Newsletters

On 9 December, the International Air Transport Association (IATA) published updated estimates indicating that Sustainable Aviation Fuel (SAF) production is set to expand more slowly in the coming years than previously anticipated.

SAF output is expected to reach 1.9 million tonnes in 2025, double the 1 million tonnes produced in 2024, but growth is projected to slow in 2026, with production reaching only 2.4 million tonnes. Despite this increase, SAF will represent just 0.6% of global jet fuel consumption in 2025 and 0.8% in 2026. At current price levels, the SAF premium is expected to add around USD 3.6 billion to airlines’ fuel costs next year. IATA noted that the 2025 forecast is a downward revision from earlier estimates due to insufficient policy support to fully utilise existing production capacity, with SAF prices continuing to exceed fossil jet fuel by a factor of two and even higher in mandated markets.

IATA stressed that implementation challenges under the EU’s ReFuelEU Aviation Regulation have contributed to the slow scale-up of SAF production. Limited SAF capacity and concentrated supply chains have resulted in significantly higher costs for airlines, with suppliers widening margins and airlines paying up to five times the price of conventional jet fuel and double the market price of SAF, without guaranteed supply or consistent documentation. Globally, airlines are expected to pay a premium of USD 2.9 billion for the 1.9 million tonnes of SAF available in 2025.

Looking ahead to the introduction of eSAF mandates under ReFuelEU from 2030, IATA stressed that policymakers must avoid repeating the shortcomings observed with SAF. eSAF is expected to have a significantly higher cost base, potentially up to 12 times that of conventional jet fuel.

Source: IATA