SUSTAINABLE AVIATION FUEL MARKET ANALYSIS

The global sustainable aviation fuel market size was valued at US$ 460.1 million in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 61% from 2023 to 2030. The global sustainable aviation fuel market is expected to grow at a rapid pace during the forecast period. This growth is attributed to the increase in demand for clean, sustainable fuels in the commercial and military aviation industries. This trend is supported by the government initiatives & tax reductions in North America, Europe & Asia.

Global Sustainable Aviation Fuel Market: Regional Insights

Based on geography, the global sustainable aviation fuel market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

North America is expected to dominate the global sustainable aviation fuel market. This is attributed to the rise in the number of passengers, rising air traffic, and government initiatives to promote the use of sustainable aviation fuels.

In Europe, the market for sustainable aviation fuel is expected to grow at a rapid pace during the forecast period. This region is home to some of the world's leading tourist destinations and has a large aviation industry. In addition, the increase in environmental awareness among people has resulted in increased demand for sustainable aviation fuel in the region.

Figure 1. Global Sustainable Aviation Fuel Market, By Regional, 2022

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Global Sustainable Aviation Fuel Market Drivers:

Growing focus on reducing carbon emissions to drive sustainable aviation fuel market growth

Sustainable aviation fuel initiatives are a key part of reducing aviation greenhouse gas emissions and helping the aviation industry reach net zero by 2050. They are also critical to the aviation industry's wider commitment to addressing climate change. The United States is leading the way in advancing the development of sustainable aviation fuels, establishing a roadmap for expanding their production that will enable airlines to reach 100% SAF use by 2050. This is in addition to a broader strategy developed by the International Civil Aviation Organization (ICAO) that endorses the 2050 ICAO Vision for Sustainable Aviation Fuels and calls for States and industry to contribute a significant proportion of SAF production by 2050.

Growing initiatives to increase supply chain process to foster market growth

The European Union has introduced an emissions trading system that allows companies to purchase greenhouse gas emissions reductions at a low cost from other firms. They are also working with local governments to reduce their emissions. The reduction of emissions will also help reduce the cost of adapting to a warmer world, which can be especially helpful for poorer and developing countries

Global Sustainable Aviation Fuel Market Opportunities:

Increasing number of partnership between airlines and SAF producers is expected to serve major growth opportunities. For instance,   in July 2022, Boeing and Alder Fuels announced a new partnership to expand production of sustainable aviation fuel (SAF) around the world. Using Boeing airplanes, the companies will test and qualify Alder-derived SAF, advance policies to expedite the transition to renewable energy in aviation, and grow the amount of SAF for the global aerospace market.

Increasing number of passenger traveling by air is expected to bring bright market opportunities for key players in the near future. According to the International Civil Aviation Organization and World Air Transport Statistics, the number of passengers carried on scheduled services reached over 4.5 billion in 2019 from 4.2 billion in 2018, which is 3.6 per cent higher. While the number of departures reached 38.3 million in 2019, a 1.7 per cent increase.

Global Sustainable Aviation Fuel Market Trends:

Upcoming and ongoing SAF projects is a recent trend

The United States government has pledged to increase the availability of sustainable aviation fuel by committing to purchase nearly 4 billion gallons over the next five years. In addition, the United States Department of Energy has launched a Build Back Better Aviation Fuel Fund to provide grants for projects that involve production, transport, blend or storage of sustainable aviation fuels.

Launch of new and improved version of SAF

Key players are introducing improved version of SAF to cater to growing demand. This trend is expected to continue in the near future also. For instance, in September 2022, Air Company, a carbon technology company that creates carbon-negative alcohols and fuels from carbon dioxide (CO2), has launched a sustainable aviation fuel (SAF) made from captured CO2.

Global Sustainable Aviation Fuel Market Restraints:

High cost of sustainable fuel to restrict market growth

At present cost of SAF is 4-5 times higher than the conventional jet fuel. Hence, various airlines are reluctant to buy SAF in bulk. Due to which very small quantity of SAF is being produced around the globe.  Additionally, feedstock costs, yields, and plant capital recovery are some of the key factors that are adding to the overall price of SAF. Hence high cost of SAF is expected to hinder market growth. However, there are incentives available that can help to lower the cost of SAF. 

Lack of experience and expertise to hinder market growth

Other factors that may prevent airlines from replacing their conventional fuels with sustainable aviation fuel are lack of experience and expertise, which can be problematic for new entrants to the market. This is expected to restrict market growth.

Figure 2. Global Sustainable Aviation Fuel Market, By  Fuel Type, 2022

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Global Sustainable Aviation Fuel Market Segmentation:

The global sustainable aviation fuel market report is segmented into fuel type, aircraft type, platform, and region

Based on fuel type, the market is segmented into Biofuel, Hydrogen Fuel, and Power to Liquid Fuel. Out of which, Biofuel is expected to dominate the global market over the forecast period and this is attributed to their inexpensive and low-cost production as compared to other bio aviation fuel .The revenue of the segment in 2020 was US$ 47.7 million which is expected to reach US$ 1230.4 million in 2027. Biofuels are produced from oil seeds, corn grain, algae, forestry residues, agricultural residues, municipal solid waste, and others.

Hydrogen Fuel segment is also expected to witness significant growth in the near future and this is owing to the fact that they offer high energy density as compared to other sustainable fuels. The revenue of the segment in 2020 was US$ 12.4 million which is expected to reach US$ 304.9 million in 2027.

Based on aircraft type, the market is segmented into Fixed Wings, Rotorcraft, and Others. Out of which, Fixed Wings is expected to dominate the global market over the forecast period. The use of sustainable aviation fuel can reduce the environmental impact of fixed wings aircraft.

Rotorcraft segment is also expected to witness significant growth in the near future and this is owing to the growing initiatives by rotorcraft industry towards using sustainable aviation fuels.

Based on platform, the market is segmented into Commercial Aviation, Military Aviation, Business & General Aviation, and Unmanned Aerial Vehicle. Out of which, Commercial Aviation is expected to dominate the global market over the forecast period. Various airlines such as United and Japan Airlines uses SAF on a portion of commercial flights.

Military Aviation segment is also expected to witness significant growth in the near future and this is owing to the growing initiatives by government to promote the use of sustainable aviation fuel in military sector.

Global Sustainable Aviation Fuel Market: Key Developments

In October, 2021, with partners like Heathrow Airport, Rotterdam The Hague Airport and Stuttgart Airport already on board, SkyNRG and CHOOOSE are launching a new carbon emission reduction solution called “Fly on SAF”. The solution enables airlines and travel companies to seamlessly integrate the offering of Sustainable Aviation Fuel (SAF) and Carbon Offsets into their customer experience.

In July 2021, European Commission proposed a blending mandate on sustainable aviation fuel (SAF). This marks a significant step towards reducing the fossil jet fuel demand in the aviation sector. The EU is sending out a clear signal that it is taking a leading role in climate action in the aviation sector. As a global supplier and a leader in SAF, SkyNRG has assessed the feasibility of meeting the targeted SAF volumes towards 2030, the requirements for capacity scale-up in the long term, and the various scenarios impacting the realization of this mandate. With this SAF market outlook, company will present the results of this assessment and our perspective on these questions.

In February 2022, LanzaJet, a sustainable aviation fuel technology provider and producer, has entered into a memorandum of understanding (MOU) with Marquis Sustainable Aviation Fuel (Marquis SAF) to construct a 120 million gallons per year integrated sustainable fuels plant in the U.S. using low-carbon intensity (CI) feedstocks to produce sustainable aviation fuel (SAF) and renewable diesel via the LanzaJet™ Alcohol-to-Jet process. The plant will employ on-site carbon capture and sequestration and renewable energy to produce SAF, resulting in a lifecycle greenhouse gas reduction of more than 70% compared to conventional jet fuel.

In July 2020, Shell along with World Energy agreed to supply Amazon Air with up to six million gallons of blended SAF which has the potential to reduce carbon emissions by 20%.

In March 2022, Gevo, Inc. has signed a “take-or-pay” agreement with Delta Air Lines, Inc. to supply 75 million gallons of sustainable aviation fuel (SAF) per year for seven years.  The  Agreement  replaces  the  existing agreement signed with Delta in 2019 to purchase 10 million  gallons  per  year  and  bolsters  Delta’s commitment to incorporating SAF into its operations.

In March 2022, Aemetis signs agreement with Finnair to Supply 17.5 Million Gallons of sustainable aviation fuel

In March 2022, Aemetis signs agreement with Qantas to Supply 35 Million Gallons of sustainable aviation fuel

In February 2022, Neste and ITOCHU Corporation have expanded their partnership to grow the availability of sustainable aviation fuel (‘SAF’) in Japan. In the expanded partnership, ITOCHU acts as the branded distributor of Neste MY Sustainable Aviation Fuel™ in Japan making Neste MY Sustainable Aviation Fuel available first at the two largest Japanese international airports; Tokyo Haneda and Narita.

Global Sustainable Aviation Fuel Market: Key Companies Insights

The global sustainable aviation fuel market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global sustainable aviation fuel market are Neste, AEMETIS, INC., Gevo, Shell PLC, Lanza Jet, and Sky NRG

*Definition: Sustainable aviation fuel is a type of biofuel that has the same properties as conventional jet fuel, but with a significantly smaller carbon footprint. Depending on the feedstock and technologies used to produce it, SAF can dramatically lower life cycle GHG emissions. Some emerging SAF pathways even have a net-negative GHG footprint.