Business Bayani PH

In a recent announcement, the International Air Transport Association (IATA) shared promising estimates for the production of sustainable aviation fuel (SAF). However, despite the substantial growth in SAF volumes, the aviation sector still faces missed opportunities due to limited capacity allocation and government policy gaps.

In 2023, SAF production surged to over 600 million liters (0.5Mt), marking a significant doubling from the 300 million liters (0.25 Mt) in 2022. Despite this boost, SAF accounted for merely 3% of all renewable fuels produced, with 97% allocated to other sectors. 

Projections for 2024 suggest a tripling of SAF production to 1.875 billion liters (1.5Mt), making up 0.53% of aviation’s fuel needs and 6% of renewable fuel capacity. However, the limited share of SAF in overall renewable fuel production is primarily attributed to the allocation of new capacity to alternative fuels.

Willie Walsh, IATA’s director general, emphasized the significance of this growth but highlighted the challenge: “The doubling of SAF production in 2023 was encouraging as is the expected tripling of production expected in 2024. But even with that impressive growth, SAF as a portion of all renewable fuel production will only grow from 3% this year to 6% in 2024. This allocation limits SAF supply and keeps prices high.”

Walsh stressed the need for government policies to incentivize the scaling-up of SAF production and diversify feedstocks locally. He emphasized that for aviation to reach net zero carbon emissions by 2050, it must secure between 25% and 30% of renewable fuel production capacity for SAF.

The Third Conference on Aviation Alternative Fuels (CAAF/3), hosted by the International Civil Aviation Organization (ICAO), achieved a significant milestone by agreeing on a global framework to make aviation fuels 5% less carbon-intensive by 2030. However, to achieve this, approximately 17.5 billion liters (14Mt) of SAF need to be produced.

“Governments want aviation to be net zero by 2050. Having set an interim target in the CAAF process they now need to deliver policy measures that can achieve the needed exponential increase in SAF production,” said Walsh.

The demand for SAF is evident, with every drop being purchased and utilized. In 2023, SAF contributed $756 million to a record-high fuel bill. Currently, 43 airlines have committed to using about 16.25 billion liters (13Mt) of SAF in 2030, reflecting a strong industry commitment.

However, the challenge lies in unlocking the supply to meet this demand. Projections indicate over 78 billion liters (63Mt) of renewable fuels in 2029, but governments must create a policy framework that encourages renewable fuel producers to allocate 25-30% of their output to SAF.

To achieve these objectives, according to IATA, effective production incentives for SAF should:

• Accelerate investments in SAF by traditional oil companies
• Ensure renewable fuel production incentives encourage sufficient SAF quantities
• Focus stakeholders on regional diversification of feedstock and SAF production
• Identify and prioritize high-potential production projects for investment support
• Deliver a global SAF Accounting Framework

Approximately 85% of upcoming SAF facilities in the next five years will utilize Hydrotreatment (HEFA) production technology, relying on inedible animal fats, used cooking oil, and industrial grease as feedstock. Limited quantities of these call for policies that diversify SAF production through certified pathways, such as Alcohol-to-Jet (AtJ) and Fischer-Tropsch (FT), utilizing bio/agricultural wastes and residue.

Moreover, a recent IATA survey revealed substantial public support for SAF, with 86% of travelers advocating for government incentives for airlines to access SAF. An equal percentage believed it should be a priority for oil companies to supply SAF to airlines.

While SAF volumes are on the rise, the aviation sector must overcome policy hurdles and diversify production to fully harness its potential in combating climate change.◼