Why sustainable aviation fuel production has remained slow – IATA

The International Air Transport Association (IATA) has explained why  Sustainable Aviation Fuel (SAF) have remained slow despite the huge benefits it presents. “SAF volumes are increasing, but disappointingly slowly. Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas. Investors in new-generation fuel producers seem to be waiting for guarantees of easy money before going full throttle.

“With airlines, the core of the value chain, earning just a 3.6 per cent net margin, profitability expectations for SAF investors need to be slow and steady, not fast and furious,” Willie Walsh, IATA’s Director General told journalists at the IATA Media Day in Geneva, Switzerland.

Walsh said airlines are eager to buy SAF and there is money to be made by investors and companies who see the long-term future of decarbonization.

He said governments can accelerate progress by winding down fossil fuel production subsidies and replacing them with strategic production incentives and clear policies supporting a future built on renewable energies, including SAF.

In 2024, SAF production volumes reached 1 million tonnes (1.3 billion litres), double the 0.5 million tonnes (600 million litres) produced in 2023. SAF accounted for 0.3 per cent of global jet fuel production and 11per cent of global renewable fuel.

This is significantly below previous estimates that projected SAF production in 2024 at 1.5 million tonnes (1.9 billiolitresrs), as key SAF production facilities in the US have pushed back their production ramp-up to the first half of 2025.

In 2025, SAF production is expected to reach 2.1 million tonnes (2.7 billion litres) or 0.7 per cent of total jet fuel production and 13 per cent of global renewable fuel capacity.

“The airline industry’s decarbonization must be seen as part of the global energy transition, not compartmentalized as a transport issue.

“That’s because solving the energy transition challenge for aviation will also benefit the wider economy, as renewable fuel refineries will produce a broad range of fuels used by other industries, and only a minor share will be SAF, used by airlines. We need the whole world to produce as much renewable energy as possible for everybody. Airlines simply want to access their fair share of that output,” said Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist.

To reach net zero CO2 emissions by 2050, IATA analysis shows that between 3,000 to over 6,500 new renewable fuel plants will be needed. These will also produce renewable diesel and other fuels for other industries. The annual average capex needed to build the new facilities over the 30 years is about $128 billion per year, in a best-case scenario. Importantly, this amount is significantly less than the estimated total sum of investments in the solar and wind energy markets at $280 billion per annum between 2004 and 2022.

“Governments must quickly deliver concrete policy incentives to rapidly accelerate renewable energy production. There is already a model to follow with the transition to wind and solar power.

“The good news is that the energy transition, which includes SAF, will need less than half the annual investments that realizing wind and solar production at scale required. And a good portion of the needed funding could be realized by redirecting a portion of the retrograde subsidies that governments give to the fossil fuel industry,” said Walsh.

Short Term Measures

Progress on expanding SAF production and use could be accelerated in three critical ways:

Increase co-processing: Existing refineries can be used to co-process up to five per cent of approved renewable feedstocks alongside the crude oil streams. This solution can be implemented quickly and requires minimal material investments. It should urgently be expanded by allowing a greater amount of renewable feedstock to be co-processed. By 2050, co-processing could save $347 billion in capex as more than 260 new renewable fuel plants would not need to be built.

There are 11 certified pathways to make SAF, but the HEFA method (hydrotreated esters fatty acids (in cooking oil, animal fats etc.)) accounts for around 80 per cent of production in the next five years. SAF volumes could be boosted by increasing investments to scale up production through the other certified pathways, in particular Alcohol-to-Jet (AtJ) and Fischer-Tropsch (FT), which use biological and agricultural wastes and residue.

A recent IATA survey revealed significant public support for SAF. Some 86 per cent of travellers agreed that governments should provide production incentives for airlines to be able to access SAF. In addition, 86 per cent agreed that it should be a priority for oil companies to supply SAF to airlines.