sustainable aviation — Sustainable aviation fuel (SAF) production is projected to double by 2025, although it will still account for less than one per cent of global jet fuel consumption. According to new estimates from the International Air Transport Association (IATA), SAF output is expected to reach 1.9 million tonnes, equivalent to approximately 2.4 billion litres, a significant increase from around 1 million tonnes in 2024.
Sustainable aviation: Production Growth and Future Projections
While the doubling of SAF production is a positive development, growth is anticipated to slow in 2026, with an expected rise to 2.4 million tonnes. Despite this increase, IATA indicates that SAF production in 2025 will represent only 0.6 per cent of total jet fuel consumption, which is projected to rise marginally to 0.8 per cent in 2026.
Financial Implications for Airlines
The financial burden of SAF production is significant. At current price levels, the premium associated with SAF is expected to lead to an additional $3.6 billion in fuel costs for airlines in 2025. IATA has noted that this estimated output for 2025 represents a downward revision from earlier forecasts due to insufficient policy support to fully utilise the installed SAF capacity.
Challenges from Policy Mandates
One of the key challenges hindering SAF growth is the high price compared to fossil-based jet fuel, with SAF prices exceeding those of conventional fuel by a factor of two. In markets with strict mandates, this discrepancy can increase to as much as five times. IATA Director General Willie Walsh has expressed concerns that poorly designed SAF mandates have stalled momentum within the sector.
“If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park,” said Walsh, who emphasised the need for regulators to collaborate with the airline industry to create effective incentives that support production and decarbonisation efforts.
Criticism of European and UK SAF Policies
IATA has been particularly critical of the SAF mandates implemented within the European Union and the United Kingdom, arguing that these regulations have failed to boost production while simultaneously inflating costs for airlines. The ReFuelEU Aviation framework in Europe, for instance, has exacerbated expenses due to limited SAF capacity and oligopolistic supply chains.
Fuel suppliers’ profit margins have widened dramatically, resulting in airlines paying up to five times the cost of conventional jet fuel and double the market price of SAF without any assurance of supply or reliable documentation. In the UK, the SAF mandate has similarly led to price spikes that airlines have been forced to absorb. IATA estimates that airlines will incur a cumulative premium of $2.9 billion for the limited 1.9 million tonnes of SAF available in 2025, with $1.4 billion of this amount reflecting the standard price premium over conventional jet fuel.
Impact on Airline Climate Goals
The ongoing challenges in increasing SAF production capacity may have serious implications for airlines’ climate commitments. Walsh warned that many carriers that have pledged to use 10 per cent SAF by 2030 will likely need to reassess these commitments. “Regrettably, many airlines that have committed to use 10 per cent SAF by 2030 will be forced to reevaluate these commitments,” he stated. He added that the production levels are “not being produced in sufficient amounts” to meet these ambitious targets.
Looking Ahead: The Need for Effective Policies
As the industry looks to the future, IATA has urged policymakers to avoid repeating the same mistakes with upcoming mandates for synthetic aviation fuels, or e-SAF, scheduled for implementation in the UK in 2028 and in the EU in 2030. The association cautioned that e-SAF could face an even higher cost base, potentially up to 12 times that of conventional jet fuel.
Without robust production incentives rather than mandates, IATA warns that supply will fall short of targets. Under the current policy framework, compliance costs could escalate to as much as €29 billion by 2032 if targets remain unmet, a scenario deemed likely by the association.
Marie Owens Thomsen, IATA’s senior vice president for sustainability and chief economist, remarked, “Given the low SAF production volumes, it is evident that current policies are not having the desired effect.” She emphasised the necessity for regulators to “course-correct, ensure the long-term viability of SAF production, and achieve scale so that costs can come down,” criticising mandates for having “done just the opposite.”
