--- title: "Open Source Securities: The SAF industry is thriving, and Chinese companies may benefit from the advantages of UCO" type: "News" locale: "en" url: "https://longbridge.com/en/news/229138803.md" description: "KaiYuan Securities released a research report stating that with the intensification of global climate change, biodiesel and sustainable aviation fuel (SAF) have become key to carbon reduction in the transportation sector due to their emission reduction characteristics. China, leveraging its low-cost and high carbon reduction UCO resource advantages, produces SAF that is competitive in the international market. It is expected that as the demand for SAF increases in regions such as Europe, the profitability of Chinese SAF production enterprises will improve, making them major suppliers of SAF" datetime: "2025-02-21T06:46:08.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/229138803.md) - [en](https://longbridge.com/en/news/229138803.md) - [zh-HK](https://longbridge.com/zh-HK/news/229138803.md) generator: "portal-rs" --- # Open Source Securities: The SAF industry is thriving, and Chinese companies may benefit from the advantages of UCO According to the Zhitong Finance APP, Kaiyuan Securities has released a research report stating that as global climate change issues become increasingly severe, biodiesel and sustainable aviation fuel (SAF) have become key means for achieving carbon reduction targets in the transportation sector due to their outstanding emission reduction characteristics. China has a resource advantage in used cooking oil (UCO) that is low-cost and has high carbon reduction attributes, making SAF products produced in China highly competitive in the international market. As demand for SAF stabilizes in Europe, the UK, and other regions, it may drive stable production of domestic SAF facilities, thereby enhancing the profitability of China's SAF production enterprises. Domestic companies with SAF and UCO production capabilities are likely to benefit. ## The main viewpoints of Kaiyuan Securities are as follows: **Biodiesel Industry Chain: Biodiesel and SAF have outstanding emission reduction characteristics in the transportation sector** As global climate change issues become increasingly severe, countries are formulating strict environmental regulations to reduce greenhouse gas emissions, with transportation being a key area for emission reduction. Biofuels, especially biodiesel and sustainable aviation fuel (SAF), are regarded by various countries as one of the key means to achieve their carbon reduction targets due to their environmental friendliness. Long-distance shipping related to biodiesel and aviation transport related to SAF are areas that are difficult to electrify. UCO, a type of waste fat, is a major raw material for biodiesel and SAF production and has attracted attention due to its outstanding emission reduction properties. According to S&P Global data, biodiesel produced from UCO has the lowest unit carbon emission value of 19.87gCO2e/MJ. **The SAF industry is expected to thrive in the future, and China, with UCO resources, is likely to become a major SAF supplier** In 2024, global SAF production capacity is limited, but entering 2025, with the EU and the UK officially implementing a 2% SAF blending ratio policy, global SAF industry demand will increase significantly. By 2027, CORSIA will require member countries to participate in aviation emission reductions, at which point most countries may introduce clear SAF blending ratio policies. By 2050, the International Air Transport Association (IATA) and the Air Transport Action Group (ATAG) have committed to achieving net-zero emissions in the aviation industry, and SAF may potentially replace a majority of aviation kerosene shares in the future. From a supply and demand perspective, regions such as the EU, UK, and Japan, which have insufficient raw material supply, may import SAF, while regions such as China, the United States, Indonesia, and Malaysia, which have abundant raw material supply and significant SAF production capacity planning, may become major SAF suppliers. Among them, China has a resource advantage in low-cost, high carbon reduction UCO, making SAF products produced in China highly competitive in the international market. **Theoretically, SAF has strong profitability, and domestic companies with SAF and UCO production capabilities may benefit** It is expected that by 2030, the hydroprocessed esters and fatty acids (HEFA) process will be the mainstream production process for SAF. The alcohol-to-jet synthesis process (ATJ), Fischer-Tropsch synthesis process (FT), and power-to-liquid process (PtL) have stronger carbon reduction attributes, but their production costs are higher than those of the HEFA process, and industrialization is not yet mature. Due to the limited UCO output, the expansion of SAF production capacity using the HEFA process is restricted. PtL uses direct air carbon capture technology, which has the greatest emission reduction potential and theoretically has no production raw material bottleneck. If the technology matures and costs decrease after large-scale production in the future, it is expected to become the main SAF production process According to EASA's estimated data, the cost of producing SAF using the HEFA process in Europe in 2023 is estimated to be €1,770 per ton, while the average price of SAF is €2,768 per ton, resulting in a net profit of nearly €1,000 per ton. According to the "Environmental Impact Report of Shandong Haike Chemical Co., Ltd.'s 500,000-ton Annual Bio-based Aviation Fuel Technology Transformation and Supporting Project," Longzhong Information, and the bank's calculations, under continuous production conditions, as of February 7, 2025, the domestic SAF net profit per ton is approximately ¥714 per ton, with UCO costs accounting for 78% of the total SAF cost; since May 2024, China's continuous SAF production facilities have had profit potential. However, as of 2024, there are insufficient orders for domestic SAF facilities, and few facilities are capable of continuous production, resulting in overall low profitability. Once the demand for SAF stabilizes and increases in Europe, the UK, and other regions, it may drive stable production of domestic SAF facilities, thereby improving the profitability of China's SAF production enterprises. Domestic companies with SAF and UCO production capabilities may benefit. **Beneficiary targets:** SAF: Jiaao Environmental Protection (603822.SH), Haixin Energy Technology (300072.SZ), Pengyao Environmental Protection (300664.SZ), and LYZY (688196.SH), etc. UCO: Shanggao Environmental Energy (000803.SZ), Langkun Environment (301305.SZ), etc. **Risk warning:** Policy advancement may fall short of expectations, significant increases in raw material prices, and technological progress may not meet expectations, etc ### Related Stocks - [688196.CN](https://longbridge.com/en/quote/688196.CN.md) - [399319.CN](https://longbridge.com/en/quote/399319.CN.md) - [20030.HK](https://longbridge.com/en/quote/20030.HK.md) - [603822.CN](https://longbridge.com/en/quote/603822.CN.md) - [300664.CN](https://longbridge.com/en/quote/300664.CN.md) ## Related News & Research - [CPCA sees China August NEV retail sales at about 1.04 million, penetration may hit record](https://longbridge.com/en/news/296629445.md) - [Cocoa Prices Fall on Rising Nigerian Cocoa Exports](https://longbridge.com/en/news/296637826.md) - [HME: Record revenue, strong netbacks, and robust shareholder returns highlight the quarter](https://longbridge.com/en/news/296488618.md) - [peaq: peaqOS integrates World ID for private human verification - 22 Aug 2026](https://longbridge.com/en/news/296680578.md) - [Chevy Is Giving Up On The Chinese Market](https://longbridge.com/en/news/296512049.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**