A new joint study by UC Berkeley’s IECC and Energy Innovation reveals that India could soon become a powerhouse in the sustainable aviation fuel (SAF) industry, potentially producing fuel at costs up to 40% below global benchmarks.

Last year, the International Air Transport Association (IATA) reported that SAF accounts for a mere 0.6% of total jet fuel consumption worldwide. This falls drastically short of the global aviation sector’s target to utilize 65% SAF to achieve net-zero carbon emissions by 2050. Currently, SAF is two to five times more expensive than traditional jet fuel, posing a significant economic hurdle for airlines that typically operate on razor-thin margins. Furthermore, producers hesitate to invest without long-term contracts, and there is a severe shortage of global refining capacity and traditional raw materials like animal fats and cooking oil.

However, India’s booming renewable energy sector could flip its crude oil import vulnerabilities into a massive export opportunity. By scaling Power-and-Biomass-to-Liquids (PBtL) technology, the nation could build a $9 billion SAF export industry by 2030, which is projected to swell to $30 billion by 2040. India generates immense volumes of surplus crop residue, which farmers typically burn. By harvesting just 4% of this agricultural waste, India could fulfill 25% of global SAF demand while simultaneously providing a direct income stream for rural communities.

This economic viability is largely driven by India’s ability to produce some of the world’s cheapest green hydrogen, fueled by abundant solar power. Green hydrogen prices are projected to decrease from $4.67 per kilogram in June 2025 to $3.23 per kilogram in February 2026, eventually dropping below $3 per kilogram by 2030. These falling costs will allow PBtL to consistently outcompete rival technologies.

The PBtL method takes agricultural waste—such as sawdust, forestry waste, and straw—and converts it into a gas mixture called syngas. Green hydrogen is then added before the mixture undergoes a Fischer-Tropsch process, which transforms the carbon-rich gas into liquid hydrocarbons. This creates a “drop-in” jet fuel that is completely compatible with current aircraft and airport infrastructure.

Introducing green hydrogen revolutionizes the economics of biomass-derived SAF. While traditional Biomass-to-Liquids (BtL) techniques discard a significant amount of the carbon found in agricultural waste during conversion, PBtL utilizes green hydrogen to retain and convert much more of that carbon into liquid fuel. This yields approximately twice the amount of SAF from the exact same volume of biomass. Additionally, because the process utilizes forestry waste and crop residues instead of food crops, it bypasses the major criticisms leveled at traditional biofuels. If paired with carbon capture and storage, the technology could even remove more carbon dioxide from the atmosphere than it emits over its lifecycle.

To guarantee a regulated domestic market alongside its export ambitions, India has established a policy mandating a 5% SAF blending requirement in jet fuel by 2030. This investment in SAF also serves to insulate the country from volatile global jet fuel markets. Following the outbreak of the Iran war and the subsequent spike in Aviation Turbine Fuel (ATF) costs, New Delhi authorized an ATF Price Stabilization Fund worth 100 billion rupees (approximately $1.05 billion). The program supplies interest-free financing to state-owned oil marketing companies (OMCs), capping domestic jet fuel prices at 115 rupees per liter to shield airlines like Air India and IndiGo from drastic fuel price swings.

Favorable production economics and strong policy support are already drawing corporate investment. California-based Aemetis (NASDAQ: AMTX) is exploring an initial public offering (IPO) for Universal Biofuels, its subsidiary in India. The IPO proceeds would finance a dedicated Indian SAF facility while adding the capacity to convert biodiesel into SAF for both international and domestic airlines. Universal Biofuels already operates an 80-million-gallon-per-year plant on India’s east coast, delivering tens of millions of liters of biodiesel to the country’s three state-owned OMCs. Globally, Aemetis holds $3.8 billion in SAF supply contracts with major airlines, alongside a $3.2 billion renewable diesel supply agreement.