INTRODUCTION TO SUSTAINABLE AVIATION FUEL (SAF) MARKET
Updated: Jun 24
What is Sustainable Aviation Fuel (SAF)?
According to the International Air Transport Association (IATA) definition, SAF is the term used by the aviation industry to describe fuels that are not produced using fossil fuels. Further, as per the U.S. Department of Energy, SAF can be produced from non-petroleum-based renewable feedstocks including, but not limited to, the food and yard waste portion of municipal solid waste, woody biomass, fats/greases/oils, and other feedstocks.
It is also known as a sustainable alternative fuel, sustainable alternative jet fuel, renewable jet fuel, or bio jet fuel in the general industry.
Why SAF and what are other options?
The global aviation industry accounted for more than 2% of the global emission or about 720 million tons in 2021. The growth of the aviation industry over the last decade is notable and it is expected that by 2050, the industry will witness a robust increase in passenger traffic from about 2 billion in 2021 to 5.6 billion by 2030 and more than 10 billion by 2050.
Thus, to handle this large traffic, a huge fleet of aircraft and millions of barrels of jet fuel will be required, which in turn result in emission more than ever witnessed. It is expected that as per the current technology used in the aviation industry, by 2050, the industry would contribute 21.2 gigatons of carbon emission, a 13-fold rise from the 2021 level.
Therefore, stakeholders associated with the industry are looking for alternative routes to conventional aviation fuel, this includes electric and hydrogen-powered aircraft, carbon offsetting, and SAF, among others. Among these, SAF is looking much more promising as it has identical properties compared with conventional jet fuel while at the same time reducing carbon emissions. Due to its similar chemical and physical properties to jet fuel, it can be used as a drop-in fuel (i.e., fuels that can be automatically incorporated into existing airport fueling systems), thereby removing the challenge and huge capital associated with the development of new aircraft engines and airport fuel-related infrastructure.
Whereas in the case of electric and hydrogen power aircraft, a completely new infrastructure will be required which is capital intensive, at a nascent stage of development, and would require a large amount of time before commercializing.
Carbon offset currently is a suitable and cheap option compared with SAF, but as the industry emission grows and the cost of offsetting carbon increases, then carbon offsetting might not alone do wonders for the industry, thus, alternative fuels mainly SAF will be required.
Table: Comparison between conventional jet fuel and new/upcoming jet technologies
SAF Production Pathways
American Society of Testing and Material (ASTM) is the standard body that approves production processes that can meet the criteria of drop-in fuel. The ASTM sets requirements for criteria such as composition, volatility, fluidity, combustion, corrosion, thermal stability, contaminants, and additives, among others to ensure that the fuel is compatible when blended.
Till now, ASTM has approved seven production pathways that can produce drop-in SAFs. These include Fischer-Tropsch (FT), FischerTropsch containing aromatics (FT-SKA), Hydroprocessed Esters and Fatty Acids (HEFA), Direct Sugars to Hydrocarbons producing Synthetic Iso-Paraffins (SIP), and Alcohol-to-Jet (ATJ) which includes isobutanol and ethanol, Catalytic Hydrothermolysis Jet fuel (CHJ), and Hydroprocessed Hydrocarbons (HH-SPK or HC-HEFA).
Table: ASTM-approved SAF production pathways
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Challenges associated with SAF adoption
Cost plays a key role in the robust adoption of SAF. Currently, the cost of SAF production is more than two times the cost of conventional jet fuel production. Therefore, if used in aircraft, the cost of traveling would increase. However, as the production scales and companies achieve production efficiency, the cost of SAF production would decrease.
No strict measurements
Governments across the globe are implementing regulations to reduce emissions, however, these regulations need to be transformed into a more stringent one in order to meet the emission reduction targets. Carbon prices need to increase to encourage carbon emitters to switch to alternatives otherwise they will have to pay a hefty amount to offset the emission.
Limited reduction in emission compared to other technologies
Stakeholders consider SAF as a promising way of decarbonizing the aviation sector, but the use of SAF will also create emissions, although to a lesser extent than conventional jet fuel. Whereas technologies like battery-electric power aircraft have 100% emission reduction potential while H2 fuel cells can reduce 75-90% emission compared to conventional jet fuel. This in turn creates a hindrance for SAF over the longer term when these technologies will be implemented commercially.
SAF market – current demand-supply scenario
In 2022, the global SAF production capacity was about 500,000 tons with only a limited number of projects operational (only considering those projects which are designed for SAF production and using the ASTM-approved pathways and do not include projects in which SAF produce as a byproduct). Most of the capacity is located in Asia-Pacific, mainly in China, despite the fact that more stringent aviation emissions norms are in Western economies.
Figure: Global SAF capacity distribution by region
Moreover, a large number of projects are either at the construction stage or announced by the companies but the final investment decision has yet to be taken. In the optimistic scenario, if all the announced projects streamed by 2030, the global SAF production capacity could range between 18-20 million tons, which would be around 6% of the global jet fuel market. Currently, HEFA is the most widely used production pathway that is being used by operational projects and is among the front runner for most of the upcoming projects for which final investment decisions has taken.
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