditure (Capex) The total estimated Capex is **$412.5 Million**, broken down as follows: 1. **Feedstock Pre-treatment Unit ($55M):** Specialized filtration and acid degumming systems to process varying grades of regional UCO. Costed at $275 per tonne of annual capacity. 2. **Hydroprocessing & Isomerization Reactors ($145M):** High-pressure vessels and catalyst systems from Tier-1 providers (e.g., Honeywell UOP or Haldor Topsoe). Includes noble metal catalyst initial charges. 3. **Hydrogen Production Plant (Electrolyzer) ($68M):** 40MW PEM electrolyzer to ensure the hydrogen used is 'Green,' maximizing the carbon reduction premium. Unit cost: $1.7M/MW. 4. **Product Storage & Logistics ($42M):** 10 x 15,000m3 storage tanks with dedicated pipeline integration to port facilities for bunkering. 5. **EPC & Project Management ($62M):** Engineering, Procurement, and Construction management, calculated at 15% of hard assets. 6. **Contingency & Land Prep ($40.5M):** 10% buffer for UAE-specific site preparation and cooling water infrastructure. ## Realistic Operating Expenditure (Opex) Opex is dominated by feedstock costs, which are sensitive to global commodity indices (Argus/Platts). - **Feedstock Procurement ($1,150/tonne):** Sourcing UCO from MENA and Asia. Total annual cost at 95% capacity: ~$230M. - **Green Electricity ($0.035/kWh):** Utilizing UAE's low-cost solar grid (DEWA/EWEC) for electrolysis and plant power. Annual cost: $14.5M. - **Catalyst Replacement ($4.2M/year):** Periodic replacement of hydrocracking and deoxygenation catalysts based on a 36-month cycle. - **Specialized Labor ($8.5M/year):** Crew of 120 personnel, including chemical engineers, refinery technicians, and HSE officers at UAE market rates. - **Maintenance & Insurance ($12.4M/year):** Calculated at 3% of total Capex for annual turnarounds and regional risk insurance. ## Financial Model & Sensitivity Range on ROI/IRR The project assumes a SAF selling price of $2,100/tonne (including a 'Green Premium' over fossil-derived Jet A-1). **Sensitivity Analysis (Project IRR):** - **Base Case (14.2% IRR):** Feedstock at $1,150/t; SAF at $2,100/t; 95% utilization. Payback: 6.8 years. - **Optimistic Case (21.8% IRR):** Feedstock drops to $950/t due to local collection subsidies; SAF rises to $2,400/t due to tighter CORSIA mandates. Payback: 4.2 years. - **Pessimistic Case (6.5% IRR):** Feedstock rises to $1,400/t; SAF premium erodes to $1,800/t; Utilization drops to 75% due to technical downtime. Payback: 11.5 years. ## Regulatory & Environmental Compliance Frameworks - **GCAA & DCAA Compliance:** Fuel must meet ASTM D7566 standards to be certified for use in UAE-registered aircraft. - **CORSIA Eligibility:** The facility must be ISCC PLUS (International Sustainability and Carbon Certification) certified to ensure the Carbon Intensity (CI) score allows airlines to claim offsets. - **UAE Industrial Incentives:** Eligibility for 'Operation 300bn' incentives and potential 0% corporate tax for 50 years if located in specific free zones (though 9% federal tax may apply to mainland activities). - **MOCCAE Integration:** Alignment with the UAE Ministry of Climate Change and Environment’s National Biofuels Policy, which may provide future blending mandates or carbon credit markets. ## Strategic Takeaways 1. **Feedstock Security is Key:** The project's bankability relies more on feedstock price hedging than on technology risk. Securing multi-year UCO supply contracts is a pre-requisite for Final Investment Decision (FID). 2. **Location Advantage:** Placing the facility in Abu Dhabi near ADNOC’s refining cluster allows for potential synergy in hydrogen supply or co-processing, which could reduce Capex by 15%. 3. **Mandate Timing:** Investment timing should align with the 2027 mandatory phase of CORSIA, ensuring peak demand coincides with the facility's ramp-up to 95% utilization.