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Drawing lessons from policies in the US related to sustainable fuels can greatly help in the commercialisation of Sustainable Aviation Fuel & other sustainable biofuels in India.
“India is emphasising the development of environmentally conscious energy sources to enhance
our energy mix.”
“A robust energy sector bodes well for national progress.”
These are just a few of the quotes by Prime Minister Modi at his inaugural speech at the India Energy Week 2024, highlighting India’s progress towards the energy transition and self-reliance. Indeed, the rapid progress towards achieving its Nationally Determined Contributions (NDCs) puts India at the forefront of the global energy transition.
In the business-as-usual scenario, India’s transport sector’s per capita Greenhouse Gases (GHG) emissions are expected to rise from 0.24 tons in 2019 to 0.35 tons in 2030, with the road sector contributing almost 85% of total emissions. India has already embarked on ambitious programmes of blending of bioethanol and biodiesel with petrol and diesel respectively, which has resulted in a reduction of GHG emissions by more than 42 million tons per year. As per the estimate of the International Energy Agency (IEA), India could triple its biofuel use in the next seven years. India also has an ambitious target of achieving 30% share of Electric Vehicles (EVs) in passenger Light Duty Vehicle (LDV) sales by 2030.
India has already embarked on ambitious programmes of blending of bioethanol and biodiesel with petrol and diesel respectively, which has resulted in a reduction of GHG emissions by more than 42 million tons per year.
Generally, GHG emissions, produced as an unwanted by-product of activities such as transport, is considered a negative externality. While conventional biofuels and EVs are contributing towards reducing GHG emissions from the transport sector in India, rapid commercialisation of advanced fuels such as Sustainable Aviation Fuel (SAF), Bio-Hydrogen and Second-Generation Ethanol is imperative for India to further decarbonise the transport sector and achieve the Net-Zero target. Currently, very few advanced fuels for the transport sector are viable to produce commercially. Government policy can greatly help in commercial production of these fuels, thereby internalising the negative externality of GHG emissions.
Typically, policies for commercialisation of sustainable and advanced biofuels come in various categories, such as regulations, incentives (e.g. Viability Gap Funding), subsidies, blending mandates etc. Some of the advanced biofuels such as SAF have been successfully commercialised in the United States (US), mainly due to an ambitious programme to accelerate the use of SAF and the implementation of various policies and regulations. These efforts can provide valuable lessons for India.
Sustainable Aviation Fuel (SAF) is a drop-in fuel complying with the sustainability criteria as laid out by the International Civil Aviation Organisation. SAF is produced using sustainable feedstock such as biomass, waste lipids/oils, CO2 etc. through various technology pathways. The sustainability of feedstock and carbon intensity of the technology pathway determines the overall potential of carbon savings by replacing fossil jet fuel with SAF, which is typically in the range of 50% to 90%.
Some of the advanced biofuels such as SAF have been successfully commercialised in the United States (US), mainly due to an ambitious programme to accelerate the use of SAF and the implementation of various policies and regulations.
Although emissions savings are high, the current cost of producing SAF ranges between 3 to 8 times the cost of fossil-based jet fuel, and the production of SAF is commercially un-viable without policy support. Considering that green hydrogen-powered or battery-powered aircrafts are still in the nascent stage of development, SAF is considered as the imminent solution for the ‘hard to abate’ aviation sector.
Considering the significant cost gap between SAF and Aviation Turbine Fuel (ATF), initially, very few airlines embarked on voluntary use of SAF in the US. In 2022, the US Department of Energy (USDOE) announced the ‘SAF Grand Challenge’, an ambitious target of using 3 billion gallons of SAF per year by 2030 and supplying sufficient SAF (of ~35 billion gallons per year) to meet 100% aviation fuel demand in the US by 2050. The USDOE, along-with other government agencies, developed a comprehensive strategy roadmap with the objective to expand SAF supply and use, reducing cost of SAF and enhancing its sustainability.
A wide range of US federal/national and state incentives are already in place for various biofuels, including SAF. Here is the summary of these policies at national and state level:
These policies of tax credit and revenue from national and state level credits help in bridging this cost gap between SAF and ATF to a large extent. This enables SAF producers to sell SAF to airlines at the price point close to the price point of fossil jet fuel and makes SAF projects commercially viable, despite having SAF cost ~3X the cost of fossil jet fuel. SAF projects of almost 2 billion gallon per year capacity have already been announced in the US as the result of this conducive policy.
In India, the government has already announced an indicative target to blend 1% of SAF in jet fuel for international flights from 2027. Taking a cue from government policies, the private sector has also become active in this sector. For instance, Praj Industries Ltd. has already embarked on developing indigenous SAF technology suitable to process feedstock available in India. India’s first commercial passenger flight using indigenously produced Sustainable Aviation Fuel (SAF) blend was successfully flown on Friday, 19 May 2023. Air Asia flight (I5 767) flew from Pune to New Delhi powered by the blend of conventional Jet Fuel and SAF produced by Praj in India using indigenous feedstock. The fuel was tested, blended and distributed by Indian Oil Corporation Ltd.
India’s first commercial passenger flight using indigenously produced Sustainable Aviation Fuel (SAF) blend was successfully flown on Friday, 19 May 2023.
Although India has embarked on the path of use of SAF, the commercial viability of SAF production poses a significant challenge to the successful commercialisation of SAF in India. Drawing lessons from policies in the US related to sustainable fuels can greatly help in the commercialisation of SAF & other sustainable biofuels in India.
Also, India has plans to establish the Indian Carbon Market (ICM), intending to decarbonise the Indian economy through the energy transition. Establishing a national Carbon Market that provides economic benefits to the fuel producers and tax incentives, both in line with the Carbon/GHG emissions savings from Sustainable Fuels, can contribute in bridging the viability gap for SAF production, as well the production of other sustainable fuels, such as Bio-Hydrogen in India.
Amol Nisal is associated with Praj Industries Ltd., where he focuses on business strategy and organisational transformation.
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Amol Nisal is associated with Praj Industries Ltd., where he focuses on business strategy and organisational transformation. His expertise extends across technology, regulatory landscapes, and ...
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