Global aviation risks missing 2030 decarbonization targets as SAF progress slows down: BCG

Despite strong momentum in recent years, the commercial aviation industry is falling behind on its decarbonization goals as sustainable aviation fuel production slows, according to a new survey by Boston Consulting Group.

Despite a remarkable 1,150% increase in SAF supply over the past three years, the industry faces a slowdown in project development and significant gaps in meeting ambitious decarbonization targets, the company said in a March 27 report.

SAF still accounted for only 0.3% of jet fuel supply in 2024, well below the industry's 2030 targets. Delays in project approvals, high production costs, and weak business cases for investment are hampering progress.

The report, based on a survey of over 500 executives from approximately 200 aviation-related companies, highlights European airlines are set to meet a 2% SAF mandate this year, rising to 6% by 2030, but high costs three to five times that of conventional jet fuel continue to hinder adoption.

Platts, part of S&P Global Commodity Insights, assessed the Asia SAF-jet fuel spread at $1,269.37/mt on March 27, the European SAF-jet fuel spread at $1,294.46/mt and on the US West Coast, the spread was at 280.71 cents/gal.

BCG projects a 30% to 45% shortfall in SAF supply by 2030, driven by economic uncertainty, rising energy costs, and a 50% to 70% drop in new facility announcements from 2022 to 2023.

"Although 80% of companies remain confident about meeting their 2030 SAF targets, only 14% feel fully prepared to tackle the challenges ahead," the report said.

The study found that aircraft and engine manufacturers and project developers are currently investing the most in SAF projects, but many airlines and lessors, constrained by thin margins, have taken a more cautious approach. Two-thirds of companies expect to remain "observers" rather than leaders in SAF adoption by the end of the decade.

"We're moving in the right direction, but not fast enough," said Pelayo Losada, BCG Managing Director and co-author of the report. "There's a clear slowdown in project momentum, and many companies are waiting for others to take the lead."

Airlines and airports are investing only 1% to 3% of their budgets in SAF, while aircraft manufacturers and project developers are taking a more aggressive stance.

Bio-SAF, produced from natural oils and biomass, is currently the preferred technology due to its maturity and relatively lower costs. However, its production is still expected to fall 30% short of 2030 targets. Meanwhile, e-SAF, a more technologically complex fuel produced from carbon and hydrogen, is projected to miss its target by 45%.

BCG suggests that carbon pricing and standardized market frameworks could boost adoption, alongside large-scale production consortiums to drive down costs.

Industry Urged to Collaborate

The report recommends that the aviation ecosystem comprising airlines, airports, OEMs, financiers, and regulators take collective action. BCG suggests aggregating SAF demand, setting industry-wide trading standards, scaling up projects, and fostering innovation beyond 2030.

"Commercial aviation is highly integrated. Unlike other industries, it has the potential to create a virtuous cycle of demand and supply but only if all players move together," the consultancy said.

Upcoming policies like the EU's ReFuelEU Aviation and the US Federal Aviation Administration's enhanced SAF programs could help bridge the gap, but faster, coordinated efforts will be needed to avoid missing climate targets.