SkyNRG releases 2024 Sustainable Aviation Fuel Market Outlook

SkyNRG, a leading company in sustainable aviation fuel (SAF), has released its 2024 Sustainable Aviation Fuel Market Outlook.

This report provides a comprehensive analysis of the state and trends of the global SAF market, as well as the opportunities and challenges for scaling up SAF production and demand.

The report has established itself as an industry reference publication over the past years.

For the first time, the market outlook has expanded to global coverage, reflecting the growing interest and activity in SAF globally.

A decisive year for announced projects

2024 will be a decisive year for projects targeting operations before 2030.

Most announced facilities still face the challenges of raising capital, construction and commissioning.

The market outlook emphasizes the need for policy discussions to evolve into concrete proposals to enable the building out of the significant pipeline of SAF capacity identified.

In addition, existing policies must offer long-term stability to attract and secure investor confidence.

This is especially critical in the United States, where significant investments are ready to be deployed, contingent upon guaranteed long-term revenue certainty from supporting policies.

Demand growing globally, mainly driven by mandates and demand incentives

In 2023, globally announced SAF capacity significantly increased to a level of 17.3 million tons (5.7 billion gallons) by 2030, a growth of 4 million tons (1.3 billion gallons) compared to last year.

This is driven by regulatory developments such as ReFuelEU in the EU, the U.K. mandate, but also voluntary uptake in the U.S. supported by incentives.

Demand from targets and mandates now add up to a total of 16.1 million tons (5.4 billion gallons) by 2030 across multiple countries.

Voluntary demand signals have continued to strengthen, with multiple airlines, cargo companies and corporates setting ambitious SAF targets, amounting to some 12 million tons (4 billion gallons) by 2030, however with overlap in the regulatory market.

These voluntary purchases have been crucial to market growth over the past years, but must now translate into reliable, longer-term commitments to attract capacity above regulatory obligations.

Announcements dominated by HEFA, other technologies lagging behind

Current global capacity announcements are dominated by the hydroprocessed esters and fatty acids (HEFA) pathway, which represents approximately 85 percent of announced capacity in 2030.

While coprocessing makes up a smaller fraction of public announcements, we expect more projects to materialize given favorable economics and low complexity.

Alcohol-to-jet (ATJ) facility announcements have increased this technology to around 8 percent of announced 2030 capacity, supported by the commissioning of the first commercial-scale facility and clarifications to U.S. federal tax credit greenhouse-gas (GHG) methodology.

All other technologies (including Fischer Tropsch, eSAF and others) remain a minority of announced capacity, at approximately 7 percent of 2030 capacity.

A globally tradeable commodity

SAF is increasingly becoming a globally tradeable commodity, with investments concentrating in countries with the most favorable policies.

Regions that have historically been significant exporters of feedstock, such as China and Brazil, are now looking to move up the value chain and produce renewable fuels.

This move is giving rise to SAF trade corridors, of which the Southeast Asia to Europe corridor is already operational today and a South America to U.S. corridor could emerge as a significant second trade corridor by 2030, driven by fungibility of the SAF on the basis of feedstock.

If mandate discussions around the world progress, particularly in China, this could restrict access to used cooking oil (UCO), tallow and palm-residue feedstock, driving up prices for these commodities, possibly causing a stronger push for advanced pathways.

Unlocking of capacity needs stable policy and financing

SkyNRG said its long-term capacity modeling illustrates that feedstock availabilities and the “aviation claim” over this feedstock will determine the long-term role for advanced SAF.

Even with displacement of waste oils and fats from existing uses and mobilization of new supply chains based on cover-crop oils, the HEFA pathway is constrained to around 40 million tons of SAF, according to SkyNRG.

This signals a need for advanced SAF to stay on track for net zero by 2050.

However, growth in advanced biomass and eFuels to reach net zero requires significant allocation of global feedstock pools to aviation.

An area for future research is how SAF prices will impact aviation demand.

Because without demand-side effects, there may not be sufficient sustainable feedstock to reach net zero.

For the coming years the sector needs to focus on policy designs that enable investment in the pathways that will be needed in the long term and work on bespoke financing instruments to realize the first significant volumes of next-generation SAF.

Building out the required SAF capacity for net zero will require an investment of around USD$1 trillion until 2050.

“As a thought leader in the SAF industry, we are pleased to present our fourth edition of the Sustainable Aviation Fuel Market Outlook, providing transparent and reliable information about the SAF market,” said SkyNRG CEO Philippe Lacamp. “It is encouraging to see the progress being made towards net zero in the report. The market outlook also highlights the importance of reliable, long-term policy environments globally to allow for capacity development planning and unlocking of the significant investments needed to enable construction and commissioning of SAF facilities.”

SkyNRG’s new report can be downloaded here.