Earn strong returns while financing the development of one of the first commercial eSAF plants in Europe, sited where renewable power is among the continent’s lowest-cost, producing into demand that already exceeds supply.
// In brief
What decides an eSAF investment is not whether demand exists, but whether a plant can be financed and built to meet it. That turns on a few things: the cost of power, which is most of the cost of the fuel; revenue that can be contracted over a horizon a lender will bank; execution risk on a first-of-a-kind facility; and the stability of the country it sits in. This project is built around those questions. Iceland’s low-cost, high-availability, all-renewable power lowers the dominant cost line, its regulatory position secures the price side, long-tenor offtake anchors the volume side, and a low-risk EEA jurisdiction underpins the whole. The component technology is already proven at scale; the first-of-a-kind step is integrating it.
The market for the output is real and short: demand for eSAF is set in EU law and rising to 2050, while almost no commercial supply has been built. Many will move to fill that gap; few hold the combination that makes a project financeable, and a plant producing while the shortfall persists sells into scarcity on contracted terms, earning the returns of being early. The sections below set out the opportunity in full, the three edges behind this project, how it is structured and financed as infrastructure, where it stands today, and the risks that remain, each with the mechanism that manages it.
// The opportunity
European airlines are legally required to buy the fuel this facility will produce. The ReFuelEU Aviation regulation sets a binding, rising blending obligation at every EU and EEA airport, with a dedicated sub-mandate for eSAF specifically. CORSIA adds a parallel global compliance layer, and the EU Emissions Trading System sharpens the same incentive: with free aviation allowances now fully withdrawn, every tonne of eSAF uplifted saves an airline roughly 3.15 tonnes of CO₂ in allowances it would otherwise surrender.1 Airlines that fall short of the mandate face formula-based penalties that exceed the cost of compliance. This is not a market that has to be created. It already exists, by law, and it grows every year to 2050.2
The supply is not there to meet it. Europe must grow from roughly 1.7 Mt of installed SAF capacity toward about 5.1 Mt of mandated demand, and on the eSAF sub-mandate specifically the shortfall is sharper still: production capacity is being built far slower than the obligation rises. As of 2026, no commercial-scale eSAF facility in Europe has reached a final investment decision.3
For a producer, that is the opportunity in its simplest form: a buyer base that is legally obliged to purchase, and not enough product to go round. A facility that is producing while the obligation climbs is selling into structural scarcity, not competing on price into a soft market. For the full picture of the mandate trajectory and how supply is tracking against it, see the eSAF market.
ReFuelEU Mandate as a share of Iceland's forecasted jet fuel demand and the Iceland eSAF Project's planned production
SOURCES 1 Dir 2003/87/EC · 2 Reg (EU) 2023/2405 · 3 Industry reporting 2026 · Chart: Orkustofnun/Landsnet 2025; Reg (EU) 2023/2405
// Policy momentum
The gap that has held eSAF back, buyers unable to commit to contracts long enough to finance a plant, is now recognised at the European level, and the response is under way. In December 2025 eight member states launched an eSAF Early Movers Coalition committing at least €500 million to bring European eSAF projects to final investment decision, delivered through double-sided auctions: a two-way contract structure that gives producers long-term revenue certainty on one side and airlines competitive short-term contracts on the other. The first auction is planned for 2026.4 In parallel, the European Hydrogen Bank has awarded over €1 billion in fixed-premium support to renewable-hydrogen projects across seven EEA countries, de-risking the input to eSAF.5 The market is being built to be financeable, and the momentum runs one way.
SOURCES 4 EC Early Movers Coalition 2025 · 5 Hydrogen Bank IF25 2026 · Scorecard: 6 Ember 2024 · 7 DR (EU) 2023/1184 · 8 Dir (EU) 2023/958 · 9 EEA JCD 334/2023 · 10 EC Decision Sep 2025 · 11 ESA CD 026/26/COL · 12 WRI Aqueduct 4.0 · 13 EU Innovation Fund
How Iceland compares with other European eSAF locations on the policy and resource factors that decide project economics
| Factor | Iceland | Norway | Germany | Netherlands | Denmark |
|---|---|---|---|---|---|
| Grid carbon intensity6 | 28gCO₂/kWh | 30gCO₂/kWh | 337gCO₂/kWh | 251gCO₂/kWh | 132gCO₂/kWh |
| RFNBO additionality7 | Exempt | Exempt | Applies | Applies | Applies |
| ETS SAF support tier89 | 100% | 95% | 95% | 95% | 95% |
| SAF allowances claimed1011 | Not yet | Yes | Yes | Yes | Yes |
| Water stress12 | Low | Low | Medium-high | Low-medium | Low |
| Innovation Fund access13 | Yes (EEA) | Yes (EEA) | Yes | Yes | Yes |
// This project
Electricity is the single largest cost in power-to-liquid fuel, running to 60 to 70% of production cost across the market.14 Iceland's low-cost, high-availability, all-renewable power lowers that dominant cost line and turns electrolyser availability from a risk into a given, with no intermittency curtailment and no battery storage, which is one of the largest single drivers of project returns.
The project is exempt by default from the RFNBO additionality and correlation requirements that constrain continental competitors, and its airports sit at the EU's highest SAF price-support tier: a right to reimbursement of 100% of the price difference against fossil kerosene, where other countries sit at 95%.1516
The project addresses it directly: a memorandum of understanding with Icelandair anchors offtake volume at the home airport, and a 15-year memorandum of understanding with Luxaviation sits among the longest-tenored commitments in the market, long enough to give lenders the revenue horizon they need once it converts to binding terms at FID.
Why Iceland's grid delivers this, and how it compares with other locations, is set out on Iceland's Advantage. The project-specific cost split and operating assumptions are in the investor portal under NDA. For an investor this is not a subsidy line but revenue security: the green premium an airline would otherwise have to absorb is closed in full at Icelandic airports, which underpins the netback the offtaker can sustain and, in turn, the contracted price lenders size debt against. The regulatory basis is detailed on Iceland's Advantage and For Airlines. Bankability in eSAF comes down to one question: can revenue be contracted over a horizon a lender can size debt against? Across the sector, airlines have been reluctant to commit to offtake long enough to underwrite that debt, and because no European eSAF project has yet reached a final investment decision, no producer holds binding offtake at all. The constraint is systemic, and it reflects the financing structure of a market still forming, not weak demand. Beneath the contracts is a mandated buyer base: the fuel is legally required, in volumes that exceed supply, across the plant's full operating life. Revenue security rests on a legal obligation to buy, not a forecast of voluntary uptake.
SOURCES 14 Project financial analysis; AACE 17R-97 · 15 DR (EU) 2023/1184 · 16 EEA JCD 334/2023
A roughly 20-year infrastructure lifetime, financed in layers that each de-risk the next, with proven component technology.
Power-to-liquid is capital-intensive, but it is not novel at the component level. Alkaline electrolysis, methanol synthesis, and methanol-to-jet conversion are all commercially deployed technologies. The first-of-a-kind element is integrating them at scale, and the project manages that through phased development, from pre-FEED through to EPC, with stage-gate decision points rather than a single, all-or-nothing commitment.
This is financed the way large European energy-transition projects reaching final investment decision actually are: as an infrastructure asset with a roughly 20-year operating lifetime, with capital arriving in layers that each de-risk the next and standard project-finance mechanics behind them. The development-equity round is open now; the rest of the structure follows as the project is de-risked and contracted. And the advantage compounds: a second plant on the same site would share infrastructure, and the first-of-a-kind premium disappears entirely for the next-of-a-kind.
// Status
// Secured inputs · power, CO₂, water
Secured through memoranda of understanding for renewable electricity exceeding the facility's nameplate capacity, positioning the project to enable large-scale, low-cost wind development.
Secured through several memoranda of understanding with local and international suppliers of CO₂ and biomass.
Secured through a memorandum of understanding for sustainable water supply with the utility.
Feasibility confirmed, with a Class V cost assessment in place.
Committed offtake under MoU against the project's 70 kta nameplate capacity
Anchored by a volume memorandum of understanding with Icelandair at the project's home airport, plus a 15-year memorandum of understanding with Luxaviation.
The methanol-to-jet pathway was confirmed in a feasibility study completed by Carbon Recycling International (CRI), built on proven, commercially deployed process technology. The project has been developed in collaboration with CRI, Nel, Icelandic Tank Storage, and HS Veitur. The founders’ deep knowledge of the power market and applied experience in industrial projects position them to lead this project to realisation; meet them on our people page.
// Risk
The process units, alkaline electrolysis, methanol synthesis, and methanol-to-jet conversion, are individually proven and commercially deployed, and the fuel pathway itself is qualified under ASTM D7566, the international standard for synthetic aviation fuel.17 The first-of-a-kind step is integrating them as a continuous chain at this throughput.
A plant is only as bankable as its inputs and its offtake. Power, CO₂, and water are each secured under memoranda of understanding, and offtake is anchored by MoUs with Icelandair and Luxaviation; the step that remains is converting these to binding terms at FID.
eSAF economics rest on the EU framework: the ReFuelEU mandate that creates the demand, in force and rising to 2050, and the Article 3c(6) price-support entitlement that Iceland has yet to enact in national law.18
Iceland's tax system, EEA single-market access, rule-of-law environment, and stable governance, the dena country-risk matrix scores Icelandic government risk in its lowest category, 1.5 out of 3.0, all shape the risk profile.19 For investors evaluating the jurisdiction itself, Investing in Iceland is our reference primer.
The full risk register, with mitigations, is available in the investor portal under NDA.
Learn more about investing in IcelandSOURCES 17 ASTM D7566 · 18 EEA JCD 334/2023 · 19 dena
// At a glance
| Metric | Value |
|---|---|
| Production capacity | 70,000 t/yr eSAF |
| Installed capacity | 300 MW |
| Offtake | 2 MoUs |
| Fuel specification | ASTM D7566, methanol-to-jet |
| CAPEX estimate | AACE Class V |
// Next step
