To power planes in the years ahead, China must look beyond used cooking oil as its sustainable aviation fuel

With low fuel production costs, abundant feedstocks and the world's fastest-growing aviation market, China is emerging as a key player in sustainable aviation fuel (SAF).

The country is a major exporter of waste and residue feedstocks, such as used cooking oil, which can be used to produce SAF, jet fuel with up to 80 percent fewer life cycle carbon emissions compared to fossil fuel. Prioritizing domestic SAF production could enable China to expand SAF refineries rapidly.

China's growing renewable energy pipeline and excess electricity could accelerate green hydrogen production and in turn, eSAF, a synthetic fuel derived from renewable energy. With China's air travel market projected to be the world's largest by 2043, these fuels could support its decarbonization goals.

Other regions and countries, such as Europe and the United States, are also pursuing SAF but Europe's ability to scale production faces challenges due to high labor costs, limited feedstocks and global competition. While refineries are in development, some projects have been scrapped due to weak demand, technical risks and financial concerns.

Europe has long relied on imported fuels. If it struggles to meet SAF mandates domestically, could China step in to fill the gap, or will Chinese-produced fuel be reserved for local use?

The World Economic Forum's Airports of Tomorrow initiative has recently hosted regional discussions on these topics.

The 14th Five-Year Plan (2021-25) sets a target for the Chinese civil aviation industry to consume 50,000 tons of SAF a year by 2025.

To date, there is around 400,000 tons per year of production capacity already in operation (over 90 percent for export), with a further 3.9 million tons per year announced.

China's ability to expand SAF production depends on the availability and prioritization of feedstocks, primarily used cooking oil, which can be used to produce hydro-processed esters and fatty acids SAF. This is currently the mainstream SAF pathway to turn vegetable oils, used cooking oils or fats into aviation fuels.

Much of this waste oil is currently exported, with major buyers including the Netherlands, Spain, Italy, the United Kingdom and more recently, the US following incentives from the 2022 Inflation Reduction Act.

Increasing used cooking oil collection could boost local production and export. However, per capita consumption is expected to peak by 2030 which will result in used cooking oil feedstock constraints.

With the limited long-term availability of used cooking oil, China must invest in alternative green jet fuel pathways.

One option is alcohol-to-jet, which uses feedstocks such as sugarcane, corn and switchgrass. However, since the early 2000s, China has prioritized food security to avoid competition between fuel feedstocks and crops. This aligns with the country's aim to reduce dependence on foreign grain imports and enhance agricultural self-sufficiency.

Given this red line, feedstocks will likely limit the potential for massively scaling alcohol-to-jet SAF in the long term, yet we can still expect bio-based waste residues to be prioritized in the short term.

Power-to-liquid fuel, made from renewable electricity, water and carbon dioxide, could be a viable alternative for China in the long term. It is currently the most expensive way to produce SAF but also presents significant benefits related to carbon emissions savings and scaling potential. As the country lowers the cost of solar and wind power, it could achieve a competitive advantage in producing synthetic fuels.

The International Energy Agency predicts that by 2028, China will account for nearly two-thirds of global renewable energy capacity, with solar and wind providing nearly half of its electricity by 2030.

However, curtailment issues — where excess clean electricity is wasted due to grid limitations — present a major challenge. If curtailment were addressed, China could leverage its renewable surplus to significantly boost SAF production.

In 2023, China saw a high curtailment of 35 terawatt hours of renewable energy. If this had been used for power-to-liquid production, according to the conversion ratio from the Forum's Clean Skies for Tomorrow initiative, it could have produced nearly 20 times the volume targeted by China for 2025.

Regions such as Northwest, North and Northeast China hold the greatest potential for green hydrogen and SAF production, but these are not traditional aviation hubs. Thus, physical infrastructure to move fuel molecules where they are used and book-and-claim systems are needed to enable greater SAF use.

Scaling this pathway will also depend on reducing the costs of electrolyzers and direct air capture technology and on how the government prioritizes decarbonization across sectors given that green electrons will be needed in other industries as well.

In established SAF markets, regulators set mandates to encourage industry growth. For instance, the European Union requires increasing SAF blends in aviation fuel, starting at 2 percent in 2025 and reaching 70 percent by 2050.

China, however, is still developing SAF policy and aviation stakeholders believe that a demand mandate will only be introduced with the assurance that it can be met.

They agree that supply-side measures and dedicated policies, such as land leasing incentives or including SAF in the China Certified Emissions Reduction scheme, are also likely to build industry and investor confidence.

While government incentives could drive economies of scale and cost reductions, they may also attract international scrutiny. There are already calls for higher tariffs on Chinese products including used cooking oil in the US, which have intensified after the presidential election, and the EU confirmed new tariffs on extra-EU biofuels in July.

Some analysts say that similar trade measures could follow for SAF if China's incentives are seen as a threat to European competitiveness, and that the timing of these trade actions is critical — too early and Europe risks missing out on China's SAF advances; too late and the European industry could struggle to stay competitive, as seen with electric vehicles.

China's ability to export SAF to the EU and other markets will also depend on the sustainability of its fuels and feedstocks. Europe enforces strict sustainability standards to prevent adverse impacts from scaling low-carbon fuels, such as land use issues.

Recognizing this, China launched a new sustainability certification body, led by the Civil Aviation Administration in Chengdu, Sichuan province, in July 2024. This SAF technical center held public consultations on three domestic standards on hydro-processed esters and fatty acids SAF and the life-cycle carbon assessment of SAF. It aims to establish industry foundations and align China's SAF standards with international markets.

China's technological advancements, feedstock availability and policy place it in a strong position to potentially reshape the global SAF market. The country is moving quickly, having launched its first SAF pilot program in September.

Twelve commercial flights from Air China, China Eastern and China Southern will use SAF at four airports, with plans to expand in 2025.

The industry is eager to find out how these early developments will shape China's mid- to long-term SAF roadmap — one that will guide not only local industry but also have geopolitical impacts on Europe and other markets.

Giorgio Parolini is lead of Aviation Decarbonization at the World Economic Forum. He Yiran is a specialist in Industry Decarbonization at the World Economic Forum. The authors contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

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