Sustainable Aviation Fuel Market

Sustainable Aviation Fuel (SAF) is an alternative to conventional fossil aviation fuels. It is produced using both biological and non-biological resources. SAF can be made from a variety of feedstocks that replace the oil, coal, or gas typically used in traditional jet fuel. These feedstocks include plant and animal materials, such as cooking oils, plant oils, agricultural residues, municipal waste, and waste gases

SAF is becoming a crucial decarbonization lever due to the availability of feedstock and rapidly developing technology pathways

The term “sustainable” indicates that Sustainable Aviation Fuel (SAF) is produced without harming the environment, as it avoids deforestation, land use changes, and significant freshwater consumption. SAF is a “drop-in fuel,” meaning it can be mixed with conventional jet fuel without needing changes to refuelling infrastructure

The global aviation industry generates approximately 2.1% of all human-induced CO2 emissions and represents 12% of all emissions from transportation

In late 2021, the International Air Transport Association (IATA) committed to achieving net-zero carbon emissions from flying by 2050. To reach this ambitious goal, the organization concentrates on a key resource: sustainable aviation fuel to reach this ambitious goal. However, airlines face significant challenges in making this transition

Sustainable Aviation Fuels (SAFs) are revolutionary liquid fuels utilized in commercial aviation, capable of cutting CO2 emissions by up to 80%. This significant reduction not only promotes environmental sustainability but also paves the way for a greener future for air travel

It can be derived from a diverse array of sources, including waste fats, oils, and greases, as well as municipal solid waste. Additionally, agricultural and forestry residues, along with wet wastes and non-food crops cultivated on marginal land, contribute to this process

SAF could contribute more than 50% of the reduction in emissions needed by aviation to reach net-zero in 2050

The largest acceleration is anticipated in the 2030s as global policy support increases, sustainable aviation fuel (SAF) becomes competitive with fossil kerosene, and credible offsets become less common

Government decarbonization targets and policies mandating the use of greener fuels guide future demand in the aviation industry. Many countries have introduced blending mandates requiring airlines to use a specific percentage of Sustainable Aviation Fuel (SAF), which is crucial for driving demand and investment in SAF infrastructure. The European Union’s ReFuelEU Aviation initiative aims for a 2% SAF blend by 2025, increasing to 63% by 2050

To support state-level targets and fulfil policy-driven requirements, governments in the United States, European Union, and other regions have established subsidies, tax credits, and grant incentives to encourage the production of Sustainable Aviation Fuel (SAF)

The market segmentation based on fuel types includes Biofuel, Hydrogen Fuel, Power to Liquid, and Gas to Liquid. In 2023, the Biofuel segment led in revenue and achieved the highest compound annual growth rate (CAGR) during the forecast period.

Biofuels are the preferred choice for sustainable aviation fuel, primarily due to their renewable nature and compatibility with existing aircraft and infrastructure. Ongoing advancements in biofuel production technologies are driving the sustained growth of this segment, positioning it as a key player in the sustainable aviation fuel (SAF) market

The aviation industry’s goals to reduce carbon emissions and minimize environmental impact drive the European Biofuel Sustainable Aviation Fuel (SAF) Market. Biofuels derived from sustainable feedstocks such as waste oils, agricultural residues, and algae offer a greener alternative to conventional aviation fuels while meeting strict emission reduction targets. Regions with a high penetration of renewable energy will be attractive for investment, as renewable electricity is crucial for SAF production, particularly for e-kerosene projects. Focusing on renewable energy sources not only supports the sustainability of SAF production but also enhances the long-term economic viability of these initiatives. Early-stage technologies like Power-to-Liquid (PtL) may require funding from state-level sources or public-private partnerships (PPPs) to mitigate risks and attract investment.

According to a study by ECLIF, Airbus and Rolls-Royce were the first to measure the emissions impact of using 100% SAF in both engines of an Airbus aircraft powered by Rolls-Royce Trent XWB engines, with data corroborated by a DLR chase plane

Major economies, including the US and the EU, have established ambitious targets for the adoption of Sustainable Aviation Fuel (SAF). The future of the aviation sector will depend on rapid decarbonization, and SAF presents the fastest, most convenient, and technology-ready solution for achieving this goal. Although there is currently a significant cost difference between SAF and fossil-based fuels, there is a strong push from airlines, governments, and passengers alike for more sustainable flying options. As a result, the industry is experiencing significant momentum towards greater adoption of SAF

Airlines 

Airlines have begun investing in sustainable aviation fuel (SAF) developers to meet the growing demand for SAF, reflecting the sector’s rapid expansion. This significant shift indicates that airlines are preparing for the future

For instance, United Airlines has invested $100 million in establishing a SAF-focused fund to support new technologies and increase SAF production

Technology partnerships  

Collaboration among technology leaders is crucial for adopting Sustainable Aviation Fuel (SAF). For instance, the partnership between bp and Johnson Matthey led to the joint development of FT CANSTM, providing a scalable and efficient method to convert waste that would otherwise be sent to landfill into syncrude, a precursor for SAF. Similarly, the strong collaboration between Virent and Johnson Matthey has resulted in the creation of a 100% drop-in SAF that is now ready for commercialisation.

The future of the aviation sector 

With the favourable combination of factors driving the adoption of Sustainable Aviation Fuel (SAF), it seems unlikely that there is any substantial evidence against the consensus that SAF will become a mainstay in the aviation sector within the next ten years.

However, the SAF market is still in its infancy, characterized by limited volumes. It also faces challenges due to unclear pricing, which is often determined by private negotiations rather than market forces

— According to the WEF (2023), the total cost for purchasing SAF, produced using the currently most commercially viable ‘Hydrotreated Esters and Fatty Acids’ (HEFA) method, is estimated to be 2.0 to 2.5 times higher than that of conventional fuel. For airlines, this translates to an estimated 300% increase in fuel costs, which significantly hinders large-scale adoption and commercial scalability

Companies looking to reduce their carbon footprint and the emissions related to corporate travel will utilize the SAFc framework created through the World Economic Forum’s Clean Skies for Tomorrow initiative. This framework allows organizations to claim reductions in emissions when they choose to invest in sustainable aviation fuel (SAF), despite the higher costs associated with it. The accounting for SAFs closely resembles the market-based approach used in accounting for renewable energy purchases. For example, consumers buy Renewable Energy Certificates (RECs) to offset their energy consumption, similar to how SAF certificates are purchased within this model. The  SAFc system will include a traceability registry for corporate buyers, which mirrors the concept of generating, selling and transferring certificates seen with RECs

Several early indicators of Sustainable Aviation Fuel (SAF) adoption include:

• In February 2025, Neste and DHL Group to collaborate on reducing emissions in logistics, DHL Group and Neste have agreed to jointly evaluate how Neste’s renewable solutions, such as renewable diesel, also known as “HVO100”, and sustainable aviation fuel can support DHL in its decarbonization targets in air and road transportation

• In January 2025, DHL Express and Cosmo Oil Marketing signed a deal to drive the usage of Sustainable Aviation Fuel in Japan. The annual SAF supply agreement states delivery of 7.2 million litres from April 2025. It is Asia’s first SAF-powered regular cargo service for international express shipping and DHL’s first SAF purchase in Asia
• In 2024, Air France-KLM ramps up its SAF offtake agreement with Total Energies, which will supply up to 1.5 million tons of more sustainable aviation fuel over a 10-year period
• In November 2023, the world’s first commercial aircraft operated using 100% SAF, flying from London to New York. This flight utilized 88% SAF derived from waste fats and 12% produced from plant sugars.
• Aircraft manufacturers, such as Boeing, have committed to delivering commercial aeroplanes that are capable and certified to fly on 100% SAF by 2030
• In May 2023, Twelve and Etihad Airways, the national carrier of the United Arab Emirates, signed a Memorandum of Understanding (MOU) to collaborate on the advancement of E-Jet® fuel, Twelve’s sustainable aviation fuel (SAF) made from CO2 and renewable energy, as well as plans for an international demonstration flight and a supply roadmap that will support Etihad’s sustainability strategy
• In February 2022, Engie SA and the US engineering company Infinium Holdings announced a EUR 500-million project to produce renewable aviation and maritime fuels in northern France