Market Challenges And Opportunities

Global Sustainable Aviation Fuel Market Drivers:

Growing focus on reducing carbon emissions to drive sustainable aviation fuel market growth

Sustainable aviation fuel initiatives are a key part of reducing aviation greenhouse gas emissions and helping the aviation industry reach net zero by 2050. They are also critical to the aviation industry's wider commitment to addressing climate change. The United States is leading the way in advancing the development of sustainable aviation fuels, establishing a roadmap for expanding their production that will enable airlines to reach 100% SAF use by 2050. This is in addition to a broader strategy developed by the International Civil Aviation Organization (ICAO) that endorses the 2050 ICAO Vision for Sustainable Aviation Fuels and calls for States and industry to contribute a significant proportion of SAF production by 2050.

Growing initiatives to increase supply chain process to foster market growth

The European Union has introduced an emissions trading system that allows companies to purchase greenhouse gas emissions reductions at a low cost from other firms. They are also working with local governments to reduce their emissions. The reduction of emissions will also help reduce the cost of adapting to a warmer world, which can be especially helpful for poorer and developing countries

Global Sustainable Aviation Fuel Market Opportunities:

Increasing number of partnership between airlines and SAF producers is expected to serve major growth opportunities. For instance, in July 2022, Boeing and Alder Fuels announced a new partnership to expand production of sustainable aviation fuel (SAF) around the world. Using Boeing airplanes, the companies will test and qualify Alder-derived SAF, advance policies to expedite the transition to renewable energy in aviation, and grow the amount of SAF for the global aerospace market.

Increasing number of passenger traveling by air is expected to bring bright market opportunities for key players in the near future. According to the International Civil Aviation Organization and World Air Transport Statistics, the number of passengers carried on scheduled services reached over 4.5 billion in 2019 from 4.2 billion in 2018, which is 3.6 per cent higher. While the number of departures reached 38.3 million in 2019, a 1.7 per cent increase.

Global Sustainable Aviation Fuel Market Restraints:

High cost of sustainable fuel to restrict market growth

At present cost of SAF is 4-5 times higher than the conventional jet fuel. Hence, various airlines are reluctant to buy SAF in bulk. Due to which very small quantity of SAF is being produced around the globe. Additionally, feedstock costs, yields, and plant capital recovery are some of the key factors that are adding to the overall price of SAF. Hence high cost of SAF is expected to hinder market growth. However, there are incentives available that can help to lower the cost of SAF.

Lack of experience and expertise to hinder market growth

Other factors that may prevent airlines from replacing their conventional fuels with sustainable aviation fuel are lack of experience and expertise, which can be problematic for new entrants to the market. This is expected to restrict market growth.