Get Together:Sasol, Topsoe ink MOU for JV to build, own, operate SAF plants

February 27, 2023 |

For today’s storyline, I do suggest you play the Youngbloods 1960s hit Get Together on your device of choice. Whenever I read of a potential game-changing JV in the bioeconomy, I think how hard JVs are, and my mind drifts hopefully to the Youngbloods singing the chorus, “Come on, people now/Smile on your brother/Everybody get together/Try to love one another right now”. 

      Listen Here!

So, here you are, news has arrived from Denmark that Sasol and Topsoe have signed a Memorandum of Understanding to establish a 50/50 Joint Venture in 2023 to develop sustainable aviation fuel solutions. The JV will develop, build, own, and operate ventures producing SAF based on Sasol’s Fischer Tropsch technology and Topsoe’s relevant SAF technologies.

Parenthetically, you’d like a little more SAF in your soundtrack as you read, you can try the Jefferson Airplane version of the song, which appeared on their Jefferson Airplane Takes Off debut album. When the two partners have formed their JV, if they do, they’ll be looking for Somebody to Love, and you can listen to that JA record then. Special bonus tip, the singer, Grace Slick, was born Grace Wing. That’s SAFtacular.

The backstory

Sasol and Topsoe seek to enhance and enable faster SAF production development through the establishment of a JV. The JV will produce SAF derived from non-fossil feedstock, utilizing green hydrogen, sustainable sources of CO2 and/or biomass. The companies note that their technology suites offer multiple pathways to SAF production at scale.

The partnership between Sasol and Topsoe, through Sasol ecoFT, is already well positioned to be a strong player in this growing market through leading technological capabilities and collaboration with the aviation industry. Sasol and Topsoe have been strategic partners for more than 25 years.

The rationale

With aviation being responsible for 3% of global carbon emissions, low carbon solutions are urgently needed; and, existing project developers have been moving slowly — combination of factors there, policy is tine on the problem-fork, yet capital and technology integration are the others.  We’ll form the guess that Topsoe and Sasol have concluded that airlines are extremely willing if the price is right, and they might as well shift from strict licensing to a hybrid of licensing and build/own/operate. 

What exactly is Sasol’s ecoFT?

It;’s more than just a Fischer Tropsch tech suite. 

There’s Power-to-X technology, which generally means splitting water using excess renewable power capacity. More about that here.

It’s fantastic news, of course

I think I have an insight now how the citizens of Rome felt on the day that Michelangelo was tapped to paint the Sistine Chapel. Fortunately, it’s great news, Unfortunately, they’ll need time, perhaps a lot of it; it will be worth it in the end, but I’d say that nothing will be finished by Saturday. Sunday isn’t too good either. And the partners will not escape the Digest’s Iron Law of Feedstock, which reads:

Sustainable, affordable, abundant, pick any two of three.

Lots of work to do

The MoU establishes the exploration effort that might lead to a JV with Sasol. MOUs usually lead to LOIs and to agreements, not always — the bigger the company, the more likely that agreements come from MOUs because large companies get shy about announcing MOUs unless they are pretty darn serious.

Having said that, there are, ahem, just a few things beyond technology integration, willing customers and willing partners to consider. Some say the devil is in the details, some say God is in the details, but for sure The Digest can say that the liters are in the details. The partners have yet to finalize feedstock choice or supply, timeline and planned capacity. And, urgent as those are, it’s not the “Job on Day One” for this venture — the partners say they are currently focused on “business plan development, setting up the JV structure and organization, and finalizing the JV agreement.” 

In short, it’s a long walk to energy freedom.

JVs are tough

We’ve seen a lot of JVs along the way, they kind of work like a horse-race in reverse, there’s champagne and a blanket of flowers at the beginning, a lot of hooves and dirt flying in the middle, and scratching at the end.

Not all. Valero and Darling have a colossally successful JV in Diamond Green Diesel, for example. The differences in corporate temperament — appetite for risk, love of committees, desire for pace — can create problems. Ask Shell and BR Biopetroleum, Cargill and Dow, BP and DuPont. As the Zen master says, we’ll see.

The tip-toe through the “we’re not competing with our customers” tulips

Yes, the JV will develop, build, own, and operate. Yet, Topsoe is at pains to clarify that ‘Topsoe’s core business will remain the same, and we will continue to support [customers as a] valued partner in SAF production and beyond. It will be very much a case of ‘business as usual’ as we strive to deliver the best for our customers.

Reaction from the stakeholders

Roeland Baan, Chief Executive Officer at Topsoe, said:  “We are very excited to announce this MoU, as it underlines our ambition to help decarbonize some of the most critical sectors in the world. If we are to reach net zero on a global scale by 2050 in order to fight climate change, all solutions need to be put into play. Creating a low carbon aviation sector is an important piece of the puzzle, and we’re excited to extend our partnership with Sasol to help speed up decarbonization. Combined, we have the technologies, capabilities and willingness to take the lead.”

Fleetwood Grobler, Sasol President and CEO said: “Sasol is excited to enter into this MOU with Topsoe to further Sasol’s long-term global sustainable aviation fuel ambition, as advanced in recent years by Sasol ecoFT, which was established to pursue SAF opportunities globally.  We are fundamentally transforming our business by focusing on decarbonizing our operations, while preserving and growing value. The MoU is underpinned by decades of collaboration between our companies in technology development, commercialization and operations. The combination of these building blocks and know how to offer solutions in aviation decarbonization, is very exciting.”

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