Global sustainable aviation fuel production lags behind policy ambitions, risking missed decarbonisation targets

Sustainable aviation fuel was meant to be the sector’s breakthrough: a cleaner substitute for conventional jet fuel at a time when geopolitical disruption has again exposed the fragility of fossil supply. Yet the industry’s central problem remains unchanged. SAF is scaling quickly, but not nearly quickly enough to meet aviation’s decarbonisation timetable.

Global output reached 1.9 million tonnes in 2025, according to industry estimates, and is expected to rise to 2.4 million tonnes in 2026. That is a sharp increase, but still tiny in the context of global jet fuel demand. Even next year’s projected volume would amount to only a fraction of total consumption, underscoring the mismatch between policy ambition and physical availability. To follow aviation’s net zero pathway by 2050, production would ultimately need to expand to roughly 500 million tonnes a year, a scale that shows how early the market still is.

The gap is particularly stark in Europe, where policymakers have chosen to force demand into existence. Under ReFuelEU Aviation, fuel suppliers must ensure SAF makes up 2% of aviation fuel delivered at EU airports from 2025, rising to 6% in 2030 and 32% in 2040. The UK has adopted a similar approach, with a 2% target this year, 10% in 2030 and 22% in 2040. The logic is straightforward: certainty should draw in capital, support production plants and create a market where one barely exists.

That strategy is already changing behaviour. Airlines are signing longer-term offtake agreements, airports are preparing blending and storage infrastructure, and energy groups are assessing new projects. But the economics remain difficult. IATA says carriers flying to, from and within Europe and the UK paid an extra $2.9 billion in 2025 for the SAF available to them, with roughly half reflecting the fuel’s price premium over fossil jet fuel and the rest tied to compliance costs passed through by suppliers. That has reignited a familiar debate over whether mandates can build supply fast enough, or simply add to airline costs while production remains constrained.

IATA’s Marie Owens Thomsen has argued that production incentives may do more to grow the market than obligations alone, especially as synthetic e-SAF would be substantially more expensive again. Willie Walsh, the association’s director general, has said the 10% target for 2030 looks out of reach on present supply. The concern is that policy is scaling the cost of compliance faster than the availability of fuel.

The United States has taken a different route, leaning on subsidies rather than binding blending rules. That approach has helped projects move ahead, most visibly at Montana Renewables in Great Falls, which is expanding to become a major SAF producer for North America and is backed by a $1.67 billion Department of Energy loan guarantee. The company signed a supply deal with World Energy in February covering more than 70 million gallons over three years, illustrating how long-term commercial commitments are starting to underpin the market.

But Washington’s support is also evolving. The One Big Beautiful Bill cut the clean fuel producer credit for SAF to $1.00 a gallon from $1.75 and excluded feedstocks imported from outside North America, a change that could complicate the economics for producers looking beyond the domestic market. In Latin America, where some suppliers had hoped to sell into the US, that shift is likely to sting. At the same time, demand signals are appearing elsewhere in the hemisphere, with Brazil introducing a 2027 emissions-cut requirement for transport fuels.

For airlines and logistics groups, the near-term answer increasingly lies in procurement structures rather than direct physical supply. Book-and-claim systems allow buyers to support SAF even when it is not delivered to their own aircraft, helping bridge the gap between ambition and local availability. DHL says it reached 10% SAF use in 2025 and is targeting 30% by 2030, evidence that firms willing to pay and plan ahead can move faster than the market average.

The broader picture, however, remains one of strain. Europe is trying to create demand through regulation, the US is trying to create supply through incentives, and producers are still battling feedstock limits, high costs and uneven policy frameworks. As several industry analyses have noted, the two transatlantic models may ultimately feed each other, with Europe’s mandates supporting US producers and US subsidies helping to stabilise supply for European buyers.

What is clear is that SAF has moved from a niche concept to an industrial policy issue. What is not yet clear is whether the sector can build the plants, secure the feedstocks and mobilise the capital needed to deliver fuel at the speed required. The ambition is now established. The test is whether the market can turn that ambition into availability.