5 Trends in Sustainable Aviation Fuel

Taking flight towards sustainability

In an era where environmental concerns loom large, the aviation industry is facing increasing pressure to reduce its carbon footprint. One promising solution is Sustainable Aviation Fuel (SAF). As the world seeks cleaner alternatives to traditional fossil fuels, SAF emerges as a beacon of hope for a more sustainable future in aviation.

Benefits

SAF, often derived from renewable resources such as agricultural waste, algae, or even municipal solid waste, offers a compelling proposition. Unlike conventional jet fuel, SAF has the potential to significantly lower greenhouse gas emissions, making it a crucial component in the fight against climate change. By harnessing bio-based feedstocks, SAF production can mitigate the reliance on finite fossil fuel reserves, thereby reducing dependency on traditional petroleum sources.

The benefits of SAF extend beyond environmental preservation. Its adoption can enhance energy security by diversifying fuel sources, thereby reducing vulnerability to supply disruptions. Moreover, SAF holds the promise of stimulating economic growth through the development of new industries and job opportunities in the renewable energy sector.

Challenges

Despite its potential, the widespread adoption of SAF faces several challenges. One significant hurdle is scalability. Current production levels of SAF are limited, and scaling up to meet the demands of the aviation industry poses a considerable logistical and technological challenge.

Additionally, the cost of SAF production remains higher than that of conventional jet fuel, necessitating incentives and investment to drive down costs and improve competitiveness. Airlines, aircraft manufacturers, and fuel suppliers must collaborate to invest in research and development, infrastructure, and production facilities to accelerate the transition to SAF.

Drivers of adoption

Despite the challenges, the momentum behind SAF is growing. Airlines worldwide are increasingly committing to incorporating SAF into their operations as part of their sustainability initiatives. Moreover, advancements in technology and innovative approaches to feedstock sourcing and conversion processes are steadily driving down costs and improving the efficiency of SAF production.

NineSigma is actively engaged in the sustainable aviation fuel (SAF) sector, we believe you should be aware of five\ pivotal trends shaping its landscape.

The 5 trends to look out for

1. Regulation will drive adoption

Regulatory mandates are emerging worldwide to propel the adoption of SAF in aviation, mandating airlines to integrate a specific percentage of SAF into their fuel mix or adhere to SAF adoption targets. These regulations offer market certainty, stimulating investment and innovation, thereby enhancing production processes, reducing costs, and facilitating widespread SAF adoption.

Publicly stated targets for SAF intoduction by country/region

2. Established companies face threats and opportunities

Established companies in the aviation fuel industry face both threats and opportunities as the market dynamics shift due to increased interest and investment in SAF. Petrochemical manufacturers confront the risk of losing market share, prompting them to invest in SAF manufacturing technology, while trading companies capitalize on opportunities to diversify their supply chains through commercial distribution agreements with new SAF suppliers.

3. Here come the new players

New players, traditionally unassociated with the oil and gas sector, are entering the aviation fuel market, particularly focusing on SAF procurement and refining stages, thus disrupting existing manufacturing and supply chain paradigms. Although logistics remain largely unchanged due to current small-scale SAF supplies, this may evolve with increased volume. The new players will further disrupt the existing manufacturing, supply chains and aviation fuel market.

4. Expect a step-change in commercial scale supplies

Currently, SAF represents less than 0.5% of all aviation fuel used each year. Commercial-scale SAF availability is expected to witness a significant surge in the coming years, driven by advancements in production processes and a growing market demand.

5. The Long-Term Play: CO2 derived SAF

The long-term trajectory of the sector points towards CO2-derived sustainable aviation fuel, which not only significantly reduces carbon emissions but also utilizes captured CO2, rendering it an environmentally sustainable alternative to fossil fuels. With the potential to be produced using renewable energy sources, CO2-derived SAF is poised for substantial market growth, anticipated to accelerate around 2030.

Expansion of SAF market and expected breakdown transition by production method

As a last note:

Sustainable Aviation Fuel represents a promising pathway towards a more sustainable aviation industry. By reducing emissions, enhancing energy security, and fostering economic growth, SAF holds the key to a cleaner and more sustainable future for air travel. As stakeholders across the aviation sector continue to collaborate and innovate, the dream of sustainable aviation may soon become a reality.

NineSigma frequently assists to understand complex business areas, how to transition to more sustainable businesses and how to enter new markets. For further information on our landscaping, foresight and strategy services please email: contact@ninesigma.com

Written by: Shun Hyodo, Director of mobility industry business division at NineSigma