Sustainable aviation fuel: What is it and why is it making flights pricier?
Zhao Yifan
FROM 2026, travellers departing from Singapore will have to pay more for their flight tickets due to a levy imposed by the government, as part of a move requiring all airlines leaving the country to use sustainable aviation fuel.
The exact amount depends on factors such as the distance travelled and the class of travel. For instance, passengers could fork out an extra S$3 for a flight to Bangkok and S$16 for one to London.
These are estimates based on Singapore’s target for sustainable aviation fuel to account for 1 per cent of all jet fuel used at Changi and Seletar airports in 2026. The aim is to have 3 to 5 per cent green fuel-use by 2030.
What is sustainable aviation fuel?
This fuel is produced from sustainable feedstocks and closely resembles traditional fossil aviation fuel in terms of chemistry.
Some typical feedstocks are cooking oil, non-palm waste oils from animals and plants, and solid waste such as packaging, textiles and food scraps. Other potential sources include forestry waste – for example, waste wood and energy crops including fast-growing plants and algae.
Most of the sustainable aviation fuel supplied today is derived from the hydrotreated esters and fatty acids (Hefa) pathway. This is driven by lower capital costs and the high energy density of the feedstocks used, which include waste fats, oils and greases.
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While Hefa is currently the only commercial pathway being used at scale to produce sustainable aviation fuel, raw materials are limited. Therefore, there is an urgent need for large-scale mobilisation of these greener feedstocks.
How will this green fuel contribute to decarbonisation?
Using sustainable jet fuel results in a reduction in carbon emissions of up to 80 per cent, compared with traditional fuel. The figure depends on the sustainable feedstock used, the production method and the supply chain.
Sustainable fuel can be blended with traditional aviation fuel up to 50 per cent and can also be handled in the same way, making it easily adoptable.
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Any aircraft certified for using the current specification of jet fuel can use sustainable fuel.
The International Air Transport Association (Iata) estimates that sustainable fuel could contribute around 65 per cent of the reduction in emissions that the aviation industry needs to reach net-zero by 2050.
Is there enough supply?
In 2023, sustainable aviation fuel volumes reached 600 million litres – double the 300 million litres produced in the previous year.
Iata projects that the level of production in 2024 will triple to 1.875 billion litres. However, this accounts for a mere 0.53 per cent of total aviation’s fuel need, and only 6 per cent of the global renewable fuel production capacity.
Willie Walsh, director-general of Iata, said in December: “This allocation limits sustainable aviation fuel supply and keeps prices high. Aviation needs between 25 and 30 per cent of renewable fuel production capacity for sustainable aviation fuel.”
Singapore is currently home to the world’s largest sustainable aviation fuel production facility, located in Tuas. Operated by Finnish refiner Neste, it has an annual capacity of up to 1.26 billion litres after its expansion was completed in May 2023.
Due to the limited supply, sustainable fuel is three to five times more expensive than conventional jet fuel.
Achieving net zero for aviation before 2050 would require a massive increase in production in order to meet demand. The largest acceleration is expected in the 2030s as policy support becomes global, sustainable aviation fuel competes more with traditional aviation fuel, and credible carbon offsets become scarcer.
How much more are passengers departing Singapore likely to pay?
The levy quantum will be determined by the Civil Aviation Authority of Singapore (CAAS) based on the prevailing national usage target of sustainable aviation fuel, as well as the fuel’s projected price at the time.
The amount will not change if the actual price differs from the projection. Instead, the volume purchased will be adjusted, although this may result in the percentage of the sustainable fuel used to be below target.
For example, in 2026, the levy will be calculated based on the overall cost of the volume of sustainable fuel that could supply 1 per cent of total fuel-use for flights departing from Singapore.
Based on this 1 per cent target, the early estimates from CAAS suggest that economy-class passengers may incur an additional S$3 for short-haul flights to cities such as Bangkok, S$6 for medium-haul flights to destinations such as Tokyo, and S$16 for long-haul flights to places such as London.
The amounts collected from passengers will be used in the bulk purchase of sustainable jet fuel.
Depending on the availability and adoption of sustainable aviation fuel, the goal is for the levy revenue to cover such fuel to form 3 to 5 per cent of total fuel-use by flights by 2030.
What is the policy of other countries?
According to CAAS, Singapore is the first country in the world to introduce such a levy.
While other countries have also implemented sustainable aviation fuel requirements, they are in the form of mandates based on fixed volumes.
Within the Asia-Pacific region, Malaysia has implemented a sustainable fuel blending mandate starting with 1 per cent in 2023. It is targeting a 47 per cent blending requirement by 2050.
In India, the government aims to achieve 1 per cent blending for international flights by 2027, and to increase the goal to 2 per cent a year later.
Japan intends to mandate a 10 per cent blending requirement for international flights using Japanese airports, starting in 2030.
The European Union is going to require 2 per cent blending for all aviation fuel used in the bloc by 2025, gradually increasing to 70 per cent by 2050.
Nevertheless, imposing mandates may also result in additional costs being passed on to consumers. Some airlines have already started to add surcharges to their flight tickets to cover the high costs of sustainable fuel.
For example, Dutch airline KLM charges a levy of between two euros (S$2.90) and 24 euros on all flight tickets from Amsterdam to help fund the use of a 1 per cent sustainable fuel blend on these flights.
Iata’s Walsh noted that Singapore’s levy will not put the Republic’s status as a global aviation hub at risk.
“There will be a cost associated with transitioning to net zero. And ultimately, that cost will have to be reflected in the ticket prices that we charge our customers,” he explained.
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