The devil in the detail – how achievable are airlines’ SAF targets?
by Robert Boyle, Partner at Clear Sky
At Clear Sky, we are dedicated to helping the aviation industry achieve sustainability. Our team invest a lot of time investigating and understanding the technologies and innovations that could help to accelerate the path to net-zero. A key factor in the aviation industry’s plans to decarbonize is Sustainable Aviation Fuel (SAF). Produced from renewable sources such as used cooking oil, waste fats, biomass and non-food crops, SAF typically results in an emissions reduction of 80% or more compared to traditional fossil fuels. One key advantage of SAF is that it is a “drop in” replacement for existing fuels and therefore does not require modification of existing aircraft or fuel distribution systems.
Most airlines are targeting SAF usage of 10% by2030, but is this target achievable? Production is starting from a very low base today, making up only 0.18% of global aviation fuel use in 2023, according to IATA. Whilst that is projected to increase to 0.5% in 2024, despite the recent rapid growth, there is a still a long way to go.
To hit the 10% target, global production volumes will need to grow from IATA’s estimate of 1.5m tonnes in 2024 to around 14 million in 2030. IATA points out that there should be sufficient global renewable fuels capacity, even based only on currently announced projects, with a total of 65 million tonnes[1] due to come online before 2030 (see next chart).
The challenge is that aviation must compete for this production with other industries, notably road transportation. To hit the 10% target will require 25-30% of expected renewables production to be used for SAF, compared to about 3% today.
Government policies lie at the heart of how scarce renewable fuel capacity gets allocated between competing sectors. In many cases, production of biodiesel attracts subsidies which are not available to SAF. Feedstock for the more mature and cheaper production pathways like HEFA have limited feedstock in some parts of the world, and that feedstock has already been allocated to road transport.
The other part of the equation is airline demand. Most of the largest airlines have committed to the industry’s 2030 target for 10% SAF use and have been actively signing multi-year "offtake agreements” with SAF producers. ICAO tracks media announcements of new offtake agreements and the chart below is based on their data. I have mostly excluded the announcements where the airline user was not clear, although I did allocate the oneworld agreements in proportion to member airline capacity at the relevant airports.
United Airlines comes out as having made by far the largest commitment to SAF, using this measure. I will say that a lot of this is due to the announced agreements being unusually long on duration (averaging 15 years on a volume weighted basis, over twice the average duration in the whole data set). Many of United’s announcements give volume figures using “up to” language, suggesting quite a few get out clauses over the 20-year period of some of these agreements. Having said that, even adjusting for duration, United would probably still be number one in terms of announced SAF offtake volumes.
Judging the level of airline commitment to SAF on the basis of press releases is of course less than ideal. The profile of volume over time is never disclosed and with long-term agreements, there is room for plenty of hockey-stick projections in later years with associated get-out clauses. Ideally, we need more tangible measures of how much SAF is being produced and which airlines are actually consuming it.
In terms of US SAF production volumes, we have some excellent data at an industry level, published monthly by the Environmental Protection Agency (EPA). I’ve shown the rolling twelve-month totals on the chart below, since the monthly figures are quite volatile, probably due to reporting delays as much as actual month to month production variation. The 2023 total of 79.6 million tonnes was considerably up on the47.9 million tonnes produced in 2022. That high growth rate has accelerated into 2024, with production for the 12 months to May 2024 reaching 171.7 million tonnes. Incentives for the production of SAF in the US were substantially increased as a result of the Inflation Reduction Act (IRA) and this has clearly been a big driver of volume growth, showing the power of policy incentives.
The SAF produced in the US hasn’t all gone to US airlines of course. Many of the off-take agreements announced by non-US airlines were from US suppliers. The SAF consumption data that I have for US airlines in 2023 add up to about 15 million tonnes, less than 60% of the total produced, suggesting that foreign airlines are buying almost as much US produced SAF as the country’s own airlines.
Amongst the US carriers, the biggest increase in SAF use has come from United and Delta, in both cases more than doubling their consumption compared to the previous year.
Despite the growth, the volume of SAF purchased by the US airlines is still much lower than the big European players. Note the difference in scale on the following chart.
As far as I can tell, it is only the big three network groups and Virgin Atlantic that have actually used any material amounts of SAF to date in Europe. Whilst there have been some off-take agreements announced for later years, the big low-cost players have been slow to start actually using SAF in their operations.
As well as the absolute volumes of SAF purchased, it is also interesting to look at the proportion of fuel use by carrier. In the chart below, the much higher penetration rates of the big European players (in blue) stand out compared to the US airlines (in purple). I’ve also included a couple of the more progressive Asian airlines (in pink) for comparison.
So, what does all this tell us? While starting from a low base, many airlines have been making real progress in increasing their use of SAF. However, others have not yet started their journey, and there is a long way to go to reach the 10% adoption targets that most have signed up for by 2030.
Hitting those targets and the even more ambitious ones the industry has set for 2050 is fraught with challenges, including production capacity, feedstock availability, and the need to bring down the cost of SAF. Whilst there is plenty of scope for innovation, it will also require industry stakeholders to coordinate their efforts and for governments to put in place supportive policies. That is the only way in which to attract the huge levels of investment that will be required to finance the transition, and to achieve a sustainable aviation future that balances the economic and social benefits of flying with the global challenge of tackling climate change.
[1] IATA estimated 63 million in their 2023 SAF update, 65 million is based on updated data.
