January 2023

Quick Bite

The aviation industry produced a total of 915 million tonnes of CO2 in 2019, accounting for 2.1% of all human-induced C02 emissions and 12% of emissions from the transportation sector. Sustainable aviation fuels (SAF) could come to the rescue, and Nigeria could benefit from its rise.

High Spirits: Harnessing Opportunities in the ethanol-to-jet fuel market

The Meat

High Spirits: Harnessing Opportunities in the ethanol-to-jet fuel market

The aviation industry is an integral part of the global economy and international trade. From vaccines, through jewellery, to military equipment, air travel is the preferred mode of transport for high-value, time-sensitive shipments, and people. Nonetheless, the industry contributes greatly to global emissions. As calls for environmental accountability increase and the industry deals with the impact of unpredictable jet fuel prices, could alternative (and greener) fuel sources come to the rescue? This article discusses the potential for ethanol-based jet fuel and the opportunities (and challenges) it presents to Nigeria and similar African countries.

The Market

The aviation industry plays a critical role in fostering international trade by moving people and goods over great distances in a relatively short time. In 2020, the industry moved nearly 4.5 billion passengers and 52 million metric tons of goods. The latter figure is dwarfed by the nearly 11 billion metric tons of goods shipped by sea annually. However, the aviation industry accounts for over 35% of global trade by value ($6 trillion), with the industry best suited for critical shipments such as perishables, pharmaceuticals, and high-value jewelry among others. All of these shipments of goods and transport of people are powered by Jet fuel; a fossil-derived input susceptible to significant price volatility and increased scrutiny.

The aviation industry, alongside shipping and other niches in the larger transportation industry, has been a major contributor to greenhouse emissions. The industry produced a total of 915 million tonnes of CO2 in 2019, accounting for 2.1% of all human-induced C02 emissions and 12% of emissions from the transportation sector. Beyond emissions, the industry’s cost economics is heavily susceptible to jet fuel prices; itself a derivative of crude oil whose prices are affected by a plethora of factors. Between January and July 2022, the price of Jet fuel increased by nearly 90%, thereby putting significant pressure on the earnings margins of local and international airlines. Similarly, prices increased by more than 300% between 2016 and 2022. While some of this volatility could be hedged (especially in the medium term), there is no gainsaying the negative impact of short-term volatility on the earnings of airline companies since fuel expenses gulp between 19-30% of operating expenses.

Source: IATA
Source: IATA

SAF to the Rescue

The aforementioned combination of negative environmental impact and crude oil-induced volatility has led to growing calls for other sources of power for the aviation industry. From electric aeroplanes to hydrogen fuel cells, alternatives are fast emerging. However, these options face multiple constraints, including cost, scalability, space/weight concerns, and the enormous cost of building out the required storage/transport infrastructure. These constraints (at least in the short to medium term) provide an early competitive advantage for sustainable aviation fuel (SAF); a plant-derived jet fuel with similar characteristics to conventional jet fuel, up to 80% reduction in greenhouse gas emissions vis-a-vis jet fuel, and little to no need for new infrastructure and/or modification to existing aircraft engines.

Furthermore, the ease with which sustainable aviation fuel could be blended with conventional jet fuel means its production could be increased over the coming years without the need for airlines to make an “either/or” decision between existing fleets and new renewables-powered fleets. Existing aircraft fleets are increasingly run on a blend of conventional jet fuel and SAF, with no need for extra modification to the aircraft and related storage/transport facilities. Higher blend ratios are already in the works in both civilian and military aircraft, further opening up dual opportunities in the aviation industry. Currently, the International Air Transport Association (IATA) reports that over 300 million litres of SAF were produced in 2022, with more than 50 airlines already using SAF and over $17 billion in forward purchase agreements concluded. While still a fraction of the conventional jet fuel market (valued at $350 billion), SAF’s relative substitutability means that its production could easily be ramped up to capture a higher chunk of the $350 billion aviation fuel market.

Where Does Nigeria Stand in this?

The increasing demand for a jet fuel alternative that minimizes cost, emits fewer greenhouse gases and avoids a multi-billion dollar infrastructure retooling bill makes sustainable aviation fuel the logical choice. The IATA has identified up to seven technical pathways and multiple feedstocks for the production of SAF. This includes crops (corn, cassava, sugarcane, etc.), cellulose, and algae among others. For Nigeria, the crop-to-ethanol-to-SAF pathway is both logical and scalable. Nigeria currently ranks as the world’s leading producer of cassava, with 60 million metric tons in annual production. Admittedly, the bulk of this production is subsistent and largely consumed in households. However, Nigeria’s wealth of arable land and longstanding local production knowledge confers a significant competitive advantage that could be harnessed.

Furthermore, Nigeria has made strides in the ethanol industry; a key mid-product for the SAF process. The country currently plays host to the largest producer of ethanol in Africa. Furthermore, the country has received sizeable investments in the ethanol value chain, including a $95 million cassava-to-ethanol plant in Benue state in late 2022. The availability of a local ethanol industry (for investors interested solely in SAF production) and a large cassava production market (for investors interested in full vertical integration) makes Nigeria a potential beneficiary of the rise of SAF. It also presents investors with a major investment opportunity in a multi-billion dollar opportunity. Other contributions include alternative income sources for local farmers and the growth of related industries dependent on side products of the process, including biofertilizers, livestock feed, etc.

Source: IATA
Source: Tridge


The aviation industry plays a critical role in fostering international trade as well as the exchange of ideas among diverse cultures. However, its huge impact on the climate has led to calls for more sustainable alternatives. Sustainable aviation fuels from bioethanol could fulfil this role alongside other innovative solutions currently in the market. Nigeria, the world’s largest producer of cassava and an emerging ethanol powerhouse, could tap into this growing industry. Investors could pursue a joint venture with existing players in the ethanol industry and/or pursue vertically-integrated projects in key cassava-producing areas

Kwakol Research could help with this. Learn more about how we help we help our client.

Crystal Ball

In just over three weeks, Nigeria will head to the polls in one of the most competitive elections in modern Nigerian history. The choice of candidate could have significant consequences for the country’s security, fiscal health, and geostrategic position. Our team designed and deployed one of the most extensive survey exercises across multiple locations in the country. Our report will be released prior to the election. Stay tuned!

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