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It’s no surprise that the market survey revealed that interest in sustainable aviation fuel (SAF) is most prevalent in the Americas and Europe. This is likely due to this year’s introduction of a 2% mandate in the EU and the UK, which is boosting demand, and the US growing its capacity which Fastmarkets predicts will double from 4 million tonnes in 2025 to 8 million tonnes in 2030.
But while these two regions were of interest to 65% of those surveyed, there is growing interest in developments in Latin America and Asia, with the former seeing key developments in places such as Brazil and the latter becoming a key current and future producer.
Government mandates and incentives were seen as the biggest factor driving SAF adoption, hardly surprising given that the UK and Europe led with the introduction of a 2% SAF blending mandate for 2025, which has cemented this region’s position as the primary demand base for sustainable aviation fuel.
Nevertheless, technological breakthroughs and cost reduction, followed by feedstock availability and sustainability, took the second and third spot respectively.
This was driven in part by concerns about the cost implications of novel production pathways such as alcohol-to-jet (AtJ) and power-to-liquid (PtL) technology, alongside restrictions on the use of certain feedstocks in SAF production and adoption in Europe, where only approved waste-based feedstocks are accepted.
Of the entities surveyed, fuel producers and suppliers were the most prevalent, more than 23% of those surveyed. Under the terms of the EU and UK mandates, the fuel suppliers are the obligated parties and are liable for penalties if the 2% target is not met.
But technology providers (15%) and investors and financiers (13%) were a sizeable portion of respondents with these firms playing a growing role in meeting the production challenges for SAF, with new technologies such as AtJ and PtL proving costly.
Airlines meanwhile, were less than 11% of respondents, exposed to SAF market dynamics but, in most cases, not obligated parties under the terms of the EU and UK SAF mandates.
Following on from the prior indicators, among all participants in the survey, the biggest hurdle to market and operational growth for SAF was indicated as regulatory uncertainty and inconsistency.
The UK and EU have a clear SAF mandate, but in the US no mandate exists or is planned, and incentives have been patchy. Furthermore, an extension of EU trade defence measures to cover US SAF will likely hamper future export potential.
And elsewhere, while countries like Singapore and South Korea will introduce SAF mandates, many other states and regions lack clear plans to require or encourage SAF use.
And beside production cost and financing issues, a lack of transparent pricing and market data was registered as a key point hindering operations and growth, highlighting the continued need for more pricing solutions.
Explore how Fastmarkets’ SAF prices and products address the market’s need for transparent data and actionable insights, empowering you to stay ahead in this dynamic sector. Read more.