Evaluating sustainable aviation fuel (SAF) solely through single-year cost comparisons presents a misleading view of project economics.
The joint report titled ‘India's Aviation Opportunity: Turning Agricultural Residue and Low-Cost Solar into Competitive Sustainable Aviation Fuel with Power-and-Biomass-to-Liquids’ detailed how conventional aviation fuel in India relies on imported crude oil priced in US dollars.
In 2030, power-and-biomass-to-liquids (PBtL) fuel carries an estimated production cost of $1.42 per litre compared to $0.97 per litre for conventional jet fuel. However, the study stressed that analysing costs across a 25-year levelised project cycle reveals a much narrower financial gap.
Historical data from 2005 to 2025 shows wholesale jet fuel prices inflating by 5.0% annually in nominal rupee terms. The findings indicated that roughly 1.9% of that increase stems from US dollar commodity inflation, while the remaining 3.1% reflects ongoing rupee devaluation against the dollar.
Synthetic fuel plants reverse this monetary vulnerability, the publication pointed out. Built as capital-intensive domestic assets, PBtL facilities lock in major operational inputs through long-term, rupee-denominated power purchase agreements (PPAs) at fixed tariffs.
Consequently, the report noted that levelised production costs remain insulated from exchange rate fluctuations and foreign commodity price shifts.
Taking these currency dynamics into account, the researchers calculated that the levelised cost of PBtL fuel produced at a plant commissioned in 2030 is Rs127 per litre, just 18% above the adjusted levelised purchase cost of conventional jet fuel over the same quarter-century.
Under base-case market assumptions, the report projected that new synthetic fuel facilities commissioned in 2036 will achieve full levelised cost parity with conventional fuel.
According to the report, that parity date can arrive much sooner if policies capture the broader economic benefits of green fuel. Monetising health co-benefits from reduced field burning adds an estimated $0.38 per litre in avoided societal harm, while applying carbon costs adds up to $0.22 per litre, potentially closing the commercial cost gap by 2030, the report added.
