Rapidly reducing greenhouse gas (GHG) emissions to limit the effects of climate change is one of the greatest challenges of our time. All industries, including aviation, must transform to meet the commitment to mitigate the effects of climate change. Sustainable Aviation Fuels (SAF) are seen as the key element in the effort to create a more sustainable aviation industry. SAFs were developed as a replacement for fossil jet fuels, as they reduce CO2 emissions depending on the feedstock, conversion route and blending rate. Currently, less than 1% of aviation fuels used in Europe are SAFs. SAF’s capacities are limited due to demand insecurity due to the higher cost of SAF compared to fossil kerosene and high capital expenditure for initial investors. These overcharges can be a critical inhibitor in the low-margin, cost-sensitive aviation industry. Thus, support for SAF becomes more important from an ecological, legal and financial point of view.
This study takes a closer look at the potential of SAFs, including their true cost premium over fossil fuel-based jet fuel. It further assesses how much SAF of which type needs to be blended to meet the EU’s planned ReFuelEU blending directive down to a net zero target until 2050. It further describes how much it would cost by calculating the estimated cost markup for SAF. The study calculates the forward-looking cost mark-up for two archetypal airline business models (full-service network carrier, FSNC, and low-cost carrier, LCC), as well as three route types (short, medium, and long-haul ).
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