‘Green’ aircraft fuel prices likely to remain elevated

THE price of sustainable aviation fuel (SAF) will remain elevated in the coming years as production remains limited, the Department of Energy (DoE) said.

“SAF output is very tight. The aspiration of IATA (International Air Transport Association) is to increase the production to eventually reach net zero,” Rino E. Abad, director of the Oil Industry Management Bureau at the DoE, told BusinessWorld by phone.

According to a recent IATA report, SAF production next year is expected to triple to 1.88 billion liters or 0.53% of aviation fuel demand. Production was 600 million liters in 2023 and 300 million liters in 2022.

“The doubling of SAF production in 2023 was encouraging as is the expected tripling of production expected in 2024,” William M. Walsh, IATA director general of the IATA, said in a statement. SAF accounted for 3% of all renewable fuel production, with 97% going to other industries, IATA said, adding that this resulted in limited SAF supply while also pushing prices higher.

IATA said SAF output is weighed down by much renewable fuel production capacity being allocated to other fuels.

It said aviation needs at least 25% of renewable fuel production for SAF, which is the level deemed needed to reach net zero carbon emissions in aviation by 2050.

“Until such levels are reached, we will continue missing huge opportunities to advance aviation’s decarbonization. It is government policy that will make the difference. Governments must prioritize policies to incentivize the scaling-up of SAF production and to diversify feedstocks with those available locally,” Mr. Walsh said.