The market for renewable aviation fuel in North America is expected to grow at a CAGR of over 60% during the forecast period of 2020 - 2025. Supportive government policies such as introduction of Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), by ICAO (International Civil Aviation Organization) and potential economic advantages along with the long-term growth in aviation industry such as increasing number of air passengers, on account of the cheaper airfare and stronger economic conditions with increasing disposable income are the major factors that are expected to drive the market during the forecast period. On the other hand, high cost of renewable aviation fuels is expected to hinder the market growth.
- The defense sector is expected to be the fastest growing market, owing to the increasing government focus on promoting bio-jet fuels in the defense/military sector, particularly in the United States.
- Increasing concerns over emissions from the airline industry and initiatives taken by the governments in developed economies to reduce airline emissions are expected to provide significant opportunities for renewable aviation fuel in the future.
- United States is expected to be the largest market during the forecast period, owing to the huge number of production facilities like Fulcrum Sierra Biofuels of gasification, FT technology etc. present in the country.
Key Market Trends
Defense Sector to be the Fastest-Growing Segment
- The defense sector consumes a large amount of aviation fuel. For instance, on average, the United States military burns about 4.8 billion gallons of jet fuel and diesel each year. Nearly half of that goes to the Air Force and around one-third to the Navy.
- Moreover, the military sector seeks to improve the environmental performance of its aircraft fleets and reduce environmental emissions. Biofuels are considered a way to maintain secure sources of fuel and reduce cost volatility, while supporting the country’s environmental initiatives, leading to the growth of the market in North America.
- As part of the United States Air Force’s goal of achieving half of its domestic fuel that needs to be drawn from alternative sources, the military and commercial airlines tested alcohol-to-jet (ATJ) fuel on A-10 ground attack aircraft.
- The renewable fuel production is getting a hard push from many federal agencies, including the United States Department of Energy (DOE) and the Federal Aviation Administration, for large-scale commercialization, which, in turn, drives the demand for renewable aviation fuel market in North America.
- A notice on the federal government’s procurement website noted that Public Services and Procurement Canada, on behalf of National Defense, awarded the contract to General Dynamics valued at USD 2 billion on Sept 5th, 2019. The overall project is estimated to cost USD 3 billion but that includes in-service support, construction of new facilities and other support to the program.
- Further, companies, such as Honeywell, use the renewable jet fuel process technology for the United States Navy and Air Force, as part of a joint program for the United States Defense Energy Support Center (DESC) for alternative fuel testing and certification.
- Therefore, such increasing development in the aviation fuel sector and the need to cut carbon emissions are expected to drive the renewable aviation fuel market in the defense sector during the forecast period.
United States to Dominate the Market
- United States accounted for the major share in air passenger count in 2018. Between 1978 and 2018, the United States airlines improved fuel efficiency by over 130%, which resulted in nearly 5 billion metric ton of carbon dioxide savings.
- According to the Airlines for America (A4A), the country’s airlines carried 2.4 million passengers, worldwide, daily, which was an all-time high number of passengers in the country airline history, as of Oct 2019. Hence, the country’s robust growth in air travel may result in greater carbon emissions during the forecast period.
- In 2018, United Airlines announced its commitment to reduce its own greenhouse gas emissions to 50% by 2050. Achieving this goal is expected to eliminate 21 million metric ton of CO2 in the atmosphere per year. In September 2018, the company operated the longest transatlantic biofuel flight, from San Francisco to Zurich.
- The military sector of the United States has also started to blend biofuels with conventional petroleum for its aircraft, to adopt a cleaner fuel. The United States’ Department of Energy (DOE) co-funded for the construction of three integrated bio-refineries that have the capacity to produce hydrocarbon fuels that meet military specifications for JP-5 (jet fuel used primarily by the US Navy), JP-8 (jet fuel used mostly by the US Air Force), or F-76 (diesel), thus, driving the demand for aviation fuel market in coming years.
- Therefore, based on the above-mentioned factors, United States is expected to have a positive impact on the renewable aviation fuel market during the forecast period.
The North America renewable aviation fuel market is consolidated. Some of the major players includes Total SA, Neste Oyj, Honeywell International Inc., Gevo Inc., and Fulcrum BioEnergy Inc.
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Table of Contents
1.2 Market Definition
1.3 Study Assumptions
4.2 Market Size and Demand Forecast in USD billion, till 2025
4.3 Recent Trends and Developments
4.4 Government Policies and Regulations
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 United States
5.3.3 Rest of North America
6.2 Strategies Adopted by Leading Players
6.3 Company Profiles
6.3.1 Total SA
6.3.2 Neste Oyj
6.3.3 Red Rock Biofuels LLC
6.3.4 Honeywell International Inc.
6.3.5 Gevo Inc.
6.3.6 Fulcrum BioEnergy Inc.
6.3.7 SG Preston Company
6.3.8 LanzaTech Inc.