RENEWABLE/BIO JET FUEL MARKET ANALYSIS

Biomass based aviation fuels are considered as a promising alternative for conventional fossil fuel based aviation fuels. Bio jet fuel is made from vegetable oils, sugars, animal fats and waste biomass, and can be used in existing aviation jet engines without any modification. The first test flight with bio jet fuel was completed in 2008 by Virgin Atlantic.

Global renewable/bio jet fuel market was valued at US$ 186.81 Mn in 2021 in terms of revenue, exhibiting a CAGR of 17.95 % during the forecast period (2022 to 2030).

Drivers

Increasing need for reduction in GHG emissions in aviation industry

Sustainable aviation fuels are a key component in meeting the aviation industry’s commitments to decouple increases in carbon emissions from traffic growth SAF gives an impressive reduction of up to 80 % in CO2 emissions over the lifecycle of the fuel compared to fossil jet fuel, depending on the sustainable feedstock used, production method, and the supply chain to the airport. According to the IATA fact sheet, SAF will be an eligible option for aircraft operators to Organization (ICAO) agreed on a Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to reduce CO2 emissions from international aviation with a pilot phase from 2021-2023, followed by a first from phase 2024- 2030

The COVID-19 pandemic disrupted the market severely. The pandemic led to lockdowns to control the virus, which resulted in minimal aviation traffic, thereby declining the demand for aviation fuel. Factors such as government policies and efforts to limit emissions from the aviation industry and increasing growth in air traffic, are some of the major factors driving the market. However, renewable aviation fuel is more expensive than conventional jet fuel, and this cost premium may restrain the market growth during the forecast period.

Figure 1. Global Renewable/Bio Jet Fuel Market Value Share (%), By Region, 2021

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Market Restraints

Inadequate availability of feedstock and refineries to meet SAF production demand

The biological and non-biological resources such as oil crops, sugar crops, algae, waste oil, etc. are the raw materials that play an important role in the entire production chain of alternative aviation fuels such as synthetic fuels, e-fuels, and bio jet fuels. The demand for sustainable aviation fuel can come to a standstill due to the inadequate supply of raw materials required for its production. Also, limitations of refineries that play a major role in the proper utilization of these feedstock’s add to the delay of the overall process of SAF production. The low availability of fuel also becomes a hurdle for the blending capacity of the fuel, leading to less efficiency.

Market Trends

Hydroprocessed Esters and Fatty Acids (HEFA) Technology to Dominate the Market

• In 2011, hydroprocessed esters and fatty acids (HEFA) technology received certification from the American Society for Testing and Materials (ASTM) for bio-jet fuel production. HEFA uses oleo-chemical feedstock, such as oil and fats, for renewable fuel production.
• A significant share of available commercial volumes of bio-jet fuels comes from HEFA biojet, with several commercial-scale facilities worldwide producing the same. However, renewable diesel (HEFA-diesel) is also produced during the process, with a larger market scope and a higher sales price. Thus, producers are focusing on HEFA-diesel instead of HEFA-jet.
• In January 2022, Johnson Matthey launched an innovative technology, HyCOgenTM, by converting captured carbon dioxide (CO2) and green hydrogen into sustainable aviation fuel (SAF) using FT technology. Such developments in the renewable aviation fuel sector are likely to increase demand for FT technology during the forecast period.
• Furthermore, in December 2021, the U.K. Department for Transport announced support of GBP 15 million to Advanced Biofuel Solutions (ABSL), which was likely to work on a detailed engineering design for a new facility in Cheshire. The plant is to be used for gasification and Fischer-Tropsch (FT) technology to convert an estimated 133,000 metric ton of waste a year into a biocrude that can be upgraded to aviation fuel. Thus, such investments in upcoming sustainable aviation fuel projects are likely to increase the demand for FT technology during the forecast period.
• However, HEFA biojet fuel costs more than fossil-derived jet fuels, and the potential feedstock for the HEFA is also costly.
• To decarbonize the aviation sector, companies such as Boeing are testing the technical suitability of high freezing point HEFA (HEFA+) aviation fuel in aircraft. HEFA+ is a synthetic hydrocarbon made from bio feedstock, such as vegetable oil or waste fats. Therefore, owing to the above points, the HEFA segment is expected to dominate the renewable aviation fuel market during the forecast period.

Figure 2. Global Renewable/Bio Jet Fuel Market value Share (%), By Conversion Technology, 2021

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Recent Developments

• In February 2022, Engie SA and the U.S. engineering company Infinium Holdings announced a US$ 500-million project to produce renewable aviation and maritime fuels in northern France. The final investment decision for the project is planned for the end of 2023, with commercial operations expected to start in 2026.
• In February 2022, Boeing announced a supply agreement for two million gallons of blended renewable aviation fuel with EPIC Fuels to power its commercial operations in Washington state and South Carolina by the end of 2022.

Competitive Section

Major players operating in the global renewable/bio jet fuel market include Gevo, Inc., Red Rock Biofuels LLC, Honeywell International Inc., Virent Inc., Fulcrum BioEnergy, Inc., Neste Oil Corporation, AltAir Paramount LLC, S.G. Preston Company, SkyNRG BV, Eni SpA Total S.A., and BP PLC