The International Air Transport Association (IATA) announced that global Sustainable Aviation Fuel (SAF) forward purchase agreements valued at $45 billion have been established by airlines.
This was disclosed during the Third Conference on Aviation Alternative Fuels (CAAF/3), convened by The International Civil Aviation Organization (ICAO) in Dubai on Friday.
The discussions primarily centred on the imperative role of governments in facilitating aviation’s decarbonization through supportive policies.
Highlighting an emerging trend, IATA emphasized instances of airlines integrating vertically into the supply chain, with some demonstrating commitment by investing equity and risk capital in SAF projects.
What the IATA said
According to IATA, airlines have entered into forward purchase agreements for SAF worth around a total of $45 billion, well more than today’s SAF availability.
- “This is necessary because airlines’ demand for SAF, in line with their commitment to net zero carbon emissions by 2050, vastly exceeds the availability of SAF today, which is limited to 0.2% of airlines’ jet fuel consumption in 2023. Airlines have sent major demand signals to the SAF production market.”
In 2022, all SAF produced was acquired by airlines at an additional cost of approximately $500 million, given SAF’s pricing premium over traditional jet fuel.
Willie Walsh, IATA’s Director General, emphasized that governments must translate the CAAF/3 declaration into actionable policies that bolster SAF production comprehensively.
More Insights
On the other hand, Willie Walsh, IATA’s Director General explained the need to see governments acting on the CAAF/3 declaration with policies that expand SAF production in all its shapes and forms.
Walsh said,
- “Despite unequivocal demand signals, the SAF production market is not developing fast enough. We need SAF everywhere in the world, and to that end, the right supportive policies — policies that can stimulate production, promote competition, foster innovation, and attract financing — must be put in place today.”
Striking a balance between existing and potential policy support across various energy sources, with a preference for renewable energies, is crucial.
The objective is to maximize SAF production globally through positive policy measures that do not penalize the industry.
Marie Owens Thomsen, IATA’s Senior Vice President of Sustainability and Chief Economist, affirmed the industry’s readiness to embrace increased SAF production.
She stated the collective responsibility of the entire value chain and governments in achieving aviation’s decarbonization goals by 2050, noting that government support would pave the way for private investment. Thomsen, “It is essential that governments play their part, and we will certainly play ours,” she added.
