Sustainable Jet Fuels Need High Carbon Price to Compete

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

  • Alternative jet fuel is at least 2.5 times cost of fossil jet
  • A carbon price of $252 could make some fuel competitive

Sustainable aviation fuels, or SAFs, are the only commercialized solution to decarbonize the aviation sector in the near-term, according to BloombergNEF. However, high production costs make SAF between 2.5 and 8 times more expensive than conventional jet fuel.

SAFs are alternative fuels derived from organic materials, or made from renewable energy, and can reduce lifecycle emissions from flying by as much as 80%. BloombergNEF expects the aviation sector will be one of the driving forces behind oil demand growth in the coming decades, with jet fuel demand doubling by 2050. In the absence of a meaningful scale-up in low-carbon alternatives, emissions from the sector will double too, according to BloombergNEF’s Aviation Fuel Outlook.

BNEF calculated the theoretical carbon price that would bring conventional jet fuel in line with each of the main SAF pathways. The lowest carbon price was for gasification + Fischer Tropsch, at $252 per ton of CO2.

By comparison, the EU ETS carbon price averaged 24.80 euros per ton in 2020 (about $28 per ton CO2). BNEF expects that the EU ETS price could rise to over 100 euros per ton CO2 by 2030.

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About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
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