|
Forecast Period
|
2025-2029
|
|
Market Size (2023)
|
USD 7.23 Billion
|
|
CAGR (2024-2029)
|
48.01%
|
|
Fastest Growing
Segment
|
Hydroprocessed Esters
and Fatty Acids (HEFA)
|
|
Largest Market
|
North America
|
Market Overview
The Global Renewable Aviation Fuel Market
was valued at USD 7.23 Billion in 2023 and is growing at a CAGR of 48.01% during
the forecast period. In order to enhance the development of Renewable Aviation
Fuel, Renewable Aviation Fuel companies can consider expansion, collaboration,
partnership, acquisition, and joint ventures. Furthermore, constantly evolving
aviation engine technology can make the existing technology obsolete very soon.
This can further intensify the industry rivalry among the prominent market
players.
Since the count of Renewable Aviation
Fuel providers (suppliers) is less in comparison to the count of buyers, the
bargaining power of suppliers is relatively higher as compared to the
bargaining power of buyers. Due to promising profit margins, the threat of new
entrants in the Renewable Aviation Fuel market is considered to be moderate.
As per the U.S. Department of Energy
(DOE), air travel accounts for nearly 175 million metric tons of CO2 emissions
or about 2.6% of domestic Greenhouse gas (GHG) emissions each year in the
United States. According to Environmental Protection Agency (EPA), large
business jets and commercial airplanes contribute around 10% of US
transportation emissions and account for almost 3% of the country’s total
greenhouse gas (GHG) production. Thus, such high contributions of harmful
emissions hinder market growth to some extent.
The use of aircraft is highly growing
across logistics applications. Airlines transport over 52 million metric tons
of goods each year. According to International Air Transport Association
(IATA), approximately 90% of cargo in international trade is shipped via sea
route, and only around 0.5% is transported by air. But this transport by air
cargo translates to around 35% of world trade by value or nearly USD6 trillion in
value. With an increasing demand for international products, the need for a
safe and efficient air service is anticipated to rise enormously in the near
future.
Key Market Drivers
Renewable Aviation Fuel is used for
powering aircraft and various types of Renewable Aviation Fuels are the
by-products of crude oil. The Renewable Aviation Fuel market is majorly driven
by the rising trend of air travel and the expanding aviation sector in various
developing nations. The development of the latest aviation biofuels and the
increasing requirement for low-cost carriers are also anticipated to create
notable opportunities for all the market players during the study period.
Factors such as stringent environmental regulations along with fluctuating
crude oil prices can hinder the Renewable Aviation Fuel market growth to a
certain extent.
Increasing Investment
Increasing investment in the aviation
sector, rising disposable income, and the growing tourism industry are some of
the latest factors that are supporting the Renewable Aviation Fuel market
substantially.
In an effort to develop sustainable Renewable
Aviation Fuel, United Airlines and 5 corporate partners announced to invest USD
100 million in February 2023. GE Aerospace, Air Canada, Boeing, JPMorgan Chase,
and Honeywell are the 5 corporate partners which would help in the development
of sustainable Renewable Aviation Fuel.
As per the data from the U.S. Bureau of
Economics, personal income increased by USD1.97 trillion (10.5%) and Disposable
Personal Income (DPI) grew by USD2.13 trillion in April 2020. With rising income
levels and expanding tourism sector, the number of air travelers is increasing
rapidly across various nations of the world.
In 2023, Dubai received around 14.36
million international overnight visitors. This number is a 97% year-on-year
(Y-o-Y) increase as compared to 7.28 million tourist arrivals in 2021.
According to the World Tourism Organization, a specialized agency of the United
Nations (UN), tourist arrivals in Maldives in January 2021 stood at 92,103.
This count rose to 99,397 by 3rd February 2021. The growing count of tourists
is creating promising scope for the aviation industry.
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Key Market Challenges
Volatility in Crude Oil Prices:
One of the primary challenges faced by
the Renewable Aviation Fuel market is the inherent volatility in crude oil
prices. The aviation industry is heavily dependent on crude oil for jet fuel
production, and fluctuations in oil prices can significantly impact operational
costs for airlines. Political instability, geopolitical tensions, and economic
uncertainties contribute to this volatility, making it a perpetual concern for
the Renewable Aviation Fuel market.
Environmental Regulations and
Sustainability:
The aviation sector is under increasing
pressure to reduce its environmental footprint. Stringent emission regulations
and the global push towards sustainability pose a challenge to traditional Renewable
Aviation Fuels, which are primarily derived from fossil fuels. The industry is
actively exploring alternative fuels, such as biofuels and synthetic fuels, but
their scalability and cost-effectiveness remain significant hurdles.
Infrastructure Limitations:
The infrastructure required for the
production, transportation, and distribution of Renewable Aviation Fuel is
complex and capital-intensive. Insufficient infrastructure can lead to supply
chain bottlenecks and increased costs. As the demand for air travel continues
to grow, ensuring a robust and efficient infrastructure becomes paramount to
meet the escalating needs of the Renewable Aviation Fuel market.
Technological Advancements:
While technological advancements have
the potential to revolutionize the aviation industry, they also present
challenges for the fuel market. The development of electric and hybrid
aircraft, although promising for environmental sustainability, poses a threat
to traditional Renewable Aviation Fuels. The industry must adapt to these
advancements by investing in research and development to stay relevant and
competitive.
Global Economic Fluctuations:
The aviation industry is highly
sensitive to global economic conditions. Economic downturns can lead to reduced
air travel demand, affecting the profitability of airlines and, consequently,
the demand for Renewable Aviation Fuel. The cyclical nature of the global
economy introduces an element of unpredictability, requiring the Renewable
Aviation Fuel market to navigate through periods of both growth and
contraction.
Political and Geopolitical Factors:
Political instability and geopolitical
tensions can disrupt the global supply chain of Renewable Aviation Fuel. Trade
conflicts, sanctions, and regional conflicts have the potential to impact the
availability and pricing of key raw materials, affecting the stability of the Renewable
Aviation Fuel market. Developing resilient strategies to navigate geopolitical
uncertainties is essential for sustained market stability.
Investment and Funding Challenges:
The Renewable Aviation Fuel industry
requires substantial investments in research, infrastructure, and technology to
address emerging challenges. Securing funding for such initiatives can be a
barrier, especially during economic downturns. Governments, industry
stakeholders, and financial institutions need to collaborate to ensure the
availability of necessary resources for the sustainable development of the Renewable
Aviation Fuel market.
Regulatory Compliance:
Adhering to stringent safety and
environmental regulations is a critical aspect of the Renewable Aviation Fuel
industry. Non-compliance can lead to severe penalties and damage the reputation
of both fuel producers and airlines. Staying abreast of evolving regulations
and investing in compliance measures are essential for ensuring the long-term
viability of the Renewable Aviation Fuel market.
Key Market Trends
Transition to Sustainable Renewable
Aviation Fuels (SAFs):
One of the most prominent trends in the Renewable
Aviation Fuel market is the increasing emphasis on sustainability. As
environmental concerns rise, there is a growing shift towards Sustainable Renewable
Aviation Fuels (SAFs). These fuels, derived from renewable resources such as
biofuels and synthetic fuels, aim to reduce the carbon footprint of aviation.
Governments, airlines, and fuel producers are investing in research and
development to enhance the production and adoption of SAFs, marking a crucial
step towards a more environmentally friendly aviation industry.
Advanced Biofuels and Synthetic Fuels:
Within the realm of sustainable Renewable
Aviation Fuels, advanced biofuels and synthetic fuels are gaining traction.
Advanced biofuels, produced from non-food feedstocks and waste materials, offer
a more sustainable alternative to traditional jet fuels. Similarly, synthetic
fuels, created through processes like Power-to-Liquid (PtL) or gas-to-liquid
(GtL), provide a pathway to decarbonize the aviation sector. These innovative
fuels have the potential to address both environmental concerns and the need
for energy security in the Renewable Aviation Fuel market.
Hydrogen as an Renewable Aviation Fuel:
The aviation industry is exploring
hydrogen as a potential clean energy source for aircraft. Hydrogen has the
advantage of producing zero emissions when used as a fuel, and research is
underway to develop hydrogen-powered aircraft. However, challenges such as
storage, infrastructure, and the energy-intensive process of hydrogen
production need to be addressed for widespread adoption. The trend towards
hydrogen reflects the industry's commitment to exploring diverse and
sustainable energy solutions.
Digitalization and Smart Technologies:
The Renewable Aviation Fuel market is
embracing digitalization and smart technologies to optimize operations and
enhance efficiency. Advanced analytics, IoT (Internet of Things), and AI
(Artificial Intelligence) are being employed to monitor fuel consumption,
streamline supply chains, and predict maintenance requirements. These
technologies not only improve the overall efficiency of the Renewable Aviation
Fuel market but also contribute to cost reduction and environmental
sustainability.
Collaboration and Partnerships:
Collaboration and partnerships across
the aviation ecosystem are becoming increasingly vital. Fuel producers,
airlines, governments, and research institutions are joining forces to
accelerate innovation and address the challenges facing the industry.
Collaborative efforts aim to enhance the production of sustainable Renewable
Aviation Fuels, invest in infrastructure, and navigate regulatory landscapes.
Such partnerships foster a holistic approach to addressing complex issues and
driving positive change in the Renewable Aviation Fuel market.
Electrification of Aircraft:
The electrification of aircraft is
gaining attention as a disruptive trend in the aviation industry. Electric and
hybrid-electric propulsion systems are being explored to reduce emissions and
operational costs. While fully electric commercial aircraft are still in the
early stages of development, the trend signifies a shift towards cleaner and
more energy-efficient technologies. The Renewable Aviation Fuel market is
closely monitoring these developments, recognizing the potential impact on
traditional fuel demand.
Global Energy Transition and Policy
Support:
The global push towards clean energy and
sustainable practices is influencing policies related to Renewable Aviation
Fuels. Governments worldwide are introducing regulations and incentives to
support the development and adoption of sustainable Renewable Aviation Fuels.
Policy frameworks that encourage research and development, provide financial
incentives, and set emission reduction targets play a pivotal role in shaping
the trajectory of the Renewable Aviation Fuel market.
Segmental Insights
Technology Insights
Hydroprocessed Esters and Fatty
Acids (HEFA), is the dominating segment, Hydroprocessed
Esters and Fatty Acids (HEFA), commonly known as Hydrogenated Vegetable Oil
(HVO) or Hydroprocessed Renewable Jet (HRJ), is a type of hydrocarbon aviation
fuel made from animal or vegetable oils (triglycerides) by hydroprocessing.
In 2011,
hydro-processed esters and fatty acids (HEFA) technology received certification
from the American Society for Testing and Materials (ASTM) for bio-jet fuel
production. HEFA uses oleo-chemical feedstock, such as oil and fats, for
renewable fuel production.
A
significant share of available commercial volumes of bio-jet fuels comes from
HEFA biojet, with several commercial-scale facilities worldwide producing the
same. However, renewable diesel (HEFA-diesel) is also made during the process,
with a larger market scope and a higher sales price. Thus, producers are
focusing on HEFA-diesel instead of HEFA-jet.
Moreover,
hydrocarbon aviation fuel made from animal or vegetable oils comes under
bioenergy. According to International Renewable Energy Agency, in 2023, the
total global bioenergy capacity accounted for 148 GW, expected to grow due to
its environment-friendly nature.
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Regional Insights
The North
America region is experiencing significant economic growth, North America is
one of the largest markets for the aviation industry and renewable aviation
fuel. Between 1978 and 2023, US airlines improved fuel efficiency by over 130%,
which resulted in nearly 5 billion metric tons of carbon dioxide savings.
According to the Airlines for America (A4A), the country's airlines operate
approximately 28,000 flights daily in the pre-pandemic stage. Most airline
companies in North America posted heavy financial losses in 2020 and 2021.
However, airline traffic is expected to recover during the forecast period.
Further, as crude oil prices are increasing rapidly, the demand for renewable
aviation fuel is expected to grow during the forecast period.
The
Bio-Energy Technologies Office (BETO) of the United States and the Department
of Energy (DOE), supported by Energy Efficiency and Renewable Energy (EERE),
are making efforts to expand the adoption of sustainable, domestically produced
alternative fuels for transportation and aviation to stimulate the growth of
the renewable fuel industry. In North America, the primary policy incentive for
renewable aviation fuel production is the US Renewable Fuel Standard (RFS),
which credits refiners and fuel importers who blend renewable fuel into
transportation fuel to meet Renewable Volume Obligation standards.
Recent Developments
- In August
2023, ZeroAvia announced that it has signed a partnership agreement with
Masdar, one of the world’s leading clean energy companies, to explore hydrogen
production and supply at key locations. The partnership with the UAE’s flagship
renewable energy company, Masdar, will focus initially on projects in North
America and Europe, while also looking at the opportunity to establish clean
flight operations in the UAE. Masdar aims to be a global green hydrogen leader
through a “smart first mover” approach, by developing and investing in
strategic projects and building scalable platforms in key markets. The company
is targeting 1 million tonnes of green hydrogen production per year by 2030.
Key Market Players
- TotalEnergies SE.
- Neste Oyj
- Swedish Biofuels AB
- Red Rock Biofuels LLC
- Gevo Inc.
- Honeywell International Inc.
- Fulcrum BioEnergy Inc.
- SG Preston Company
- LanzaTech Inc.
- Shell Plc
|
By Technology
|
By End User
|
By Region
|
- Fischer-Tropsch
(FT)
- Hydroprocessed
Esters and Fatty Acids (HEFA)
- Synthesized
Iso-Paraffinic (SIP)
- Alcohol-to-Jet
(AtJ)
|
- Commercial
- Defense
- General
Aviation
|
- North
America
- Europe
- South America
- Middle East
& Africa
- Asia Pacific
|
Report Scope:
In this report, the Global Renewable Aviation Fuel Market has been segmented into the following categories,
in addition to the industry trends which have also been detailed below:
·
Renewable Aviation Fuel Market, By Fuel Technology:
o Fischer-Tropsch (FT)
o Hydroprocessed Esters and Fatty
Acids (HEFA)
o Synthesized Iso-Paraffinic (SIP)
o
Alcohol-to-Jet
(AtJ)
· Renewable Aviation Fuel Market, By End User:
o Commercial
o Defense
o
General
Aviation
· Renewable Aviation Fuel Market, By Region:
o
North America
§ United
States
§ Canada
§ Mexico
o
Asia-Pacific
§ China
§ India
§ Japan
§ South
Korea
§ Indonesia
o
Europe
§ Germany
§ United
Kingdom
§ France
§ Russia
§ Spain
o
South America
§ Brazil
§ Argentina
o
Middle East & Africa
§ Saudi
Arabia
§ South
Africa
§ Egypt
§ UAE
§ Israel
Competitive Landscape
Company
Profiles: Detailed analysis of the major companies present in the Global Renewable
Aviation Fuel Market.
Available Customizations:
Global Renewable Aviation Fuel Market report with the given market data,
Tech Sci Research offers customizations according to a company's specific
needs. The following customization options are available for the report:
Company Information
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