WEF & Kearney say US$45bn Needed to Meet Global SAF Demand
Sustainable aviation fuel (SAF) significantly reduces air transportation emissions and is critical in the global movement towards greener travel methods.
Produced from non-petroleum sources, SAF is a beacon of hope for reducing the aviation industry’s carbon footprint.
However, several economic, political and technological challenges obstruct its large-scale adoption.
A report from the World Economic Forum (WEF) and Kearney forecasts a surge in global SAF demand, expected to hit 17m tons per year by 2030, with capital required to meet this need ranging from US$19bn up to US$45bn, depending on the technology mix.
The rising demand for SAF
By 2030, it is projected that SAF demand will constitute 4% to 5% of the total jet fuel consumption due to the ambitious commitments within the aviation sector and increasing regulatory pressures.
Already, 43 airlines have committed to utilising approximately 16.25 billion litres of SAF by 2030.
In line with WEF and Kearney's Airports of Tomorrow initiative, their research stipulates that up to US$45bn in capital investment is required to achieve the SAF targets by 2030.
Claudia Galea, Global Sustainability Director at Kearney, says: “If we are serious about hitting SAF targets by 2030, it is essential that SAF producers, governments and investors are working collaboratively to de-risk production and scale employment.
“There are a number of financing roadblocks for SAF to scale-up effectively, so addressing these barriers requires a multifaceted approach with technological innovation, policy frameworks and innovative financial structures to increase investment appeal for SAF projects across their lifecycle.”
Identifying the gaps in SAF Production
Despite the accelerated demand, there is a substantial gap in SAF production capacity.
By2024, the global SAF production capability was 4.4Mt per annum.
With confirmed facility expansions and new refineries, this capacity is expected to increase by another 6.9 Mt/a by 2030.
Nevertheless, to fully meet the burgeoning demand, an additional investment in production capacity of 5.8Mt is necessary by 2026.
As well as finance, there are a number of challenges impeding SAF production.
They include:
- High production costs: SAF currently costs two to five times more than conventional jet fuel
- Technological risks: Many SAF production technologies are still in development or early stages of commercialisation
- Feedstock availability: Securing sustainable feedstocks in sufficient quantities remains a challenge for producers
- Market uncertainty: The lack of long-term policy consistency and demand certainty makes investors hesitant
To overcome these barriers, WEF and Kearney’s joint Financing Sustainable Aviation Fuels report has identified 10 conditions as enablers of greater SAF investments.
- Research and innovation grants for early-stage, high-risk SAF technologies to reduce upfront costs
- Multilateral development bank support, particularly in developing regions with complex regulatory landscapes
- Guarantees and insurance, such as loan guarantees, first-loss capital, and insurance solutions
- Strategic investments, such as collaboration with airlines, airports, OEMs and energy players to provide demand assurance and foster a supportive ecosystem
- Long-term offtake agreements to provide stable revenue and reduce demand uncertainty
- Book-and-claim mechanisms allow corporate travellers to take an active role in funding SAF
- Green bonds tied to SAF production offers a powerful tool for raising impact-driven capital
- Private equity capital and operational expertise, can accelerate commercialisation and scale SAF projects
- Infrastructure investors with lower capital costs and a long-term investment horizon
- Tolling models can mitigate market risks by charging a fixed fee for refinery capacity while customers supply feedstock and retain ownership
Not only showcasing what can be done, the report also calls on SAF producers, governments and investors to work together in combining these to provide the best mix of de-risking levers.
Giorgio Parolini, Aviation Decarbonisation Lead at WEF, adds: “Banks will often view SAF projects as high risk due to their novelty, extended timelines and reliance on emerging technologies, so project developers must bear this in mind when attempting to attract capital.
“For SAF to reach scalable production, a shift in financing mechanisms will be necessary, leveraging both private and public capital to mitigate perceived risks and catalyse substantial cash flow into the sector.”
SAF: What's ahead?
The obstacles in expanding SAF are notable, yet the potential benefits of managing to scale up are immense.
Beyond just reducing carbon emissions, enhanced SAF production can generate new jobs, increase energy security and stimulate innovation in the renewable energy domain.
As the globe grapples with the imperative necessity to counter climate change, the aviation sector’s move towards sustainability could set a precedent for other sectors.
Anticipating an upward trajectory, Boston Consulting Group (BCG) expects the global demand for SAF to significantly grow in the coming decades.
It predicts that it will eventually make up 12% of the global aviation energy demand by mid-century.
BCG says: “European mandates kicking-off in 2025 are expected to spark a period of long-term demand growth for sustainable aviation fuels.
“However, key uncertainties — like US policy framework, voluntary willingness to pay and Asian mandates — cloud the trajectory.
“At the same time, rapid SAF capacity expansion has led to an overcapacity slump in 2024, suppressing prices and margins.
“We anticipate that demand will surpass capacity toward the end of the decade, restoring margins to reinvestment levels.”
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