Why it matters now
The aviation industry faces increasing pressure to decarbonize, with numerous governments and international bodies implementing mandates for the use of Sustainable Aviation Fuel (SAF). While these mandates are crucial for achieving climate goals, the current production capacity for SAF is significantly lower than projected demand. This creates a substantial supply gap, posing challenges for airlines to meet compliance targets and for fuel producers to scale up production. Understanding the magnitude of this gap is critical for strategic planning, investment in new production facilities, and navigating the evolving regulatory landscape of aviation decarbonization.
Who is exposed
Airlines face compliance costs, potential penalties, and operational challenges in securing sufficient SAF. Fuel producers see significant opportunities but also face high investment requirements and technological hurdles. Aerospace manufacturers are exposed to shifts in aircraft design and fuel compatibility. Biofuel companies are at the forefront of scaling up SAF production, impacting their growth trajectories.
Most relevant for: Procurement director, sustainability director, strategy VP
What this Viewpoint covers
- What are the current and projected SAF mandates in key aviation markets?
- What is the current global production capacity for sustainable aviation fuel?
- How large is the projected supply gap for SAF under existing mandates?
- What are the primary technological pathways for increasing SAF production?
- What policy incentives are being implemented to accelerate SAF supply?
Signals to watch
- Public announcements of new SAF production facilities or expansions.
- Changes in SAF blending mandates or regulatory targets.
- Investment decisions by major oil and gas companies in SAF production.
- Reports on SAF feedstock availability and pricing trends.
Decisions it supports
- Adjusting fleet decarbonization strategies and SAF procurement plans.
- Evaluating investment opportunities in SAF production technologies.
- Formulating strategies for securing long-term SAF supply agreements.
How it is built
Prepared after your order from dated public sources - such as future tech & energy filings and announcements, regulatory records, trials, patents and trade data, where relevant - and our market model. Reported facts are cited, estimates are labelled and our assessment is marked as such, following our research method. You receive our verdict, the evidence, who is exposed, the signals to watch and recommended actions, within 24 hours.
Questions
Why is there a significant supply gap for Sustainable Aviation Fuel?
The gap exists because SAF production technologies are still scaling up, feedstock availability can be limited, and the capital investment required for new facilities is substantial. While demand is driven by ambitious mandates, the pace of supply expansion has not yet caught up, creating a significant imbalance.
What data sources are used to assess the SAF supply gap?
We analyze public data from government mandates and policy documents, industry association reports on SAF production capacity, company announcements regarding new facilities, and trade statistics. This allows us to compare projected demand against current and planned supply, quantifying the gap.
Can this Viewpoint help my company plan for SAF procurement?
Yes, by detailing the supply gap and its drivers, this Viewpoint helps airlines and other stakeholders understand the challenges in SAF procurement. It supports decisions on long-term contracts, exploring diverse feedstock options, and advocating for policies that accelerate SAF production to meet future demand.