Sustainable Aviation Fuel Market: Current Analysis and Forecast (2023-2030)

Sustainable Aviation Fuel (SAF) is a type of biofuel that is designed to be used in aircraft engines while reducing the environmental impact of aviation. SAF is made from renewable sources such as waste biomass, algae, or agricultural residues, and can be used as a drop-in replacement for traditional fossil fuels.

The sustainable aviation fuel market is expected to grow at a steady rate of around 46.07% owing to the increased environmental regulations and emissions reduction targets. In response to increasing pressure on the aviation industry to reduce its carbon footprint due to environmental concerns, various countries have implemented regulations aimed at reducing greenhouse gas emissions from aircraft, creating opportunities for companies involved in the production and use of Sustainable Aviation Fuels (SAF). SAFs are derived from renewable sources such as waste biomass or algae, which can be processed into jet fuel through a process known as hydro treatment.

The European Union's Carbon Neutral Aviation Package sets out to achieve net-zero CO2 emissions from international civil aviation by 2050 and will enforce a carbon fee on airlines starting in 2021, eventually reaching €18 per ton of CO2 emitted. The EU additionally requires all commercial aircraft operators to use SAF or equivalent low-carbon technologies by 2030. The California Air Resources Board's Low-Carbon Fuel Standard also requires refineries to blend SAF and other low-carbon fuels into their gasoline and diesel supplies and to meet a target of 4.7 billion gallons of low-carbon fuels by 2029.

The International Civil Aviation Organization (ICAO) is key in promoting the use of SAF globally with its goal of achieving carbon-neutral growth in the aviation sector by 2020. Therefore, the increasing environmental regulations and emission reduction targets drive the sustainable aviation fuel market.

Based on fuel type, the market is divided into biofuel, hydrogen fuel, and power-to-liquid. The biofuel segment dominated the market in 2022 and is expected to show the same fashion in the forecast period. Biofuels are created from renewable biomass sources such as agricultural waste, algae, or even garbage. These fuels emit significantly fewer greenhouse gases during combustion than traditional fossil fuels, thereby helping to reduce the adverse environmental effects of aviation. Additionally, biofuels can be blended with traditional fossil fuels in various proportions, allowing operators to reduce their reliance on fossil fuels incrementally without causing significant operational disturbances. Many countries have established ambitious goals to reduce greenhouse gas emissions from the aviation sector, and biofuels are seen as a crucial part of this endeavor. For instance, the European Union has mandated that all commercial flights must solely use sustainable aviation fuels (SAF) by the year 2020. In addition, the California Air Resources Board has implemented a target of 10% SAF usage in California by 2020. These regulations are providing a compelling impetus for airlines and other aviation stakeholders to incorporate biofuels into their practices.

Based on aircraft type, the market is bifurcated into fixed wings and rotorcrafts. The fixed wings hold a significant market share in 2022 and are expected to showcase the same trend in the forecast period due to fixed-wing aircraft being more commonly used for long-haul flights, which require more fuel and therefore more SAF. Furthermore, the development of more efficient and environmentally friendly fixed-wing aircraft, such as the Airbus A220 and the Boeing 787 Dreamliner, is also expected to drive the demand for SAF in the fixed-wing market. Additionally, the regulatory environment for SAF is also more favorable for fixed-wing aircraft. For instance, the Federal Aviation Administration (FAA) has set a goal of reducing greenhouse gas emissions from aviation to 80% below 2005 levels by 2050. Additionally, regulatory environments favor fixed-wing aircraft, such as the FAA's goal to reduce greenhouse gas emissions and the EU's 10% jet fuel target from sustainable sources by 2030, likely driving more adoption of SAF in fixed-wing aircraft.

Based on the platform, the market is bifurcated into commercial aviation and military aviation. Commercial aviation holds a significant market share in 2022 and is expected to showcase the same trend in the forecast period due to the growing demand for SAF in the commercial aviation sector, the increasing awareness of the environmental impact of traditional fossil fuels, and the need for more sustainable and environmentally friendly alternatives. The International Civil Aviation Organization (ICAO) set a goal for net-zero levels to reduce greenhouse gas emissions from international aviation by 2050. To meet this goal, Sustainable Aviation Fuel (SAF) is seen as a key component to reduce emissions and promote sustainable alternatives. Sustainable Aviation Fuel (SAF) is considered a more cost-effective option than conventional fossil fuels, given its capacity to lessen fuel costs while also endorsing sustainability and environmental accountability. This is especially pivotal for commercial airlines, which strive to reduce expenditures and enhance their profitability while upholding sustainability and environmental accountability.

For a better understanding of the market adoption of the shipbuilding industry, the market is analyzed based on its worldwide presence in countries such as North America (U.S., Canada, and Rest of North America), Europe (Germany, U.K., France, Italy, Spain, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. The North American sustainable aviation fuel market dominates the market and is expected to behave in the same fashion due to the early adoption of the SAF. Over the past couple of years, demand for Sustainable Aviation Fuel (SAF) has seen a rapid increase in North America due to regulatory requirements and the desire to reduce greenhouse gas emissions from the aviation sector. In 2020, the United States Environmental Protection Agency (EPA) issued a final rule requiring airports to provide Self-Serve Aviation Fuel (SAF) to general aviation aircraft operators by August 2023. Similarly, in 2017, the Canadian Air Transport Security Authority (CATSA) introduced new regulations requiring airports to offer SAF to commercial operators by December 2020. These regulations have created a mandate for airports to install SAF pumps and attract suppliers to establish themselves in the region. Moreover, reducing greenhouse gas emissions is a crucial step in the United States, aviation contributes 2.5% to global CO2 emissions, making it instrumental in fighting climate change. Sustainable Aviation Fuel (SAF) reduces emissions without compromising performance and is gaining support from airlines and airports as a way to become more sustainable.

Some of the major players operating in the market include: Neste, Fulcrum BioEnergy, World Energy, LLC, TotalEnergies, Gevo, Avfuel Corporation, Aemetis, Inc., Preem AB, SkyNRG, Northwest Advanced Biofuels, LLC.