Europe Sustainable Aviation Fuel Market: Current Analysis and Forecast (2024-2032)

The Europe Sustainable Aviation Fuel Market is growing at a steady rate of 32.1% in the forecast period, owing to increased environmental regulations and emissions reduction targets. Transportation is one of the most significant contributors to emissions globally and applies to Europe. Aviation (including all the movements within and outside the EU, excluding the military) contributes 13 percent of the total emissions today, accounting for 9% of EU transport emissions. It has thus become the second highest after road transport. These regulations and targets aim to restrain greenhouse gas emissions, improve air quality, and promote exemplary environmental practices. Also, the world's countries set specific objectives to limit GHG emissions and targets to get to zero emissions.

The European Union has aimed at net-zero emissions by 2050, and making sustainable aviation fuel is the key to this success. For example, the EC has presented the ReFuelEU Aviation strategy, which focuses on increasing the share of sustainable fuels in the EU. This proposal sets mandatory blending obligations for fuel suppliers to ensure that all aviation fuel made available to EU airports contains a growing share of sustainable aviation fuels: 2% by 2025, 5% by 2030, and 63% by 2050.

Similarly, the package of measures called "Fit for 55" within the framework of the European Green Deal intends to achieve emissions reductions of at least 55% by 2030. Within this package, the EU ETS (Emissions Trading System) has been amended and will eliminate the allocation of free emission allowances for aviation starting from 2026 and include all flights leaving the EU. Also, the EU has planned that at least 5% SAF should be incorporated by 2030 while raising it to 63% by 2050. The target for e-fuels has been set at 0. respectively, to 7% in 2030 and 28% in 2050.

Based on fuel type, the Europe sustainable aviation fuel market is segmented into biofuel and power-to-liquid. The biofuel segment captured the greatest share, and it is anticipated that the same fashion will be followed for the forecast period. Biofuel is produced from biomass renewable resources like agricultural residues, algae, or garbage. These fuels have lower GHG emissions per energy content when combusted compared to conventional fossil fuels, hence having the potential to mitigate the negative impacts of aviation on the environment. Besides, biofuels can be blended with traditional fossil fuels in various blends, making it easier for the operators to gradually shift to biofuels since they will only be progressively substituted in equal chain requites of their operations. Many EU countries have set caps on the emissions of greenhouse gases from aviation; therefore, biofuels are seen as pivotal. Furthermore, In the transport sector, the European Union's Renewable Energy Directive II (RED II) has a separate target for advanced biofuels. 2% for the year 2022 to 3. 5% by 2030. It also has a directive outlining food-based biofuels at 2020 levels, setting a maximum of 7%, indicative of promoting advanced biofuels from other sources than food. In parallel, the Netherlands has disclosed a SAF blending mandate, the first of its kind at a 1% level from 1 January 2023, scaling up to 14% by 2030.

Based on aircraft type, the Europe sustainable aviation fuel market is bifurcated into fixed wings and rotorcrafts. The fixed wings hold a significant market share in 2023 and are expected to showcase the same trend in the forecast period due to fixed-wing aircraft being more commonly used for long-haul flights, which require more fuel and, therefore, more SAF. The regulation is also biased towards fixed-wing aircraft, especially in Europe, in the case of SAF. For example, the European Union Aviation Safety Agency (EASA) has adopted objectives of a 50-55% reduction of CO2 emissions from aviation by 2030 compared to the 1990 level and climate neutrality by 2050. This ambitious target is primarily relevant to the fixed-wing aircraft responsible for most aviation emissions. Furthermore, government incentives towards the emergence of more production of sustainable aviation fuel from distinct technologies, including algae technologies, have helped develop the market in the future. For example, the European Commission's Horizon Europe program has a funding cap of €95.5 billion (USD ~103.6 billion). This five-year budget for 2021-2027 is accompanied by solid funding for research for sustainable aviation fuels. In one case, the program disbursed €5 million (USD ~5.43 million) for the AlgaeCraft venture, which intends to build high-efficiency photobioreactor systems for commercial-scale bio-SAF cultivation.

Based on platform, the Europe sustainable aviation fuel market is bifurcated into commercial and military aviation. Commercial aviation holds a significant market share in 2023. It is expected to showcase the same trend in the forecast period due to the growing demand for SAF in the commercial aviation sector, the increasing awareness of the environmental impact of traditional fossil fuels, and the need for more sustainable and environmentally friendly alternatives. Furthermore, European aerospace giant Airbus has partnered with several companies to boost SAF production. In 2022, it signed a Memorandum of Understanding (MoU) with Neste and Rolls-Royce to work towards adopting 100% SAF for a wide range of aircraft. They aim to achieve 100% SAF certification for all Airbus aircraft by 2030. Similarly, in 2023, Airbus collaborated with TotalEnergies to develop SAF production in Europe, focusing on e-fuels derived from green hydrogen and captured CO2.

For a better understanding of the Europe market of the sustainable aviation fuel market, the market is analyzed based on its presence in region in the Europe (Germany, The UK, France, Italy, Spain, Russia, and Rest of Europe). Russia has dominated the market in 2023 and is expected to behave similarly in the forecast period. The primary driving forces encouraging the more considerable growth of the market in Russia are the government and partnerships to raise the number of R&D projects demonstrating new technologies to enhance aircraft fuel efficiency and minimize impact on the environment. For example, in late 2022, the government of Russia approved a new state program, the "Development of the Aviation Industry until 2030," which references increased attention to the creation of more fuel-efficient and environment-friendly aviation technologies and vehicles. Also, starting in early 2023, the Russian Ministry of Industrial Development and Trade presented 'Green Aviation' with a proposed budget of 50 billion rubles or the equivalent of USD 650 million. By funding research in this area, this program aims to find ways to lower emissions from aviation, a field necessary to support Russia's participation in the Paris Agreement despite tensions worldwide.

Some of the major players operating in the market include Neste, Fulcrum BioEnergy, World Energy, LLC, TotalEnergies, Gevo, Avfuel Corporation, Aemetis, Inc., Preem AB, SkyNRG, Northwest Advanced Biofuels, LLC.