Beijing's recent policy shift regarding the export tax rebate on a critical biofuel feedstock has ignited cautious optimism among aviation industry insiders about the future of sustainable aviation fuel (SAF) in China. Despite this development, experts predict that a significant rise in domestic consumption of SAF remains improbable in the short term. The primary hurdles hindering this growth are production constraints and the prohibitively high costs associated with SAF.
One of the critical challenges facing the SAF market in China is its steep price, which ranges from three to five times more than standard jet fuel. This inflated cost is largely attributed to high production expenses and the limited domestic supply of SAF. However, the removal of the export tax rebate on a vital biofuel feedstock offers a glimmer of hope for overcoming these obstacles. By eliminating this rebate, production costs may decrease, and domestic supply could potentially increase.
The push for SAF is part of a broader initiative to reduce carbon emissions within the aviation industry. SAF has been identified as a pivotal component in achieving this goal, as its usage can significantly cut greenhouse gas emissions. The Chinese government has set ambitious targets for SAF consumption as part of its efforts to transition towards a more sustainable aviation sector.
While the removal of the export tax rebate represents a positive step towards achieving these targets, industry insiders remain cautious about immediate impacts. The high cost and limited availability of SAF continue to pose significant barriers to widespread adoption. However, the policy change is seen as a crucial move towards making SAF more accessible and affordable in the long run.
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