SAF Production Slows; Urgent Action Needed Ahead of e-SAF Mandates

Article Summary:

The International Air Transport Association (IATA) has released new estimates indicating that Sustainable Aviation Fuel (SAF) production growth has slowed in 2025, reaching only 1.9 million tonnes (Mt) compared to 2.4 Mt in 2024. This slowdown is attributed to poorly designed mandates that have stalled momentum in the SAF industry. IATA predicts that SAF production growth will further slow in 2026, reaching 2.4 Mt. The article highlights the negative impacts of EU and UK SAF mandates, which have increased costs and failed to accelerate production. Willie Walsh, IATA’s Director General, emphasizes the need for policymakers to redesign incentives to boost SAF production and decarbonize aviation. The article also warns that airlines may need to reevaluate their SAF targets if production cannot meet the increasing demand, especially with upcoming e-SAF mandates in the UK (2028) and EU (2030).

Key Points:

1. SAF production in 2025 is projected to be 1.9 Mt, a downward revision from earlier forecasts due to insufficient policy support.
2. SAF production growth is expected to slow in 2026, reaching 2.4 Mt.
3. SAF accounted for only 0.6% of total jet fuel consumption in 2025, increasing to 0.8% in 2026.
4. The SAF premium, translating to an additional USD 3.6 billion in fuel costs for the industry in 2025, is a result of high prices and limited supply.
5. Poorly designed EU and UK mandates have increased costs and failed to accelerate SAF production.
6. Airlines paid a premium of USD 2.9 billion for the limited 1.9 Mt of SAF available in 2025.
7. e-SAF mandates approaching in the UK (2028) and EU (2030) face high costs and potential supply shortfalls if current policies continue.
8. Regulators must course-correct to ensure the long-term viability of SAF production and achieve scale to reduce costs.

Actionable Takeaways:

• Redesign SAF Incentives: Policymakers must redesign incentives to boost SAF production and decarbonize aviation. This is crucial as poorly designed mandates have failed to accelerate production and increase prices (Takeaway 1).
• Evaluate SAF Targets: Airlines that have committed to using 10% SAF by 2030 may need to reevaluate these commitments due to insufficient SAF production. This highlights the need for realistic and achievable targets (Takeaway 2).
• Course-Correct Policies: Regulators should course-correct to ensure the long-term viability of SAF production and achieve scale to reduce costs. The current policy framework is not working and needs urgent adjustments (Takeaway 3).
• Monitor e-SAF Mandates: With e-SAF mandates approaching in the UK (2028) and EU (2030), it is essential to avoid repeating the policy missteps seen with SAF. Strong production incentives are necessary to ensure supply meets targets (Takeaway 4).

Contextual Insights:

The article reflects the current challenges in the aviation industry, particularly the slow growth of SAF production due to ineffective policy frameworks. The focus on SAF is critical for the decarbonization of aviation, but the current policies are not achieving the desired outcomes. The insights provided are relevant for travel startups and fintech innovations, as they highlight the need for innovative solutions to support the scaling of SAF production and reduce costs. The upcoming e-SAF mandates present both challenges and opportunities, emphasizing the importance of adaptive and supportive regulatory policies.

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