Air, Freight News, Logistics

SAF Production Lags Despite Mandates, IATA

[ January 16, 2026   //   Gary Burrows ]

The International Air Transport Association (IATA) said new estimates find 2025 sustainable aviation fuel (SAF) production was expected to reach 1.9 million tonnes, double the 1 million tonnes produced in 2024. However, 2026 SAF production is projected to slow to 2.4 million tonnes, the airline advocacy said.

SAF production in 2025 accounted for 0.6 percent of total jet fuel consumption, compared to 0.8 percent expected in 2026. At current price levels, the SAF premium translates into an additional US$3.6 billion in fuel costs for the industry in 2025.

The estimated SAF output for 2025 was revised downward from earlier IATA forecasts due to lack of policy support to utilize 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 IATA Director General Willie Walsh.

Mandates in the EU and UK have failed to accelerate SAF production and adoption.

Europe’s ReFuelEU Aviation 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 cost of conventional jet fuel and double the market price of SAF. All this comes without guaranteeing supply or consistent documentation, IATA said.

The UK’s SAF mandate has triggered price spikes, leaving airlines to absorb the burden.

The cumulative impact of policy frameworks is that airlines paid a premium of US$2.9 billion for the 1.9 million tonnes of SAF available in 2025. Of this, US$1.4 billion reflects the standard SAF price premium over conventional fuel.

The failure to accelerate expansion of SAF production capacity will cause many airlines to review their own SAF targets, as many have committed to use 10 percent SAF by 2030, Walsh said. “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.”

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, IATA said.

Tags: International Air Transport Association, ReFuelEU