Clean Jet Fuel Production Lagging Behind 2030 Goals

The ramp-up of Sustainable Aviation Fuel (SAF) has been slower than expected due to high costs and economic uncertainty, putting global clean jet fuel supply off course to reach the 2030 targets, according to a report by Boston Consulting Group (BCG).

Airlines and airports globally invest just 1-3% of their revenues or capex on SAF, per the report cited by Reuters.

High production costs remain the key barriers to faster adoption of SAF, according to BCG’s findings.

“Despite continuing to scale the availability of sustainable aviation fuel, and we see that trend very clearly, there is a slowdown in the development of projects and even bigger gaps to some of the commitments that some of the companies have made,” said BCG Managing Director and Partner Pelayo Losada, who co-authored the report.

Last year, for example, Shell paused on-site construction work at a biofuels plant in Rotterdam amid weak market conditions. The plant is designed to produce sustainable aviation fuel and renewable diesel made from waste.

In 2023, Willie Walsh, Director General at the International Air Transport Association (IATA), said that the airline industry would be ready to embrace the fact that SAF would always be more expensive than oil-based jet fuel.

IATA said at the end of 2024 that growth in SAF volumes is “disappointingly slow.”

Last year, SAF production volumes reached 1 million tons, double the 500,000 tons produced in 2023. However, SAF accounted for just 0.3% of global jet fuel production and 11% of global renewable fuel, according to IATA’s latest estimates.

“Investors in new generation fuel producers seem to be waiting for guarantees of easy money before going full throttle,” IATA’s Walsh said.

To reach net zero CO2 emissions by 2050, IATA analysis shows that between 3,000 and more than 6,500 new renewable fuel plants will be needed.

The annual average capex needed to build the new facilities over the 30-year period is about $128 billion per year, in a best-case scenario, according to IATA.

By Tsvetana Paraskova for Oilprice.com

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