Bain Capital, a major shareholder in sustainable aviation fuel producer EcoCeres, expects blending mandates in several countries will drive long-term growth and sees China requiring them in the coming years, a partner at the private equity firm said.

Bain partner James Tam, who is also co-chair of EcoCeres, said in an interview the sustainable aviation fuel (SAF) sector was at the start of a multi-decade expansion as rules for airlines to cut carbon emissions spread from Europe to Asia.

“SAF is almost the only commercially available solution to decarbonise aviation,” Tam said. “There won’t be hydrogen or electric planes for long-haul flights any time soon.”The comments come as EcoCeres, the world’s second-largest producer of SAF by capacity, prepares a Hong Kong initial public offering that Reuters reported last month could raise about $1 billion.

Tam declined to comment on details of the IPO, which would be a key public market test of investor appetite for pure-play SAF producers.

The industry is facing weak demand and has vast spare production capacity, as airlines balk at paying hefty premiums for SAF.

The International Air Transport Association said in June an estimated 2.4 million metric tons of SAF will be produced in 2026, “representing just 0.8% of global jet fuel demand and indicating a slowdown in growth”, while production capacity is expected to exceed 9 million tons.

Hong Kong mandate underpins Bain invested more than $700 million in EcoCeres in 2022, when it was the second company after Finland’s Neste to commercialise SAF production, Tam said.

EcoCeres, which supplies global airlines including Qantas, Air France, British Airways and Cathay Pacific, has combined renewable fuels capacity of about 770,000 metric tons per year at plants in Zhangjiagang in eastern China and Johor, Malaysia.

Tam said SAF’s inclusion in China’s 15th Five-Year Plan signalled that domestic mandates were on the horizon, though exact targets have yet to be announced.

The 2026-2030 plan, approved in March, lists SAF among fuels to be developed, but sets no aviation targets.

Separately, Hong Kong’s first Five-Year Plan, published in September, targets SAF accounting for 1%-3% of fuel for departing flights in 2030.

The plan also backs developing SAF production in Dongguan, Guangdong province, where EcoCeres plans a 450,000-ton-a-year plant, due to open by 2030, to supply airports in Hong Kong, Shenzhen and Guangzhou.

Tam said the timeline was firm and the reported HK$10 billion ($1.27 billion) investment covered a 10-year build-out, with the refinery itself costing “meaningfully less.”Meeting the top of Hong Kong’s target would take nearly half the plant’s output, he said. Any surplus could be exported to Europe, where the EU has mandated 6% SAF by 2030.

Unlike some rivals, EcoCeres owns its full technology stack and does not rely on third-party technology licensors or catalyst suppliers, giving it a cost advantage, he said.

EcoCeres’ feedstocks are entirely waste-based, including used cooking oil collected from 500,000 restaurants across China and traceable to each one, a key selling point for airlines. Tam declined to comment on the company’s production costs.