February 25, 2024

The Sustainable Aviation Fuel Market Is Driven By Growing Concern Over Carbon Emission

The sustainable aviation fuel market is fast gaining importance owing to the need for reducing carbon emission from air travel. Sustainable aviation fuels are produced from sustainable resources like vegetable oils, sugarcane waste, and other biomass residues which offer a minimum of 50% lower carbon emissions as compared to conventional jet fuel. Aviation currently contributes approximately 2% of global carbon emissions but is predicted to grow rapidly in coming years. Sustainable aviation fuels help reduce greenhouse gases as they are produced from renewable non-fossil sources and do not require significant changes in aircraft or fueling infrastructure. Successful commercialization and large-scale production of sustainable aviation fuels depends on sufficient supply and affordable cost.

The global Sustainable Aviation Fuel Market is estimated to be valued at US$ 5.8 Billion in 2023 and is expected to exhibit a CAGR Of 19 % over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

One of the major trends driving the growth of sustainable aviation fuel market is the rising emphasis on decreasing emissions from air travel. Air travel accounts for around 2% of global CO2 emissions currently but is growing fast with increasing passengers. To curb emissions, government and industry bodies across various countries have outlined clear targets and policies forusage of sustainable fuels. For instance, European Union aims to incorporate at least 2% sustainable aviation fuels by 2025 and 5% by 2030.Similarly, under its “Future of Aviation” strategy, the UK government targets a 10% blend of SAF by 2030. Such initiatives aim to facilitate commercial production and usage of sustainable aviation fuels. Another key trend is the increasing research and development to produce SAF from other renewable sources like municipal solid waste, algae and other biological sources which can offer even lower carbon emissions and higher yields. This is expected to significantly boost the production and supply of sustainable aviation fuels over the coming years.

Porter’s Analysis

Threat of new entrants: The threat of new entrants is moderate as sustainable aviation fuel production requires huge capital investments and the industry is dominated by major oil companies. However, increasing focus on renewable jet fuels by various governments may encourage new players to enter this space.

Bargaining power of buyers: The bargaining power of buyers is relatively low in this market as a limited number of airlines have the capability to purchase sustainable aviation fuels in bulk.

Bargaining power of suppliers: Major oil companies that produce sustainable aviation fuels have significant bargaining power over buyers as they control the technology and supply of renewable jet fuels.

Threat of new substitutes: There is a growing threat of new energy efficient substitutes like electric planes that may limit the demand growth for sustainable aviation fuels.

Competitive rivalry: Competition in this industry is intense as key players are investing heavily in developing advanced biofuel technology to gain a bigger market share.

Key Takeaways

The Global Sustainable Aviation Fuel Market Demand is expected to witness high growth over the forecast period supported by stringent emission regulations and incentives offered by governments. North America currently dominates the market due to presence of major producers and proactive policies. Europe is also a major producer whilst Asia Pacific is identified as the fastest growing regional market with China and India emerging as key hubs.

Key players operating in the sustainable aviation fuel market are Neste, Gevo, World Energy, Eni, SkyNRG, and Velocys. Regional analysis Neste is the global leader in production capacities with plants located in Singapore, Netherlands and US. The company sources feedstock from waste and residue to produce drop-in fuels. SkyNRG and Gevo has collaborated with KLM, SAS Scandinavian Airlines and Alaska Airlines for supplying sustainable fuel.

Key players operating in the sustainable aviation fuel market are Neste, Gevo, World Energy, Eni, and SkyNRG. Neste is the global leader with production facilities in Singapore, Netherlands and US. Gevo has strategic partnerships with various airlines for supplying biofuel. World Energy producesustainable aviation fuel from food and agricultural waste at its California plant.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it