India can emerge as the global leader of the SAF market but harnessing this potential will require a robust policy framework.
New Delhi: The aviation industry currently accounts for 2-3% of the global carbon emissions and these figures are set to multiply manifold as air travel picks up in the post pandemic world. In a bid to minimise the adverse effects of international civil aviation on the climate, the Air Transport Action Group has committed the global civil aviation operations to achieve net zero by 2050. Realising this target would require the aviation industry to substantially augment its operational efficiency through measures such as fleet renewal and deployment of hydrogen or electricity-powered planes. The challenge, however, lies in meeting the cost and within the targeted timelines – Fleet renewal will require huge capital investments and though hydrogen and electric planes appear to be promising alternatives, it will take at least 10-15 years for the technology to fully mature and for such planes to become commercially viable. The emission problem, therefore, requires a more immediate solution, which may be provided by the readily deployable sustainable aviation fuel (SAF). Extracted from sustainable raw materials such as cooking oil, municipal and agricultural waste, SAF is a biofuel that has the potential to reduce greenhouse gas emissions by up to 80% and it can be blended with up to 50% of the traditional jet fuel without disrupting the existing aircraft infrastructure.
In addition to the potential of reducing carbon emissions, establishing an SAF supply chain in India will also generate employment opportunities for stakeholders who can collect agricultural residue/biomass from the farmers and supply it to the SAF producers. This will, in turn, create an additional stream of income for the farmers. Processing of agricultural waste that would otherwise be burnt will also aid in combating the problem of air pollution caused by stubble burning every year. Given that agricultural and municipal waste are key raw materials for SAF production, an SAF supply chain could also play a key role in streamlining the hitherto unorganised waste management system in India and potentially address the issue of rising landfills in cities like New Delhi. The SAF industry promises numerous benefits that spill over well beyond the realm of the aviation sector and the SAF industry has, therefore, has been estimated by the World Economic Forum to add ~USD 2.8 billion to India’s GDP annually. With an abundant supply of SAF feedstock and a proven track record of producing renewable energy at the lowest cost in the world, India is well placed to assume the position of a global leader of the SAF supply chain. However, given that the SAF supply chain in India is at an embryonic stage, achieving this milestone will require a robust roadmap and resolute policy commitments in the form of viability gap fund and tax incentives to attract investments in this sector. Though the government had released the National Policy on Biofuels in 2018 that set a target of blending 20% ethanol in petrol by 2030, similar targeted measures for the promotion of SAF may also be introduced to bolster investor confidence in the SAF industry. The government may also consider tapping the private sector expertise for the development of the SAF infrastructure through the public-private partnership model. SAF currently costs approximately 2.5 times more than the traditional jet fuel, which is why until cost goes down, its uptake by the aviation sector will be remain a hurdle. However, with the introduction of an appropriate regulatory framework to promote the production of SAF in India, the cost of SAF is expected to eventually be at par with, if not lower than, the traditional jet fuel; allowing the aviation sector to reduce its carbon footprint without incurring additional costs.
SAF holds the key to unlocking the path of decarbonisation of the aviation sector and the role of government in this endeavour cannot be emphasised enough. It is paramount that proactive policy measures are put in place to incentivise investments in this sector. Upon establishing a robust supply chain, the government may also consider introducing measures akin to renewable purchase obligations for SAF to encourage the aviation sector to increase the consumption of the biofuel.
The SAF industry is expected to grow from USD 209 million in 2021 to USD 12.7 billion in 2028 and the policymakers must leave no stone unturned to ensure that India takes a lion’s share of this revenue pie. Capitalising on this opportunity to emerge as the global leader of the SAF industry will not only bolster India’s reputation in terms of innovation but also put it on the forefront of climate leadership.