Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Okay, that's 10:02. So we'll kick off. So welcome to the webinar. This is the first in a series on sustainability in the supply chain. This month, we are focusing on sustainable air fuels. Obviously, a very prevalent topic as companies quite rightly look to ways to reduce their emissions in the supply chain. I'm Tim Cook, a regional sales manager for the Nordics. This month's webinar is hosted by the Nordic region. So welcome to any of our customers from the 4 Scandinavian countries. Before we begin, a couple of housekeeping items. There is a chance to ask questions to the panelists. We do ask you put that in the Q&A box, not the chat box. This allows us to answer the questions. We'll try and do some of them live at the end or we'll follow up on e-mail. So please use that function. The webinar isn't recorded, but we will be sending out the slides to all the participants as well as a questionnaire, which we'd love for you to fill out and come back on your feedback. So that will be going out this week following the closure of the webinar. So again, thank you for joining. We appreciate you taking your time out of your day to listen to this webinar. It's going to be a very interesting topic, and we've got some great, great speakers. We're joined by Nick Weise, our regional Sustainability Manager based in Europe. And we've also got Tina Trinks from Neste. Neste is the world's leading producer sustainable fuels. So you really are hearing from the industry experts today. So I'll hand over to Nick to get us going with a webinar.

Thanks very much, Tim. That's very much interested in hearing some questions, seeing some discussions today. So maybe we'll start by just looking at the results, if we can, [ rejoice ]. So what I see here is 58%, and see if it pops up, if everyone can see that. But I see 58% of the people are either investigating and looking to buy. And quite a few there we would like to, but the budget does not allow very, very few Tina. It's interesting to see very few say no way never. So I think this really fits well into the discussion we're going to have. A lot of investigation going on, a lot of discussions about the cost of sustainable fuels. So yes, it's definitely some good alignment there with the topics we're going to have. I see there's a guest in there with a question about the slides. You will get a copy of the slides, as Tim said, afterwards, once we finish the session. So let's just start by looking a little bit at the impact of logistics emissions. And really, why so many people are focused on logistics emissions. We see, first of all, shipment emissions can be 4x higher than the company's own operations. So we know that's definitely raising a lot of concerns within organizations. It's right now the third largest source of greenhouse gases. And the 10% to 24% of global greenhouse gases come from shipping. Now you say, well, why is it such a broad range, 10% to 24%. And the simple reason is it is quite difficult to break out different aspects of that. So for example, a commercial flight might have passengers on it. It might have goods on their cargo or freight on there. So -- at the end, whether it's 10% or 24%, the forecast of increasing up to 42% is what scares people. I say sometimes it's a little bit unfair, right? Because it assumes all other industries will do a lot to decrease and it assumes logistics won't. And I don't think that's necessarily fair, but it's very clear the call-out is a concern over the increase if we don't do enough. So that's really whether it's 10% or 24%, the concern is the growth that could be seen. So those there, the impact of logistics makes this front and center within organizations is an area they want to tackle to reduce emissions. I'll look at there just what are those. So first, you see on top of definition of sustainable logistics at those activities that contribute to the reduction of Scope 3 emissions. And when I talk about that, we talked specifically, as you see on the screen, the 4 and the 9 within Scope 3. So it's the upstream and downstream transportation. That's the area of focus for our discussion today around SAF. That's a focus for the discussion around sustainable logistics. Just want to break that down a little bit further into that aspect of where those in logistics emissions are coming. So you see on the screen, first the modes on the left, and then you see the second 1 and this example of the sea and inland waterways, 72% of the freight that's moved in a percentage measured by ton kilometers is by sea and inland waterways. The next column about CO2 emissions takes the percentage of total emissions that, that equates to. So on sea 72% of the freight move for 20% of the emissions. And that's pictured on the right with an example, as you see, but an example showing the amount of average intensity for those sea and inland waterways. If we go to rail, you'll see 7.8% of the freight moved, 5% of the emissions. And then again, that's pictured on the intensity. Road sort of goes the opposite way of the sea. So 19% of the freight moved but almost 70% of the emissions. That's why you see a lot going on about how do we reduce emissions on the road. Take it to the last one, which is the first 1 for our discussion today talking about SAF predominantly. You see there quite low numbers in the amount of freight moved by airs, I'll say, only 0.2%, but as a percentage and the share of the total emissions, it's high, it's 4.8%. And you see there on the right, the average intensity over 600 in this example. So really intensive in the emissions impact coming from air. Tim mentioned at the beginning, we're going to talk about several topics in upcoming events. I just want to very briefly touch on it. You see here the reporting, you'll hear things about things like GHG Protocol, Black methodology, ISO 14083, and we talked a little bit about the scope. So reporting is really about measuring the carbon emissions from logistics activities, upstream and downstream. The next 1 you see there, the avoidance and the reduction. I get a little bit -- we put them together because you sort of get people say, "Well, I'm going to reduce my emissions by switching from air to ocean. That's correct, where some people might say, "No, no, no, I'm going to avoid emissions andsomebody will say, "No, no, it's not avoiding because you're just reducing. But don't get too caught on it. We generally put them together. The initiatives are focused on reducing or avoiding emissions together. The third 1 that's what we're here for. We're all here waiting for Tina to talk in a minute. I'll shut up I promise. But we're going to come back and talk about the insetting. And you see there, investing in GHG emission reductions within an organizations value chain. And that gets a little bit of a, let's say, people to look at it a little together and say, "Well, what's different there in insetting and offsetting. And so I put it there quite far off to the right. So we're not going to talk too much on the offsetting there. You could see some examples there, but we do realize these are generally the things that people want to look at when they're looking to reduce emissions in logistics. We do try and look at moving from left to right as much as possible, right? First focus, of course, onset in the baseline. Then avoid and reducing. There is going to be a need to inset -- look at insetting. And then there will be something probably left over at the end, there might be a need to do offsetting at the end. But it's always considered at the end, right? Do everything you possibly can to avoid reduce and inset first? So I hope that's not too quickly run through. Certainly, if you have any questions on these please put it into the chat there. We'll come back to them a little bit later and promise, Nina is sitting there in Hong Kong, waiting to talk to you and say hello to you and answer any questions with us. But without further ado, I'm going to jump across Tina and let her take it forward a little bit.

Thank you, Nick, for the introduction, and good morning, everyone. Thank you for joining us a topic on sustainable fuels, which is not always, I think, for everyone yet, the most sexy topic, but I'm obviously getting super excited about it. So I'm happy that there are more of us together now. Maybe a short background on myself and I'm at Neste now for about a year and part of the renewable aviation part of Neste and as a key account manager for our Neste impact or maybe some not, it's a sub-solution program. And of course, with that focus on aviation, I will bring a bit more insights from a SAF perspective, but I've also previously worked in the renewable marine fuel side. So I would try to make some parallels or wherever I can add the modalities to make it a bit broader in general. But of course, my capacity here and we have the most up-to-date knowledge is on SAF, and I'm happy to leave a lot of time in the end to have an exchange on that. And briefly about Neste, you will see quite some branding and then also will show videos that present a little bit about the program we launched, but actually, it really is about the content. So I hope I keep it short enough. From a brand perspective, but just to give you a bit of a background on what is Neste, we are a company from Finland originally that has embarked already for the last 3 to 4 decades on transforming all its operations into renewable solutions for the fuel market -- for different fuel markets and really became a frontrunner there, where we had, I think, the first big footprint in the market and on the renewables side is really the road transport. We have established ourselves already since decades. Then there's also 1 arm for sustainable shipping, which is fairly small in the bigger picture of Neste recently since 2011 already, but a bit more acceleration in the last years. We have added our sustainable aviation fuel business, first, of course, much more research and looking into what our -- what are the possibilities to start up with SAF production and lately really in scaling phase. And then we also have a more recent business unit, which is the renewable polymers and chemicals, which fits in very well because we have similar feedstock streams and ways of cascading our raw material and feedstock usability here inside of Neste. From a production perspective, I'm just going to say a few words because I think that's what we get asked a lot. Currently, we have 3 big production plants for renewable road transport, but also for SAF now. One is in Finland in Espoo, close to Espoo in [indiscernible] which is our home refinery and this refinery is producing HVO and SAF but also has now embarked in a big transformation project for the next 10, 15 years to become really a fully renewable refinery. And I think the goal is really to be the most sustainable refinery in the world and become net zero, which is, of course, as you can imagine, still quite a challenge. And then we just opened a refinery in Singapore last year that produces renewable road transport fuel and sustainable aviation fuel, and we're really scaling this production up now. And here I'm based in the Netherlands, close to Schiphol airport but we have also a refinery here in Rotterdam that is producing HVO and is now being expanded massively with a SAF production added as well later this year. So just to give a little bit of overview on what Neste does right now. Next slide, please. So why are we talking about this? And what do we expect actually for -- now I'm focusing on aviation, but I think in general, on logistics and transport industry until 2050 in order to achieve our net zero targets. I think what is important to start with is there is not 1 single silver bullet. We will really need all kinds of different technologies, and we will need them fast, and we will need them affordable. And in order to give you a little bit of a projection on what is expected, I added to this slide. You can see here, again, this is for aviation on the top blue part, the dark blue part, this is really what is expected to be achievable by new technologies, such as electrification, but also hydrogen is part of this bulk. You can see this is not something where we see it can be -- it's a big lever for the short term, but really much more long term. And also what is important to understand is that it meets the change of vessels or aircraft or engines or even airport infrastructure. So yes, any -- for the marine side and aviation side, any new vessel that is now purchased will be in use for the next 25, 30 years. So you can get a bit of an idea of how -- what we need to do here and how fast this could happen. Then the light blue part is really, I think, where also a lot of you practitioners in logistics are already very good and like how can we become more efficient? How can we optimize operations and infrastructure in order to not only decrease emissions but very often also to become more efficient and more cost effective. And of course, this will continue to play an important role. On the bottom line, the gray line what Nick also mentioned in 1 of the pillars on what we can all do in terms of our decarbonization journey. There is, of course, a place for offsets, which is more compensation somewhere else in outside of their own supply chain or value chain and this will continue to play a role, but it's really more the idea of using this for residual emissions that cannot be avoided or reduced in any other way. And then you see the light green area and this is where a lot of industry experts expect roll off renewable fuels. So in this case, the state aviation fuel for aviation that IATA is expecting this to be around 65% by 2050. And of course, right now, we're using a certain pool of feedstock of raw materials for this, but there will be many other different technologies until 2050 and I will highlight a few more in a second. But just to give you an idea, what we expect in terms of, yes, multi-technology uptake and where the possibilities and needs are in the next decades. We can go to the next slide. Or maybe just to -- sorry, I forgot something to make parallel. If you could go back what is maybe for the ones also working a lot on the road side, also important to understand or you're probably also aware but just to highlight again, the dark blue area is, of course, much bigger for the road side because there's so much more potential for electrification. So we can also see it depends a little bit on this sector and modality, what is possible and how this graph will look like. But of course, we are also highly dependent on green energy in this case. And by the way, also for hydrogen and other sustainable aviation fuel, raw materials, we need a lot of green energy. But I will mention that when I talk more about things. So we can go to next slide, 1 more click. Yes. So what is SAF or at least what is the SAF that Neste is doing right now? And of course, there's a lot of parallel in other technologies in the market. But I can mostly, of course, talk about what we are doing and highlight that. So it is a next-generation fuel, make it a renewable fuel. But what is also important is that this is really strictly made of sustainable sources, which is considered -- what is considered as a sustainable source nowadays, so it's waste and residual streams that are also certified as such in regionally different -- it can be different certification frameworks in Europe. This is mostly IACC. And that is also, in our case, certifying all our feedstock streams. And then well, how do we achieve this CO2 reduction? Or what does it mean? It is, of course, something that is calculated within the greenhouse gas protocol framework and in our case of SAF, it can reduce up to 80% compared to fossil fuels. In practice, actually, it can range between 75% and even 86%, I see sometimes depending on the raw material use that where it comes from and where we produce it. But in average, I would say, it's around 80% at this point. How this works, I will show you a little bit more in-depth in a second. Then also, it is a drop in solution, which is important because it means that nothing needs to be changed in terms of airport infrastructure and aircraft engines which, of course, makes a big difference in terms of adaptability and scalability of the solution. Right now, we are using an average -- a blend of 35% to 40% from a regulatory perspective, it is possible to use 50%. And of course, there's more and more demonstration slides and experimentation to look how can it actually be 100% SAF. But looking at the uptake of SAF right now, which is between 1% and 2% globally. I think we are for now covered with the 50%. But of course, it is good to develop technologies that can -- or aircraft and also the regulations that can actually handle 100% SAF. And also good to highlight why this is the ongoing research, it burns cleaner than current Jet A-1. And it also has other non-CO2 -- positive non-CO2 effects like if you think of contrails it creates less contrails. So there is less global warning effect, but that's something that is under research to really put numbers on this and qualify -- and quantify this much more. We can go to the next slide. One question, of course, we get a lot, and I can imagine practitioners when you make a long-term plan, you want to know are these solutions scalable, are these solutions for the long term for us. What if we need much more, if this is available. And I know for and in the case of SAF, there has been now quite a period of scarcity. But luckily, we are moving out of this. The market is maturing. There's more production going on, but there's also more maturing raw material market and a better understanding of what item raw materials we can use now in the short term, but also midterm and long term. And in order to give you an outlook on that, I've added this slide. Maybe you can see, and this is actually the case for all modalities, what is expected in terms of feedstocks. Right now, we use mostly used cooking oil, which falls under the light blue part on the bottom and also some tallow and animal fed residuals, but there is also more and more experimentation and development on, for example, novel vegetable oils. We already used some municipal waste. In this case, it's more sewage sludge. So anything oily that comes from this sewage and can be extracted. And of course, the Lignocellulose's streams can be interesting. So waste streams from agriculture or forestry and paper production. And I think 2 raw material streams that get also quite a lot of attention, justifiably and needs the development is algae and then from a technological point of view, power to liquid where you have, of course, many different technologies that are being researched right now. But here, again, I think the key will be to have enough green electricity and as well making it economically viable as a solution. We can go to the next slide. This is already in the video. Thank you. So I thought I'm going to add a 2 videos, actually, sorry. Sorry, Nick, making it hard for you to highlight how this residual reduction can work. Sorry, let's go. [Presentation]

I cohost Tina. I'm just too slow for you.

No, no, no. It's my mistake, I had a more boring slide in between, but decided to remove it for the sake of the video because I think it explains it much more nice than a dry slide. But that was actually kind of a video that to show you how can actually SAF or other renewable fuels achieve the CO2 reduction. And if there are more in-depth questions, we can go more in depth later. And now I think what is interesting for you is how does this fit into the bigger picture of your journey from a logistics point of view. And Nick already highlighted, of course, a few important steps that come before. We get into a book and claim action or an in-setting option. But in order to open up that box as well, like how can that work and how do we do it in the case of SAF, I would like to show you another video, and I will talk with you more about that in a bit. [Presentation]

Thank you, Nick. And apologies that in the end, it's a little bit of an ads for our new program, but the intention is really more to highlight a little bit of content and how that could work. And of course, here, I show you the 3 steps, how we usually work. But there, of course, is much happening in the front. And I think Nick talked you through really like perfectly what -- how Expeditors supports you in this journey. So of course, there's always a step of first gathering the data, getting your reports, understanding your situation, where are the hotspots, Unfortunately, of course, as we saw in relative terms, aviation is a big hotspot but of course, there are probably other many more depending on the complexity of your value chain. And then once you have the data and you can interpret it and you see what the options are and then of course, you discussed it with your experts at Expeditors like what are the options to avoid or reduce and I'm sure you're already achieving great results there. But there is a moment where this is limited or you might have still in the case of aviation freight that just needs to go by air for whatever reason or you need to have unexpected situations and you move or shift again, some freight to air that can also disrupt your decarbonization path and targets. And then it's good to understand what options there are in order to also reduce this I can imagine that a lot of you already also are engaging on the last box that Nick mentioned, the offsetting part. This was, of course, 1 of the first strategies of a lot of companies to do something about the emissions, but I think we are moving now in a direction where it becomes much more nuanced sometimes also more challenging but also more exciting and much more effective. But of course, it's also a big puzzle to understand what can be achieved and how -- what kind of budgets do you need for that? And what is the effect on long-term strategies there. For offsetting, I think why there is this notion of offsetting and insetting is really that insetting is kind of a new concept, a new idea on how can you actually indirectly use sustainable fuels in order to reduce your footprint. But where it is very similar to offsetting is the fact that it is the ease of use for you. As the user you can basically tell Expeditors or also any other partners you work with, who's offering this, how much of your emissions do you want to reduce. And then in this case, we will take care of making the magic happen in the back end. But how does it work? So in the first part you see there is this target you want to set and however you're set up if it's with your logistics partner or maybe you even have a carbon consultancy that is supporting you on this journey in a bigger picture, you will sit with them and then decide on okay, what makes sense, what is achievable for us what is aligned with our reduction targets. And then you said concrete number once we have that CO2 amount that you want to reduce, which is super easy. We just really need the number of CO2, you want to reduce, then we convert that into the amount of renewable fuel needed that is the same for any modality. It doesn't make a difference for SAF road or marine. So you look really like how much of renewable fuel is needed to replace the equivalent fossil fuel in the aviation side, we have an airline partners that collaborate with us in different locations in the world, and we will with them uplift in the fuel. In this case, they will get Scope 1 benefits for this transaction or this activity and the clients who paid for it will get the Scope 3 benefits allocated. And of course, this is all verified externally where we already go into the third step. So there is external third-party verification to really look at different things. Like, for example, is the amount of fuel the right corresponding amount to reduce the CO2 reported, also checking the sustainability claims and reduction claims with connected sustainability documents, but then also very important to check that there is no double claiming, whatever accounting happening. All these things are externally verified. So that actually the end client, the user of this report can continue use it credibly in or against the sustainability target in your carbon accounting. However, what's maybe also good to mention there because there's a lot of talk about registries. Maybe some of you have already looked into that. So similar to also what we have seen, the offsetting markers external platforms that are creating extra layer of transparency and kind of chain of custody verification. And in the case of SAF, in our case, we are using the IACC credit transfer system. At this point, it is not many of these platforms are not used very broadly yet. So a lot of them are still in pilot phases. But it is a new area and it is coming up. It will play an important role also if you have like different partners like in this case, it be the fuel provider and then Expeditors in between and the end user, and you want to make sure that it is really bulletproof when it's happening there in terms of the carbon accounting and the claims that can be made. And in that field and external registry where you can retire these credits or certificates as well can play an important role. So I just wanted to highlight that as well. And yes, I think I want to conclude here so that we have some time for questions. And thank you so much for your attention for joining.

If you don't mind Tina, I'm going to even start you on this page just to bring some questions because I think this and really did a great job of discussing the many aspects, but it's kind of like an onion. As you peel back the layers, you might start crying, first of all, but generally, it's quite a deep topic. So we get a lot of questions from people like, oh, will I be assure that my goods are flying on a plane that has a SAF in that plane. And sometimes you see people sort of cloud that a little bit and make it confusing for people. So you mentioned indirectly you said specifically. And I think that's 1 thing I'd just like to sort of talk about here there is a lot of discussions. Somebody said to me, I was in Italy this week, and they said, "Yes, but if I take a flight, they offer that SAF will be exactly on that plane that I'm flying on. And that's why it's not necessarily working like that. It's -- you talked about booking claim and how that works. You talked about receiving the report. So I don't want to go over this too quickly. This is definitely a topic that I think is really, really critical to the success of a SAF program. And we appreciate there's a lot of different ways out there of how this is conveyed. But I think thank you first Tina, for how you've put that together to convey this type of fuel what it can do, how you work on that verification, et cetera. So I'm sure there'll probably be some more questions coming in there. I won't preempt that, but thank you very much for going through that Tina. Well, we have in Nina sitting in Hong Kong waiting for us to answer anything. I don't know Nina if anything jumps up that you'd like to start with. We will jump into a Q&A.

There are several questions here Nick. So I hope you and Tina are ready. I'll kind of fire these at you. So 1 of the first ones actually, this is for Tina, it was about the -- in the video it talks about how flights will double by 2050. And she's just asking how that calculation has been made?

Yes, this is similar to the 10% to 24% estimates that Nick gave. This is basically industry projections by IATA and some others and anything -- in this case, I'm not sure it's very -- there are many different industry projections, but they all assume that it will be around double from passenger flights, so for leisure and business travel and for freight, but of course, different parts of like compositions. I hope it will be less. I really hope so. As a human on this planet, but looking at how we are still -- how economic systems still work in terms of growth, these are the projections taking that into account.

Okay. And no surprise, but there's quite a lot of questions here about the cost difference between a traditional jet fuel and asking on average, what the rate difference is and how it's calculated. If you could perhaps share some insights in terms of the cost value. I think that's going to answer pretty much both of the questions that we have in the Q&A.

Yes. So on average, it's around 3 to 5x more expensive than regular jet fuel. Maybe I can give a bit more insight, of course, it depends also on the technology and the location. There are some locations in the world where you have incentives or other advantages if SAF is used, but it's very, very limited. I can tell you, unfortunately, especially compared to if we look at more the fossil system and how many subsidies are still on all ends of the fossil system. So this is something we have to take into account. And then, of course, the fossil price. So the lower the fossil price, the bigger, of course, the premium for SAF because it's the data between the 2. And yes, we can -- I think it's quite easy to look at the fossil jet fuel fluctuations. If fossil prices go up of course, the premium is more digestible. But if they go down, we saw in recent months again as well, then we have to struggle, unfortunately, with a higher SAF premium.

Maybe just if I can, Tina, I'd like to think the challenge I have when the people ask that question is that they think that fuel is just going to replace the fuel. But your goods, as we talked about that working with the book and claim, your goods are going to fly on a plane that's going to be fueled by Jet A-1. They're going to be -- you're going to pay for the price of that movement. But as Tina said earlier, what you're looking at is you're looking at the cost of SAF to reduce the carbon emissions, right? So we generally look at, okay, what does it cost for a ton of CO2 equivalent to be reduced? And that, I think, sort of because when we think of that sort of, okay, it's this much more, it's that -- that's the amount you're going to pay. It's not like, okay, I have cost of fuel was $1 and the cost of the SAF is $5 so I pay $4, right, or anything like that? No. You're paying the $6 in that example, right? Because you're still moving your goods in the way that you would traditionally do. It's that you're getting this SAF in here to really get that verification as you see on this slide that you're paying for the SAF as the amount of reduction in emissions that you want to bring forward. And that's 1 challenge I see when people are asking this in a tender process. They say, what's the cost of SAF. Well, it depends how much do you want to reduce and how much is your emissions because that really drives that a lot just something to, I think, change the narrative a little bit how you're looking at SAF and how you're looking at implementing it. Sorry, Tina.

No, that's completely right. But a question I get also a lot maybe good to highlight here again is, of course, you were not paid double for the fuel itself for the fuel that uplift your goods. Because that's what Nick mentioned, that's already part of the contracts you have with your logistics partner, you will only pay for the premium of the SAF service data between the fossil price and the sustainable aviation fuel price. But nevertheless, yes, this is not -- this is still quite a budget to take into account, obviously.

And another question that I know that I hear a lot as well is around the production of SAF and how that's going to be from ramped up and sort of cope with the expected demand. And we know that at the moment, it's a small percentage of the actual requirements on the IRS goal. So what is the plan with regards to the development of the production of SAF going forward?

Maybe Nick can also add to that after my comments because he has maybe a different view in the industry, I can mostly comment of curse on what Neste does. So these 3 production plants that I mentioned earlier, that's kind of the investment that we made at this point to really scale SAF production and with the SAF capacity end of this year of more than 1.5 million metric tons -- million tons of SAF fuel. And yes, I get asked a lot how much investment is that, that was around $4 billion, so quite significant. I know there's like dozens of SAF projects going on with different technologies right now, but there is also a lot of news on projects being delayed or changed or scrapped and the new ones popping up. So it is quite hard to make a bigger picture statement on that. But yes, this is what I can say what we did from a Neste perspective and our SAF is available now. We do not see scarcity in the long term, and we really hope that companies have the realization that we don't need to wait. We can invest and we can make a difference right now. This is a technology that is available in an easy way for airlines and airports now. And at the same time, we need to work on other technologies for a later stage as well to scale more but we need the technologies that are available at this point also for road and for marine, where there are technologies available now to give them the investments to really scale and to show -- to give this demand and also further development of technologies that is worth doing this. Because it is a huge investment. It is a risk. It is an unknown market. So for the technologies that are available I can only share a call to action, but please make use of them now.

Yes. I think maybe just to add on to that. IATA's numbers showed that they produced 300 million in '22 it doubled to 600 million in '23 and they anticipate 18 million. So I think there's an absolute ramping up of production and a desire to do that. I think you'll see a lot of call for action also for subsidization of that to really help increase the speed. What I will say is that the number of offtake agreements that are in place very, very far outpaces that demand -- sorry, that supply and I think the equation is there, there needs to continue to be that ramp-up. But I think we see with the likes of what Tina said, and what Neste is doing that there's companies that are genuinely increasing their supply of that to keep up with that demand.

And I think as well, Nick, just to add on to that, that the mandates that are being put into place, it also helped to have a positive impact from a production standpoint as well. A lot more questions for you. So I'm just trying to read through these. So Tina have been asked here. So how is Neste seeing the future on EASA versus HEFA feedstock?

Yes. And that was part of the power to liquids or power to X part in the presentation. So it is definitely like it is important. We are researching and developing heavily there as well. So it's this gray area on the top. Right now, I can tell you, it is not yet where it needs to be, it needs to mature a lot the different technologies from a emission reduction potential point of view, but also from an economic point of view. I sometimes have the feeling that a lot of companies are now looking at the next best thing, okay, now residual-based SAF is there. What can be -- what is the next thing we can help to scale. And it's good. But we are -- it's still a long way to go, and it will cost money. This is not a cheap technology. So -- and we need the green electricity to be available to that extent needed. So I think that's the few comments I can make without having a crystal ball. But of course, it is an important technology or the different technologies within the e-fuel field and Neste is definitely looking into that and researching and developing as well.

Great. I am sorry my questions at you rather than Nick because I think the audience has been much more interested in hearing what you have to say. So I do have a couple more for you as well, Tina. How does the SBTi science-based target initiatives play into this? Will it encourage the use of SAF to meet the commitment to the initiative.

The use of SAF is definitely an important lever also within their guidelines. But the details on book and claim mechanisms are still being developed, and that's -- but I see sometimes a little bit of a chicken and egg situation between greenhouse gas protocol and SBTi. However, I think they all acknowledge this is very important. And now it's a question on putting the right guidelines and clarity in place that also companies that are dependent on this in order to reduce their footprint have the chance to do so.

I think it really plays, Tina, into this slide. And when you talked about where you get the SAF from, Is it from sustainable sources. All the types of blending questions, the verification of the things that you're getting back from your SAF certification process. Those are really critical, not only SBTi, but in general, from an accounting standpoint. As you rightly said, those accounting guidelines are call it, early day guidelines. We don't have really very solid guidelines in place. So I'd say, do the right things, you'll be more likely to have success down the road. It's not that vague, but it's quite close to that. So really looking at the source, looking at what's coming with it, looking at how it's externally verified are really critical in any process, whether it's SBTi or otherwise.

Yes. And maybe to add there, because thanks, Nick, for mentioning this for me sometimes. It almost feels like given for granted because my words, your words, it's all about sustainability certification and like how can we trace things. But of course, transparency is key here. And I think this is really also where maybe SBTi and other frameworks and looking into the details of how can an auditor in the end still assess if all these criteria are met and how can we verify this along the chain of custody and how long should this chain of custody be even. So I think that this ecosystem and how this ecosystem can be evaluated is 1 of the main areas that SBTi is looking at. But also, having said that, and that also relates to other regulations and frameworks coming up in Europe right now like the Green Plains directive for now, transparency is key. And as long as we can really make sure we have to write data and can answer the important questions when it comes to the claims in the sustainability criteria, then we are on a good track. And I -- for us what we are doing here at Neste we are aligning everything very, very closely with SBTi and the guidelines there.

Great. Anything really hot Nina, otherwise I see still a number of questions in there that we definitely want to get to. We'll give some feedback on that afterwards. But anything quickly there, Nina, I would have 1 more point before we wrap up?

Well, moving how long your points take Nick, I will let you get that point in, and then I think we'll need to and just get back to everybody at a later date with all answers to the questions. There's some great questions here and we'll make sure that we come back to everybody with an answer to all your questions are -- you get a good answer to every single on 1 of your questions.

I just wanted to maybe just come backwards to go forward on 1 little point because we had a great question about what do we see in the future, many different points about what do we see happening into the future. And I just wanted to highlight 1 thing that I think is important. SAF will not work on its own. Future behavior is going to be helping us go forward, but past behavior can also. And I just wanted to highlight here where you see this drop that we had in that certain COVID time. Now I don't want to go back to any COVID times. But I think we can all learn business continued, flights drops, cargo moved, products got into our consumers' hands. Again, what lessons can we learn from that? And the topic of sustainability, while some of this is maybe new to us, some of the actions and reactions resilience you've all shown in the past can teach us. We talk about creating muscle memory, and we talk about creating muscle when it comes to sustainability topics. Don't be afraid to look back at what you've done that you might not have seen from a sustainability angle but certainly did have that. We normally talk about in the past, things were done from a standpoint of cost and service. What we're talking about on sustainability brings another aspect into it. I'll call it the triangle of decision-making, it won't work on its own, but you won't work without it. So just include it and make sure you take those lessons from the past. So I'm going to -- anything else any last minute thoughts Tina, or you okay?

I'm perfect. Thank you for bringing this up. I think it's a very good closing and also almost like a call to action to everyone. So thank you.

Thank you. All right. I think I'll turn it over to Tim, if I get the right direction on that. I'm sorry for that.

Thank you, Nick and Tina, that was very interesting. I definitely learned something really good. Guys thank you for that. So that concludes our webinar. We're just coming up to the hour now. I hope you found it interesting and you learned something alongside myself. This is in a series of webinars. The next 1 coming up is on a completely different topic. It's on trade compliance with some different speakers. So you're welcome to join that. The link should be coming in the chat box shortly. We also have various market updates that you can sign up to, not just around sustainability, but what else is going on in the logistics industry. So again, you can scan these QR codes. As I said before, you will be getting the slides so you can use that at your leisure. And thank you for those really interesting questions. We will try our best to answer those and send them out in written form. But really, thank you for attending. Thank you to our speakers, and we'll see you again next time. Thank you.

Thanks, everyone. Thanks, Tina. Take care, everyone. Have a good day.