Market dynamics and pathway competition

The forecast, which profiles Shell, BP, TotalEnergies, Neste, and 49 other key players, underscores the intensifying competition between first-generation HEFA pathways and emerging synthetic routes. HEFA remains constrained by feedstock availability—used cooking oil and animal fats are finite—while Power-to-Liquid offers theoretically unlimited scalability if renewable electricity and carbon sources are secured. BloombergNEF’s price outlook suggests SAF costs are beginning to level off as production scales, yet the International Air Transport Association has warned that growth remains too slow to meet aviation decarbonisation targets despite higher 2026 production forecasts.

Airbus recently unveiled a study examining SAF’s potential to support economic growth and accelerate Canada’s climate ambitions, reflecting intensifying government and OEM interest in securing domestic supply chains. Fischer-Tropsch synthesis—the core of Power-to-Liquid—requires precise catalyst formulation and heat integration; AI-driven reactor optimisation and co-electrolysis tuning are now being explored by engineering firms to improve carbon conversion efficiency and reduce parasitic energy losses at scale.

Power-to-Liquid technology readiness

Fischer-Tropsch reactors convert syngas (a mixture of hydrogen and carbon monoxide) into liquid hydrocarbons that can be refined into drop-in jet fuel. The process demands careful temperature control, optimal H₂:CO ratios, and advanced catalysts—typically cobalt or iron-based—to maximise selectivity toward kerosene-range molecules. Co-electrolysis, which simultaneously splits water and CO₂ in a single high-temperature cell, offers a more thermally efficient route to syngas than coupling separate electrolysers with reverse water-gas-shift reactors. Heat recovery from exothermic Fischer-Tropsch synthesis can be integrated into upstream electrolysis units, reducing overall electricity demand and improving project economics.

Investment outlook and policy drivers

The ReFuelEU Aviation mandate, requiring 2% SAF blending by 2025 and 70% by 2050, is channelling capital toward both biogenic and synthetic pathways. RED III’s multipliers for renewable fuels of non-biological origin (RFNBOs) provide additional revenue support for Power-to-Liquid projects. As module manufacturers scale compact Fischer-Tropsch units and electrolyser costs continue to decline, the gap between HEFA and e-fuel production economics is narrowing faster than many industry observers anticipated even two years ago.

Sources

• Sustainable Aviation Fuel Market – Global Forecast 2026-2032 Now Available
• IATA warns SAF growth remains too slow despite higher production forecast for 2026
• Airbus unveils study on the potential of sustainable aviation fuel to support economic growth and accelerate Canada’s climate ambitions
• Sustainable Aviation Fuel Price Outlook: Leveling Off

Featured image via Unsplash.