Current landscape and future of SAF industry

From a production capacity and demand point of view, the SAF industry today is still at an early stage of development with an estimated EU supply of less than 0.05% of total jet fuel demand in 2020 ( Figure 4.5. ) [12] [20] [21] . The following section provides an overview of the current landscape, while also looking into the future on how the sector may be able to meet the proposed SAF mandates, which fixes the minimum level of both supply and demand, starting from 2025 and increasing every 5 years thereafter ( Figure 4.6. ).

According to the supporting study for the ReFuelEU Aviation initiative [17] , with the introduction of a SAF blending mandate at EU level, demand for aviation fuel at EU airports would amount to around 46 million tonnes in 2030. In order to reach 5% of SAF by 2030 for all flights departing from EU airports, approximately 2.3 million tonnes of SAF would be required.

Currently, the maximum potential SAF production capacity in the EU is estimated at around 0.24 million tonnes, i.e. only 10% of the amount of SAF required to meet the proposed mandate by 2030. Announcements of significant capacity increases from these existing SAF producers, combined with production from new market entrants, means that the 2030 mandate level is ambitious but realistic.

More companies have announced plans to enter the SAF market by 2030. An analysis showed that if all existing biofuel facilities in Europe were calibrated to maximise SAF production, potential capacity could reach around 2.3 million tonnes. It is estimated that more than 60% of the European SAF supply in 2030 would be covered by HEFA and Alcohol-to-Jet pathway fuels ( Figure 4.7. ), followed by imports and PtL fuels. As such, the majority of the needed feedstock is expected to be used cooking oils, animal fats and waste oils, cover crops and other sustainable biomass.

Oil and gas industry

Forecasting the production and demand in 2040 and 2050 is challenging due the lack of public announcements from fuel producers. However, modelling performed under the ReFuelEU Aviation Initiative offers a useful outlook on the achievability of the mandated targets and the required resources.

The ReFuelEU Aviation proposal would require that 32% and 63% of jet fuel consumed by flights departing from EU airports be SAF in 2040 and 2050, respectively. With the proposed SAF blending mandate in place, the total EU demand for aviation fuel is estimated to be 46 million tonnes in 2040, and 45 million tonnes in 2050. This implies that approximately 14.8 million tonnes of SAF would be required annually by 2040, and 28.6 million tonnes by 2050 ( Figure 4.7. ).

The ReFuelEU Aviation study noted that 7 additional SAF production plants would be needed in the EU by 2030, and 104 additional plants by 2050. To cover the demand for PtL fuels, it is estimated that 0.4% and 5.5% of EU’s renewable electricity generation would be needed by 2030 and 2050, respectively. Other studies suggest an even bigger need, with approximately 30 additional SAF plants by 2030 and 250 plants by 2050 [18]  and a higher share of EU’s electricity demand to produce the estimated volume of PtL fuels [24] . These projections demonstrate the magnitude of the scale-up that must be achieved in SAF production to support the decarbonisation of the aviation sector.

Refueling of aircraft

Based on the percentage CO2e emissions reductions of the different SAF pathways, combined with modelled future SAF production and mandated usage, Figure 4.8. illustrates the significant impact SAF uptake could have on the overall emissions of the European aviation sector and its contribution in reaching the objectives of 2030 Climate Target Plan.

The price of fossil-based jet fuel is approximately €600 per tonne [13] , while current SAF prices can range from 1.5 to 6 times higher. There are various reasons for this wide range, including different levels of SAF industrial and technological maturity and a low level of certainty on the production costs of certain SAF pathways.

It is difficult to accurately predict how SAF prices will evolve in the future. Feedstock prices and the evolution of electricity mix prices depend on many factors, including the uncertainty linked to the COVID-19 pandemic and the increased reliance of States around the world on bioenergy to decarbonise. Nevertheless, the long-term trend is expected to be a reduction in SAF production costs enabled by economies of scale and technological advancements. Additional economic incentives from market-based measures (e.g. EU ETS, CORSIA) and potential tax credits will also help in reducing the price gap relative to fossil-based jet fuels.

Closeup of refueling operation of passenger aircraft