Europe will be a primary consumption hub for sustainable aviation fuel (SAF) in 2025, driven by EU and UK mandates that come into effect in January. The mandates could push European SAF demand above 1.5mn t next year, according to Argus Consulting estimates.
There should be more than enough global SAF supply to meet mandated demand in Europe in the early stages of obligations. If all announced projects are completed on time, global capacity could surpass 10mn t/yr in 2025, according to Argus Consulting, with hydrotreated esters and fatty acids synthetic paraffinic kerosene (HEFA-SPK) still the dominant SAF production pathway.
But several projects have been hit with delays in the past, and some European majors have scaled back or paused their capacity plans. Actual production is likely to be far lower than nameplate capacity, with the International Air Transport Association (Iata) forecasting global output of 2.1mn t next year.
European suppliers may also opt to maximise hydrotreated vegetable oil (HVO) production over HEFA-SPK. In most HEFA-SPK plants, the production process relies on first hydrotreating vegetable oils and fats, a process aligned with standard HVO production. Renewable diesel demand should increase with higher mandates for renewables in road transport and changes to German and Dutch carryover rules on renewable fuel tickets next year.
At the same time, European HVO imports face barriers. Definitive EU anti-dumping duties (ADDs) on Chinese biodiesel and HVO are expected to be imposed by February. And anti-dumping and anti-subsidy duties are in place on HVO and biodiesel of US and Canadian origin. SAF is excluded from ADDs on Chinese biofuels.
SAF supply has grown at a faster pace than demand this year, pushing the northwest European HEFA-SPK premium to jet fuel to record lows. The European benchmark HEFA-SPK fob ARA range assessment averaged around $2,203/t over 1 January-12 December, down from around$3,016/t in the same period last year.
Ready, set, mandate
Fuel suppliers will need to incorporate a 2pc share of SAF in their annual EU jet fuel deliveries from next year, with the share rising to 70pc by 2050. Synthetic aviation fuels, such as e-kerosine and hydrogen, must reach a total share of 1.2pc from 2030, rising to 35pc in 2050.
The UK's mandate also requires aviation fuel suppliers to hit a 2pc SAF share in 2025, increasing linearly to reach 22pc in 2040. A UK obligation for power-to-liquid SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 3.5pc in 2040.
Separately, London's Heathrow airport aims to increase the share of SAF used to 3pc in 2025 as part of an incentive scheme that helps airlines cover extra costs.
Beyond Europe
Progress to introduce SAF blending obligations or legislate consumption targets is slower outside of Europe. In China, a pilot programme was launched earlier this year to support domestic SAF uptake. A consumption target of 50,000t was set in the country's five-year plan for 2021-25.
Other initiatives in the Asia-Pacific region include South Korea's plan to require all international flights departing from its airports to use a mix of 1pc SAF from 2027 and Singapore's 1pc SAF target by 2026 for flights departing the country. Indonesia plans to require 1pc SAF from 2027, while Malaysia and Hong Kong are also expected to set targets.
In the US, the level of priority to be given to renewable aviation fuels is less clear following Donald Trump's election victory. Guidance around a new producers' tax credit, set to come into effect next year, is still pending. The growth of the US SAF market has so far been driven mainly by federal and state financial incentives.
