AIRLINES & ALLIANCES

McKinsey Report: Understanding the sustainable-fuel market to capture value

With SAF and sustainable fuels firmly on the agenda of airlines, airports, transport companies and hospitality industry, very useful report by McKinsey breaking down types of sustainable fuel and giving projections till 2050.

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GLO

The sustainable-fuel market is nascent, complex, and growing fast. Participants need to develop an in-depth understanding across different fuels, feedstocks, and regions can gain a competitive advantage.

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Key takeawyas: 

• As countries around the world seek to limit their carbon emissions, sustainable fuels will play an important role. This category consists of a broad range of low-carbon fuels, including biofuels, e-fuels, and chemical by-products (see sidebar, “Know your sustainable fuels”). Because sustainable fuels can fill gaps in decarbonization and complement electrification, demand is expected to triple over the next 20 years, reaching approximately 600 million metric tons (Mt) by 2050 (Exhibit 1).¹ To date, completed advanced-biofuels projects and announced investment pipeline in sustainable-fuel capacity have reached $100 billion.²

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• ^{In the coming years, constraints on sustainable biomass feedstocks are expected to create a gap between demand for and supply of fuels with existing technologies. Although biomass feedstocks, notably lignocellulosics, have significant potential for energy production,3 practical constraints on their collection mean the global community likely won’t be able to achieve net-zero targets without a shift to e-fuels and dedicated biomass production on marginal lands or surplus agricultural land.} 

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• ^{Source: McKinsey}