The Impact of the Top 3 Strategic Imperatives on the Sustainable Aviation Fuel Industry

Transformative Megatrends

• Global private and public actors are increasingly worried about rising emissions, climate change, and global warming.

• As net-zero targets approach, the sustainable aviation fuel (SAF) industry will grow due to the emphasis on global vulnerability.

• This can have a compelling impact on motivating governments to reinforce their pledges and impose mandates for SAF usage, driving manufacturing and adoption.
• The public's understanding of the effects of climate change might also be a decisive factor driving this transition.

Disruptive Technologies

• SAF can be produced through various pathways or methods, each with different feedstock requirements, energy needs, and environmental impacts.

• While ASTM International (the standards body that regulates the industry) has approved 11 pathways at present, it is also considering other pathways.

• SAF industry expansion relies on the development of more cost-effective and sustainable pathways to address longterm feedstock limitations.

• Economies of scale and technology maturity will reduce the challenges related to some of these pathways,
  making widespread adoption possible.

Internal Challenges

• Airlines’ emissions are being carefully examined due to their negative environmental impact, and markets are demanding they meet their net-zero targets.

• A major hindrance to decarbonization is the high price of SAF, which is about two and a half times higher than conventional jet fuel.

• Tax incentives, grants, and financial support can play a pivotal role in helping SAF producers scale production to meet demand.

• Suppliers are challenged by high production costs, which will decrease as technology matures and alternative production methods are explored.

Scope of Analysis

Content Present in Points

• Policymakers targeting the aviation industry to reduce environmental impact.

• Aviation industry contributes 2% to global CO2 emissions.

• SAF can reduce GHG emissions by up to 94% based on production pathways and feedstock.

• SAF is produced from non-petroleum feedstock with lower GHG emissions than regular jet fuel.

• Approved SAF production pathways by ASTM International: 11.

• Transition to SAF accelerated with ASTM D7566 approval in 2011.

• ICAO adopted CORSIA to address CO2 emissions in 2016.

• IATA and ICAO committed to net-zero carbon emissions by 2050.

• Virgin Atlantic operated the first transatlantic flight powered only by SAF in November 2023.

• SAF has been used in over 400,000 commercial flights as a drop-in fuel.

• SAF blending limit currently between 5% and 50% with conventional jet fuel.

• Campaigns aim to expand SAF blending limit to 100% by 2030.

• This study analyzes the North American SAF industry from a technological perspective.

Segmentation

SAF

• Fischer-Tropsch (FT)

  • This method consists of the conversion of syngas into SAF and other liquid hydrocarbons. Syngas is obtained from various waste sources.

  • Hydrogen and CO2 can be synthesized into syngas and then further processed into fuel by this pathway, producing power-to-liquid (PtL) fuels, the most sustainable yet costly alternative.

• Alcohol to Jet (AtJ)

  • Under-development plants draw attention to this pathway, which is expected to gain prominence.

  • It involves converting alcohol into jet fuel, facilitated by existing ethanol production infrastructure.

• Hydroprocessed Esters & Fatty Acids (HEFA)

  • HEFA is the dominant pathway due to lower costs and technology maturity.

  • HEFA uses feedstock such as used cooking oil, animal fat, and other lipid-rich materials. As other industries also use these, feedstock limitations turn HEFA into one of the least scalable and sustainable pathways.

• Other Production Pathways

  • These include less commercially relevant pathways, such as direct sugars to hydrocarbons, catalytic hydrothermolysis jet fuel, and co-processing.

  • Usually, scalability concerns in terms of feedstock or technology restrict these pathways’ usage.

Competitive Environment

Growth Drivers

• The development of appropriate policies and net-zero targets: The key to fostering public and private investment in SAF production. Adoption and production incentives in the form of financing, subsidies, or benefits can de-risk investments and accelerate the transition.

• The ICAO's CORSIA agreement: Compels companies to use SAF as a CO2 emission reduction strategy, aligned with the sector's 2050 net-zero targets, becoming compulsory in 2027 for 25% of aviation's international emissions.

• The transition to electrified mobility: Reduces the need for renewable diesel production, which strains SAF manufacturing capacity and feedstock availability, potentially decreasing fuel demand and allowing for more SAF production.

• SAF production and use can provide sociopolitical benefits: Including supply diversification, job creation, energy security, and opportunities for countries with degraded land to grow energy crops instead of food crops.

• Book & Claim solutions: Drive the growth of SAF production and help airlines reduce their carbon footprint by allowing them to meet SAF demand competitively.

• SAF implementation can provide environmental benefits: In the form of emission reduction and repurposing of waste as feedstock.

Revenue and Volume Forecast

SAF: Revenue and Volume Forecast, North America, 2020–2030

Revenue CAGR, 2023–2030 = 48.8%
Volume CAGR, 2023–2030 = 69.8%