 "Indian Oil may offer domestic airlines a stake in its green fuel plant")
Indian Oil (IOC) might offer minority equity stakes to domestic airlines in its proposed sustainable aviation fuel (SAF) production plant in Panipat, Haryana.
This proposal was mooted at a meeting chaired by Rajiv Bansal, secretary in the Ministry of Civil Aviation, on Monday that was attended by representatives of airlines, oil marketing companies, and government officials.
In a statement, IndiGo said it was evaluating IOC’s proposal following the recent discussion. Other airlines didn’t respond to emails.
IOC has tied up with tech provider LanzaJet to produce SAF at its Panipat refinery and is seeking investments from airlines with a view to securing offtake commitments.
IOC did not respond to a query on the equity investment offer. It said: “With the Carbon Offsetting and Reduction Scheme for International Aviation entering its mandatory phase from 2027, biomass and waste-based sustainable aviation fuel adoption is gathering interest globally. In view of this, the company is working on creating its capabilities in SAF production through collaboration with technology providers.”
The Panipat refinery complex is one of IOC’s largest facilities and houses a second generation ethanol plant set up in co-operation with Praj Industries. IOC and LanzaJet plan to collaborate on production of SAF using alcohol-to-jet technology. At the meeting on Monday, IOC officials informed airlines and the civil aviation ministry that the company will invest Rs 3,000 crore in the project and it is expected to be ready in two-and-a-half years.
SAF refers to waste-derived aviation fuel and is made from various sources such as used cooking oil, agricultural waste, fats or non-food crops.
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Indian carriers have operated demonstration flights using sustainable fuel — the most recent being a Vistara flight for the delivery of its Boeing 787 aircraft. However, there have been no commercial flights using SAF in India yet and AirAsia India is working to fly the first commercial flight using 1 per cent SAF blended with conventional jet fuel.
Globally, since 2011 more than 450,000 commercial flights have been flown using SAF. International Air Transport Association member airlines have agreed to achieve net zero carbon emissions by 2050. The International Civil Aviation Organization (ICAO), too, has adopted net zero as a long-term goal. However, SAF production is limited globally. The high cost of production is also a deterrent.
Local production of SAF is critical as Indian airlines will have to offset carbon emissions generated from international flights from 2027. This is part of a global scheme approved by the ICAO.
European countries such as Norway and Sweden have made it mandatory for fuel suppliers to blend conventional fuel with small quantities of SAF. The European Commission has proposed a SAF blending mandate for fuel supplied at its airports with a minimum share of SAF increasing from 2 per cent in 2025 to 63 per cent in 20250.
In India, the civil aviation ministry, too, is considering a similar step, which could require 1 per cent blending of SAF with conventional jet fuel. The ministry is also working on an environment policy spelling out de-carbonisation goals for the aviation sector.