SAF Production Increased but Fell Short of 2024 Projections
IATA calls for the faster adoption of SAF production to meet net-zero goals by 2050.
Governments should support oil companies by providing incentives for SAF production and moving away from subsidies for fossil fuel production and exploration.
Sustainable Aviation Fuel (SAF) plays a constructive role in reducing the aviation industry's emissions and achieving net-zero emissions by 2050. However, new analyses from IATA note that, in 2024, SAF production doubled compared to the previous year but fell short of earlier projections.
The International Air Transport Association's (IATA) estimates show that SAF production in 2024 reached 1 million tonnes (1.3 billion litres), double the amount produced in 2023. Yet, this figure falls short of earlier predictions, which had forecasted 1.5 million tonnes (1.9 billion litres) for 2024.
This slower growth is attributed to a delay in ramping up key SAF production facilities in the US, and by 2025, production is estimated to reach 2.1 million tonnes, or 0.7% of global jet fuel production, if output is significantly increased in 2025.
READ MORE: UK Sustainable Aviation Fuel Mandate Takes Effect on Jan 1, 2025
Though SAF production is increasing, it is happening 'disappointingly slowly,' says IATA. This is due to many governments sending mixed signals to oil companies, which continue to receive financial support for fossil fuel exploration and production. Also, new investors hesitate to put large sums of money into SAF without guaranteed returns. Meanwhile, airlines committed to SAF have very thin profit margins, meaning SAF is a long-term investment, and investors need to be patient.
Willie Walsh, IATA’s Director General, said: "SAF volumes are increasing, but disappointingly slowly. Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas. And investors in new generation fuel producers seem to be waiting for guarantees of easy money before going full throttle.
"With airlines, the core of the value chain, earning just a 3.6% net margin, profitability expectations for SAF investors need to be slow and steady, not fast and furious. But make no mistake that airlines are eager to buy SAF and there is money to be made by investors and companies who see the long-term future of decarbonization.
"Governments can accelerate progress by winding down fossil fuel production subsidies and replacing them with strategic production incentives and clear policies supporting a future built on renewable energies, including SAF."
To scale up SAF production, governments have to shift away from fossil fuel subsidies and provide incentives that support the production of renewable fuels such as SAF.
IATA underlines that, to reach net-zero CO2 emissions by 2050, around 3,000 to 6,500 renewable fuel plants will be required. These plants would not only produce SAF but also provide other types of renewable fuels for several industries. This is achievable with an estimated annual investment of $128 billion, which, according to IATA, is less than the $280 billion spent annually on solar and wind energy between 2004 and 2022.
The global trade organisation for the air transport industry also suggests some actions for faster progress, such as increasing co-processing, diversifying SAF production, and creating a global SAF accounting framework. It also highlights a recent study showing strong support for SAF, where 86% of travellers agreed that governments should incentivise SAF production.
Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist, said: "The airline industry’s decarbonization must be seen as part of the global energy transition, not compartmentalized as a transport issue.
"That’s because solving the energy transition challenge for aviation will also benefit the wider economy, as renewable fuel refineries will produce a broad range of fuels used by other industries, and only a minor share will be SAF, used by airlines. We need the whole world to produce as much renewable energy as possible for everybody. Airlines simply want to access their fair share of that output."
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Source: IATA
