Policy Gaps Threaten SAF Production

June 6, 2025 (New Delhi) – The International Air Transport Association (IATA) projects that sustainable aviation fuel (SAF) production will reach 2 million tonnes (2.5 billion liters) in 2025, representing just 0.7% of total airline fuel consumption.

“It’s encouraging to see SAF production expected to double to 2 million tonnes in 2025, but this still accounts for only 0.7% of aviation fuel needs. Even this relatively small amount will add $4.4 billion to fuel costs. We need faster growth in production and efficiency gains to reduce costs,” said Willie Walsh, Director General of IATA.

The Challenge of Mandates
Most SAF is currently directed to Europe, where the European Union and the UK have mandated its use since January 1, 2025. The cost borne by airlines has doubled due to compliance fees imposed by SAF producers and suppliers, which is unacceptable. For the estimated one million tonnes of SAF that airlines plan to buy to meet European obligations in 2025, the current market price suggests a cost of $1.2 billion. Compliance fees are estimated at an additional $1.7 billion, a sum that could have reduced carbon emissions by 3.5 million tonnes. Instead of promoting SAF use, European SAF mandates have made the fuel five times more expensive than conventional jet fuel.

“This highlights the problem of implementing mandates before market conditions are ready and before protections are in place against unreasonable market practices that increase decarbonization costs. Increasing the cost of the energy transition—which is already valued at a staggering $4.7 trillion—should not be the goal of decarbonization policies. Europe needs to recognize that its approach isn’t working and seek alternative solutions,” Walsh stated.

IATA’s Role in Developing a Global SAF Market
To support a global SAF market, IATA has launched two initiatives:

• A SAF registry managed by the Civil Aviation Decarbonization Organization (CADO), providing a transparent, standardized system for tracking SAF purchases, use, and associated emission reductions, in line with international regulations such as CORSIA and the EU Emissions Trading System.
• The SAF Matchmaker platform, which will facilitate SAF supply by connecting airline demands with available supplies.

Urgent Action Needed from Governments
IATA urges governments to take action in three key areas:

1. Create More Effective Policies: Eliminate disadvantages faced by renewable energy producers compared to major fossil fuel companies to boost renewable energy and SAF production. This includes redirecting a portion of the $1 trillion in subsidies currently given to fossil fuel producers worldwide.
2. Develop a comprehensive energy policy framework that includes SAFs. This means increasing renewable energy generation from which SAFs are derived and ensuring SAFs represent an appropriate share of renewable energy outputs. A holistic approach should promote infrastructure sharing, co-production, and measures supporting the energy transition in aviation and other sectors.
3. Ensure CORSIA’s success as the only market-based mechanism for reducing international aviation CO2 emissions. IATA calls on governments to make eligible emission units available to airlines. To date, Guyana is the only country that has made its carbon credits accessible for airline use under CORSIA obligations.

The Case of India
India, one of the world’s emerging economies, is the third-largest oil consumer after the U.S. and China. The country has launched the Global Biofuels Alliance to position biofuel as a key part of its energy transition and economic growth. Targets include 2% SAF use for international flights by 2028, supported by policies such as guaranteed pricing, financial support for new projects, and technical standards. IATA will collaborate with the Indian Sugar and Bioenergy Association (ISMA) and Praj Industries Limited to provide guidance on best practices for life-cycle assessments of raw materials used domestically.

As the third-largest civil aviation market globally, India can strengthen its leadership in biofuels by accelerating SAF adoption through progressive policies.