According to Technavio, the international market size for sustainable aviation fuel (SAF) is projected to increase by $5.29 billion between 2024 and 2028. During this forecast period, the market is anticipated to grow at a Compound Annual Growth Rate (CAGR) of approximately 75.62%.
The growth of the market is being propelled by advantageous government policies, alongside a shift towards investigation into third-generation biofuels. Unfortunately, the higher production cost in comparison to traditional fuels creates an obstacle. Among the key players in the market are Aemetis Inc., Alder Energy LLC, Chevron Corp., Cummins Inc., Deutsche Lufthansa AG, Eni SpA, Fulcrum BioEnergy Inc., Gevo Inc., LanzaTech Global Inc., Neste Corp., OMV Aktiengesellschaft, Pan Oleo Energy Ltd., Preem Holdings AB, Sasol Ltd., Shell plc, SkyNRG BV, SYNHELION SA, TotalEnergies SE, Velocys Plc, and World Energy LLC.
Major Trends Propelling Market Growth
With the development of biofuel technology, the SAF market is observing substantial growth. Second and third generation biofuels, primarily SAF, are obtained from non-food feedstocks like wood, organic waste, and algae. Algae fuels, which offer several benefits, include a variety of high-quality fuels such as biodiesel, butanol, and jet fuel. They provide superior performance with fuel production per acre being up to ten times that of conventional fuels. Microalgae, due to their high lipid content and easy cultivation, are becoming popular as viable options for SAF production. This progression in biofuel technology is expanding feedstock alternatives and enhancing fuel performance.
The SAF market is growing significantly as increasing importance is being laid on eco-friendly alternatives in the aviation industry. Components like vegetable oils, animal fats, and used cooking oil are often used to produce SAF. Hydroprocessing and fermentation technologies are being utilized to transform these feedstocks into jet fuel. With an aim to enhance the efficiency and sustainability of SAF production, companies are investing in R&D. SAF, by decreasing carbon emissions, is aiding the aviation industry’s quest to become more eco-friendly. Its adoption is a trend rapidly gaining traction in the aviation sector, with numerous airlines and governments backing its introduction.
Market Challenges
The SAF market is dealing with issues relating to the ineffective production technology and high feedstock costs. Advanced biofuel processing is complicated, which results in higher operating costs for SAF as compared to traditional fuels. The growth of the SAF market could be negatively impacted by electric and hybrid vehicles, which are both cheaper and more sustainable alternatives, and are becoming increasingly popular due to their lower carbon emissions.
The SAF market is encountering several hurdles in its application and adoption. The high cost of SAF compared to regular jet fuel is one of these challenges. Another problem is the limited availability of SAF, as it is currently created from raw materials such as algae and waste vegetable oils. Additionally, the infrastructure for the production and distribution of SAF is not extensively available yet. Technological developments and government incentives are required to make the production of SAF profitable at a larger scale. Moreover, the aviation industry needs to bring down its carbon footprint and achieve emissions reduction targets, making SAFs an essential aspect of sustainable aviation.
by Technavio