Malaysia's state refiner Petronas to produce sustainable aviation fuel by 2028

Malaysian state-run refiner Petronas is set to produce sustainable aviation fuel by 2028, Transport Minister Anthony Loke said Sept. 5 at a National Aviation Consultative Council meeting launching the Malaysian Aviation Sector Decarbonization Roadmap, or MADB.

Currently, no local airlines in Malaysia use SAF, which is primarily attributed to its high cost in a price-sensitive market.

“The biggest challenge with SAF is its price," Loke said. "It’s about three times more expensive than conventional jet fuel because of limited production and supply. We need to address the supply side first before discussing how airlines can adopt SAF.”

Loke said the use of SAF is not currently mandated by the government. However, with production starting in 2028, the transport minister hoped that by then, “SAF prices will decrease and become more affordable for airlines.”

Earlier the same day, Loke announced the launch of the MABD, which outlines clear guidelines for reducing carbon emissions in the aviation sector by 2050.

The four pathways highlighted for aviation decarbonization were aircraft technology, operational improvements, increasing SAF usage and carbon offset, such as buying carbon credits under market-based measures.

According to the MADB, this initiative aims to substantially cut carbon emissions by up to 46% through the increased use of biofuels and other sustainable alternatives, alongside parallel improvements in aircraft technology and operational enhancements.

The report projects SAF adoption will cut Malaysian aviation’s carbon emissions by as much as 46.2% by 2050. The fuel can also help reach intermediate milestones, such as achieving up to 3.7% emissions reduction by 2029 and between 5.1%-19.9% emissions reduction between 2030-2040, calculated on the base of total emissions in 2020.

Malaysia Airlines is also targeting an 18% reduction in emissions by 2050 through advancements in aircraft technology, the report said. These improvements include the deployment of more fuel-efficient aircraft and cutting-edge aeronautical engineering aimed at minimizing fuel consumption and emissions.

Platts, part of S&P Global Commodity Insights, assessed SAF production costs (palm fatty acid distillate) in Southeast Asia at $1,623.49/mt on Sept. 5, down $8.28 from the previous assessment.