Sustainable Aviation Fuel - the size of the challenge and opportunity
At a glance
Today, the aviation sector contributes 4 per cent of global greenhouse-gas emissions and is expected to grow significantly over the next decades. Despite a 39 per cent increase in aviation fuel efficiency between 2005 and 2019, absolute emissions growth still outpaces efficiency gains. If the sector continues with business as usual, aviation emissions could increase to 3.4 GtCO2eq by 2050, more than 2.5 times current levels. Nonetheless, the aviation industry is committed to achieving net zero by 2050. Sustainable aviation fuel (SAF) is crucial for decarbonising aviation, addressing 65 per cent of the sector’s total emissions. Demand for SAF by airlines has surpassed available capacity because of public demand for low-carbon flights.
The UK’s Net Zero strategy outlines key milestones towards net zero aviation by 2050, including a commitment to 10 per cent and 22 per cent SAF blend in all jet fuel by 2030 and 2040, respectively. The UK government estimates the SAF industry will be worth £1.8 billion by 2030, creating more than 10,000 jobs.
Sustainable aviation fuels: sources and feedstocks
SAF includes any aviation fuel meeting sustainability requirements, such as synthetic kerosene and hydrogen. However, SAF typically refers to kerosene-like drop-in fuel made from non-fossil sources via various pathways and feedstocks. The UK SAF mandate sets criteria for SAF, including feedstock sustainability, carbon-emission reduction, and technical specification.
The most developed SAF production pathway is HEFA (hydroprocessed esters and fatty acids), but its production capacity is limited because of feedstock-sustainability issues and competition with other sectors. Advanced fuels from sustainable carbon sources are expected to dominate post-2030, including technologies like Fischer-Tropsch (FT), waste gasification, Alcohol-to-Jet (AtJ), and Power-to-Liquid (PtL).
The challenge: ramping up production and reducing cost
Significant progress has been made in SAF production and use. Since the first test flight with Biojet fuel in 2008, the number of flights using SAF has grown to over 490,000. SAF production capacity tripled between 2021 and 2023, reaching 300 million litres annually, with over 130 SAF production projects announced across 30 countries. Virgin Atlantic’s Flight100 flew with 100 per cent SAF in November 2023. However, global SAF production capacity is only 0.2 per cent of jet-fuel use.
In the UK, the planned SAF production capacity is 0.2 Mt, compared to the required 1.2 Mt by 2030. The challenge is to scale advanced SAF production pathways (non-HEFA) and reduce costs. Key developments include biogenic carbon capture, direct air capture (DAC), PtL, and large-scale green-hydrogen production and storage.
Today, SAF production costs are 2–5 times higher than kerosene, necessitating further technological and infrastructure advancements to reduce costs.
Opportunities and call to action
Developers and feedstock suppliers
SAF production plant developers have growth opportunities because of SAF mandates and the UK SAF revenue support scheme expected by 2026. Collaboration with hydrogen production and anaerobic-digestion developers can create large-scale demand for hydrogen and CO2, supported by government schemes. The oil and gas industry can repurpose existing infrastructure for SAF production using sustainable feedstocks.
Airports and flight operators
SAF offers a less-disruptive decarbonisation route for airports and airlines. Early discussions with fuel suppliers about SAF supply contracts and rollouts are essential to future planning. Airports and airlines must understand the requirements for 100 per cent SAF and multi-fuel infrastructure developments.
Government
The current mandate provides a solid foundation. Further clarity on the revenue support scheme and support for technology development, including DAC and PtL, will encourage investment and expedite advancements.
Investors
The growing SAF industry offers investment opportunities in new technologies and businesses. Understanding the technology and benefits of various SAF production pathways is crucial for managing risks and maximising rewards. As the industry scales, significant capital is not only required for research and development, but also the adjacent infrastructure needed to produce and distribute SAF at a competitive price. Investors should consider and understand the government regulatory landscapes, incentives, and the potential for long-term returns driven by increasing global demand for sustainable aviation solutions.
Conclusion
SAF is key to decarbonising aviation, with demand expected to grow rapidly. The UK has proactively introduced SAF mandates, but challenges remain in scaling, cost, technology development, and feedstocks. The 10 per cent SAF target by 2030 presents growth opportunities for multiple sectors, including CCUS, hydrogen, biogas production, and advanced SAF technologies. Combined expertise in technologies, feedstocks, supply infrastructure, SAF applications, and commercial drivers will be invaluable for the industry’s success.
As we navigate the challenges and opportunities in SAF, collaboration and shared expertise are crucial. I’d like to acknowledge the contributions of Andrew Winship and Jose Batista to this thought leadership piece.