New Delhi, Aug 29 (SocialNews.XYZ) India's sustainable aviation fuel (SAF) industry could achieve cost parity with conventional jet fuel by 2036 with domestic production offering greater protection from currency fluctuations and global commodity price volatility, a report has said.
The report by Gulf Times said that evaluating SAF projects only through single-year production costs gives an incomplete picture of their long-term economics.
It noted that while power-and-biomass-to-liquids (PBtL) fuel is estimated to cost $1.42 per litre in 2030, compared with $0.97 per litre for conventional jet fuel, the gap narrows substantially when costs are assessed over a 25-year project cycle.
In addition, historical data between 2005 and 2025 showed wholesale jet fuel prices rising by 5 per cent annually in nominal rupee terms.
About 1.9 per cent of the increase was attributed to US dollar commodity inflation, while 3.1 per cent reflected rupee depreciation against the dollar.
According to the report, domestic synthetic fuel plants can help reduce this currency vulnerability as major operational inputs can be secured through long-term, rupee-denominated power purchase agreements at fixed tariffs.
Taking these dynamics into account, researchers estimated the levelised cost of PBtL fuel from a plant commissioned in 2030 at Rs 127 per litre, only 18 per cent above the adjusted levelised purchase cost of conventional jet fuel over the same 25-year period.
Under base-case market assumptions, new synthetic fuel facilities commissioned in 2036 are projected to achieve full levelised cost parity with conventional fuel, the report said.
It also noted that the cost gap could close sooner if the wider economic benefits of green fuel are factored into policy decisions.
Moreover, monetising health benefits from reduced agricultural field burning could add an estimated $0.38 per litre in avoided societal costs, while applying carbon costs could add up to $0.22 per litre.
These benefits could potentially bring SAF to commercial cost parity with conventional jet fuel as early as 2030, it said.
Additionally, the report highlighted the potential for India's agricultural residue and low-cost renewable power to support a domestic SAF ecosystem while reducing exposure to imported crude oil and foreign exchange risks.
Source: IANS
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