WEF & Kearney: US$45bn Needed to Meet Global SAF Demand
Sustainable aviation fuel (SAF) undeniably has the potential to drastically reduce the environmental impact of aviation.
An alternative fuel made from non-petroleum feedstocks, SAF significantly reduces emissions from air transportation.
But economic, political and technological barriers stand in the way of its mass adoption.
A report produced by the World Economic Forum (WEF) and Kearney says that global SAF demand will reach 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 growing demand for SAF
By the end of the decade, global demand for SAF is expected to reach 17 million tonnes per annum (Mt/a), representing 4% to 5% of total jet fuel consumption, thanks to ambitious industry commitments and regulatory pressures.
Forty-three airlines — and counting — have already pledged to use some 16.25 billion litres (13Mt) of SAF in 2030, with more agreements regularly announced.
As part of its Airports of Tomorrow initiative, WEF and Kearney’s Financing Sustainable Aviation Fuels research shows the total capital expenditure required to meet SAF demand by 2030 could reach up to US$45bn.
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.”
The SAF production gap
Despite the growing demand, SAF production capacity falls significantly short of meeting future needs.
At the end of last year, global SAF production capacity reached 4.4Mt/a, with an anticipated expansion of 6.9 Mt/a towards 2030 based on confirmed facility expansions and new refineries.
However, to meet the projected demand, an additional 5.8Mt of production capacity needs to secure financial investment decisions 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.
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.
- 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
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 next?
SAF challenges are significant, but potential benefits are huge.
Beyond reducing the aviation industry's carbon footprint, scaling up SAF production could create new jobs, enhance energy security and drive innovation in the broader renewable energy sector.
SAF could be the tonic aviation needs as the need to address climate change becomes increasingly urgent — with other hard-to-abate sectors hopefully following the model toward sustainability.
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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