Hong Kong: Bain Capital expects government blending mandates across several countries to drive long-term growth in the sustainable aviation fuel (SAF) sector and anticipates that China will introduce such requirements in the coming years, according to a senior executive at the private equity firm, Reuters reported.
James Tam, a partner at Bain Capital and co-chair of SAF producer EcoCeres, said the industry was entering a period of long-term expansion as governments extended rules requiring airlines to reduce carbon emissions from Europe to Asia.
“SAF is almost the only commercially available solution to decarbonise aviation,” Tam said in an interview, adding that hydrogen-powered and electric aircraft were unlikely to become practical alternatives for long-haul flights in the near future.
His comments come as EcoCeres prepares for a planned initial public offering (IPO) in Hong Kong. Reuters reported in September that the company could raise around $1 billion through the offering. Tam declined to comment on the IPO details, which could provide an indication of investor interest in companies focused exclusively on sustainable aviation fuel.
Despite expectations of long-term growth, the sector is facing weak demand and substantial unused production capacity as airlines remain reluctant to pay the higher prices associated with SAF.
The International Air Transport Association said in June that global SAF production was expected to reach 2.4 million tonnes in 2026, equivalent to just 0.8% of global jet fuel demand. The association also projected that production capacity would exceed 9 million tonnes, indicating a gap between available capacity and expected output.
Hong Kong target supports EcoCeres’ expansion plans
Bain Capital invested more than $700 million in EcoCeres in 2022. Tam said EcoCeres was the second company, after Finland’s Neste, to commercialise SAF production.
The company supplies international airlines, including Qantas, Air France, British Airways and Cathay Pacific. Its plants in Zhangjiagang in eastern China and Johor in Malaysia have combined renewable fuel production capacity of around 770,000 tonnes annually.
Tam said the inclusion of SAF in China’s 15th Five-Year Plan indicated that domestic blending requirements could be introduced in the coming years, although specific targets have not yet been announced.
China’s 2026–2030 plan, approved in March, identifies SAF as a fuel for development but does not establish aviation blending targets.
Hong Kong has separately set a target for SAF to account for 1%–3% of fuel used by departing flights by 2030. The target forms part of the city’s first Five-Year Plan, published in September.
The plan also supports SAF production in Dongguan, Guangdong province, where EcoCeres intends to build a plant with an annual capacity of 450,000 tonnes. The facility is scheduled to begin operations by 2030 and is expected to supply airports in Hong Kong, Shenzhen and Guangzhou.
Tam said the project remained on schedule. The reported investment of HK$10 billion ($1.27 billion) covers a 10-year development programme, while the refinery itself would cost considerably less.
Meeting the upper end of Hong Kong’s SAF target would require nearly half of the proposed plant’s output, according to Tam. Any remaining production could be exported to Europe, where the European Union has mandated a 6% SAF blending share by 2030.
Waste-based feedstocks underpin production strategy
Tam said EcoCeres had an advantage over some competitors because it owns its entire production technology system and does not depend on external technology licensors or catalyst suppliers.
The company uses waste-based raw materials, including used cooking oil collected from around 500,000 restaurants across China. Tam said the supply chain can trace the oil back to individual restaurants, providing airlines with information about the origin of the feedstock.
The use of waste-based materials is a key selling point for the company as airlines seek ways to reduce emissions from aviation.
Tam declined to disclose EcoCeres’ production costs, Reuters stated.
