Renewable Aviation Fuel Market - Global Industry Analysis 2020

According to Intergovernmental Panel on Climate Change, airline industry liberates approximately 2% of global anthropogenic CO2 emissions. The aviation industry has invested significant amounts in improving their engine designs and fuel efficiency. Yet despite of these improvements in mechanism, emissions are still growing in the aviation industry. The aviation fuel accounts for a major share of the operating costs for an airline company. Fluctuations in the crude oil prices impact the profit margins of this industry.

Renewable aviation fuel is an innovative solution to reduce carbon emissions and reduce the dependency on unstable crude oil prices. The aviation fuel industry is intensively investing large amounts for the large scale commercialization of alternative fuels. The commercial production of renewable aviation fuel would assist airline companies in diversifying their fuel sources and develop new hedging strategies. The market for renewable aviation fuel is anticipated to grow at a substantial rate after the commercial production of this alternative fuel starts in the coming few years.

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Stringent environmental regulations and vulnerable fuel prices are the major market drivers which have encouraged investment in the renewable aviation fuel market. The strict emission standards imposed by government agencies have forced the aviation industry to invest in the alternative fuel market. The Federal Aviation Administration of U.S. has set a target for the U.S. aviation industry to reduce carbon emissions and consume a fixed quantity of renewable aviation fuel from 2018. The defense departments of several nations consume a significant amount of aviation fuel, thus these nations are investing significant amounts to commercially develop the renewable aviation fuel market. The U.S. defense department is the largest buyer of aviation fuel in the world and is allocating millions for testing and certifying renewable aviation fuels. The need to reduce dependency on fossil fuel prices is another major factor attracting investment in this market. However, the high cost of production and accurate information on large scale commercial production can hamper the growth of renewable aviation fuel market.

The market for renewable aviation fuel can be segmented based on the processes employed for production of the fuel. The two broad segments in this market are Fischer-Tropsch process and Hydroprocessed esters and fatty acids process. The market can also be segmented based on the feedstock used in these processes. Animal fat, vegetable oil, algae oil and biomass are the major feedstock which can be utilized for manufacturing renewable aviation fuel.

Europe is the leading region to invest in the renewable aviation fuel market. Several airline companies as Lufthansa and Air France have tested this fuel in commercial passenger flights. Many companies in this region have entered this market with new and proven technologies to earn profits in this developing market. North America is another major market to invest in this technology and various companies are producing renewable aviation fuel in small quantities. Asia Pacific will be a major market for renewable aviation fuel in the future owing to increasing airline traffic in this region. The increasing passenger size and developing economies of this region would be a prospective market for the renewable aviation fuel industry.

Some of the major players investing in the commercialization of renewable aviation fuel are LanzaTech, Amyris Inc, Total S.A., SGB Inc. and General Biomass Company.

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