The sustainable aviation fuel market utilizes biomass feedstocks such as used cooking oil, animal fats, and municipal solid wastes which are further processed and blended with petroleum-based jet fuel to produce a cost-effective and low carbon sustainable aviation fuel. This next generation renewable fuel has equivalent performance properties compared to conventional jet fuel and can reduce greenhouse gas emissions by 50-80% over the lifecycle compared to traditional fossil fuels. With air travel accounting for about 2% of global man-made carbon emissions, there is significant demand for low carbon alternatives to power aircraft and reduce the environmental impact of the aviation industry.
The Global sustainable aviation fuel market is estimated to be valued at US$2.37 Bn in 2024 and is expected to exhibit a CAGR of 11% over the forecast period 2024 to 2031. Key Takeaways:
Key players operating in the sustainable aviation fuel market are Eisai Co., Ltd., Novartis AG, AbbVie Inc. (Allergan Plc.), Adamas Pharmaceuticals, Inc., H. Lundbeck A/S, Biogen, AC Immune, F. Hoffmann La Roche Ltd., Daiichi Sankyo Company, Limited, Johnson & Johnson Services, Inc., TauRx Pharmaceuticals Ltd. These players are investing heavily in renewable fuel production capacities and partnerships to meet the growing aviation industry's need for low carbon fuel.
The growing demand for air travel and increasing pressure on aviation industry to reduce carbon footprint is driving significant interest in Sustainable Aviation Fuel Market Growth from airlines. Major airline companies are entering into offtake agreements with sustainable fuel producers to encourage commercial production and meet renewable fuel blending mandates in regions like European Union.
Stringent environmental regulations around the world along with government incentives and policies are also boosting global expansion of sustainable aviation fuel market. The production of SAF is expected to rapidly increase to match up to 10% of global jet fuel demand by 2030 to achieve international climate goals under the Paris Agreement.
Market drivers:
Growing environmental concerns regarding the emissions from the aviation sector is a major market driver. The aviation industry currently accounts for 2-3% of total carbon emissions globally but passenger traffic is expected to grow significantly creating a pressing need to reduce CO2 footprint through low carbon fuel alternatives like SAF. Stringent emission norms and carbon reduction targets for airlines will further push demand for sustainable aviation fuels in coming years.
The current geopolitical situation has a significant impact on the growth of the Sustainable Aviation Fuel Market. The ongoing war between Russia and Ukraine has disrupted global fuel supplies and supply chains. It has increased the volatility in crude oil and jet fuel prices worldwide. This makes conventional jet fuel production and distribution more expensive for aviation companies. As a result, airlines are more motivated than ever to reduce their dependence on conventional petroleum-based fuels and explore sustainable fuel alternatives.
The stable policy support and incentives provided by many countries for sustainable aviation fuel production and offtake are helping to mitigate the risks arising from geopolitical tensions in key oil and gas producing regions. Countries like the USA, Canada, UK, Germany have implemented tax credits, grants and mandates to boost domestic SAF production capacities in the coming years. However, geopolitical unrest can still impact global trade and transportation links, slowing down technology transfer, feedstock imports as well as marketing and sales activities of sustainable fuel producers in different parts of the world.
In terms of geographical concentration, North America accounted for the largest share of the global Sustainable Aviation Fuel Market in 2024, both in terms of volume consumed as well as manufacturing capacity installed. The USA has emerged as the leader driven by supportive policies and the presence of major airline hubs demanding lower carbon alternatives. Another key region is Western Europe led by heavyweights like Germany, France and Sweden. Stable government incentives are attracting significant investments in SAF plants from Neste, Total and Shell in the region.
Looking ahead, Asia Pacific is expected to witness the fastest growth during the forecast period from 2024 to 2031. Countries like China, Japan, India and South Korea are actively working to decarbonize their domestic aviation sectors and explore South-East Asian feedstock options for SAF production. Their focus on replacing pollutive fossil fuels with smart green alternatives within and beyond national borders is projected to substantially increase Asia Pacific's share in the global Sustainable Aviation Fuel Market over the coming years.
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