Sustainable aviation fuel prices in India could see a major cut in premiums over conventional aviation turbine fuel, driven by significant SAF capacity additions in the country, said Vijay Nirani, founder of biofuels company TruAlt Bioenergy.

Currently, SAF produced through the hydroprocessed esters and fatty acids (HEFA) route is priced nearly 3.5 times higher than ATF, trading around $3.2/gallon in international markets.

In an interview with Platts, part of S&P Global Commodity Insights, on the sidelines of the India Energy Week 2025 on Feb. 14, Nirani said alcohol-to-jet (ATJ) derived SAF can achieve cost parity faster.

"Our goal is to bring SAF costs to just 35-40% above ATF in the coming years, mirroring how solar and wind energy prices dropped drastically within a decade," Nirani, also, newly appointed co-chair of the India SAF Alliance, said.

The key to this cost reduction lies in the company's upcoming 300 kl/day SAF plant, which aims to be one of the world's largest SAF plants from derived ethanol, he said. TruAlt Bioenergy is India's leading ethanol producer.

AtJ pathway promise for cost parity

TruAlt Bioenergy is targeting the commissioning of the plant by 2027, aligning with India's SAF mandate of 1% blending in international flights by the same year, scaling to 5% by 2030.

This translates to an estimated SAF demand of 120 million-140 million liters over the period for a 1% blend target.

TruAlt Bioenergy's proposed plant will utilize the alcohol-to-jet (AtJ) pathway, which allows for direct integration with existing ethanol infrastructure. Despite industry concerns over high capital expenditures, Nirani emphasized that the company is strategically leveraging existing ethanol storage, cogeneration plants, and renewable energy sources to mitigate costs.

"Our ethanol storage is already in place, and we generate power and steam from biomass-based cogeneration plants. Hydrogen, a crucial input for SAF production, will come from our compressed biogas (CBG) plant via steam methane reforming (SMR) reactors, which is far more cost-effective than green hydrogen from electrolysis," he explained.

Tackling high CapEx challenges

According to Nirani, the primary cost burden in SAF production stems from oligomerization. However, he remains optimistic that increased plant deployment will naturally drive down costs.

“The first few plants will bear higher [capital expenditures], but as we streamline design and detailed engineering while utilizing available infrastructure, costs will reduce significantly.”

He drew a parallel to the dramatic decrease in solar and wind energy costs over the past decade, suggesting that similar cost reductions are possible with SAF as the industry scales up.

Nirani highlighted global benchmarks, citing LanzaJet's Georgia facility and Indian Oil Corp's Panipat project. "LanzaJet's 100 kl/day plant in the US costs around $200 million, while Indian Oil's Panipat facility has a similar budget. However, our estimates suggest that our 300 kl/day plant will have a per-unit CapEx nearly one-third lower."

However, he underscored the need for a robust policy framework to support offtake agreements and long-term price stability.

"We must ensure alignment between technology providers, airlines, refiners, policymakers, and global stakeholders. Frequent engagement and knowledge-sharing will accelerate adoption and cost reduction," he noted.

Feedstock frugality and SAF scale up

Besides policy, another key hurdle for higher SAF adoption in India is the availability of feedstocks.

India only has only 35% of arable land for cultivation use, but corn — a key ethanol feedstock — can grow in harsh conditions, Nirani said.

The Indian government’s push to raise corn-based ethanol prices is aimed at improving corn production in India's capacity, he said. “Additionally, India generates 120 million-160 million mt of surplus biomass every year, which could yield [3 billion] liters of ethanol annually."

He argued that shifting from first-generation ethanol, whose base raw material (feedstock) costs INR 40-50 per liter, to second-generation ethanol derived from biomass, whose base raw material (feedstock) costs INR 14-15 per liter, would drastically lower SAF production costs.

“If ethanol costs drop from Rupee 65/liter to Rupee 30/liter, SAF prices could fall from Rupee 180/liter to Rupee 100/liter. This is not just theoretical, it’s a practical possibility on rational calculations," he said.

While alternative fuels such as hydrogen and ammonia are emerging for road and maritime transport, aviation's decarbonization efforts remain heavily reliant on SAF.

Nirani acknowledged the challenge of feedstock competition but emphasized that policy-driven scaling of ethanol and biomass utilization would ensure sufficient supply for SAF.

“In the last five years, India scaled ethanol capacity at an unprecedented rate, outpacing many developed countries. With the right policies, the same can happen with SAF,” he said.

India has the potential to produce 8 million-10 million mt/year of SAF by 2040, requiring investments of $70-$85 billion to achieve this target, according to a new report by Deloitte India.

According to the report, this projection aims to reduce carbon emissions by 20 million-25 million mt each year.

The report highlights that India, currently holding a 2%-3% share in the global aviation turbine fuel market, is optimally positioned to become a leading exporter of SAF.

Based on exceeding the projected domestic demand of 4.5 million mt needed for a 15% blending mandate by 2040, India can serve both local and international markets.

Additionally, the report said that using agricultural residues as SAF feedstock could boost farmers’ incomes by 10%-15%, offering a sustainable alternative to the harmful practice of crop burning while also expected to generate 1.1 million-1.4 million jobs across the value chain and significantly cut the nation's crude oil import bills by $5 billion-$7 billion annually.

Platts assessed SAF FOB straits at $1,706.50/mt on Feb. 18, up $6.25/mt from the previous assessment.