CAAS Launches Tender to Study and Develop Offtake Mechanism for Sustainable Aviation Fuels in Singapore

20 January 2023

The study will help chart Singapore’s approach to support SAF adoption, develop a sustainable air hub and maintain Singapore’s competitiveness

         The Civil Aviation Authority of Singapore (CAAS) launched a tender today to engage consultancy services to study and develop a structural offtake mechanism for Sustainable Aviation Fuels (SAF) in Singapore, to support the adoption of SAF at Changi Airport and boost Singapore’s competitiveness as a sustainable air hub. The development of the SAF offtake mechanism is one of the 15 recommendations submitted by the International Advisory Panel (IAP) on Sustainable Air Hub in September 2022¹ (see Annex A).

2        The key Terms of Reference of the study are:

a)    Assess the various models for driving structural offtakes and shortlist the preferred option(s) for Singapore, including, but not limited to the following:

i.     Perform horizon scanning of the various models for structural offtakes, considering sustainability goals, air hub competitiveness and level-playing field.

ii.     Align on the objectives, design principles and guardrails, keeping in view Singapore’s unique context.

iii.     Map preferred models versus Singapore objectives, design principles and guardrails to shortlist the structural offtakes mechanisms for Singapore.

iv.     Undertake analyses to assess impact on demand across various segments.

v.     Identify the stakeholders involved in the industry consultation and kickstart the stakeholder engagement / consultation.

b)    Design structural offtake mechanism and assess economic impact, align on model and identify enablers, including but not limited to the following:

i.     Design different structural offtake mechanism scenarios, including participation options, scope of mechanism, funding mechanism and charging mechanism.

ii.     Construct economic impact model to assess impact on traffic growth, traffic mix and financial impact, such as to the air hub, airlines, passengers and based on varying targets and pace of implementation.

iii.     Design the operating model to implement structural offtake, including the flow of SAF credits and physical SAF.

iv.     Build the investment case and implementation roadmap. The roadmap should lay out the key implementation phases in the form of Gantt chart, including possible timelines.

c)    Syndication with key stakeholders to align on target and pace of implementation, including but not limited to:

i.     Socialise, iterate and align with key stakeholders on the target and pace of implementation.

ii.     Refine and iterate on mechanism based on stakeholders’ input.

3        The study will commence in the first quarter of 2023 and will take about four months.

4        In February 2022, CAAS partnered Singapore Airlines, Temasek, ExxonMobil and Neste in a SAF Pilot to advance the use of SAF in Singapore. The first batch of blended SAF was delivered to Changi Airport in July 2022, and the sale of SAF credits was launched in June 2022. In October 2022, Singapore signed an agreement with International Civil Aviation Organisation (ICAO) to provide and receive assistance, capacity-building and training (ACT) on SAF under the ICAO ACT-SAF programme.

5        Mr Han Kok Juan, Director-General of CAAS, said, “SAF is the key pathway for the decarbonisation of the aviation sector. The setting up of a SAF offtake mechanism is an important next step in CAAS’s effort to catalyse the development of a self-sustaining ecosystem and flow of funds for SAF in Singapore. It will encourage greater SAF adoption at Changi Airport and help create long-term, predictable demand to incentivise capital-intensive investments in SAF production and help drive down price over time.”

Annex A – Extract of Report of the International Advisory Panel on Sustainable Air Hub [Sustainable Aviation Fuel (SAF) Structural Offtake Mechanism]