From farm to sky: Feedstocks fuel India’s path to cleaner skies

A report from McKinsey and the World Economic Forum examines how India is deploying sustainable aviation fuels at scale.

In the not-so-distant future, waste products such as used cooking oils and agricultural residues will fuel airplanes in the sky. One country championing the use of such sustainable aviation fuels (SAFs) is India. The nation—which is among the world’s fastest-growing aviation markets—is on the journey to producing and deploying SAFs at scale.

SAFs are seen as an increasingly important component of global aviation’s decarbonization efforts to align with targets outlined in the Paris Agreement. The sector emits around 3 percent of the world’s total greenhouse gases, a figure that belies a climate-change impact that could be two to four times larger because of non-CO2 pollutants and other negative externalities.

McKinsey’s recent report with the World Economic Forum’s Clean Skies for Tomorrow Coalition—which is working toward making carbon-zero flying a reality by the middle of the century—is a blueprint for India’s ongoing transition to SAFs. The coalition’s community in India has set the goal of flying 100 million passengers on SAFs at a 10 percent blend by 2030.

India is particularly well positioned to have significant impact in the area. Of the more than 80 private- and public-sector organizations that make up the Clean Skies for Tomorrow Coalition, around 20 are from India. The nation not only is projected to go from its current position as the world’s eighth-largest aviation market to third place by 2025 but also generates abundant amounts of agricultural residues (farming byproducts, such as husks and chaff), used cooking oil, and other solid waste—feedstocks used to produce SAFs. Furthermore, India enjoys the availability of low-cost renewable-energy sources and the technology to scale up deployment of SAFs.

Leadership, commitment, and coordination from a broad range of stakeholders are key to converting roughly 166 million tons of feedstocks produced in India every year into 22 to 24 million tons of SAFs. There are three main priority areas:

  • Collection systems for feedstock. Harvesting agricultural residues and other waste products would require implementing new mechanisms at the farm level and end-to-end segregation infrastructure.
  • Production systems according to four pathways. ASTM has approved a mix of production technologies and feedstocks that need to be set up: hydroprocessed esters and fatty acids made from lipid feedstocks (such as used cooking oil), gasification from the Fischer-Tropsch process of municipal solid bio and plastic waste or agricultural residues, alcohol to jet fuel made from agricultural residues and surplus sugar streams (such as cane molasses and syrup), and power to liquid produced with hydrogen technology and carbon from industrial sources. We estimate that around $2.5 billion in initial investments is needed across the different production pathways.
  • Delivery systems to close operational gaps. Because ASTM-approved SAFs are nearly identical to current forms of fossil-based jet fuels, their deployment will require minimal additional infrastructure and delivery infrastructure. Oil producers can work with oil-marketing companies to blend SAFs with fossil jet fuels in the proper rations. Blending facilities would have to be constructed along delivery routes, as current regulations prohibit blending on airport grounds. That will require additional tanks and supply routes.

Price is a hurdle to overcome in the large-scale deployment of SAFs. As SAFs are still an emerging fuel source, they are between 200 and 500 percent more expensive than traditional jet fuels are. While costs would fall as the production technologies mature, bridging the cost differential right now would require government support and substantial investment from the private sector.

There are three possible scenarios of how the Indian government can support the scaling up of SAF production and deployment. First, the government could provide the funds to close the cost gap with measures such as tax breaks on aviation fuel, lowered taxes on SAFs, and subsidies on SAF-production investments. Second, the government could pursue a budget-neutral option in which it imposes a passenger duty to prevent price competition among airlines because of the deployment of more expensive SAFs. The surcharge could be adjusted according to unit costs of SAFs. Third, it could consider a hybrid, 50-50 cost-sharing model between the government and passengers in which both subsidies and passenger duties are introduced to facilitate the SAF transition.

Momentum is building in the private sector. Companies in the Clean Skies for Tomorrow community in India have committed to scaling the use of SAFs. Many see a unique opportunity to seize on a first-mover advantage in a burgeoning market and demonstrate global leadership. For instance, SpiceJet has committed to the 2030 target and is conducting proof-of-concept test flights. Direct investments in pilot projects could drive a virtuous cycle of wider adoption and innovation.

Beyond being cleaner fuel alternatives, SAFs yield manifold social and economic benefits as eco-conscious air travel becomes a greater priority globally. The report projects that the SAF industry will generate a combined GDP equivalent of $2.8 billion for India, assuming that annual SAF production reaches 360,000 tons by 2030. More than 120,000 new green jobs would be created, farmers’ incomes would increase by between 10 and 15 percent, and better waste-management systems and less open-air burning would lead to overall reductions in pollution.

Given the numerous economic, social, and environmental benefits of SAFs, it’s clear that there’s no more opportune moment than now for India’s aviation players to embrace them. Besides being the responsible thing to do, it’s also a way for India to have an outsize impact on shaping the norms and standards around the future of safe, clean, and inclusive mobility.

Download Clear Skies for Tomorrow: Deploying Sustainable Aviation Fuels at Scale in India, the full report on which this article is based (PDF–7.88MB).

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