The global aviation sector is confronting a critical bottleneck in its decarbonization efforts, primarily driven by the prohibitive cost and constrained availability of Sustainable Aviation Fuel (SAF). Despite its potential to reduce lifecycle carbon emissions by up to 80%, SAF currently represents a mere 0.7% of total jet fuel production, with prices remaining two to three times higher than conventional jet fuel, a disparity projected to persist until at least 2030. This market dynamic poses a significant challenge to the industry's ambitious target of achieving net-zero emissions by 2050, as highlighted in the recent Global Aviation Sustainability Outlook 2025.
The core issue is a "chicken-and-egg" dilemma: producers require long-term offtake agreements to secure financing for new facilities and achieve economies of scale, while airlines hesitate to commit to large volumes given the high price and uncertain supply. Paul Griffiths, CEO of Dubai Airports, underscored the magnitude of the problem, noting that even if SAF production were to double every two years, it would still take over seven and a half years to reach just 10% of total jet fuel supply. This underscores the urgent need for substantial investment and a coordinated global strategy.
Policy certainty emerges as a paramount factor in unlocking this investment. Ayesha Choudhury, Chief Commercial Officer at Infinium, a leader in synthetic efuels, emphasized that predictable revenue streams, enabled by clear and consistent policy frameworks, are essential for securing the long-term commitments necessary to finance and construct SAF production plants. The introduction of new measures, such as Singapore's recent levy of just under $2 per passenger to fund SAF production, and similar proposals in the UK, illustrate potential mechanisms for generating dedicated funding. However, the effectiveness of such schemes is contingent on international alignment to prevent market distortions and ensure a level playing field.
Compounding these challenges are persistent geopolitical headwinds and a shaky global economic outlook. Increasing protectionism and tariffs are disrupting feedstock supply chains, leading to rising raw material prices and squeezing margins for existing SAF plants. Furthermore, domestic energy security concerns and the potential for policy reversals following significant electoral cycles add layers of risk for investors. While the aviation sector is experiencing robust growth, with revenues exceeding $1 trillion this year, these external pressures threaten to divert focus and resources from the critical net-zero agenda.
Achieving the internationally agreed target of reducing the carbon intensity of jet fuel by 5% by 2030, and ultimately net-zero by 2050, demands swift and concerted action. This necessitates a collaborative effort spanning governments, regulators, airlines, airports, and the broader value chain. While SAF is undeniably a crucial short-to-medium-term solution, its widespread adoption requires overcoming the current cost and supply barriers through innovative financing, harmonized policies, and a sustained commitment to investment in production infrastructure.