The global military jet fuel market is expected to grow at a CAGR of over 3% during the forecast period. Factors such as the growing increasing expenditure in the defense sector as the security threats intensified, requiring governments around the world to continue increasing their defense budgets, in turn, is expected to drive the military jet fuel market. Moreover, with countries such as China, United States, India, and other countries increasing the fleet of their air force planes are further expected to promulgate the market during the forecast period. However, the high costs associated with jet fuel and renewable fuel is expected to hinder the growth of military jet fuel market.
- The renewable aviation fuel segment is expected to be the fastest-growing segment for the military jet fuel market during the forecast period, owing to its several advantages in comparison to air turbine fuel plus increasing adoption due to less carbon emission by several countries.
- Moreover, the military sector seeks to improve the environmental performance of its aircraft fleets and reduce the environmental emissions. Biofuels are considered a way to maintain secure sources of fuel and reduce cost volatility, in turn creating several opportunities for market being studied.
- North America is expected to the largest and the fastest growing region during the forecast period, bolstered by highest defense sector budget and largest fleet of air force plane and navy planes, mainly in the United States.
Key Market Trends
Renewable Aviation Fuel to be the Fastest Growing Market
- Defines expenditure is expected to grow between 3-4% in 2020 to reach an estimated USD 1.9 trillion, as governments around the world continue to modernize and recapitalize their militaries. Subsequently, the defense aviation sector is also expected to increase and pave the way for adding new aircraft in the defense sector.
- The defense sector consumes a large amount of aviation fuel. For instance, on average, the United States military burns about 4.8 billion gallons of jet fuel and diesel each year. Nearly half of that goes to the Air Force and around one-third to the Navy.
- In Asia-Pacific, higher defense spending by major regional powers such as India, China, and Japan will likely contribute to the increase in defense aircraft and the total flying time. Therefore, with an increase in aircraft, and stringent carbon emission rules in the hindsight, the demand for renewable aviation fuel is expected to increase in upcoming years.
- Moreover, in May 2019, the Russian made AN-32 transport aircraft of the Indian Air Force was certified to fly on blended aviation fuel containing 10% bio-jet fuel. The indigenous bio-jet fuel was first produced by the Indian Institute of Petroleum, Dehradun, in 2013, but it could not be tested or certified for commercial use on aircraft due to the lack of test facilities in the civil aviation sector.
- Hence, such increasing development in the aviation fuel sector and the need to cut carbon emissions are expected to drive the renewable aviation fuel market in the defense sector during the forecast period.
North America to Dominate the Market
- North America has emerged as one of the largest military jet fuel market in recent years, with a rise in energy demand from Air Force and Navy, which in turn increased the demand for cable accessories in this region.
- In the United States, the demand for jet fuel has increased at a steady pace the fleet is expanding exponentially with an increase in the defense budget. As of 2019, the United States had the highest defense budget of over USD 730 billion, in turn aiding the market growth.
- As part of the United States Air Force's goal of achieving half of its domestic fuel needs drawn from alternative sources, the military and commercial airlines tested alcohol-to-jet (ATJ) fuel on A-10 ground attack aircraft.
- Under the Defense Protection Act 2014, the United States' Department of Energy (DOE) co-funded the construction of three integrated bio-refineries, with the capacity to produce hydrocarbon fuels that meet military specifications for JP-5 (jet fuel used primarily by the US Navy), JP-8 (jet fuel used mostly by the US Air Force), or F-76 (diesel).
- Further, companies, such as Honeywell, Shell and Chevron, use air turbine fuel and renewable jet fuel to fuel the United States Navy and Air Force, as part of a joint program for the US Defense Energy Support Center (DESC) for alternative fuel testing and certification.
- Therefore, owing to above factors, North America, and in particular United States is expected to be the largest market during the forecast period.
The military jet fuel market is moderately consolidated. Some of the key players are Royal Dutch Shell PLC, BP PLC, Honeywell International Inc., Repsol SA, and GS Caltex Corporation.
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