Japan to form task force on SAF price gap
Japan’s Ministry of Economy, Trade, and Industry (Meti) has announced plans to form a task force to tackle the challenge of high sustainable aviation fuel (SAF) prices with the goal to bridge price gap between refiners’ production costs and airlines’ affordability.
The cost of domestically-produced SAF, even with existing government support for suppliers, remains too high for airlines to adopt widely without negatively impacting their profits. A Meti official highlighted that closing this price disparity is a major hurdle, according to a report by Argus.
The decision to establish the task force was approved on June 25 by Meti’s SAF deployment promotion committee. The new team will focus on devising strategies to cover the price difference and aims to present its proposed measures by December.
These recommendations will be particularly timely as Japanese refiners — including Eneos, Cosmo Oil, Idemitsu, and Taiyo Oil — are poised to make final investment decisions on their domestic SAF projects. These refiners received financial assistance from Meti in February for their projects and are expected to finalize investment plans this year or next.
Airlines, on the other hand, are wary that deploying high-priced SAF will harm their revenues, stating that current price levels are unsustainable for their business.
While the task force aims to report possible measures by December, Meti does not anticipate finalizing the entire scheme design by the end of this year. A Meti official indicated there’s no need to rush, as a substantial amount of domestic SAF is expected to enter the market around 2028 or 2029, allowing the committee to finalize scheme details by then.
Japan has an ambitious target of replacing 10% of domestic airlines’ jet fuel consumption with SAF by 2030. Calculations from Meti and the land transport ministry (as of January 2024) project that Japan’s total SAF requirements, including demand from foreign airlines, will be around 1.7 million kiloliters in 2030, with an estimated supply of 1.9 million kiloliters in the same year.