SAF Production Cost Cut via Grants: Study

New Delhi, Sep 29 (PTI) Financial assistance, including capital grants and loan guarantees, can help reduce the initial cost of building facilities for the production of sustainable aviation fuel in India, which also has significant volumes of feedstocks for producing the fuel, according to a study.

The study has been prepared under the ICAO ACT-SAF Assistance Project Capacity Building for Sustainable Aviation Fuels (SAF) eligible under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

ICAO ACT-SAF refers to the International Civil Aviation Organization Assistance, Capacity-building and Training for Sustainable Aviation Fuels.

At a low estimate, the study said India can annually produce more than 14 million tonnes of SAF from various feedstocks, with sugarcane bagasse, rice straw, and municipal solid waste forming the bulk of the biogenic feedstocks.

The production quantum can be more than 33 million tonnes per year at the higher end.

"The potential low estimate of SAF volumes that can be produced in India is more than sufficient to supply up to 70 per cent SAF blends into all jet fuel used in India (based on jet fuel forecasts to 2050), with additional SAF available for export," the study said.

"India can produce more than enough SAF to deliver high blending targets demand and also export SAF to other regions... India's favourable geographic location positions it for export to Southeast Asia and Europe," the study said, adding that the country has significant volumes of sustainable feedstocks for producing the fuel.

The production of SAF through the alcohol-to-jet (AtJ) process presents the largest opportunity for India as a route to SAF production, it added.

SAF will be a key element in decarbonisation of the country's fast growing civil aviation space.

While highlighting that the lack of supportive and adequate policies in India makes investment in SAF facilities uneconomical, the study said providing financial assistance in the form of capital grants and loan guarantees can be used to reduce the initial cost of building a first-of-a-kind facility for SAF production, and such an approach will also create a favourable investment environment.

"A combination (basket) of policies with different mechanisms targeting different challenges in the SAF supply chain can spread the higher cost of SAF blending and use.

"Long-term mandates that create a structural demand, combined with long-term, firm offtake agreements (not just a memorandum of understanding), and the establishment of a stable policy framework providing long-term security, will derisk investment and create a favourable investment environment and drive consumption of SAF," it noted.

The idea of having mandates for SAF is not being favoured, including by the International Air Transport Association (IATA), which is of the view that mandates alone are not adequate and incentives are also needed.

The study has suggested setting up a SAF Council to develop a long-term vision and strategic plan for SAF and integration of SAF within existing biofuels policies to address competition and achieve synergy towards long-term climate goals, among other steps.