The International Air Transport Association (IATA) has published revised forecasts for Sustainable Aviation Fuel (SAF) output, highlighting a slowdown in the sector’s growth.
Key figures:
- 2025 SAF production is projected at 1.9 million tonnes (approximately 2.4 billion litres), twice the 1 Mt produced in 2024.
- Growth is expected to decelerate in 2026, reaching about 2.4 Mt.
- SAF will account for roughly 0.6 % of total jet‑fuel consumption in 2025, rising to 0.8 % in 2026.
- At current price spreads, the SAF premium adds an estimated US$3.6 billion to airlines’ fuel expenses in 2025.
The downward revision reflects a lack of effective policy support, which has prevented the industry from fully utilising existing SAF production capacity. SAF prices remain two to five times higher than conventional jet fuel, especially in markets with mandatory blending requirements.
“Mandates that are poorly designed have stalled momentum in the fledgling SAF market. If the aim is to curb progress and inflate prices, policymakers have succeeded. If the goal is to boost SAF production and advance aviation decarbonisation, they must learn from this failure and work with airlines to create workable incentives,” said Willie Walsh, IATA Director General.
EU and UK mandates underperform:
- The EU’s ReFuelEU Aviation scheme has driven up costs while limited SAF capacity and an oligopolistic supply chain keep supply uncertain.
- In the United Kingdom, the SAF mandate has triggered sharp price spikes, leaving airlines to absorb the additional cost.
Airlines paid a total SAF premium of US$2.9 billion for the 1.9 Mt available in 2025; US$1.4 billion of this reflects the standard price differential between SAF and fossil fuel.
“Europe’s fragmented policy approach distorts markets, slows investment and hampers the scaling of SAF production. Regulators must recognise that the current strategy is ineffective and act swiftly. The recent European Commission STIP announcement is a step forward, but it lacks a clear timeline. Concrete actions, not words, are needed,” added Walsh.
Because of the shortfall, many airlines are likely to revisit their commitments to use 10 % SAF by 2030, acknowledging that the available volume cannot meet those targets.
Preparing for e‑SAF mandates:
e‑SAF obligations are expected in the United Kingdom by 2028 and in the EU by 2030. Without robust production incentives, these mandates risk repeating the mistakes of current policies. The projected cost of e‑SAF could be up to twelve times higher than conventional fuel, and compliance costs may reach €29 billion by 2032 if production does not scale.
“Given the low SAF volumes, it is clear that existing policies are not delivering the intended results. Regulators must course‑correct, ensure the long‑term viability of SAF production and achieve scale so that costs can fall. Repeating the same mandate‑only approach with e‑SAF would be disastrous,” said Marie Owens Thomsen, IATA Senior Vice President for Sustainability and Chief Economist.
Source: www.iata.org
Read also: A Fresh Take on Christmas Parties: Celebrate on the Gold Coast Broadwater