by The Sustainable Aviation Fuel Market is estimated to be valued at US$ 740.76 Mn in 2023 and is expected to exhibit a CAGR of 61.% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Sustainable aviation fuel (SAF) is a biofuel produced from renewable sources such as vegetable oils, animal fats, waste grease and algae. It has same chemical structure as conventional jet fuel but with lower carbon footprint. SAF can be directly used or blended with conventional aviation fuel to power aircraft engines. Some key advantages of SAF are reduce in carbon dioxide and particulate matter emissions by upto 80%. Currently, SAF production processes are expensive but the use of e-fuels, bio-jet, bio-kerosene are alternative options being explored.
Market Dynamics:
Growth in air passenger traffic along with stringent environmental regulations to curb carbon emissions from aviation industry are primary drivers for sustainable aviation fuel market growth. According to IATA, the number of air passengers is expected to double and reach 8.2 billion by 2037. Aviation sector accounts for 2-3% of total human-induced carbon emissions globally. ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA) aims to achieve carbon neutral growth from 2020 and net-zero carbon emissions by 2050. Second major driver is ongoing Research & Development to explore production of SAF from sustainable feedstock at commercial scale. For instance, efforts are being made to produce SAF using algae, solar/wind energy along with hydrogenated esters and fatty acids. Emergence of new production technologies to reduce costs is expected to further boost market growth during forecast period.
Segment Analysis
The global Sustainable Aviation Fuel Market is dominated by the biofuel segment. Biofuels are produced from biomass sources like agricultural residues and municipal solid waste and account for over 80% of the sustainable aviation fuel market share. This is because biofuel can replace petroleum-based jet fuel without requiring any changes to the aircraft or fueling infrastructure at airports.
PEST Analysis
Political: Stringent regulations to curb emissions from aviation are driving demand for sustainable fuels. The CORSIA framework by ICAO requires airlines to offset their emissions through purchase of carbon credits or use of sustainable aviation fuels.
Economic: High production costs of sustainable aviation fuels compared to conventional jet fuel is a challenge. However, reducing production costs through technological advancements and economies of scale could boost the market.
Social: Growing passenger traffic and increasing awareness about impact of aviation on climate change is encouraging airlines and fuel suppliers to adopt more sustainable options.
Technological: Advancements in biomass conversion processes like hydroprocessing have enhanced the yields and lowered the costs of sustainable aviation fuel production from sources like vegetable oils and waste greases. Continuous R&D is underway to develop cost-effective technologies.
Key Takeaways
The global Sustainable Aviation Fuel Market is expected to witness high growth, exhibiting 61% CAGR over the forecast period 2023 to 2030, due to increasing international air passenger traffic and stringent emission regulations. The market size is projected to reach US$ 740.76 billion by 2030 from US$ 119.6 billion in 2023.
North America dominates the market currently due to supportive government policies and presence of key industry players like Neste, AEMETIS INC and Gevo in the region. Europe is another major market led by countries like France and Germany that have set targets for minimum blend shares of sustainable aviation fuels.
Asia Pacific is expected to be the fastest growing market between 2023-2030 with countries like India and China experiencing double digit growth in air travel. This increases the demand for lower carbon aviation fuels in the region.
Key players operating in the Sustainable Aviation Fuel market are Neste, AEMETIS INC., Gevo, Shell PLC, Lanza Jet, and Sky NRG. Neste is the global leader in production of sustainable aviation fuel from waste and residue oils. Gevo and AEMETIS are focusing on development of cost-effective production technologies for biofuel from cellulosic biomass.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
