Sustainable Aviation Fuel Market Trends

Growth Drivers

• Growing Number of Passenger Taking Flights –Rising use of aircrafts for traveling is expected to drive the need for fuel and is likely to more opportunities for incorporating sustainable aviation fuel. According to the International Air Transport Association, global air passenger traffic recovered significantly in 2022, rising from 41.7% of 2019 revenue passenger kilometers (RPKs) in 2021 to 68.5% in 2022.
• Rising Pollution Caused by Aircraft –Higher pollution by aircraft has prompted airlines and the government to use sustainable fuels. Aviation accounts for around 2% of worldwide CO2 emissions. The industry, collectively with other gases and water vapor trails produced by airplanes, is accountable for around 5% of global warming.
• Increasing Investment in New Aircrafts – Rising deployment of new aircraft for sufficing the need for growing air traffic is also expected to drive market growth. In 2021, Rakesh Jhunjhunwala, a billionaire investor in India, intended to launch a new airline with 70 aircraft within four years by spending USD 35 million in 2021.
• Lower CO2 Emission by Sustainable Fuel–The rising benefits of sustainable fuel have increased its adoption across the aviation industry. SAF reduces carbon emissions by up to 80% over the lifecycle of the fuel when compared to traditional jet fuel. However, it is dependent on the feedstock used, production process and supply chain to the airport.
• Rising Military Aviation Exercises– The majority of SAFs authorized for civil aviation use have also been examined and approved for use in the majority of fighter aircraft. Arctic Forge 23, a US Army (Europe-Africa) led umbrella exercise, was held from February 16 to March 17, 2023. It comprised the Defense Exercise North in Finland and the Joint Viking Exercise in Norway. These exercises are undertaken on a yearly basis to strengthen military capabilities and cooperation among participating countries.

Challenges

• Limited supply of SAF- The production capacity of sustainable aviation fuel is currently limited also there are not enough suppliers of the fuel. This can make it difficult for airlines to procure enough SAF to meet the needs of the aviation industry and is likely to hamper market growth.
• The production cost of SAF in comparison to traditional fuels
•  Lack of consistent government policies and incentives