Renewable Aviation Fuel Market

Renewable Aviation Fuel Market is anticipated to exhibit a Compound Annual Growth Rate (CAGR) of 51.3% during the forecast span from 2024 to 2034. In 2023, the market size was assessed at USD 1.6 billion and is projected to reach USD 157 billion by the completion of 2034.

Product Overview

Renewable aviation fuel (RAF), also called sustainable aviation fuel (SAF), is a sustainable option for traditional jet fuel made from renewable sources instead of fossil fuels. It is made from renewable sources such as recycled cooking oil, farm leftovers, algae, or city trash through technologies such as hydroprocessing or Fischer-Tropsch synthesis to provide a fuel with a similar composition to standard jet fuel. Renewable aviation fuel offers various benefits, such as low carbon emissions over its lifespan, better air quality from less particulate matter, and the ability to work with existing aircraft and infrastructure. Additionally, while it is possible to mix RAF with regular jet fuel to a limited extent, efforts are being made by the aviation industry and governments to improve its availability and use. Thus, the aim is to aggressively achieve future carbon reduction goals and diminish the aviation industry's environmental footprint.

Market Highlights

Renewable Aviation Fuel Market is expected to grow at a compound annual growth rate (CAGR) of 51.3% from 2024 to 2034

Renewable aviation fuel industry is expected to reach USD 157 billion during the forecast period, owing to major growth in the renewable aviation fuel industry, which is attracting large investment as the aviation industry seeks to reduce carbon emissions. Large airlines and fuel producers are collaborating to accelerate the innovation and adoption of sustainable fuels. In addition, governments across the world are implementing favorable policies and incentives to promote the production and utilization of RAF. However, there are still many obstacles such as limited manufacturing capabilities and the need for wider infrastructure. Despite these challenges, there is a positive market perspective, due to the increasing demand from the commercial and military aviation industries. Besides, as environmental issues are still impacting the sector, the RAF market will experience further growth in the upcoming years.

Source: Fatpos Global

Renewable Aviation Fuel Market Segmentation

Hydro-processed Esters & Fatty Acids segment will lead due to its ability to work efficiently with existing refineries

Renewable aviation fuel market is divided based on Technology into Fischer-Tropsch (FT), Hydro-processed Esters & Fatty Acids (HEFA), Synthesized Iso-Paraffinic (SIP), and Alcohol-to-Jet (ATJ). Among these, the hydro-processed esters & fatty acids (HEFA) segment is leading the renewable aviation fuel market owing to its ability to use different types of raw materials and work well with existing refinery systems. HEFA technology can transform various sustainable oils and fats, such as used cooking oil, animal fats, and plant oils, into top-notch jet fuel. The fuel produced is very similar to traditional jet fuel in its chemical composition, which makes it simple to use with modern aircraft systems without any changes needed. The benefit of HEFA is also credited to its lower production costs in comparison to other technologies, along with its ability to generate aviation fuel that complies with industry standards. Therefore, multiple airlines and fuel producers have made large investments in HEFA technology, which confirms its dominance in the renewable aviation fuel market.

Biofuel segment will dominate due to its excellent production method.

Renewable aviation fuel market is segmented based on the Fuel Type in Biofuel, Power-to-Liquid, and Gas-to-Liquid. Biofuel is projected to be the primary segment in the renewable aviation fuel industry due to its well-established manufacturing methods and better variety of raw materials. Biofuels are made from materials such as recycled cooking oil, farm waste, and algae. They have been in existence and used for a longer period compared to other alternatives. In addition, biofuels benefit from the preexisting infrastructure and compatibility with existing aircraft engines. On the contrary, power-to-liquid and gas-to-liquid fuels are in the early stages of development and commercialization. However, they are becoming highly popular due to their potential to reduce carbon footprints and use renewable energy in production.

Source: Fatpos Global

Market Dynamics

Growth Drivers

Environmental Regulations and Industry Commitments are Promoting Growth in the Market

Aviation sector is under increasing pressure to lower its carbon emissions due to several environmental rules and voluntary pledges. Governments are framing new measures to reduce emissions from the aviation industry, as international organizations such as ICAO are establishing ambitious goals for achieving carbon-neutral growth. In response, many airlines have committed to reducing their emissions in the upcoming years. Moreover, renewable aviation fuel is seen as a practical answer to achieving these objectives, which can provide a major fall in carbon emissions over traditional jet fuel. As a result, the investment in the production and infrastructure of RAF is constantly increasing, which is attracting innovation and growth in this industry.

Technological Advancements and Scaling-Up of Production Will Act as a Catalyst for Market Growth

Developments in production methods for RAF are improving efficiency and reducing multiple expenses, which has led to competition with traditional fuels. Improvements in processing raw materials, creating catalysts, and increasing production size are reducing the price per gallon of RAF. In addition, major fuel companies are investing in expanding their production facilities and partnering with airlines and tech companies to boost the adoption of new RAF production procedures. Furthermore, such advancements in technology increase the economic feasibility of RAF and provide new materials that can be effectively turned into jet fuel. Therefore, as the price difference falls, airlines will likely use RAF in their fuel mix, which will boost the growth and draw more investment in the industry.

Restraints

Limited Availability of Sustainable Feedstocks Fuel Market Will Impact its Growth

Creation of renewable aviation fuel depends a lot on sustainable sources, but the limited supply presents a major obstacle to its usage. A lot of current RAF production techniques use resources that compete with food production or other biofuel industries, like used cooking oil or agricultural residues. This competition might result in limitations in supply, which could impede the growth of RAF production. Moreover, the sector is actively investigating alternative sources of feedstock, such as algae, municipal solid waste, and specially-grown energy crops, to expand the range of available resources. However, it requires major time and investment to develop these alternatives at a commercial scale. Therefore, to overcome this restriction, it is important to conduct research on new raw materials and develop new conversion technologies to improve output from resources.

Recent Developments

• In 2023, Neste Corporation announced a major expansion of its Singapore refinery, increasing its renewable products production capacity to 2.6 million tons annually. This expansion significantly boosts Nestle's ability to produce Renewable Aviation Fuel.
• In 2022, Gevo Inc. signed a fuel sales agreement with American Airlines for 100 million gallons of sustainable aviation fuel (SAF) per year for five years. The agreement is valued at approximately $2.75 billion over the five-year term.
• In 2021, Fulcrum BioEnergy completed construction of its Sierra BioFuels Plant in Nevada, the world's first commercial-scale plant converting municipal solid waste into renewable transportation fuels, including SAF.
• In 2023, LanzaJet opened the world's first Alcohol-to-Jet sustainable aviation fuel production plant, "Freedom Pines Fuels," in Georgia, USA. The plant can produce 10 million gallons of SAF and renewable diesel per year.
• In 2022, Shell plc announced its final investment decision to build a renewable fuel facility at the Shell Energy and Chemicals Park Rotterdam, the Netherlands. Once built, the facility will be among the largest in Europe to produce SAF and renewable diesel made from waste.

Renewable Aviation Fuel Market

Key Players:

• Neste Corporation
• World Energy
• Gevo Inc.
• SkyNRG
• Velocys
• Aemetis, Inc.
• Eni S.p.A.
• Fulcrum BioEnergy
• Total SE
• Shell plc
• BP plc
• LanzaJet
• Red Rock Biofuels
• SG Preston
• Sundrop Fuels
• Other Prominent Players (Company Overview, Business Strategy, Key Product Offerings, Financial Performance, Key Performance Indicators, Risk Analysis, Recent Development, Regional Presence, SWOT Analysis)

Regional Analysis

Renewable Aviation Fuel Market is segmented based on regional analysis into five key regions: North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa. The North American region is expected to dominate the renewable aviation fuel market due to its strong aviation sector and supportive government regulations. The region has a strong partnership between airlines, fuel producers, and research institutions working together to promote the production and use of RAF. In addition, tough environmental regulations and the aim of companies to attain sustainability are responsible for promoting the growth of the market across the North American region.

In the next ten years, the Asia Pacific region is expected to show noteworthy growth in the RAF market. This growth is driven by an increase in airline travel and governmental efforts to lower carbon emissions. Moreover, countries such as Japan, China, and Singapore are making massive investments in the research and development of RAF facilities. Furthermore, the large number of residents in the area and the growing middle-class population are resulting in a higher demand for air travel.

Source: Fatpos Global

Impact of COVID-19 on the Renewable Aviation Fuel Market

COVID-19 pandemic had a major but complex impact on the renewable aviation fuel (RAF) market. Initially, the sharp decline in air travel led to low demand for all aviation fuels, including RAF. This slowdown caused delays in some RAF production projects and investments. However, the pandemic also accelerated the focus of the aviation industry on sustainability and long-term resilience. Several airlines and governments viewed the crisis as an opportunity to "build back better," by incorporating more sustainable practices into their recovery plans. The pandemic further highlighted the need for supply chain diversification and energy security, which boosted interest in domestically produced RAF.

Renewable Aviation Fuel Market is further segmented by region into:

• North America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United States and Canada
• Latin America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – Mexico, Argentina, Brazil, and Rest of Latin America
• Europe Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United Kingdom, France, Germany, Italy, Spain, Belgium, Hungary, Luxembourg, Netherlands, Poland, NORDIC, Russia, Turkey, and Rest of Europe
• Asia Pacific Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – India, China, South Korea, Japan, Malaysia, Indonesia, New Zealand, Australia, and Rest of APAC
• Middle East and Africa Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – North Africa, Israel, GCC, South Africa, and Rest of MENA

Renewable Aviation Fuel Market Scope and Segments:

Frequently Asked Questions (FAQ):