Asia Pacific Sustainable Aviation Fuel (SAF) Market Outlook to 2030

Asia Pacific Sustainable Aviation Fuel (SAF) Market Overview

• The Asia Pacific Sustainable Aviation Fuel (SAF) market is valued at USD 380 million, based on a five-year historical analysis. The market is driven by growing government mandates for carbon reduction, airline commitments to reducing their carbon footprint, and increased investments in renewable energy. SAF production has seen significant developments as airlines and aviation companies aim to meet emission targets, resulting in a push for greater SAF adoption.

• Countries such as Japan, Australia, and Singapore dominate the market due to their advanced infrastructure, supportive regulatory frameworks, and strong partnerships between government and private sectors. In Japan and Singapore, significant investments in SAF production have positioned these countries as leaders in SAF development, with Australia following closely behind due to its strong focus on biofuel research and governmental support for sustainable energy.
• Several countries in the Asia Pacific have adopted emission trading systems (ETS) and carbon taxes to encourage the use of SAF. In 2024, South Korea and Japan imposed carbon taxes of up to $50 per ton of CO emissions from aviation, pushing airlines to adopt SAF as a cost-effective alternative. These carbon pricing mechanisms are helping reduce the cost gap between SAF and conventional jet fuels, making SAF more competitive.

Asia Pacific Sustainable Aviation Fuel (SAF) Market Segmentation

By Fuel Type: The Asia Pacific SAF market is segmented by fuel type into Bio-SPK, FT-SPK, HEFA-SPK, and ATJ-SPK. HEFA-SPK dominates this segmentation, holding a significant market share of 65% in 2023. The dominance of HEFA-SPK is attributed to its technological maturity and compatibility with existing jet engines without the need for major modifications. This fuel type is also favored due to its ability to be produced from various feedstocks, including waste oils and fats, which are widely available in the region.

By Feedstock: The SAF market in the region is segmented by feedstock into municipal waste, algae, waste oils and fats, and agricultural residue. Waste oils and fats hold the dominant market share of 50% in 2023. This is because waste oils and fats are easily accessible and cost-effective feedstock options for SAF production, especially in countries like Australia and Singapore, where there is an ample supply of used cooking oil and other waste oils, making it a sustainable and viable source for SAF production.

Asia Pacific Sustainable Aviation Fuel (SAF) Market Competitive Landscape

The Asia Pacific SAF market is dominated by a combination of global fuel producers and regional energy companies. These companies are at the forefront of developing SAF technologies, forming strategic partnerships with airlines, and expanding SAF production capacity across the region. The competitive landscape highlights the concentration of these market leaders who possess advanced technology and production capabilities. The following table showcases five major players in the SAF market:

Asia Pacific Sustainable Aviation Fuel (SAF) Industry Analysis

Growth Drivers

• Increasing Focus on Carbon Emission Reduction: The aviation sector contributes approximately 2.5 billion metric tons of CO emissions annually worldwide. Countries in the Asia Pacific region, such as China and India, are placing greater emphasis on carbon reduction strategies, which include promoting sustainable aviation fuels (SAF). The International Civil Aviation Organization (ICAO) estimates that the region's aviation-related CO emissions could reach 500 million metric tons by 2025 if left unchecked. The adoption of SAF has become crucial in reducing the carbon footprint of aviation, aiming to reduce emissions by up to 80% per lifecycle compared to conventional jet fuels.
• Regulatory Support from Governments: Governments in the Asia Pacific region, including Australia, Japan, and Singapore, have launched various policy initiatives to accelerate SAF production and usage. In 2024, the Japanese government set aside $250 million to develop bio-refineries capable of producing SAF. Additionally, the Australian government aims to produce 10 million liters of SAF by 2025 through its biofuel blending mandates. These policies reflect strong regulatory backing for SAF, as aviation decarbonization has become a national priority, particularly in nations with high air traffic volumes.
• Rising Airline Initiatives for Sustainability: Airlines across the Asia Pacific are actively incorporating SAF into their operations to meet environmental goals. Singapore Airlines, for instance, has committed to using 25 million liters of SAF annually from 2024 onward. Moreover, Japan Airlines (JAL) has signed a 10-year contract to utilize SAF as part of its long-term sustainability initiatives. Airlines are also setting ambitious carbon-neutrality targets by 2050, making SAF an essential part of their strategies to reduce their carbon emissions and meet regulatory demands.

Market Challenges

• High Production Costs Compared to Fossil Fuels: The current production cost of SAF ranges from $2,000 to $3,500 per ton, significantly higher than conventional jet fuel, which costs around $900 per ton. This disparity in cost is a major barrier to widespread adoption. Despite government subsidies and regulatory support, the price gap remains a challenge. Additionally, limited economies of scale hinder SAF's ability to become cost-competitive in the short term, especially in countries like India and Thailand where SAF production is still nascent.
• Limited Feedstock Availability: The Asia Pacific region faces challenges in securing sufficient quantities of sustainable feedstocks for SAF production. Nations like Indonesia and Malaysia have abundant biomass, but other countries like Japan and South Korea depend on imports of bio-based materials like used cooking oil and waste oils, which increases production costs. The demand for feedstock in 2024 reached over 10 million tons across the region, but only about 30% of that can currently be sourced sustainably.

Asia Pacific Sustainable Aviation Fuel (SAF) Market Future Outlook

Over the next five years, the Asia Pacific Sustainable Aviation Fuel (SAF) market is expected to experience rapid growth, driven by stringent emission targets, ongoing technological innovations in feedstock processing, and increasing airline initiatives for adopting greener fuels. The rising investments in SAF production facilities and stronger government incentives for SAF adoption are likely to accelerate the shift toward more sustainable aviation practices. Countries in the Asia Pacific region are expected to play a pivotal role in increasing global SAF production capacity, as large-scale SAF production plants are under development in Australia, Japan, and Singapore. Furthermore, collaboration between governments, energy producers, and airlines will be crucial in scaling up SAF deployment.

Opportunities

• Development of New Feedstocks: There is a growing shift toward diversifying SAF feedstocks, particularly in using non-traditional materials such as municipal waste, algae, and agricultural residues. In 2024, the Asia Pacific region produced over 50 million tons of waste oils and municipal waste annually, which could be converted into SAF. Countries like China and India have initiated pilot projects to turn algae into biofuel, further enhancing the sustainability of SAF production. These developments offer promising opportunities to reduce reliance on limited traditional feedstocks.
• Increasing Investments in SAF Production Plants: Major investments in SAF production facilities are being made across the region, with several new plants scheduled to come online by 2025. In China, for example, a new SAF plant with an annual capacity of 300,000 tons is under construction, backed by an $800 million government investment. Similar projects are being initiated in countries like Australia and Japan, where governments are also providing grants and tax incentives to attract private-sector investment.