Every drop of SAF(s) produced has been bought and used this year, in which production reached an all-time record. This is confirmed by a report on sustainable fuel for airplanes published by the International Air Transport Association (IATA).
The SAF, at the moment, is the only way for the airline sector to meet the decarbonisation targets that have been set for this sector by 2050. But while the airlines and aircraft manufacturers are making every effort to reach the goal, the production of this sustainable fuel is not going at the rate that the airlines need, as their international employer has warned, and this despite the fact that 2023 was a record year in terms of production and demand for SAF.
Production reached more than 600 million liters, double the 300 million liters produced in 2022. It is forecast to triple in 2024, reaching 1.875 billion liters. If the forecasts are met, the SAF would contribute only 0.53% of aviation fuel needs and 6% of renewable fuel capacity. At least 43 airlines have already committed to using around 16.25 billion liters (13 MT) of SAF by 2030 and more agreements will be announced periodically.
“But even with this impressive growth SAF, as a share of all renewable fuel production, will only grow from 3% this year to 6% in 2024. This allocation limits the supply of SAF and keeps the high fuel prices. Aviation needs between 25% and 30% of renewable fuel production capacity to be allocated to SAF to achieve net zero carbon emissions by 2050. Until these levels are reached, we will continue losing great opportunities to advance in the decarbonisation of the sector”, warns the IATA report.
According to CEO Willie Walsh, it will be government policy that will make the difference. “Governments want aviation to be net zero emissions by 2050. After setting a target, they must now adopt political measures to achieve the necessary exponential increase in SAF production”, claims Walsh.
Estimates indicate that by 2029 more than 78,000 million liters of renewable fuels will be produced, but the allocation to the SAF is minimal, given the doubts of the producers that aviation will offer sustained demand in the long term. From IATA they assure that the sector will need 17,500 million liters of SAF to meet the objectives.
However, “only 3% of the world’s oil and gas budgets are invested in the production of SAF, when profit margins are much higher in this sector than in the aviation sector, which will achieve a profit margin of 2.7% in 2024,” IATA Chief Economist Marie Owens Thomsen said at a press event in Geneva on Wednesday.
In 2023, airlines spent an extra $756 million on their fuel bill because of the SAF bid, and according to Thomsen, they are ready to invest up to $2.4 billion in 2024. “But not all investment has to be done in airline sector,” warned Owens. For this reason, IATA is asking for the direct involvement of governments to encourage through direct aid and regulations for energy companies so that production can meet demand around the world.
