The International Air Transport Association (IATA) has announced that global production of sustainable aviation fuel (SAF) is expected to reach 1.9 million tonnes in 2025, nearly doubling that of 2024. Despite this growth, the forecast is revised downward due to a lack of adequate policy support, which limits the realization of existing SAF capacities. The organization projects a further modest increase to 2.4 million tonnes in 2026.
Currently, SAF accounts for only 0.6% of total jet fuel consumption. The recent implementation of SAF-focused mandates by the European Union and the United Kingdom has significantly increased prices for the fuel, often exceeding fossil-based jet fuel by up to five times. As a result, airlines are incurring a $2.9 billion premium in 2025 due to higher SAF costs, which could impede decarbonization efforts.
Policy Impact and Industry Challenges
"If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park. But if the objective is to increase SAF production to further the decarbonization of aviation, then they need to learn from failure and work with the airline industry to design incentives that will work,"
SAF, which is generally produced from sustainable resources like waste oils and agricultural residues, promises lifecycle greenhouse gas emissions reductions of up to 85%. However, limited supply and high costs remain major hurdles. Walsh warned that a lack of increased SAF availability might lead airlines to reconsider their 2030 targets of using 10% SAF, especially as many have committed to this goal.
The report calls for policy reforms, particularly in Europe, to address market distortions, stimulate investment, and support the scaling of SAF production. It underscores that better collaboration between policymakers and industry stakeholders is essential to foster a sustainable pathway for aviation decarbonization and cost reduction.
Overall, the findings highlight the critical need for improved policy measures and strategic industry partnerships to accelerate SAF growth, reduce costs, and achieve environmental objectives in aviation.
