The production of sustainable aviation fuel has grown less than expected.
The latest SAF (Sustainable Aviation Fuel) production forecast report by the International Air Transport Association (IATA, abbreviated as "IATA") shows that the SAF production in 2024 will be 1 million tons (1.3 billion liters), which is twice the 500,000 tons (600 million liters) produced in 2023. SAF accounts for 0.3% of the global jet fuel production and 11% of the global renewable fuel production.
According to projections, in 2025, the production of SAF is expected to reach 2.1 million tons (2.7 billion liters), accounting for 0.7% of the total jet fuel production and 13% of the global renewable fuel capacity.
The International Air Transport Association expressed disappointment over this. The association believes that this production level is significantly lower than what was previously expected.
The president of the International Air Transport Association, Willie Walsh, said that the production of SAF is still increasing, but the growth rate is disappointingly slow. The government has sent complex signals to oil companies, which continue to receive production subsidies for fossil oil and gas exploration. Investors in the new generation of fuel producers seem to be waiting for more lenient financial guarantees before they can fully commit themselves.
On the one hand, this directly affects the profit level of airlines. Data shows that the global airline net profit margin is 3.6%.
On the other hand, the decarbonization of the aviation industry is regarded as a part of the global energy transition. Renewable fuel refineries can also produce various fuels used by other industries, with only a small portion being SAF used by airlines. The International Air Transport Association believes that the whole world needs to work together to produce as much renewable energy as possible, and airlines merely want to obtain a fair share of the production volume.
According to data from the International Air Transport Association, in order to achieve net zero carbon emissions by 2050, approximately 3,000 to 6,500 new renewable fuel plants will be needed. These plants can also produce renewable diesel and other fuels for other industries. In the most optimistic scenario, the average annual capital expenditure required to build new facilities over a 30-year period is approximately $128 billion.
In comparison, this amount is lower than the total investment of 280 billion US dollars in the solar and wind energy markets over the period from 2004 to 2022.
The International Air Transport Association believes that there are three ways to accelerate the progress of expanding the production and use of SAF:
First, increase co-processing. Existing refineries can be used to co-process up to 5% of approved renewable raw materials together with crude oil. This solution can be implemented quickly and requires minimal capital investment. The scale should be expanded urgently to allow for the co-processing of more renewable raw materials. By 2050, co-processing is expected to save $347 billion in capital expenditures as no new over 260 renewable fuel plants need to be built.
Secondly, the production of SAF is diversified. There are 11 certified methods for producing SAF, but the HEFA method will account for approximately 80% of the output in the next five years. By increasing investment and through other certification channels, production will be expanded, especially through the production of alcohol-based aviation fuel (AtJ) using biological/agricultural waste and residues, and Fischer-Tropsch synthesis (FT), to increase the output of SAF.
Thirdly, establish a global SAF calculation framework. "In order to enable all airlines to purchase SAF globally and for all SAF producers to sell fuel to airlines, the establishment of a registration list is extremely necessary," the International Air Transport Association believes.
