Sustainable aviation fuel (SAF) opportunities on horizon for Australian agriculture

Growing global and local demand for sustainable aviation fuel (SAF) presents promising opportunities for Australian agriculture, according to new research by Rabobank.  

The report noted global capacity to produce SAF is expected to reach 17 million tonnes within two years, rising to more than 25 million tonnes by 2030.  

RaboResearch Australia & New Zealand General Manger Stefan Vogel believes as airlines work towards decarbonisation, the largest reduction in aviation emissions over the next decade will come from the transition to SAF, typically made from agricultural products and by-products.  

“This SAF capacity will often require agricultural products as feedstock, with three-quarters expected to use fats such as vegetable oil, animal fat, or used cooking oil, and almost 10% requiring ethanol from sugarcane or grain,” Mr Vogel said. 

The Rabobank report suggested that demand for SAF feedstocks might mimic the global biodiesel industry's demand over the past two decades, benefiting Australian farmers similarly.  

“SAF could offset volume reductions in road transport biofuels, helping maintain positive farmgate prices for feedstocks like canola, oilseeds, grain, and sugar,” Mr Vogel said. 

The potential for Australian farmers to supply low-emissions feedstock for SAF production, could lead to significant structural changes in demand for agricultural products like those seen with the growth of the automotive biofuels industry. 

“Developing an Australian SAF industry would be beneficial for agriculture, as it could provide another demand outlet for canola, sugar, bagasse, tallow, and potentially grains,” said Mr Vogel. 

The report notes that while the future of local SAF production in Australia is uncertain, the global SAF market is expected to grow significantly. This growth could benefit Australian farmers by increasing international demand for feedstock.  

Mr Vogel noted that agricultural producers with low-carbon footprints can command higher price premiums, aiding their transition to lower-emission farm production. 

The global aviation industry’s emissions problem is one agriculture could significantly help address.  

While some regions, like the EU, restrict the use of food crops for SAF production, the report identifies vegetable oil and sugarcane as the most economically attractive feedstocks in Australia, with grain and ethanol also holding promise.  

Long-term potential exists for municipal waste and cellulosic materials such as grains, sugar and tallow, if conversion economics improve. Australia’s SAF industry is in its infancy, driven by voluntary airline actions and initial trials. Demand for SAF in Australia is expected to rise with more aggressive airline decarbonisation efforts and government support. However, scaling up local production requires strong aviation industry commitment and supportive legislation. 

Despite potential future shifts to non-agricultural feedstocks, the report concludes that for at least the next decade, SAF would generate increased demand for agricultural products and economic benefits for farmers.