IATA forecasts that air travel demand will double from 2019 levels by 2040, but the trajectory of SAF uptake may impact the outlook for conventional jet fuel consumption.

• Platts estimates that jet fuel demand will peak in 2035 at 7.8m b/d, at which point SAF will be 11% of total aviation fuel consumption.
• SAF could constitute 36% of aviation fuels by 2050, Platts added.
• One of the key issues will be whether supply can match demand for SAF.
• BNEF said SAF capacity is on track to hit 0.42m b/d by 2030, although demand could start to exceed supply from 2029, pushing up prices for an already more expensive fuel.
• The price of SAF relative to jet fuel may be a key factor in how quickly airlines take up SAF, although further government mandates and subsidies will be critical.
• In the US, SAF supply hit a fresh record in Q2, up 75% on Q1, BNEF said, citing EPA data.
• This brings total US SAF supply in H1 to 51.5m gallons, almost double the volume for the whole of 2023.
• The steep trajectory is set to persist, as BNEF expects 400m gallons per year of new capacity to come online in 2024 in the US.

Source: S&P Global Commodity Insights