BUSINESS

Export Tax Rebate Removal Raises Hopes for Clean Aviation Fuel in China

By Feng Yiming, Zou Xiaotong and Wang Xintong

Published: Jan. 22, 2025 5:00 p.m. GMT+8

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Used cooking oil can be refined into an aviation fuel that can reduce carbon dioxide emissions by up to 80% compared with traditional jet fuel. Photo: AI generated

Beijing’s recent removal of an export tax rebate on a key feedstock for biofuel has offered a glimmer of hope to those pushing for an increase in the use of sustainable aviation fuel (SAF) in the country.

But aviation industry insiders told Caixin a significant rise in domestic SAF consumption is unlikely in the short term, mainly due to production constraints and high costs.

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Beijing removed a 13% tax rebate on used cooking oil exports to boost sustainable aviation fuel (SAF) production domestically, but high costs and limited supply hinder significant SAF consumption increases in the short term.
China aims to reach 50,000 tons of SAF consumption by 2025, but as of late 2023, consumption was below 10,000 tons, illustrating slow progress.
Despite challenges, experts remain optimistic due to China's strong chemical manufacturing capabilities and abundant domestic waste oil resources, potentially leading to competitive SAF pricing.

AI generated, for reference only

Who’s Who

Soochow Securities Co. Ltd.: Soochow Securities Co. Ltd. is an analysis firm that commented on the removal of the 13% tax rebate for used cooking oil exports by the Chinese government. The firm suggested that this move will help Chinese producers secure necessary feedstock and boost domestic biofuel consumption, potentially aiding the development of sustainable aviation fuel (SAF) within China, despite existing production and cost challenges.

Honeywell International Inc.: Honeywell International Inc. is involved in the development of sustainable aviation fuel (SAF) in China. According to Luo Chao, an executive at Honeywell's energy and sustainability solutions unit, despite challenges, he remains optimistic about SAF in China, citing the nation's strong chemical manufacturing capabilities and abundant waste oil resources. This, he believes, will lead to lower production costs and competitive pricing for domestically produced SAF.

AI generated, for reference only

What Happened When

In 2022：: The Civil Aviation Administration of China announced a target of 50,000 tons of SAF consumption by 2025 year-end.

By the end of 2023：: SAF consumption in China remained under 10,000 tons.

In mid-November 2024：: The Ministry of Finance and the State Taxation Administration announced the removal of the 13% tax rebate for used cooking oil exports.