Prior to the COVID-19 pandemic, commercial aviation accounted for over 2 percent of global greenhouse gas (GHG) emissions. Among other solutions, industry stakeholders are looking to reduce these GHGs by pursuing three alternative fuel strategies: SAF, hydrogen, and electricity. Of these, SAF, also known as sustainable drop-in fuel, is the most developed and economically feasible today. According to a new report from Guidehouse Insights, the global SAF market will grow significantly, with Much of the revenue is expected during the latter half of the outlook period, driven by technology maturity and market mandates.
“SAF use typically generates 60 percent to 95 percent fewer GHG emissions compared with a fossil fuel reference value of 89 grams of CO2 equivalent per megajoule” said Elizabeth Wilson, research analyst with Guidehouse Insights. “Additionally, SAF has been tested in long-haul flights and can be incorporated into existing fuel infrastructure and engines without costly modifications.”
SAF markets are driven by multiple forces. Governments are moving to incentivise and mandate SAF use through policies such as the European Union’s ReFuelEU proposal, which would set an SAF target of 63 percent market share by 2050, and the US SAF Grand Challenge, which aims for 3 billion gallons of SAF production per year by 2030. Corporate environmental, social, and governance initiatives are giving airlines strong indications of market demand and value around decarbonisation.
However, significant challenges must be addressed. SAF production is considerably more expensive than conventional jet fuel production - 2 to 10 times the cost - and the two are unlikely to reach parity within the outlook period. A substantial component of this cost is tied to the immature distribution system for SAF.
The report, Market Outlook for Sustainable Aviation Fuels, provides an assessment of the current and future SAF market, including an overview of the market drivers and challenges, key industry players, and production outlook through 2035. The outlook is provided for major world regions across all nine ASTM-certified SAF production processes.
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