[SMM Analysis] SAF Aviation Fuel Market: Data-Driven Realities and Breakthrough Paths

The pressure on the aviation industry to decarbonize continues to escalate, with sustainable aviation fuel (SAF) emerging as a core solution. This article analyzes the current state of the SAF market, its core challenges, and key growth points based on data from the SMM industry database and global authoritative institutions.

I. Rigid Demand: Policy Drivers and Airline Commitments Form the Foundation of the Market

EU ReFuelEU Regulation: Clear roadmap for mandatory blending: 2% by 2025, 6% by 2030, 20% by 2035, and 70% by 2050 (based on the 2020 aviation fuel consumption baseline). This alone will result in EU SAF demand exceeding 6 million mt/year by 2030 (IEA data).

US IRA Policy Leverage: The Inflation Reduction Act (IRA) provides strong tax credits for SAF (up to $1.25-1.75/gallon) and sets a production target of 3 billion gallons (approximately 9 million mt) by 2030 (US Department of Energy).

Major Airlines' Bets: The International Air Transport Association (IATA) target: SAF usage to reach 7-8% of total aviation fuel by 2025 (approximately 7 million mt) and 10% by 2030 (approximately 23 million mt). Leading airlines such as Delta, United Airlines, and Lufthansa have already signed multi-decade long-term offtake agreements to secure future supply.

II. Supply Bottlenecks: Capacity Ramp-Up Lags Far Behind the Demand Curve

Current Capacity Severely Insufficient: Global SAF production was only approximately 600,000-650,000 mt in 2023 (IEA), accounting for less than 0.2% of global aviation fuel demand (~300 million mt).

Limited Short-Term Increments: SMM's tracking of global projects under construction/planned indicates that global SAF capacity is expected to reach 3-4 million mt/year by 2025, still falling significantly short of policy targets (such as EU demand by 2030).

Prominent Raw Material Constraints:

Mainstream HEFA Route (accounting for over 85%): Highly dependent on used cooking oil (UCO) and animal fats. The global annual collectable amount of UCO is approximately 8 million mt (Argus Media), facing issues such as an imperfect catering recycling system and competition in the gray market for waste cooking oil. High prices: The average price of UCO in Europe was approximately $1,200/mt in 2023, significantly driving up SAF costs.

Advanced Routes (PtL/eFuels): Dependent on green hydrogen (produced via water electrolysis using renewable energy) and carbon sources (direct air capture (DAC) or point-source CO₂). The current global green hydrogen capacity is insufficient, with electrolyzer costs (~$700-1,200/kW CAPEX, BNEF) and extremely high energy consumption (~50 MWh/mt SAF) constraining large-scale deployment.

III. Cost Gap: Economic Viability Remains the Biggest Challenge

Significant Price Disparity: The current price of traditional aviation kerosene (Jet A1) is approximately $800-1,000/mt (2023 average, Platts). The price of commercial SAF is 3-5 times higher:

HEFA-SAF: $2,500-3,500/mt (including raw materials, processing, and certification)

PtL-SAF: $4,000-8,000+/mt (dominated by the costs of green electricity, electrolyzers, and DAC)

High reliance on policy subsidies: The US IRA tax credit can cover up to ~$600/mt of costs; the EU ETS price (~€80-90/mt CO₂) and mandatory blending obligations provide support, but this is still not enough to fully bridge the price spread.

Disproportionately high proportion of raw material costs: In the HEFA pathway, the cost of waste oil and fat raw materials can account for 70-80% of the total SAF production cost, indicating significant supply chain vulnerability.

IV. Competition among technological pathways: Diversifying to seek breakthroughs

HEFA (Hydroprocessed Esters and Fatty Acids):

Current status: The only pathway to achieve large-scale commercialization (led by Neste and World Energy), with high technological maturity and capable of 100% blending (ASTM D7566 Annex 2).

Limitations: Obvious ceilings in raw material sustainability and scalability. Unable to independently support the industry's decarbonization goals in the long run.

FT-SPK (Fischer-Tropsch Synthetic Paraffinic Kerosene):

Representatives: Velocys, Fulcrum BioEnergy. Utilizes gasification synthesis of biomass/municipal solid waste.

Progress: Multiple demonstration projects are in operation (e.g., the Fulcrum Sierra project in the US), but high CAPEX (>$1 billion per million-ton scale) and technological complexity restrict rapid replication.

ATJ (Alcohol-to-Jet):

Raw materials: Cellulosic ethanol or waste ethanol.

Current status: LanzaJet (US) will commission its first commercial plant (in Georgia) in 2024, with a capacity of 10 million gallons/year (~30,000 mt). The technology is feasible, with raw material supply and cost being the key factors.

PtL / eSAF (Power-to-Liquids / e-SAF):

Core: Green hydrogen + CO₂ (from DAC or industrial capture) → converted into aviation fuel via the Fischer-Tropsch or methanol synthesis pathway.

Strategic significance: Theoretical capacity has no raw material constraints, and the product can 100% replace traditional aviation fuel, making it the ultimate technological option for the aviation industry to achieve net-zero emissions.

Challenges: Current costs are extremely high, heavily dependent on green electricity prices (competitive only at <$20/MWh, according to IEA) and a sharp drop in electrolyzer/DAC costs. Demonstration projects are emerging (e.g., Norsk e-Fuel in Norway, the Lufthansa-Siemens joint project in Germany), but large-scale commercialization is expected after 2030.

V. Project Dynamics and Regional Landscape

North America Leads: Benefiting from the strong IRA policy, the US has become a hotspot for project investment. Companies like World Energy, Gevo, and LanzaJet are accelerating capacity expansion. SMM statistics show that the US accounts for nearly 40% of global SAF capacity under construction or planning.

Europe Follows: Major players such as Neste (expanding its Rotterdam facility to 1.2 million mt/year), TotalEnergies, and Shell are making moves. Nordic countries focus on PtL (e.g., Sweden, Norway) leveraging abundant green electricity resources.

Asia-Pacific Starts: China is pushing policies (the CAAC's 14th Five-Year Green Development Plan outlines SAF pathways), with Sinopec, PetroChina, and Air China conducting pilot production and applications (e.g., Zhenhai Refining's bio-jet fuel project). Japan (Eneos, ANA) and Singapore (Neste's facility) are also advancing. Raw material (especially UCO) procurement capability is a key variable for Asia-Pacific players.

VI. Key to Breakthrough: Overcoming Cost and Scale Barriers

Continued Policy Reinforcement and Optimization: Beyond mandatory blending and fiscal support, efforts should focus on:

Green Premium Sharing Mechanism: Explore "certificate separation" (e.g., the EU’s Draft SAF Certificate system) to involve non-airline entities in cost-sharing.

Dedicated Raw Material Support: Establish sustainable waste oil collection and certification systems, combat adulteration, and ensure supply.

Disruptive Cost-Reduction Technology Breakthroughs:

Electrolyzers: Improve efficiency (>80%), lifespan (>80,000 hours), and reduce CAPEX (target <$250/kW, US DOE Hydrogen Shot).

DAC: Break energy consumption barriers (currently ~1,500 kWh/mt CO₂), targeting <500 kWh/mt CO₂.

Biotechnology: Mature next-generation biomass technologies like efficient cellulosic ethanol and algal lipids.

Building Resilient Supply Chains:

Diversified Raw Material Pool: Accelerate pathways for agricultural/forestry waste, energy crops, and municipal solid waste conversion.

Regionalized Production: Locate PtL projects near cheap green electricity (wind and solar power bases) or carbon sources (industrial zones).

Infrastructure Adaptation: Synchronize compatibility upgrades for airport storage and transportation facilities.

Deep Industry Capital Involvement: Energy giants (BP, Shell, Total), chemical firms (BASF, Johnson Matthey), airlines, and aircraft manufacturers (Airbus, Boeing) must form investment alliances to share high-risk, long-cycle projects.

Conclusion: A promising market with rapid growth is unstoppable.

The SAF market has moved beyond the conceptual stage and entered a period of growth driven by mandatory policies and capacity competition. In the short term (2025-2030), the HEFA route will remain the most-traded contract for supply, but the constraints of raw material supply are difficult to resolve. In the medium and long term (post-2030), PtL/eSAF will be the key to unlocking unlimited capacity and achieving deep decarbonization. Its commercialization process will depend on the speed of cost reduction in green hydrogen and carbon capture technologies, as well as the availability of green electricity resources.