Bio-fuel as Aviation Fuel Market

Global Bio-fuel as Aviation Fuel Market: Snapshot

The use of biofuels is gathering traction in the largely booming aviation industry, world over. Aviation biofuels play an increasingly significant role in reducing the carbon emission contribute of the aviation industry. One way that has been realized is blending lower carbon sustainable aviation fuel (SAF) with fossil jet fuels. Market observers contend that the penetration of biofuels in the aviation industry is poised to increase by the end of 2040, and will help meet IEA’s Sustainable Development Scenario (SDS). Airlines in various parts of the world are partnering with biofuel producers-- offtake agreements--to boost the share of biofuels in their aviation fuels. Great advances are being made in blending related with fossil jet kerosene. Further, research into novel aviation biofuel production pathways for blending has catalyzed the prospects of the biofuel market. Stridently, this will expand their choice of sources. This is important since airlines will have the freedom to choose the feedstocks that abundant as well as cheapest.

On the other hand, the wave of continuing commercialization of aviation biofuels will take into account the reserves of agricultural residues and municipal solid wastes. This might be an accelerator of commercial-scale production of SAF, thereby boosting the market. This is important in order to reduce the cost of biofuels used in aviation, since they are substantially costlier than jet fuels. This has also hindered producers of biofuels to seek growth in cost-sensitive market, such as in a few countries of Asia Pacific. Emerging markets should understand the role of continues research and development in novel advanced aviation biofuels.

Fuels made from biomass, known as bio-fuels, contains enormous amount of energy similar to any other energy resources such as oil, gas, coal and others. However, bio-fuel provides more cleanliness than any other conventional energy resources. Bio-fuel has the potential to fulfill the needs and objectives of both aviation and bio-fuels stakeholders. Aviation industry uses a variety of strategies to deal with aviation fuel price fluctuations, including increased vertical integration, financial hedges and adjustments in aircraft utilization and size. Investments in the research and development in alternative aviation fuel can become a way to diversify exposure to the price of conventional fuels. Bio-fuel can be proved a more diversified fuel for airlines, resulting in decreased impact of fuel price volatility, increased price certainty, reduced hedging costs and narrowed fuel costs.

The aviation Industry uses two type of conventional fuel including aviation gasoline and jet fuel. Jet fuels are further are divided into two types based on the specifications such as kerosene-type and naphtha-type. Kerosene-type aviation jet fuel is the most commonly used fuel type in commercial aviation and bio-fuel can be an economical substitute for kerosene-type aviation fuels, known as bio-jet. Currently bio-fuel, in the form of ethanol is one of the largest domestic fuels used for cars and trucks which are blended into motor gasoline. Bio-fuel can be segmented on the basis of the production methods. There are chiefly two methods to produce bio-fuels such as Fischer-Tropsch (FT) and hydroprocessed esters to meet the American Society for Testing and Materials (ASTM) standards for aviation use.

Bio-fuel as aviation fuel can be segmented according to the number of airports and air-carrier capacity in different regions. The U.S. is one of the largest countries for aviation network in North America and is highly developed for aviation market as compared to other regions. These countries are consuming more fuel to operate aviation industry smoothly. Bio-fuel can act as a ray of hope in these regions in economically and geopolitically adverse situations. North America is also a developing market in biomass production therefore using bio-fuels for air-carriers can be a potential to offer a new market for the bio-fuels industry. China and India are countries in Asia-Pacific that are the largest consumer of oil and gas globally. Half of the consumption is fulfilled by the imports therefore bio-fuel can be the clean solution for these regions while reducing financial and environmental challenges in the aviation industry. Middle East and South America are few major regions that can be a potential market for bio-fuel produces. 

Bio-fuels have the potential to match the aviation fuel specifications and needs with the reduction in uncertainty in price occurred due to geopolitical issues. The overall market structure and size of aviation industry is some of the opportunities for bio-fuels. Increasing environmental concern and depleting conventional resources are some of the major driving factors for the development of bio-fuel market as aviation fuel. Installation cost of biomass plant is one of the major restraints for this market that can hinder the growth of bio-fuel as aviation fuel.

Some of the major players and organizations in the research and development of bio-fuel as aviation fuels are Airbus S.A.S., International Air Transport Association, EBTP-SABS, The Atlantic Monthly Group, Smart Abroad, Shell and Abengoa Bioenergy