IATA warns that global SAF production is falling short of expectations, with slow growth, higher costs and ineffective mandates in Europe and the UK creating major challenges ahead of upcoming e-SAF requirements.
The International Air Transport Association (IATA) released new estimates for Sustainable Aviation Fuel (SAF) production showing that:
- In 2025, SAF output is expected to reach 1.9 million tonnes (Mt) (2.4 billion liters), double the 1 Mt produced in 2024. However, in 2026, SAF production growth is projected to slow down and reach 2.4 Mt.
- SAF production in 2025 represents only 0.6% of total jet fuel consumption, increasing to 0.8% the following year. At current price levels, the SAF premium translates into an additional USD 3.6 billion in fuel costs for the industry in 2025.
- The estimated SAF output for 2025 of 1.9 Mt is a downward revision from IATA’s earlier forecasts due to lack of policy support to take full advantage of the installed SAF capacities. SAF prices exceed fossil-based jet fuel by a factor of two, and by up to a factor of five in mandated markets.
“SAF production growth fell short of expectations as poorly designed mandates stalled momentum in the fledgling SAF industry. If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park. But if the objective is to increase SAF production to further the decarbonization of aviation, then they need to learn from failure and work with the airline industry to design incentives that will work,” said Willie Walsh, IATA’s Director General.
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The Negative Effects of EU & UK SAF Mandates
Mandates in the EU and UK have failed to accelerate SAF production and adoption:
- In Europe, ReFuelEU Aviation has sharply increased costs amid limited SAF capacity and oligopolistic supply chains. Fuel suppliers have widened their profit margins to such an extent that airlines pay up to five times more than the price of conventional jet fuel and double the market price of SAF. All this comes without guaranteeing supply or consistent documentation.
- The UK’s SAF mandate has triggered price spikes, leaving airlines to absorb the burden.
The cumulative impact of poorly designed policy frameworks is that airlines paid a premium of USD 2.9 billion for the limited 1.9 Mt of SAF available in 2025. Of this, USD 1.4 billion reflects the standard SAF price premium over conventional fuel.
“Europe’s fragmented policies distort markets, slow investment, and undermine efforts to scale SAF production. Europe’s regulators must recognize that its approach is not working and urgently correct course. The recent European Commission STIP announcement is a step forward though it lacks a clear timeline. Actions, not words, are what matter,” said Walsh.
The failure to accelerate the expansion of SAF production capacity will cause many airlines to review their own SAF targets. “Regrettably, many airlines that have committed to use 10% SAF by 2030 will be forced to reevaluate these commitments. SAF is not being produced in sufficient amounts to enable these airlines to achieve their ambition. These commitments were made in good faith but simply cannot be delivered,” said Walsh.
Looking Ahead to e-SAF Mandates
With e-SAF mandates approaching in the UK (2028) and EU (2030), it’s essential not to repeat the policy missteps seen with SAF.
Already, e-SAF faces a much higher cost base, potentially up to 12 times that of conventional jet fuel. Without strong production incentives (as opposed to mandates), supply will fall short of targets. On top of that, compliance costs could escalate to EUR 29 billion by 2032 if targets aren’t met, as seems very likely with the current policy framework.
“Given the low SAF production volumes, it is evident that current policies are not having the desired effect. Faced with such facts, regulators must course-correct, ensure the long-term viability of SAF production, and achieve scale so that costs can come down. Mandates have done just the opposite, and it is outrageous to repeat the same mistakes with e-SAF mandates,” said Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability and Chief Economist.
