Indian Oil Corp. plans to build a Rs 1,000 crore ($122 million) sustainable aviation fuel plant as global supplies fall far short of what airlines require to meet decarbonization targets.

The facility will have a capacity of 88,000 tonnes of SAF per year, and Indian Oil is looking for partners on the project, according to S.S.V. Ramakumar, director of research and development. He added 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 way to reduce emissions. However, global output is currently only a fraction of what is required, and airlines are banking on a significant increase in supply.

"This is going to be a booming business," Ramakumar predicted during an interview. "The reason we conceived of such a large plant is that you won't get economies of scale unless the capacity is higher."

The plant, which will be built at Indian Oil's Panipat refinery north of New Delhi and will use LanzaJet's alcohol-to-jet technology, is expected to be the country's first SAF facility if it is built. Mangalore Refinery and Petrochemicals Ltd., a competitor, has proposed another plant using a different technology.

Tax breaks will also be required for Indian Oil to proceed with the plant investment, according to Ramakumar, who did not elaborate. He also mentioned the possibility of exporting the fuel to Southeast Asia and Africa.

Airlines will also require government tax breaks or carbon credits to make SAF viable due to the high operating costs, he said.