What South Africa needs to unlock its sustainable jet fuel potential

From the newsletter

A new World Bank report positions South Africa as a frontrunner in Africa’s sustainable aviation fuel (SAF) market, leveraging its green hydrogen plans, Fischer-Tropsch (FT) technology and abundant industrial carbon sources. But to unlock this potential, it must prioritise renewables, cut costs and coordinate phased investments.

• Africa's aviation sector is set for substantial growth, with the International Air Transport Association (IATA) forecasting a doubling of passenger traffic from 2023 levels by 2043.

• Such expansion underscores the imperative to address the environmental ramifications of aviation emissions, which could significantly exacerbate pressures on African ecosystems and global climate commitments.

More details

• Titled Fueling Africa’s Flight: A Techno-Economic Assessment of Sustainable Aviation Fuels in Africa, the report explores the potential for producing sustainable aviation fuels across Ethiopia, Kenya, Nigeria, and South Africa. These nations were selected due to their strategic importance within Africa's aviation sector, their diverse array of available feedstocks, and their varying levels of infrastructure and policy development. Among these, South Africa emerges as a key focus given its distinctive potential to utilize green hydrogen for SAF production.

• The report specifically finds that South Africa is well-positioned to lead e-kerosene production via the power-to-liquid (PtL) pathway. This strategic direction could enable the country to capitalise on growing global demand for SAF, a trend driven by international climate mitigation efforts and rising carbon offset costs.

• However, the World Bank cautions that South Africa’s potential is constrained by several economic and structural challenges. Chief among these is the high minimum selling price (MSP) of e-kerosene, which stands at $4.60 per litre, more than double the global average of $2.20. 

• The high MSP is largely due to the high cost of green hydrogen, significant capital expenditure and continued reliance on a coal-heavy electricity grid, which diminishes the climate benefits of PtL fuels. The MSP is also highly sensitive to the costs of hydrogen and carbon dioxide, as well as the national discount rate, all shaped by South Africa’s volatile economic and energy landscape.

• To overcome these barriers and realise its SAF potential, the report recommends a phased approach grounded in public-private collaboration and international support. In the short term, South Africa should issue a clear policy commitment with ambitious but achievable production and blending targets. This should be backed by tailored fiscal incentives, such as those available in special economic zones.

• A national feedstock strategy is also essential, prioritising sustainable sources like industrial waste carbon, which qualifies under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), and exploring biogenic carbon from invasive plant species to meet EU import requirements. At the same time, feasibility studies should assess the economic, environmental and social impacts of SAF production, particularly when co-located with existing refinery infrastructure. These studies should also evaluate the renewable electricity capacity required to produce green hydrogen at scale.

• In the medium term, the report recommends a progressive SAF blending mandate, starting at 2% and increasing to 10% by 2035, to create predictable market signals and boost investor confidence.

• Financing for pilot projects will be critical and should come from a mix of public and private sources, including multilateral development banks. These institutions can offer concessional loans, guarantees and blended finance instruments to mitigate South Africa’s credit and energy market risks. In parallel, expanding renewable energy infrastructure must be prioritised to ensure that green hydrogen is produced using low-carbon electricity, preserving the environmental integrity of PtL SAF.

• In the long term, the report recommends that South Africa aims to scale up e-SAF production to meet domestic jet fuel demand and become a regional exporter. Establishing a robust SAF certification system aligned with global best practice will also be vital to ensure sustainability and build trust.

• Moreover, SAF deployment should be integrated into wider national decarbonisation strategies across the transport sector, including shifts to more efficient modes of mobility and enabling corporate procurement of SAF credits to meet Scope 3 emissions targets.

Our take

• South Africa’s drive to scale SAF may start locally, but its success could chart a course for the rest of Africa, setting the standard for a greener, more resilient aviation future.

• Its success in overcoming challenges like high production costs and securing investment coupled with its experience in FT technology could serve as a valuable blueprint for other African nations exploring similar pathways.

• SAF production offers Africa significant opportunities for economic diversification, fostering new industries beyond traditional sectors, such as those related to green hydrogen, green methanol, green ammonia, and green steel.