Airlines are spending many millions of euros more on kerosene these months. They initially try to cover these extra costs with stopgap measures. For example, KLM canceled one hundred and sixty flights in May due to rising fuel prices due to the war in Iran. Since mid-March, airline tickets have had a fuel surcharge of a few tens of euros, depending on destination and flight duration.
“We still have sufficient fuel in stock,” KLM CEO Marjan Rintel assured last week. “The summer is safe for the time being.”
But, says Rintel, if the scarcity due to problems with the supply of kerosene and crude oil from the Gulf continues until the autumn, KLM does not rule out new changes to the flight schedules. “Then we will look again at European routes. Especially at routes that we fly several times a day. Then we can rebook passengers to a flight an hour earlier or later. But that may only happen after the summer. I don’t have a crystal ball.”
In addition, airlines such as KLM have been hedging for some time: they purchase fuel in advance at fixed prices through long-term contracts. This way they are partly protected against price peaks. This provides guidance, but is not a structural solution as long as they remain dependent on fossil kerosene.
And there is another way in which KLM wants to do something about the dependence on the Middle East, energy security and the strategic resilience of European aviation. That is: investing in our own biokerosene factory. At the same time, this is also good for sustainability and to meet the growing European requirements in that area.
On Thursday, KLM and the Dutch kerosene producer SkyNRG celebrated the start of construction of their first biokerosene factory in Delfzijl. The faltering project was already announced in 2019, but construction in Delfzijl only really started in May. Due to years of nitrogen crisis, corona delay and a difficult permit process, the first fuel will not flow to Schiphol until mid-2028. Biokerosene is currently two to three times as expensive as regular kerosene, but the war in Iran has (temporarily) reduced that difference.
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Mix
The factory in Delfzijl, DSL-01, makes sustainable aviation fuel based on used frying oil, agricultural waste, animal fat and industrial waste from Northwestern Europe. The use of this sustainable aviation fuel (SAF) produces 60 to 90 percent less CO compared to fossil kerosene2emissions over the entire life cycle. DSL-01 will produce 100,000 tons of SAF per year, more than 2 percent of KLM’s total fuel needs.
From 2028, KLM will purchase 75 percent of SkyNRG’s entire SAF production for fifteen years, for a total of approximately 3 billion euros. That contract was also signed in 2019. The European Commission introduced a legal blending obligation for SAF in 2023. Brussels requires airlines to use an increasing percentage of SAF in the coming years. In 2025, approximately 4.6 percent of KLM’s total fuel consumption consisted of SAF. In 2024 (most recent figures), 0.6 percent of all aviation fuel in the EU consisted of biokerosene.
KLM now buys its more sustainable fuel from Neste in Rotterdam, among others. The Finnish energy group’s plant is the largest biorefinery in Europe, producing 500,000 tons of SAF per year now, growing to 1.2 million tons by 2027. Shell and BP also had plans for biokerosene plants in Rotterdam, but both companies canceled them because they proved “not commercially viable.”
The relatively limited capacity of ‘Delfzijl’ makes last week’s construction start particularly symbolic. The fact that KLM decided in 2019 to also become a shareholder in a biokerosene factory is special. The Dutch company was the first airline in the world to invest as a shareholder in the construction of its own SAF factory. Not as a remote customer, but as a co-owner and guaranteed customer. Other European and North American companies now also have interests in SAF production. For example, in 2024 Air France concluded a purchasing contract with the TotalEnergies biokerosene factory in Grandpuits, near Paris.
With the arrival of new investors such as Macquarie Group and pension fund APG, KLM’s interest in SkyNRG has now fallen to less than 10 percent, but the long-term offtake contract remains the financial backbone of the project. SkyNRG (120 employees in the Netherlands and the US) started in 2009 as an importer and distributor of SAF. In addition to Delfzijl, it has two more projects: in the American state of Washington and in northern Sweden. The ‘scale-up’ does not share turnover figures, but according to the Chamber of Commerce, it suffered a loss of 10.1 million euros in 2024 (2023: -11.3 million).
Energy security
The tensions surrounding the Strait of Hormuz have sparked a discussion that SkyNRG director Maarten van Dijk has been trying to have in Brussels for years. The combination of sustainability and energy security is now on the agenda at the same time for the first time.
European climate policy, he says, has long been aimed at purchasing sustainable fuels as cheaply as possible – regardless of origin. This built up production capacity for SAF in Canada, Australia, Brazil and China, while creating demand in Europe. “If you, as Europe, pay for something, why do you let an industry be built up somewhere else? If something happens and the borders close, you are left with nothing.”
Only now, partly due to the ongoing tensions in the Middle East, are three European Directors General – Climate, Transport and Energy – sitting together at the table. According to Van Dijk, that has never happened before. Member States are also starting to realize that they need to have something in their own country. According to him, the factory in Delfzijl is exactly the type of project that meets this need: regional, European, with a customer who makes production financially possible.
Marjan Rintel links the fuel shortage to a broader warning towards The Hague. If flying from the Netherlands becomes “unaffordable” due to taxes and higher costs, the financial space to invest in sustainability will also disappear, she says. “If you do not ensure that we can remain competitive from the Netherlands, then there is a limit to what we can invest.” KLM also uses the same argument for the fleet renewal, which will cost the company 7 billion euros in the coming years. Only if we can continue to fly enough – and the capacity at Schiphol is not reduced – can we afford cleaner (and more economical, therefore cheaper to use) aircraft, Rintel has been saying for some time.
She points to Sweden, which has now reduced its air passenger tax to zero, precisely based on the belief that a hub, a well-connected aviation hub, is economically and strategically indispensable. And that you can only become more sustainable if you have the economic basis in order.
Resource cliff
Since 2025, airlines must add 2 percent SAF at EU airports. That will grow to 6 percent in 2030, 20 percent in 2035 and ultimately 70 percent in 2050. Based on the current production capacity, this is a difficult task, according to Van Dijk. Current SAF production in Europe relies largely on waste fats and oils. Those flows are finite.
Van Dijk warns of a “resource cliff” that will become visible around 2035. SkyNRG says it only uses frying fat, animal waste and other raw materials from Northwestern Europe, but on average, more than a third of European SAF production relies on supply from China and 12 percent from Malaysia. If China were to limit its exports, there would be insufficient raw material to produce sufficient biokerosene as early as 2032 or 2033.
The next generation of sustainable fuel must come from synthetic kerosene, also known as e-SAF: made from green energy, water and CO2. Can be produced entirely in Europe, Van Dijk thinks, but more expensive.
SkyNRG and KLM wanted to build an e-SAF factory in the port of Amsterdam, but that project failed due to grid congestion and the price of green energy. Power operator Tennet was unable to provide a new connection until 2032. The project moved to northern Sweden.
According to Van Dijk, Europe needs roughly 750 factories of at least the size of Delfzijl by 2050 to meet the European blending obligation. This requires investments of many billions of euros in factories, green energy, hydrogen and CO2– or infrastructure. Government help is essential, says Van Dijk. “At a certain point it is: we do everything we can. Then it is up to the government.” The taxes collected from aviation via the European emissions trading system should also be used by SkyNRG and KLM to make the sector more sustainable. Van Dijk: “Now they still unfairly flow entirely into the general resources.”
