Sustainable Aviation Fuel
SAFs, or Sustainable Aviation Fuels, are a type of liquid fuel that is currently being used in commercial Aviation. These fuels have the potential to reduce CO2 emissions by up to 80%. What makes SAFs unique is that they can be produced from various sources, known as feedstocks, which include waste fats, oils, and greases, municipal solid waste, agricultural and forestry residues, wet wastes, and non-food crops grown on marginal land. Additionally, SAFs can also be produced synthetically by capturing carbon directly from the air.
One of the key advantages of SAFs is their sustainability. Unlike traditional fuels, the feedstocks used to produce SAFs do not compete with food crops or output. Furthermore, their production does not require additional resources such as water or land clearing. This means that SAFs do not contribute to environmental challenges like deforestation, soil productivity loss, or biodiversity loss.
Another important aspect of SAFs is their ability to recycle CO2. While fossil fuels release carbon that had been previously locked away, SAFs recycle the CO2 that has been absorbed by the biomass used in the feedstock during its lifetime. This recycling process helps to reduce the overall level of CO2 emissions and contributes to net zero carbon goals in aviation.
In summary, SAFs offer a promising solution for reducing CO2 emissions in the Aviation industry. Their diverse feedstock sources and sustainable production methods make them an environmentally friendly alternative to traditional fuels. It is a market-based incentive that provides economic incentives to countries or businesses to reduce their environmental footprint while achieving net zero emissions targets.
Contribution to achieving Net Zero Carbon in 2050 The state of SAF in 2023
SAF could contribute to 65% of the reduction in emissions needed by Aviation to reach net zero carbon 2050. This will require a massive increase in production in order to meet demand. The largest acceleration is expected in the 2030s as policy support becomes global, SAF becomes competitive with fossil kerosene, and credible offsets become scarcer.
How SAF is made?
Ecosystem of SAF
Drivers of SAF Ecosystem
- Anticipated higher CAGR for >50% blending capacity in the SAF market reflects increased airline commitment, regulatory pressure, and rising demand for SAF
The SAF market is set to witness a higher Compound Annual Growth Rate (CAGR) in the segment where blending capacity exceeds 50%. This elevated blending capacity signifies a more robust integration of SAF into conventional Aviation fuel, highlighting the unwavering commitment of Airlines and the Aviation sector to mitigate carbon emissions. The increased blending capacity is a direct response to the growing demand for SAF, driven by regulatory mandates, corporate sustainability objectives, and a rising environmental consciousness. As the Aviation industry intensifies its 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.
The SAF market is projected to be dominated by the unmanned aerial vehicles segment, owing to various significant factors. Within this segment, the UAV industry is expected to experience a higher compound annual growth rate (CAGR) due to the increasing utilization of drones in agriculture, surveillance, and logistics. By incorporating SAF into UAV operations, the industry aligns with global initiatives to minimize carbon emissions and promote environmental sustainability. Furthermore, the UAV sector’s rapid adoption of new technologies and adherence to regulations results in further expansion of SAF market.
- 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 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 and achieve net zero carbon 2050. 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.
Global SAF Market Drivers:
- Growing Efforts to Reduce Carbon Emission from Various Organizations and Governments
Numerous governments and industry associations across the globe are actively working towards the reduction of carbon emissions. These entities have established specific goals to attain lower or zero emissions within the coming years. In 2015, a total of 196 countries committed to altering their development paths towards sustainability as part of the Paris Agreement. The objective of this agreement is to restrict global warming to approximately 2°C above pre-industrial levels. To meet these targets, it is imperative to decrease global carbon dioxide emissions by 45 percent by 2030, based on 2010 levels, and ultimately achieve net-zero emissions by 2050. In addition, more than 70 nations, 1,200 businesses, 1000 towns, 1000 schools, and 400 financial institutions have made a firm committed for taking immediate and rigorous action to halve global emissions by 2030. SAF is recognized as a significant component in the pursuit of these objectives. With its ability to reduce emissions by up to 80% over its entire lifecycle, SAF is a driving force behind the market’s growth in the forecasted period.
- Increasing Number of Passengers Using Air Transportation
The number of passengers opting for air travel has been on the rise, as indicated by the International Civil Aviation Organization and World Air Transport Statistics. In 2019, the number of passengers on scheduled services exceeded 4.5 billion, up from 4.2 billion in 2018, showing a 7 percent increase. Additionally, departures reached 38.3 million in 2019, marking a 1.7 percent rise. Furthermore, passenger traffic surged by 4.9 percent compared to the previous year, reaching 8,686 billion revenue passenger kilometers.
Additionally, the surge in passengers choosing air travel leads to a rise in the number of flights annually. With more passengers opting for air transportation, airlines are expanding their operations by growing their aircraft fleet and increasing flight frequencies on specific routes. This increased airline capacity drives up the demand for Aviation Fuel. Furthermore, the higher efficiency of SAF compared to traditional Aviation Fuel enables it to meet the growing demand from airlines. Consequently, the increasing passenger numbers and the effectiveness of SAF contribute to market growth.
Future Outlook (2023 to 2033) for SAF Market in
- Short-term Growth (2023 to 2026): The expanding of Aviation industry leads to the stricter government laws around pollution prevention. Furthermore, the rise in disposable income has pushed the end users to adopt airlines with sustainability. With this wide range of applications, the market is expected to have USD 563.2 million in 2023. While it is likely to reach USD 2.3 billion by 2026.
- Mid-term Growth (2026 to 2029): COVID-19 has helped companies in extending research and development facilities. Alongside this, the high-quality, sustainable aircraft fuel available for aircraft is flourishing the market growth. This takes a market value from USD 2.3 billion in 2026 to a value of USD 9.42 billion in 2029.
- Long-term Growth (2029 to 2033): The rising air pollution and government planning on reducing carbon footprints are fuelling the demand for SAF. Furthermore, the expanding biofuel manufacturing hub in second-world nations is expected to fuel market growth during this period. The market is anticipated to thrive at a strong CAGR of 60% between 2023 and 2033.
Conclusion
To pave the way for a low carbon economic model and a sustainable, climate-resilient future, it is imperative to prioritize the decarbonization of the Aviation sector.
Consequently, the initial switch to SAF would primarily rely on bio-based Aviation fuels, but it is projected that these fuels will eventually be replaced by more sophisticated power-to-liquid fuels or e-fuels.
In the foreseeable future, there may emerge a sustainable and optimized method for harnessing energy, but during the transitional phase, the most efficient approach is to rapidly increase the adoption of the SAF.
How Acuity Knowledge Partners can help
We are the preferred partner for sustainable finance solutions. We offer our expertise in carbon trading mechanisms and clean-energy markets, sustainable aviation fuel strategy building along with in-depth market research capabilities across the energy value chain, helping some of the biggest companies in the world transition to sustainability and carbon-neutral operations. Our large pool of experts is experienced in the power and energy sectors and support companies active in investing, developing, and promoting clean energy and cleantech solutions across geographies.
Sources:
- https://www.weforum.org/agenda/2023/11/what-is-sustainable-aviation-fuel/
- https://www.technavio.com/report/sustainable-aviation-fuel-market-industry-analysis
- https://www.marketsandmarkets.com/Market-Reports/sustainable-aviation-fuel-market-70301163.html
- https://www.iata.org/en/iata-repository/pressroom/fact-sheets/fact-sheet---alternative-fuels/
- https://www.sciencedirect.com/science/article/pii/S0960148123016117
- https://www.icao.int/environmental-protection/pages/SAF.aspx
- https://www.precedenceresearch.com/sustainable-aviation-fuel-market#:~:text=The%20U.S.%20sustainable%20aviation%20fuel,for%20worldwide%20sustainable%20aviation%20fuel.
- https://www.gminsights.com/industry-analysis/sustainable-aviation-fuel-market#:~:text=Biofuel%2C%20derived%20from%20organic%20materials,integrate%20biofuels%20into%20their%20operations.
Rupal Pujara have 5.2 years of experience in ESG, Sustainability and Climate Change and has completed 1.8 years with Acuity knowledge Partners. Her expertise is in consultancy with experience in climate change, sustainability strategy, emissions & risk assessment. ESG analysis, rating & benchmarking of the companies as part of the global team involved in the production of the prestigious Dow Jones Sustainability Index (DJSI). At Acuity Knowledge Partners she is part of ESG teams and is specialized in ESG analysis, rating & benchmarking of the companies as part of the team involved in the providing client solutions and consultancy services. Rupal Pujara is MBA from Guru Gobind Singh Indraprastha University.
