India has the potential to emerge as a major player in the Sustainable Aviation Fuel market thanks to its vast feedstock availability and growing technological expertise. However, challenges related to policy incentives, infrastructure, and cost competitiveness could hinder large-scale production, said Maurits van Tol, Chief Executive, Catalyst Technologies at Johnson Matthey, in an interview with S&P Global Commodity Insights on the sidelines of India Energy Week.
India's potential as a SAF hub stems from its vast agricultural biomass, which, if utilized effectively, could not only address pollution concerns such as stubble burning but also reduce fuel import dependency. "Why not collect the biomass and convert it into something of value? You produce local jet fuel, need to import less, and keep the rupees in the country," he said.
Despite its feedstock advantage, India's SAF adoption faces policy hurdles. The country currently lacks a strong mandate, with blending targets set at just 1% in 2027, rising to 5% by 2030. "Mandates help. Without them, nobody is going to pay a lot more for SAF," van Tol said. He suggested India should also view SAF production from an energy security perspective, as a diversified energy mix could reduce reliance on imports.
Export opportunities
With growing global SAF demand, van Tol sees potential for India to position itself as an exporter. "If India can scale up production quickly, it could achieve very competitive costs, much like DG Fuels in the US," he said.
However, he cautioned that achieving economies of scale would require large investments and abundant renewable hydrogen to improve SAF yields.
Scaling up SAF production is a time-intensive process, with projects typically taking 4-5 years from conception to operation. "If investment decisions are made now, large-scale SAF plants could be operational by 2029," he explained, hinting that India may struggle to meet its 2027 blending targets without imports.
Van Tol emphasized that global mandates for SAF blending are driving demand, with regions such as Europe and China implementing strict targets. "Airlines need SAF because it's the only way for them to decarbonize, given the long lifespan of aircraft."
The demand is there, but production is currently limited," he said. Van Tol added that blending mandates of even 2-6% could help scale up production while keeping overall costs manageable.
Methanol
Van Tol highlighted Johnson Matthey offers multiple pathways to produce SAF, including Fischer-Tropsch synthesis and methanol-based routes.
"Methanol is particularly attractive because it's versatile. It can be used directly in shipping, converted into SAF, or serve as a precursor for other chemicals," he said. However, cost remains a crucial factor. "The price of green hydrogen—determined by electricity costs—plays a significant role. In regions with low-cost renewable electricity, clean methanol and SAF production become more feasible."
Van Tol sees significant potential for methanol-based biofuel in the shipping industry, particularly given the availability of flex-fuel engines and methanol bunkering infrastructure. He also acknowledged the competition for bio-based materials, noting that other industries, like plastics, might be willing to pay higher prices.
Addressing concerns about sustainability, particularly regarding palm oil, Maurits van Tol clarified that the focus is on utilizing residual biomass and agricultural waste, not virgin oils.
The road ahead for India
India has the potential to produce 8 million-10 million mt/year of SAF by 2040, requiring investments of $70-$85 billion to achieve this target, according to a report by Deloitte India, which could reduce carbon emissions by 20 million-25 million mt each year.
The report highlights that India, currently holding a 2%-3% share in the global aviation turbine fuel market, is optimally positioned to become a leading exporter of SAF.
By exceeding the projected domestic demand of 4.5 million mt needed for a 15% blending mandate by 2040, India can serve both local and international markets.
Additionally, the report said that using agricultural residues as SAF feedstock could boost farmers' incomes by 10%-15%, offering a sustainable alternative to the harmful practice of crop burning while also expected to generate 1.1 million-1.4 million jobs across the value chain and significantly cut the nation's crude oil import bills by $5 billion-$7 billion annually.
Platts assessed SAF FOB Straits at $1,682/mt on Feb. 20, up $18.50/mt from the previous assessment.
