Sustainable Aviation Fuel Market

[251 Pages Report] The global Sustainable Aviation Fuel market size is projected to grow from USD 1.1 billion in 2023 to USD 16.8 billion by 2030, at a CAGR of 47.7% from 2023 to 2030. The sustainable aviation fuel (SAF) market is experiencing robust growth propelled by several key factors. Heightened global awareness of climate change and the imperative to reduce carbon emissions in the aviation industry are primary drivers, leading airlines to adopt SAF as a cleaner alternative to traditional jet fuels. Regulatory initiatives and mandates, including those from the International Civil Aviation Organization (ICAO) and various governments, further accelerate market expansion. Increased investments in research and development to enhance SAF production efficiency, coupled with advancements in feedstock technologies, contribute significantly to the sector's growth. Collaborations among airlines, manufacturers, and biofuel producers play a pivotal role in scaling up SAF production, fostering a more sustainable future for air travel. The economic viability and scale achieved by commercial aviation, along with the efficacy of hydrogen fuel cells, are additional factors bolstering the growth of the SAF market.

Current trends in the sustainable aviation fuel (SAF) market include a notable uptick in airline adoption to reduce carbon emissions. The industry is witnessing increased collaboration among airlines, biofuel producers, and governments, fostering a more coordinated approach to SAF research and production. Advancements in feedstock technologies, particularly exploring sources like algae and waste materials, aim to enhance the sustainability and scalability of SAF. Governments and international aviation bodies are implementing supportive policies and regulations to incentivize SAF use. Ongoing investments in research and development continue to drive technological improvements, making SAF production more cost-effective. Additionally, there is a growing focus on integrating hydrogen fuel cells as a viable alternative, aligning with broader trends in clean energy adoption.

Sustainable Aviation Fuel Market Forecast to 2030

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Sustainable Aviation Fuel Market Dynamics

Driver: Increasing need for reduction in GHG emissions

The escalating need to reduce greenhouse gas (GHG) emissions is a significant driver for the Sustainable Aviation Fuel (SAF) market. With the aviation sector being a notable contributor to carbon emissions, there's a global imperative to transition towards cleaner alternatives. SAF, derived from renewable feedstocks, offers a substantial reduction in lifecycle carbon emissions compared to traditional jet fuels, aligning with international climate goals. The urgency to combat climate change and meet sustainability targets has prompted governments, regulatory bodies, and airlines to prioritize the adoption of SAF to curb aviation-related emissions.

Increasing need for reduction in GHG emissions

The leading growth factor driving such enormous growth in the Sustainable Aviation Fuel market is growth in air passenger traffic. Consequently, this forces airlines to fly more and hence expand their fleets due to the growing demand that has sent overall fuel consumption upwards by leaps and bounds. This, in turn, increases the carbon footprint of the aviation industry. Through it all, airlines try by all means to reduce their impact on the environment. Thus, the adoption of SAF has become important for meeting these high targets with lower emissions, meeting the rising fuel demands. The set corporate social responsibility goals also keep airlines setting high ambitions for sustainability. While passenger traffic increases, airlines are under further scrutiny to be able to show passengers, investors, and stakeholders that their commitment to sustainability will grow. The SAF provides a tangible way for airlines to cut down on their carbon emissions and add to their sustainability credentials-particularly with their expansion to put more passengers through.

Restraint: Price difference between SAF and conventional jet fuel

One notable restraint for the SAF market is the existing price disparity between sustainable aviation fuel and conventional jet fuel. The production costs of SAF are often higher, making it less economically competitive. This price difference poses a challenge for widespread adoption, especially for airlines operating on thin profit margins. Despite the environmental benefits, the economic viability of SAF remains a critical factor hindering its broader acceptance. Efforts to bridge this price gap through technological innovations, increased production efficiency, and supportive policies are essential to overcome this restraint.

Shortage of feedstock and refineries

Raw materials include biological and non-biological resources such as oil crops, sugar crops, algae waste oil, among others, which are the major players in the value chain of producing sustainable aviation fuel. Poor supply of the needed raw materials for the production of sustainable aviation fuel reduces its demand to a complete standstill. Besides, the limitations in refineries that play a major role in the proper utilization of these feedstocks add to the delay of the overall process of sustainable aviation fuel production. Low availability of fuel acts as a hurdle in the blending capacity of the fuel, hence making it less efficient.  The potential for sustainable aviation fuel is large, but production capacity to supply the market needs to be developed. Currently, the low-carbon feedstocks are not available in sufficient quantity and quality at a price that works for the production technology. Supplies like used cooking oil (UCO) simply are not widely available because much of the available quantity has already been used for diesel production. Therefore, feedstock availability and price, energy intensity of the process, and facility capital expenditure are some of the significant barriers. Feedstocks would have to be made available at a scale, quantity, cost, carbon footprint, and a sustainability profile that would allow scaling up sustainable aviation fuel production. Centrally, with respect to the magnitude of the market, there would likely have to be all sorts of technologies and feedstocks.

Opportunity: Rising demand for SAF by airlines across the globe

The increasing demand for SAF by airlines globally presents a significant opportunity for market growth. Airlines are proactively seeking sustainable alternatives to meet emission reduction targets and fulfill corporate social responsibility commitments. This rising demand creates a market opportunity, encouraging greater investment in SAF production, technological advancements, and feedstock innovations. As more airlines commit to integrating SAF into their operations, the industry experiences a positive feedback loop that fosters innovation, economies of scale, and, ultimately, a more sustainable aviation sector.

Government initiatives and sustainable fuel alternatives

This means increased demands for alternatives, such as sustainable aviation fuels, through swelling government and regulating authorities' initiatives in setting standards and goals for carbon footprint reduction. Moves by Finland and Norway to compile business models in order to achieve the target of 40% of renewable energy resources in the aviation industry by the year 2050, or providing tax cuts for industries using sustainable fuel and other alternative sources of energy, have helped mark a way for market growth in the region. The following set of business models that could possibly allow the profitable use of sustainable jet fuel was compiled during 2014 in cooperation between Finnair, Finavia, Neste, the Finnish Ministry of Transport and Communications, and the Finnish Ministry of Employment and the Economy.

Challenge: Large quantity of SAF must be produced to increase fuel blends

A challenge facing the SAF market is the need to produce large quantities to meet the rising demand and increase the blend of SAF in aviation fuel. Scaling up production while maintaining sustainability standards is complex and requires significant infrastructure investments. The challenge lies in ensuring a consistent and affordable supply of SAF feedstocks, as well as the development of efficient production processes. Overcoming this challenge involves addressing feedstock availability, technological scalability, and regulatory frameworks to encourage the large-scale production necessary for meaningful reductions in aviation-related carbon emissions.

High operating cost of Airline

The target of airlines for reducing GHG emissions, on the basis of engine and flight improvements alone, is unreachable-the airlines need sustainable aviation fuel. Fuel cost comprises a significant share of operating costs. Whereas made from wastes and feedstocks that are available at very low cost, advanced and expensive technological pathways are required for sustainable aviation fuel. Sustainable aviation fuel will be more expensive than petro-jet, since new production capacity has to be deployed. The sustainable aviation fuel will also not be widely available, since production capacity is built for contracted positions rather than as a commodity, at least through the first decade or so. New biofuel factories take many years and vast sums to build, which in turn pushes the price of their offtake upward once they go online, making it hard for them to achieve that critical mass regarding profitability.

Sustainable Aviation Fuel Market Ecosystem

The sustainable aviation fuel (SAF) market ecosystem comprises various interconnected stakeholders. Feedstock suppliers provide raw materials, which biofuel producers convert into SAF using advanced technologies. Airlines and aircraft manufacturers in the aviation industry play a central role by adopting and advocating for SAF, while government and regulatory bodies establish policies and incentives to support market growth. Research institutions drive innovation, and investors provide financial support for SAF projects. Transportation and logistics ensure the efficient distribution of SAF, and airports contribute by incorporating necessary infrastructure. Consumers indirectly influence the SAF market through their support for airlines prioritizing sustainable practices, and environmental organizations play a role in promoting environmentally friendly aviation solutions. This collaborative ecosystem is essential for advancing SAF production, distribution, and adoption in the aviation sector. The prominent companies are Neste (Finland), World Energy (Ireland), Total Energies (France), LanzaTech (US), and Fulcrum BioEnergy (US), among others.

Anticipated higher CAGR for >50% blending capacity in the SAF market reflects increased airline commitment, regulatory pressure, and rising demand for sustainable aviation fuel.

The segment with a blending capacity exceeding 50% is expected to experience a higher Compound Annual Growth Rate (CAGR) in the Sustainable Aviation Fuel (SAF) market, driven by several factors. This elevated blending capacity indicates a more robust integration of SAF into conventional aviation fuel, underscoring a heightened commitment from airlines and the aviation sector to curb carbon emissions. The increased blending capacity reflects a growing demand for SAF, influenced by regulatory mandates, corporate sustainability objectives, and a rising environmental consciousness. As the aviation industry intensifies efforts to achieve substantial emission reductions, the segment with over 50% blending capacity is poised for accelerated growth, emblematic of a significant transition towards sustainable practices within the sector.

The unmanned aerial vehicle segment is projected to witness a higher market share during the forecast period

Based on the platform, the unmanned aerial vehicles segment is expected to hold a market share for the Sustainable Aviation Fuel market due to several key factors. The UAV segment is poised for a higher CAGR in the SAF market, driven by the escalating adoption of drones in agriculture, surveillance, and logistics. With a growing emphasis on environmental sustainability, incorporating SAF in UAV operations aligns with global efforts to reduce carbon emissions. The UAV sector's rapid adaptation to new technologies and regulations further accelerates its growth within the sustainable aviation fuel market.

The Biofuel segment is projected to witness a higher market share during the forecast period

Based on the fuel type, Some of the key factors that are likely to drive this segment's growth in the forecast period include a fully developed technology of biofuel compared to other SAF options, such as PtL or GtL. Biofuel is hence more available and can be produced on a large scale at lower costs. Most of the time, biofuel production uses already established agricultural and waste management infrastructure, hence, a better-established supply chain is realized. This supply chain, being somewhat developed, minimizes the need for new investments in production facilities upfront. Production of biofuels can occur from a varied range of renewable sources, such as from waste cooking oil, agricultural residues, and even municipal solid waste. This ensures a level steadiness in supplies even in the face of fluctuating specific feedstock availability.

The HEFA-SPK segment is projected to witness a higher market share during the forecast period

Based on the biofuel manufacturing technology, the The HEFA-SPK manufacturing technology is foreseen to capture the maximum share in the market of SAF. It is highly scalable and efficient, hence allowing large-scale production of SAF using HEFA-SPK technology. Therefore, it would emerge as a plausible alternative to the growing demand for sustainable aviation fuels. Starch and sugarcane are abundant, available, and renewable resources, especially in South America and Asia. This alone can assure long-term feedstock security for HEFA-based SPKs production. In general, HEFA-SPK has much lower carbon intensity compared with the other production routes for SAFs. These production routes also signify different greenhouse gas intensities for the resultant SAFs where, in general, HEFA-SPK should be considered the one from which such kind of emission results in the least intensity. Fine, this HEFA technology allows more cost-effective solutions compared to others. Such produced fuels are drop-in fuels, meaning they can be used in jet engines of today. Thus, it shall be practical and no-fuss solution for the.

The Airline segment is projected to witness a higher market share during the forecast period

Based on the End user segment, The market share of airline end-users is expected to be the highest in the SAF market, owing to the fact that more stringent regulations are imposed by governments around the globe on airlines to reduce their carbon emissions. Very often, such mandates involve the use of a certain percentage of SAF by the airlines. Consequently, airlines also face growing pressure from consumers, investors, and environmental organizations to reduce their environmental impact. It's good enough an option upon which one can look to assuage such fears and improve their public image. SAF helps airlines diversify fuels without reliance on traditional fossil fuels, thus taking away the risk associated with a shortage in fuel supplies.

The Middle East market is projected to grow the fastest from 2023 to 2028

The Middle East is expected to experience a higher Compound Annual Growth Rate (CAGR) in the Sustainable Aviation Fuel (SAF) market due to various factors. The region's emphasis on sustainable development and substantial investments in renewable energy establish a favorable environment for the growth of SAF. Abundant sunlight enables efficient biofuel production, aligning with global initiatives to mitigate carbon emissions. Additionally, the Middle East's robust financial capabilities and government support stimulate innovation and infrastructure development, positioning the region as a crucial influencer in advancing the adoption of SAF.

Sustainable Aviation Fuel Market by Region

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The North America is projected to have highest market share 2023 to 2028

The North America will hold the major market share in the sustainable aviation fuel market. The governments of North American countries, particularly the United States, have laid down strict policies and regulation for adaptation to SAF. These include a system of tax incentives, mandates, and investment in research and development. Research and development related to sustainable aviation technologies in North America-including production methods for SAF-are very strongly based. This competitive advantage will further enable production in an efficient and cost-effective way. The region holds varied availability of renewable feedstock-such as agricultural residues, waste cooking oils, and municipal solid waste-suitable for the production of SAF. This raw material source will be common and continuing. The North American aviation infrastructure is already well established, refineries and fuel distribution networks being a part of the infrastructure. The introduction of SAF into the supply chain for aircraft fuel would be easier to implement.

The Asia Pacific is projected to have second  highest CAGR 2023 to 2028

By regional market, the Asia-Pacific will be the second-fastest-growing in terms of CAGR in the SAF market. The economic boom in the region is translating into exponential increases in demand for air travel. This increase in demand for more aviation services raises a need for fuel options in terms of sustainability to be developed to meet the needs or substitution of other fuels. Most of the Asian countries have framed policies and regulations with the aim of attaining sustainable development and accomplishing a low level of carbon emission. This includes support for the development and use of SAF. In fact, such renewable feedstocks for SAF production include agricultural residues, waste cooking oil, and MSW.

The Sustainable Aviation Fuel market is dominated by a few globally established players such as Neste (Finland), World Energy (Ireland), Total Energies (France), LanzaTech (US), and Fulcrum BioEnergy (US), among others.

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Scope of the Report

Sustainable Aviation Fuel Market Highlights

The study categorizes the sustainable aviation fuel market based on Fuel Type, Biofuel Manufacturing Technology, Blending Capacity, Platform, and Region

Recent Developments

• In October 2023, Emirates and Neste have broadened their collaboration to provide more than three million gallons of blended Neste MY Sustainable Aviation Fuel (SAF) in 2024 and 2025. The SAF, combined with traditional jet fuel, is slated for delivery during 2024 and 2025, specifically for Emirates' flights departing from Amsterdam Schiphol and Singapore Changi airports.
• GAIL has joined forces with LanzaTech Global, a US-based company, to investigate the establishment of a pilot project focused on capturing and converting CO2 into valuable materials in July, 2023. This collaboration aims to explore cutting-edge technology solutions aligning with GAIL's Net Zero 2040 objectives and has the potential to contribute to broader global decarbonization initiatives, as stated by India's largest gas utility.
• Gevo, Inc. (NASDAQ: GEVO) has revealed a new fuel sales deal with Iberia Airlines, a part of International Airlines Group (IAG) in November 2022. Under the agreement, Gevo will supply Iberia Airlines with 6 million gallons of sustainable aviation fuel annually for five years, starting in 2028. The estimated value of the agreement, including environmental benefits, is $165 million over the specified period.
• In July, 2021 Fulcrum BioEnergy completed the construction of Sierra BioFuels Plant – the world’s first commercial-scale plant that can convert household garbage and MSW into transportation fuel.
• Fulcrum BioEnergy Inc. has finalized a $20 million equity investment from SK innovation, the energy division of South Korea's SK Group. This collaboration extends beyond the investment, as Fulcrum and SK innovation plan an exclusive licensing agreement. The agreement aims to explore the application of Fulcrum's patented waste-to-fuel process in South Korea and select Asian countries.

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