Sustainable aviation fuel: why policies are key to unlocking vast growth potential in greener flying in Asia and China
- Asia-Pacific, including China, is a huge potential market for sustainable aviation fuels, according to an executive with the world’s largest producer
- Lack of clarity about government targets for such fuels stands as a hurdle to the market’s growth, he says
Global consumption of sustainable aviation fuel (SAF) made from non-fossil materials could exceed 12 million tonnes annually by 2030, and the Asia-Pacific region is a huge potential market, according to Neste, the world’s largest producer of green jet fuel.
Governments can help encourage the use of such fuels by outlining clear targets for the percentage of SAF that should be blended with fossil-based jet fuel, according to Sami Jauhiainen, vice-president of Asia-Pacific renewable aviation at the Finnish oil refining and marketing group.
“In Asia-Pacific, some countries have already published clear targets, like Japan with a 10 per cent blending goal by 2030,” he said in an interview. “In China, it is more difficult [to project], because there is no clear target.”
Given that jet-fuel consumption in mainland China and Hong Kong was just over 40 million tonnes a year before the onset of the coronavirus pandemic in 2020, there is a potential SAF market of several million tonnes annually if similar targets are established, he noted.
“We see a lot of potential to grow,” Jauhiainen said. “Hong Kong is the world’s largest cargo hub, while China is the world’s second-largest aviation market after the United States, with a strong growth outlook.”
The Civil Aviation Administration of China, under a green development policy and action plan published last December, aims for cumulative consumption of sustainable aviation fuel to reach 50,000 tonnes by 2025. It did not provide annual targets.
Neste has been in discussions with various airlines and fuel-distribution firms to supply a growing number of airports in Asia-Pacific, Jauhiainen said, adding that sales in the region began in 2020 covering Japan, New Zealand, Malaysia, Australia and Hong Kong on a pilot basis.
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Hong Kong’s flagship carrier Cathay Pacific Airways bought Neste’s product last year through fuel distributor Shell, he added, declining to divulge the volume.
Globally, aviation consumed around 300 million tonnes of jet fuel in 2019, which is worth US$218 billion at current market price of about US$727 per tonne according to S&P Global Platts. SAF amounted to just 0.1 per cent of the total that year, mostly driven by voluntary trials by airlines.
Aviation accounts for just over 2 per cent of global energy-related carbon-dioxide emissions, according to the International Energy Agency.
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“[SAF] is still in an early stage of adoption with fairly limited volumes,” Jauhiainen said. “The key challenge is the cost of SAF, which is three to five times more expensive than conventional jet fuel. Hence it is difficult for airlines to justify the use of SAF if their competitors are not required to do the same.”
Norway and Sweden are spearheading the adoption, with existing mandates of blending 0.5 to 1 per cent of SAF, rising to 30 per cent by 2030. The European Union has announced a 2 per cent minimum share for 2025 and 70 per cent by 2050, while the UK plans to mandate at least 10 per cent mixing by 2030.
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Currently, the maximum ratio of SAF to fossil-based jet fuel is 50:50, depending on the feedstock and production process, under international certification standards. Its SAF’s carbon emission is up to 80 per cent lower than that of conventional jet fuel, Jauhiainen said.
Neste last month completed a €1.6 billion (US$1.72 billion) expansion of its facility in Singapore that doubled its annual SAF refining capacity to as much as 1 million tonnes.
The plant’s SAF production line uses as feedstocks animal waste from slaughtering and used cooking oil from restaurants and food-processing plants. Its products mainly ship to markets in Asia-Pacific and the Western United States.
Additional sustainable feedstocks, such as forest and agricultural waste, municipal solid waste and algae oil, will be needed to support expansion of SAF production, given that the global annual volume of recycled animal waste and used cooking oil amounts to only around 40 million tonnes, Jauhiainen said.
