Sustainable Aviation Fuel Market Is Estimated To Witness High Growth Owing To Opportunity For Decarbonizing Aviation Sector
Sustainable Aviation Fuel Market
Sustainable aviation fuel or biojet fuel is a renewable fuel produced from various biomass feedstocks such as camelina, jatropha, algae, and others. It helps in reducing greenhouse gas emissions and has carbon neutrality properties as compared to conventional jet fuel. The aviation sector is currently dependent upon petroleum-based jet fuel; however, sustainable aviation fuel provides an opportunity to decarbonize the aviation industry by reducing its carbon footprint.
The global Sustainable Aviation Fuel Market is estimated to be valued at US$ 2.5 Billion in 2023 and is expected to exhibit a CAGR Of 19% over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The opportunity for decarbonizing the aviation sector through adoption of sustainable aviation fuel is projected to drive the market growth over the forecast period. International regulations are being introduced to promote usage of sustainable aviation fuel in aircrafts and cut down greenhouse gas emissions. For instance, the CORSIA agreement of International Civil Aviation Organization aims to achieve carbon neutral growth in international aviation from 2021 onwards by using sustainable aviation fuel. Growing environmental concerns and government support through incentives and subsidies for production of sustainable aviation fuel will further propel the demand and help realize the market opportunity for decarbonizing the aviation industry in the forthcoming years.
Porter’s Analysis
Threat of new entrants: The sustainable aviation fuel market has high capital requirements for building production facilities and obtaining certifications, which pose a barrier to entry. However, joint ventures and partnerships can help overcome these barriers.
Bargaining power of buyers: Airline companies have significant bargaining power as buyers since sustainable aviation fuel is a small part of their total fuel procurement currently. However, government policies and regulations are increasing demand.
Bargaining power of suppliers: Large oil producers and energy companies have greater bargaining power than smaller sustainable fuel producers since supply is limited currently. Collaboration between various players in the value chain can help balance this.
Threat of new substitutes: No direct substitutes exist for jet fuel currently, but continuous research into alternative propulsion technologies can pose a long term threat.
Competitive rivalry: As production capacity increases through ongoing projects, competition is expected to intensify among existing and new market players.
SWOT Analysis
Strengths: Growing environmental concerns and supportive regulations help increase demand. Technological advances lower production costs.
Weaknesses: High capital and operating costs. Limited supply chain and infrastructure currently. Certification of new pathways can take time.
Opportunities: Strong government support and incentives in North America and Europe. Global initiatives by aviation industry to reduce emissions. New partnerships and offtake agreements boost capacity.
Threats: Fluctuations in crude oil prices impact feedstock costs. Geopolitical issues could disrupt supply. Slow economic growth affects airline sector and fuel demand.
Key Takeaways
The Global Sustainable Aviation Fuel Market Demand is expected to witness high growth over the forecast period aided by supportive regulations and initiatives to reduce carbon emissions from air travel. Pioneering producers in North America are expected to dominate supply over the near term backed by production targets under the LEAP coalition and availability of biomass and waste-based feedstocks. However, upcoming large scale facilities in Europe and capacity additions through new joint ventures will see the region's share grow substantially by 2030.
Key players operating in the sustainable aviation fuel market include Neste, SkyNRG, Velocys, Gevo, World Energy, Eni, Preem, and Hypoint. Neste, with their renewable diesel and jet fuel production facilities, dominates current supplies. Partnerships with airlines and airports help offtake agreements and boost capacity additions globally. Research is also ongoing into alternative sources like algal fuels and power-to-liquids pathways to diversify feedstocks and supply over the long term.
Regional analysis fastest growing and dominating region: North America, led by the U.S. and Canada, currently accounts for a major share of global supplies backed by supportive programs like the FRESH fuels initiative. However, dedicated production facilities under development in the Netherlands, Germany and France will help Europe emerge as the fastest growing regional market. Scandinavian countries are also pioneering the use of sustainable aviation fuels. Collaboration across the aviation value chain is vital to achieve the target of 10% sustainable fuel blending by 2030.
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