The global sustainable aviation fuel market is estimated to be valued at US$ 460.1 million in 2022 and is expected to exhibit a CAGR of 61% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Sustainable aviation fuel (SAF) refers to a type of biofuel that can be used in aircraft jet engines as substitutes for conventional jet fuel. It provides significant environmental benefits with lower carbon emissions compared to conventional jet fuel. Aviation is responsible for up to 3% of global carbon emissions and SAF can help reduce the carbon footprint of air travel. SAF can be produced from biomass and waste resources like used cooking oil, municipal waste, sugar beet, and agricultural residues. It is a drop-in fuel and requires no aircraft modification to be used. With growing environmental concerns, airlines and governments are pushing for the adoption and commercialization of SAF to lower emissions from air travel.
Market key trends:
One of the key trends in the sustainable aviation fuel market is the increasing investments by major airlines and SAF producers to boost production capacities. For instance, United Airlines has invested in building large-scale SAF production facilities through agreements with Neste and Fulcrum BioEnergy. Shell Aviation and Swedish Biofuels have also partnered to build a plant capable of producing 8,000 barrels per day of SAF by 2026. Stringent emission norms by regulatory agencies are also compelling the aviation industry to use higher blends of SAF. The International Civil Aviation Organization aims to achieve a 2% SAF blend by 2025 and a 63% reduction in CO2 emissions by 2050 compared to 2005 levels. These initiatives are expected to significantly increase the demand for SAF over the forecast period.
Porter's Analysis:
· Threat of new entrants: The threat of new entrants is moderate due to high capital requirements for production facilities and the need to achieve economies of scale to compete with existing players.
· Bargaining power of buyers: The bargaining power of buyers is moderate as sustainable aviation fuels make up a small fraction of overall jet fuel demand currently. However, buyer pressure is expected to increase with more stringent emissions regulations.
· Bargaining power of suppliers: The bargaining power of suppliers is high currently due to limited competition and supply constraints. However, this is expected to reduce as production capacity increases over the coming years.
· Threat of new substitutes:The threat of new substitutes is low as there are no viable alternatives to jet fuel for meeting the energy needs of air travel in the near future.
· Competitive rivalry: Competition is intense among existing players to capture market share through partnerships with airlines and production capacity expansion.
Key Takeaways:
The Global Sustainable Aviation Fuel Market Growth is expected to witness high growth, exhibiting CAGR of 61% over the forecast period 2023-2030, due to increasing focus on reducing emissions from the aviation industry.
The market size for sustainable aviation fuel was valued at US$ 460.1 million in 2022. North America currently dominates the market due to presence of key producers like Neste and Aemetis in the region and supportive policies. However, Europe and Asia Pacific are expected to witness faster growth during the forecast period led by investments in new production facilities and partnerships with airlines in countries like France, Netherlands, Japan and India.
Key players operating in the sustainable aviation fuel market are Neste, AEMETIS INC., Gevo, Shell PLC, Lanza Jet, and Sky NRG. Neste is the global leader in production capacity while partnerships are a key strategy among producers to increase supply and sales volumes.
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