The output of qualified SAF products by multiple companies and the obtainment of airworthiness certification may indicate the continuous solid foundation for the pilot promotion and application of domestic bio aviation coal, confirming the accelerating development trend of the SAF industry in China.
According to the Wisdom Financial APP, Debon Securities released a research report stating that since the beginning of this year, various SAF enterprises in China have successively released important phase results, continuously solidifying the foundation for the pilot promotion and application of domestic bio aviation coal, confirming the accelerating development trend of the SAF industry in China. In recent years, the country has attached importance to the development of biomass fuels, with intensive policy catalysis, potentially accelerating SAF demand. The aviation industry's recovery may drive up SAF demand, with the expectation to unlock a million-ton scale market in the 15th Five-Year Plan period; the SAF usage in 2030 is expected to reach 3.63 million tons, driving market expansion significantly.
Event: 1) According to Jinlianchuang, as of November 21, 2024, the European bio aviation coal delivered price (SAF CIF NWE) was $2200.00 per ton, a $99.00 per ton increase from the previous trading day. 2) Jiaao Environmental Protection's holding subsidiary Lianyungang Jiaao New Energy Co., Ltd. successfully started production in the recent period at the Lingang Industrial Zone in Ganyun County, Lianyungang City, with the bio aviation coal project producing qualified products that meet the standard.
Debon Securities' main points are as follows:
The domestic SAF development is accelerating, with the continuous solidification of the application foundation.
Since the beginning of this year, various SAF enterprises in China have successively released important phase results:
In January 2024, Henan Junheng Bio officially obtained the CAAC HEFA-SPK airworthiness certificate, becoming the second enterprise in nearly ten years after Sinopec Zhenhai Refining & Chemical to obtain the SAF airworthiness certification in China; in September, Penyao Environmental Protection's biomass liquid fuel technology renovation project produced qualified bio aviation coal products, with its airworthiness certification expected to begin processing in the near future; in November, Haixin Energy Science's bio aviation coal products officially obtained the CAAC HEFA-SPK airworthiness certification, and its 0.2 million tons/year bio-diesel isomer project is expected to start production in the second quarter of next year; in November, Jiaao Environmental Protection successfully produced qualified SAF products, and it is expected that the airworthiness certification work will also proceed in an orderly manner.
The production of qualified SAF products by multiple companies and the acquisition of airworthiness certification may signify the continuous consolidation of the pilot promotion and application foundation of domestic bio-aviation fuel, confirming the overall accelerated development trend of the SAF industry in the country.
In recent times, domestic policies have been intensively catalyzing, and the demand for SAF may be released more rapidly.
In recent years, the country has attached importance to the development of biomass fuels, introducing a number of SAF-related policies. In 2022, the Civil Aviation Administration of China's "14th Five-Year Plan for Green Development of Civil Aviation" mentioned striving to achieve a SAF consumption of over 0.02 million tons in the year 2025, with a cumulative consumption during the 14th Five-Year Plan period reaching 0.05 million tons, providing a quantitative SAF consumption target. Subsequent top-level plans such as the "14th Five-Year Plan for Renewable Energy Development," "Outline for Development of Green Aviation Manufacturing Industry (2023-2035)," and "Guiding Catalog for Industrial Structure Adjustment (2024)" all mention the encouragement of SAF development, gradually solidifying the policy foundation.
In September 2024, the Civil Aviation Administration of China initiated the pilot application of SAF for 12 flights; the following month, six departments including the National Development and Reform Commission issued the "Guiding Opinions on Vigorously Implementing the Action of Renewable Energy Substitution," mentioning: 1) comprehensively enhancing renewable energy supply capacity, developing green fuels such as bio-natural gas, biodiesel, bio-aviation coal, etc., according to local conditions; 2) accelerating the integration and interaction between transportation and renewable energy, supporting pilot operations of biodiesel, bio-aviation coal, bio-natural gas, green hydrogen alcohols, etc., in ships and aviation areas in regions with conditions. A series of policies are expected to accelerate the practical application and implementation, catalyzing the release of SAF demand.
The recovery of the aviation industry may drive an increase in SAF demand, and it is expected to unlock a million-ton market during the 14th Five-Year Plan period.
According to a report from China Petroleum & Chemical Corporation, in 2023, China's aviation kerosene consumption achieved rapid growth with the recovery of the aviation industry, reaching an annual consumption of about 34.7 million tons. It is expected that in 2024, China's aviation kerosene consumption will increase by around 10.1% year-on-year to reach 38.2 million tons; according to Deloitte China, by 2030, China's total aviation kerosene consumption is expected to reach 60.5 million tons.
Although China has not yet set a mandatory blending ratio for SAF, only recommending a cumulative SAF consumption of 0.05 million tons during the 14th Five-Year Plan period, this bank believes that there is a high probability that China will introduce a clear mandatory SAF blending ratio during the 15th Five-Year Plan period. According to Deloitte's forecast, if calculated based on the EU's 2030 mandatory blending ratio of 6%, China's SAF consumption in 2030 is expected to reach 3.63 million tons, driving market expansion to its full potential.
Recommended targets: Beijing Haixin Energy Technology (300072.SZ), Zhejiang Jiaao Enprotech Stock (603822.SH), Longyan Zhuoyue New Energy (688196.SH), Penyao Environmental Protection (300664.SZ), Shandong High Speed Renewable Energy (000803.SZ).
Risk warnings: Insufficient promotion efforts for SAF-related policies, trade friction risks, lower-than-expected demand for civil aviation-related fuels.
