The Future of Sustainable Aviation Fuel (SAF): Progress, Challenges & Opportunities

Aviation sits at a tricky crossroads: it’s essential for global connectivity and commerce, yet it’s responsible for roughly 2–3% of global CO₂ emissions and growing. Sustainable Aviation Fuel (SAF) has emerged as the most immediate, scalable lever to cut aviation’s carbon footprint without waiting decades for new airframe or propulsion technology. But while progress is real and some airlines are committing to meaningful volumes, material barriers—chiefly cost and supply—still slow the sector’s transition. Below I summarise where SAF stands today, who’s producing it, how airlines are adopting it, and what will be needed to scale.

What SAF(Sustainable Aviation Fuel) is — and why it matters

SAF is a drop-in replacement (or blend) for conventional jet kerosene produced from non-fossil feedstocks and pathways that substantially lower lifecycle CO₂ emissions compared with fossil jet fuel. Pathways include hydroprocessed esters and fatty acids (HEFA) from used cooking oil and waste fats, Fischer–Tropsch from municipal solid waste, alcohol-to-jet from plant sugars or residues, and e-SAF (electro-SAF) produced from hydrogen and captured CO₂. IATA and other industry bodies now recognise a growing list of certified pathways, and production—though still tiny—has doubled recently. IATA

Recent progress — production and policy nudges

Production is rising from a very low base. Global SAF (sustainable aviation fuel) output rose sharply in 2023–2024 and IATA estimated production around ~1 million tonnes in 2024 with a forecast to roughly double to ~2 million tonnes in 2025—still a fraction (well under 1%) of total jet fuel demand. That increase stems from new commercial plants, more off-take agreements, and stronger national/regional policies (mandates, blending targets, incentives) that create guaranteed demand. IATA+1

Policy is the accelerant. The EU and UK have introduced SAF blending mandates (starting with low percentages and ramping to higher targets through the decade), while other jurisdictions deploy tax credits, grants, and loan guarantees to stimulate domestic SAF projects. These rules are already shifting commercial conversations from “if” to “how fast” SAF will scale. Reuters

Key producers to watch

Several established refining and biofuel firms plus a crop of specialist start-ups dominate current supply. Companies frequently cited as market leaders include Neste, World Energy, Gevo, LanzaJet (and LanzaTech partnerships), Aemetis, Shell, TotalEnergies, and regional players such as Preem and SkyNRG. Many combine different routes (HEFA, ATJ, FT, and e-SAF investments) and pursue off-take deals with airlines years in advance to underwrite project finance. Grand View Research+1

Noteworthy trends among producers:

• Major oil and energy companies (Shell, TotalEnergies, BP) are reallocating project capital to SAF and creating commercial platforms and marketplaces to manage certification and claims.

• Dedicated biofuel firms (Neste, World Energy, Gevo) are scaling specialized plants and signing long-term airline offtakes.

• Emerging e-SAF players are attracting venture and public capital because e-SAF pathways promise the deepest lifecycle emission reductions—if cheaply available renewable power and CO₂ feedstocks can be secured. Reuters+1

Airline adoption: pilots, purchase agreements, and pipeline

Airlines are pursuing SAF strategically via (1) short-term spot purchases and blended fuelling at select airports, (2) long-term purchase agreements to secure supply and price predictability, and (3) investment or equity stakes in SAF producers. Large network carriers and some low-cost carriers have publicly committed to hundreds of millions of gallons of SAF via multi-year deals, and some flag carriers are integrating SAF into corporate sustainability offerings. For example, several U.S. carriers have announced sizable purchase commitments from Aemetis, Gevo and others as they hedge future compliance and corporate demand. MarketsandMarkets

But adoption metrics remain modest in absolute terms: most airlines still use SAF only for a tiny share of total fuel consumption (often <1% company-wide), with higher localised blends at airports where drop-in supply exists or where book-and-claim systems let companies account for SAF use without physical delivery. IATA’s industry roadmaps see continued growth but stress that policies and capital must align to meet mid-century net-zero goals. IATA+1

The cost barrier — why SAF is pricier and how much pricier?

Cost is SAF’s single largest practical hurdle. Today SAF (sustainable aviation fuel) typically costs multiple times the price of conventional jet kerosene—commonly reported as roughly 3–5× higher—depending on feedstock, technology, location, and whether markets include compliance surcharges. Airlines and trade bodies argue that policy mandates can expose carriers to high near-term costs if procurement markets remain thin and suppliers add surcharges. Producers counter that until capacity and consistent demand scale, unit costs will remain elevated. Reuters+1

Why so expensive? Several structural reasons:

• Feedstock costs (waste oils, residues, agricultural residues, or renewable hydrogen + CO₂) are higher and more volatile than crude.

• New SAF plants are capital intensive with complex conversion technologies and long ramp-up periods.

• Supply chains and certification systems add administrative and logistics costs for segregation, blending, and tracking.

• Early projects lack the economies of scale of conventional refining—higher CAPEX and smaller runs mean higher per-litre costs.

Opportunities to bring costs down

There are clear levers to reduce SAF (sustainable aviation fuel) prices over time:

1. Scale and standardisation: larger plants, repeatable designs and industrial learning reduce unit costs.

2. Policy incentives: production tax credits, grants, or blending credits that close the price gap for airlines and investors.

3. Feedstock innovation: cheaper, sustainable feedstocks (e.g., municipal solid waste, agricultural residues) and more efficient conversion pathways.

4. Electrification/E-SAF: costs can fall as renewable electricity and electrolyser capacity grow—pivotal if cheap renewable power becomes abundant. IATA+1

Practical recommendations for stakeholders

• Policymakers: pair mandates with supply-side incentives (grants, tax credits, loan guarantees) and transparent sustainability criteria to avoid perverse outcomes and market distortions.

• Airlines: lock in diversified long-term offtake agreements to de-risk supply and help underwrite new plants; use book-and-claim platforms to accelerate corporate claims where physical delivery lags.

• Producers/investors: focus on feedstock security and modular plant designs to lower CAPEX and shorten time to first production.

• Buyers (cargo, corporates): aggregate demand across buyers and geographies to create bankable pipelines and avoid paying punitive spot surcharges. Reuters+1

Bottom line

SAF is not a silver bullet—but it is the most deployable, near-term pathway to substantially reduce aviation’s lifecycle emissions at scale. The past two years have shown real momentum: production has grown, big players have moved capital, and policy frameworks are maturing. Yet cost and limited feedstock remain the twin constraints. If public policy and private capital act together—de-risking projects, guaranteeing demand, and investing in next-generation pathways—SAF can move from niche compliance fuel to mainstream fuel. That transition won’t be cheap or instant, but with aligned incentives it’s achievable—and essential—if aviation is to keep flying while shrinking its climate footprint. IATA+1

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