Rs 1,000 crore project: This PSU company plans to make green jet fuel to fulfil the rising demand!
The shares of the company saw a spurt in volume by more than 1.16 times on BSE.
Indian Oil Corporation Ltd plans to develop a Rs 1,000 crore ($122 million) sustainable aviation fuel plant as global supplies fall far short of what airlines require to satisfy decarbonization targets.
The facility will have a capacity of 88,000 tonnes of SAF each year and Indian Oil is looking for partners on the project, according to S.S.V. Ramakumar, director of research and development. He noted that supply agreements with airlines are required to move forward with the investment.
The International Civil Aviation Organisation last year set a goal of achieving net zero emissions by 2050, and SAF has long been regarded as the industry's quickest solution to reduce emissions.
“This is going to be a booming business,” Ramakumar said in an interview. “The reason for us to conceive such a big plant is that unless the capacity is higher, you won’t get the economies of scale.”
Tax incentives will also be needed for Indian Oil to push ahead with the investment in the plant, Ramakumar said, without elaborating. He added that there was an opportunity to export the fuel to Southeast Asia and Africa.
The next step will be a government recommendation to blend SAF with jet fuel, which will be the key to airlines signing supply agreements with Indian Oil. An oil ministry panel, which Ramakumar leads, recommended an initial blending of 1 per cent SAF into regular fuel from 2026 followed by a gradual ramp-up, he said.
Airlines will also need tax breaks from the government or carbon credits to make it viable to use SAF due to the tight cost of operations, he said.
Global aviation accounts for more than 2 per cent of the gases warming the planet and other alternatives to curb emissions are lacking. Battery-powered aircrafts don’t have sufficient range for medium- and long-haul flights and hydrogen will likely take many years to be a suitable option.
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Indian Oil Corporation Limited explores for and refines crude oil, in addition to manufacturing petroleum & petroleum products. The greatest majority shareholding in the company is held by Indian Government.
Today, shares of the climbed 0.81 per cent to Rs 83.34 per share with a day’s high of Rs 84.50 and a low of Rs 82.86. The shares of the company saw a spurt in volume by more than 1.16 times on BSE.
The stock has a 52-week high of Rs 85.54 and a 52-week low of Rs 65.20. Investors should keep an eye on this Large-Cap PSU stock.