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SAVi Report

Friday 2 February 2024 in Sustainable Finance

SAVi Five: CALC’s third sust finance transaction, Sunak stands by 2025 SAF mandate, and more…

Eduardo Mariz
Senior Analyst at Ishka
eduardo@ishkaglobal.com
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Five noteworthy aviation sustainability developments in the past seven days curated by the Ishka SAVi team.

Here are the new developments to keep in mind:

1. CALC makes third return to sustainable finance, leading lessors – Hong Kong-headquartered lessor China Aircraft Leasing Group (CALC) has closed an unsecured revolving syndicated loan totalling a maximum of $500 million, becoming the first lessor to announce a sustainable debt raise in 2024. It is the lessor’s third sustainable finance transaction. According to CALC, it is the largest aircraft PDP financing in 2023 (when it closed) and represents the aircraft leasing industry's first-ever sustainability-linked PDP loan facility. China Construction Bank Shanghai Branch served as the lead arranger. It is the lessor’s third sustainable finance transaction after issuing a RMB 1 billion ($140 million) debut low-carbon transition bond in 2022 and the completion of the first and second tranches to raise RMB 1.5 billion ($210 million) of low-carbon transition corporate bonds in 2023.

2. Rishi Sunak reaffirms UK SAF mandate still on track – UK Prime Minister Rishi Sunak reaffirmed his commitment to deliver a UK SAF mandate to be in place by 2025 as well as a revenue certainty mechanism for SAF by 2026 at this week’s Prime Minister’s Questions in the UK Parliament. Sunak’s message was prompted by a question by MP Henry Smith, a Conservative politician for Crawley, the constituency where London’s Gatwick Airport is located. “[Department for Transport] will be consulting in the Spring this year on options for how [the revenue certainty mechanism] should work in practice,” Sunak commented. The question follows delays in DfT’s finalisation of the SAF mandate and the revenue certainty mechanism, which has prompted calls from industry for speedier action.

3. Cathay Pacific and Emirates continue SAF support – Two separate developments supportive of the SAF scale-up this week bring into focus airlines outside of Europe and North America. In Hong Kong, Cathay Pacific Group was among the 13 founders announcing the launch of the Hong Kong Sustainable Aviation Fuel Coalition (HKSAFC), convened and chaired by the Business Environment Council (BEC). The multi-stakeholder coalition seeks to support the Hong Kong government’s intention to promote the supply of SAF and grow Hong Kong as a regional SAF hub. Meanwhile, Emirates has joined a UK cross-sector cluster aiming to develop a SAF plant with an estimated fuel production capacity of 200,000 tonnes per year which could be delivered through pipelines to Heathrow and Gatwick, two of Emirates’ largest destinations.

4. New RMI report casts light on US SAF policy developments – Non-profit Rocky Mountain Institute (RMI) has published a new report titled Refueling Aviation in the US: Evolution of US Sustainable Aviation Fuel Policy providing a complete overview of US SAF policy development, from an evaluation of federal policies including the Inflation Reduction Act (IRA) incentives to a state policy evaluation covering ongoing efforts in states like Colorado, Illinois, Michigan, Minnesota, New Mexico, New York, Oregon, and Washington.

5. Heart Aerospace triples capital base, Eviation gets new executive leadership - Two of the largest and most promising new propulsion clean-sheet aircraft OEMs, Heart Aerospace and Eviation, had big news to share this week. Heart Aerospace has tripled its capital base with a Series B raise of $107 million, taking the total financing raised since inception to $145 million. Investors include Sagitta Ventures, Air Canada, Breakthrough Energy Ventures, European Innovation Council Fund, EQT Ventures, Lowercarbon Capital, Norrsken VC, United Airlines, and Y Combinator. Meanwhile, all-electric aircraft developer Eviation has announced the appointment of Andre Stein, the co-founder and former CEO of Embraer-backed e-VTOL developer Eve Air, as its new CEO. Jeff Hurford, an industry veteran and former Gulfstream executive, joins Eviation as CFO – rounding an executive team with long industry experience.

Tags: CALC, Cathay Pacific, Emirates Airline, PDP financing, SAF mandate, SAF policy, UK, US

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