Renewable aviation fuel derived from biomass offers the single largest opportunity to reduce emissions and at the same time ensure energy security for the sector. The airline industry is committed to curb greenhouse gas emissions and attain a set target of carbon-neutral growth in the near future. As per statistics of the Intergovernmental Panel on Climate Change, CO2 emissions from the airline industry account for 2% of global emissions due to anthropogenic activities.
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In recent years, the aviation industry has invested significantly in improving the engine designs and fuel efficiency. Despite these improvements, emissions are still on the rise in the aviation industry. Moreover, with fluctuating prices of crude oil prices, airlines are striving to reduce dependency on conventional fuels that have an impact on their profit margins. This is because aviation fuel accounts for substantial operating costs for an airline company.
The use of renewable aviation fuel is an innovative solution to curb carbon emissions and reduce the dependency on conventional fuels. Therefore, the aviation fuel industry is investing heftily for the commercialization of alternative fuels. This is because the large-scale production of renewable aviation fuel would enable airline companies to diversify their fuel sources and devise new hedging strategies.
The global aviation fuel market is expected to rise at a substantial rate post the large-scale production of alternative fuels over the next few years. Fluctuating crude oil prices and stringent environmental regulations are some of the major factors that are encouraging investments in the renewable aviation fuel market. Moreover, stringent regulations in place for curbing greenhouse gas emissions have compelled the aviation industry to invest in alternative fuels. The U.S. Federal Aviation Administration has specified a target for the U.S. aviation industry to curb carbon emissions and partially shift to renewable aviation fuel from 2018.
Investments from several governments for commercial production of renewable aviation fuel for their defense departments is aiding the growth of the renewable fuel aviation market. The U.S. department of defense displays the highest demand for aviation fuel, thus it is allocating huge sums of money for testing and adoption of renewable aviation fuels. The depletion of conventional fuels has also necessitated seeking alternative fuels, which is boosting the growth of this market. However, factors such as high production cost and lack of accurate information about the commercial production of alternative fuels can hamper the market’s growth.
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The regional segments of the global renewable aviation market are North America, Europe, Asia Pacific, and Rest of the World. Currently, Europe is the largest market for renewable aviation fuel due to large investments made in the region. Several airline companies such as Air France and Lufthansa have tested this fuel for commercial passenger flights as well. Several companies in this region are adopting renewable aviation fuels to reduce dependency on crude oil and reduce operating costs in the long run.
North America is another major market that is making investments for renewable aviation fuel and several companies are producing alternative fuels in small quantities. Asia Pacific is expected to be a major market for renewable aviation fuel due to increasing airline traffic in this region.