Synopsis
- The Government will “soon” announce a national Sustainable Aviation Fuel (SAF) policy, signalling intent to scale low-carbon jet fuel domestically.
- ATF demand is projected at 15 – 16 MTPA by 2030 and 30 – 31 MTPA by 2040; SAF can reduce lifecycle CO₂ emissions by up to ~80%.
- An India-specific feasibility note references a 1% blend by 2027 rising to 5% by 2030 (policy details awaited).
- Biomass surplus estimates of ~230 MTPA strengthen the feedstock case for SAF pathways.
Market Context
At the India Sustainable Aviation Fuel Summit (FICCI with MoCA), Civil Aviation Minister Ram Mohan Naidu stated that the Government will shortly release India’s SAF policy, positioning the country to lead in SAF production and exports. The remarks also cited strong traffic growth and network expansion as supportive conditions for a rapid transition.
Aviation turbine fuel demand is expected to rise to 15 – 16 million tonnes by 2030 and 30 – 31 million tonnes by 2040, expanding the base on which any blend mandate would operate. In parallel, India continues to add airports and capacity, improving the feasibility of SAF logistics as supply scales.
SAF remains the most material decarbonisation lever available to aviation this decade, with lifecycle CO₂ reductions of up to ~80% versus fossil Jet A-1 depending on pathway and feedstock.
Business Model and Value Chain
The emerging India SAF value chain runs from feedstock aggregation to certified fuel at the wingtip. Residue-based feedstocks (agro-residues, used cooking oil, non-food lipids) are pretreated and converted via ASTM-approved pathways such as HEFA, ATJ, or FT. Fuel is then upgraded to meet ASTM D7566 specifications and blended into Jet A-1 under Indian standards for distribution to airports. As policy clarifies trajectory and incentives, producers can align offtake with airlines and oil marketing companies (OMCs).
Feedstock availability is a competitive advantage. India’s surplus agro-residue has been estimated at roughly 230 million tonnes per year, indicating headroom for bio-based fuels if collection systems, pricing, and competing uses are managed well.
Also Read: Bamboo Biomass-Based 2G Ethanol in India: Unlocking the Future of Biofuels
Unit Economics
SAF currently carries a premium to ATF due to feedstock logistics, conversion yields, and limited scale. Global experience indicates prices often at several multiples of conventional jet fuel, narrowing with scale, technology learning, and policy support. Blending trajectories under discussion (1% by 2027, 5% by 2030) would create early demand visibility and enable bankable offtake contracts if paired with fiscal levers or certificate mechanisms.
Regulatory, Compliance, and Risks
The forthcoming policy is expected to clarify eligible feedstocks and pathways, certification and quality norms, indicative blending paths, and possible incentive structures. India’s stance will also need to stay consistent with CORSIA monitoring, reporting, and verification on international routes from 2027. Key risks to plan for include feedstock competition (power, biogas, materials), price premiums versus ATF, and the readiness of airport storage and into-plane systems beyond major hubs.
HMSA’s Opinion on This
India can graduate from isolated SAF pilots to scaled adoption if the policy sets a clear, rising blend path and pairs it with early hub infrastructure support and a credible certificate mechanism. In the first quarter post-policy, airlines should map CORSIA exposure and lock multi-year offtake with volume corridors and indexed premiums; producers should secure feedstock catchments, choose proven pathways (HEFA near term, ATJ in ethanol clusters), and firm up EPC and licensor arrangements; OMCs and airports should commission storage, blending, and into-plane procedures at major hubs before cascading to Tier 2 and Tier 3.
It is also recommended to use digital chain-of-custody and MRV systems to prevent double-counting and monetize certificates. From an investment lens, greenfield plants near residue basins often deliver stronger unit economics, while selective brownfield retrofits can compress timelines where standards compatibility is assured. Diligence must stress-test feedstock availability and pricing, validate certification and quality compliance, and diversify airline and OMC offtake so projects remain bankable despite initial price premiums over ATF.
FAQs
- What is SAF?
A drop-in aviation fuel produced from sustainable feedstocks, certified under ASTM D7566, and blended into Jet A-1. Lifecycle CO₂ savings can reach ~80% depending on pathway.
- Will India mandate blending immediately?
Signals point to an initial trajectory (1% by 2027 toward 5% by 2030), but final mandate design is awaited in the policy notification.
- Is there enough feedstock?
Biomass surplus estimates (~230 MTPA) indicate potential, subject to aggregation economics and competing uses.
- What will determine project viability?
Feedstock cost and security, conversion yield, capacity utilisation, and the structure of incentives and certificates. Early, bankable offtake is critical.
How HMSA can help
If you are evaluating entry into this space, or scaling an existing operation, HMSA Consultancy brings hands-on support across strategy planning, performance improvement, and transaction support. We develop evidence-based business plans, size markets with defensible assumptions, design operating models and KPIs, optimise cost and working capital, and run end-to-end diligence and deal support. To explore how these levers apply to your context, reach out for a focused discussion with our senior team.
Reference: PIB
