The renewable aviation fuel market is expected to register a CAGR of more than 50% during the forecast period of 2022-2027, reaching the value of USD 16,764 million in 2027 from USD 359.67 million in 2020. The COVID-19 pandemic disrupted the market severely. The pandemic led to lockdowns to control the virus, which resulted in minimal aviation traffic, thereby declining the demand for aviation fuel. Factors such as government policies and efforts to limit emissions from the aviation industry and increasing growth in air traffic, are some of the major factors driving the market. However, renewable aviation fuel is more expensive than conventional jet fuel, and this cost premium may restrain the market growth during the forecast period.
- The hydroprocessed esters and fatty acids (HEFA) technology segment is expected to dominate the market during the forecast period, owing to the increasing government focus on promoting bio-jet fuels in the aviation sector.
- The aviation industry is one of the highest emitters of greenhouse gases, primarily due to the combustion of conventional fossil fuels by aircraft engines. Countries globally have agreed to the Paris Accord and have set targets to reduce emissions. This is expected to result in an increase in investments in the renewable aviation fuel market and present opportunities in the coming years.
- North America is likely to dominate the renewable aviation fuel market during the forecast period, with majority of the demand coming from countries like United States, Canada, etc.
Key Market Trends
Hydroprocessed Esters and Fatty Acids (HEFA) Technology to Dominate the Market
- Hydroprocessed esters and fatty acids (HEFA) technology received certification from the American Society for Testing and Materials (ASTM) for bio-jet fuel production in 2011. For renewable fuel production, HEFA uses oleo-chemical feedstock, such as oil and fats.
- At present, a significant share of available commercial volumes of bio-jet fuels are HEFA biojet, with several commercial-scale facilities worldwide producing the same. However, renewable diesel (HEFA-diesel) is also produced during the process, with a larger market scope and a higher sales price. Thus, producers are focusing on HEFA-diesel instead of HEFA-jet.
- In September 2021, Shell PLC announced the construction of an 820,000-tonnes-a-year hydro processed esters and fatty acids (HEFA) plant at the Shell Energy and Chemicals Park Rotterdam, the Netherlands. Once built, the facility is likely to be among the biggest in Europe to produce sustainable aviation fuel (SAF) and renewable diesel made from waste. Thus, such investments in the SAF projects are likely to increase the HEFA technology during the forecast period.
- Furthermore, in September 2021, SG Peterson signed a ten-year agreement with Jet Blue that starts from 2023 to deliver approximately 670 million gallons of blended SAF prepared using HEFA technology to JetBlue to fuel its flight operations and help jet blue avoid about 1.5 million metric ton of CO2 emissions. Thus, such agreements are anticipated to increase the market studied during the forecast period.
- However, HEFA biojet fuel costs more than fossil-derived jet fuels, and the potential feedstock for the HEFA is also costly.
- In a bid to decarbonize the aviation sector, companies, such as Boeing, have begun testing the technical suitability of high freezing point HEFA (HEFA+) aviation fuel in aircraft. HEFA+ is a synthetic hydrocarbon made from bio feedstock, such as vegetable oil or waste fats.
- Therefore, owing to the above points, HEFA segment is expected to dominate the renewable avaiation fuel market during the forecast period.
North America to Dominate the Market
- North America is one of the largest markets for both the aviation industry and renewable aviation fuel. In 2020, the air passenger transport in North America carried more than 397 million air passengers, which was approximately 22.2% of the world traffic. Countries, such as the United States and Canada, accounted for the major share in air passenger count in 2020.
- Between 1978 and 2020, the United States airlines improved fuel efficiency by over 130%, which resulted in nearly 5 billion metric tons of carbon dioxide savings. According to the Airlines for America (A4A), the country’s airlines operate approximately 28,000 flights worldwide, daily, in the pre-pandemic stage. Most airline companies in North America have posted heavy financial losses in 2020 and 2021. However, airline traffic is expected to recover in 2022. Further, as prices for crude oil are increasing at a rapid rate, demand for renewable aviation fuel is expected to grow during the forecast period.
- Bio Energy Technologies Office (BETO) of the United States and the Department of Energy (DOE), supported by Energy Efficiency and Renewable Energy (EERE), and is making efforts to expand the adoption of sustainable, domestically produced alternative fuels for transportation and aviation, to stimulate the growth of the renewable fuel industry.
- In North America, the primary policy incentive for renewable aviation fuel production is the Unites States Renewable Fuel Standard (RFS), which provides credits to refiners and importers of fuel who blend renewable fuel into transportation fuel to meet Renewable Volume Obligation standards.
- In January 2022, the Environmental Protection Agency (EPA) issued proposed volume requirements, under the RFS program, for cellulosic biofuel, advanced biofuel, and total renewable fuel for the year 2022. Under this, the renewable fuel standard for 2022 was set at 36 billion gallons, an increment of over 3 billion gallons over that of the previous year.
- Further, the existing framework of fuel policies in North America is expected to support hydro processed esters and fatty acids (HEFA) fuel production in the near future, thereby increasing the opportunities for HEFA fuel producers in the region.
- Therefore, owing to the above points, North America is expected to dominate the region during forecast period.
The renewable aviation fuel market is moderately fragmented. The key players include TotaEnergies SE, Neste Oyj, Swedish Biofuels AB, Gevo Inc., and SG Preston Company.
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1.2 Market Definition
1.3 Study Assumptions
4.2 Market Size and Demand Forecast in USD million, till 2027
4.3 Government Policies and Regulations
4.4 Recent Trends and Developments
4.5 Market Dynamics
4.6 Supply Chain Analysis
4.7 Porter's Five Forces Analysis
4.7.1 Bargaining Power of Suppliers
4.7.2 Bargaining Power of Consumers
4.7.3 Threat of New Entrants
4.7.4 Threat of Substitutes Products and Services
4.7.5 Intensity of Competitive Rivalry
5.1.1 Fischer-Tropsch (FT)
5.1.2 Hydroprocessed Esters and Fatty Acids (HEFA)
5.1.3 Synthesisized Iso-Paraffinic (SIP) and Alcohol-to-Jet (AJT)
5.3.1 North America
5.3.4 South America
5.3.5 Middle-East and Africa
6.2 Strategies Adopted by Leading Players
6.3 Company Profiles
6.3.1 TotalEnergies SE
6.3.2 Neste Oyj
6.3.3 Swedish Biofuels AB
6.3.4 Red Rock Biofuels LLC
6.3.5 Gevo Inc.
6.3.6 Honeywell International Inc.
6.3.7 Fulcrum BioEnergy Inc.
6.3.8 SG Preston Company
6.3.9 LanzaTech Inc.
A selection of companies mentioned in this report includes:
- TotalEnergies SE
- Neste Oyj
- Swedish Biofuels AB
- Red Rock Biofuels LLC
- Gevo Inc.
- Honeywell International Inc.
- Fulcrum BioEnergy Inc.
- SG Preston Company
- LanzaTech Inc.