SAF at the Crossroads: From Policy Ambition to Industrial Reality

There is no single global SAF market. Instead, different regions are adopting distinct approaches based on their policy priorities, industrial capabilities, and market maturity.

Europe and the United Kingdom have established some of the strongest demand signals through blending mandates and carbon pricing mechanisms: ReFuelEU Aviation requires 6% SAF by 2030, including a 1.2% e-SAF target, rising to 70% by 2050, while the UK targets 10% by 2030. These policies provide long-term market visibility and encourage investment. However, this visibility guarantees neither the physical availability of fuel nor the bankability of production projects, and demand is growing faster than domestic production capacity.

North America has taken a different path. Rather than relying primarily on blending mandates, the market has developed around production incentives, tax credits, and project-level support. This approach has stimulated investment but also leaves developers exposed to evolving incentive schemes (such as the shift from the SAF-specific 40B credit to the broader 45Z credit), lifecycle carbon accounting methodologies, and policy uncertainty.

Across Asia, development is progressing at different speeds. Countries including China, Japan, Singapore, and India are each pursuing their own roadmaps through varying combinations of industrial policy, airline commitments, incentives, and emerging mandates, such as Japan's 10% target and India's 5% target for 2030. Asia has no harmonized regional framework. As a result, success in the region requires country-specific strategies rather than a one-size-fits-all approach.

Beyond these established markets, new production hubs are beginning to emerge. South America benefits from significant feedstock availability, particularly in Brazil, while the Middle East is positioning itself to leverage its energy infrastructure and strategic aviation location to become a future producer of e-fuels and other low-carbon molecules, although the Gulf conflict adds investment uncertainty.

Today, Hydroprocessed Esters and Fatty Acids (HEFA) remains the dominant SAF production pathway, accounting for more than 60% of announced and operational capacity.

Its commercial maturity, existing refining infrastructure, and well-established supply chains have enabled the first wave of SAF deployment. Existing synergies with renewable diesel production have further accelerated its growth.

Yet the industry's long-term trajectory cannot depend solely on HEFA.

Eligible feedstocks, including used cooking oil, animal fats, and waste oils, are inherently limited and increasingly compete with other low-carbon fuel markets. As demand continues to rise, feedstock availability is likely to become one of the industry's most significant constraints.

Future growth will therefore require broader technology diversification.

Alcohol-to-Jet (ATJ), Fischer-Tropsch, and Power-to-Liquid (PtL) pathways each offer different opportunities depending on regional resources and industrial ecosystems. These pathways remain more expensive than HEFA and, for many projects, are still pre-FID or unproven at commercial scale. While ATJ may provide an important intermediate step by leveraging existing ethanol and alcohol value chains, PtL and e-SAF will ultimately be critical for achieving deep aviation decarbonization despite their current higher costs and need to demonstrate viability at industrial scale.

Global SAF announcements continue to accelerate, creating the impression that supply is rapidly catching up with demand.

Announced capacity should not be confused with bankable production. At the end of 2025, announced and operational projects represented about 37 Mt/year of capacity worldwide, yet only about 4 Mt/year was in operation.

Many announced facilities remain in early development stages and must still navigate permitting, financing, final investment decisions, engineering, construction, and commercial commissioning before producing meaningful SAF volumes.

Europe illustrates this challenge particularly well. Current European operational production would cover only about 40% of theoretical 2030 needs, requiring additional capacity from new pathways and imports to comply with mandates.

Although regulation has successfully created predictable demand, this alone is not sufficient to unlock investment.  Developers require long-term, creditworthy offtake agreements, often around ten years, to secure financing, while airlines and fuel suppliers remain cautious about committing to long-term contracts given very high price premiums and uncertainty around future production costs, technology evolution, and regulatory frameworks.

The challenge becomes even greater for e-SAF. No industrial scale e-SAF project has yet reached final investment decision in Europe with first volume required by 2030, and e-SAF costs expected more than 3 times over HEFA price.

While synthetic fuels are expected to play a central role in aviation's long-term decarbonization, scaling production depends on the simultaneous development of renewable electricity, hydrogen production, CO₂ capture, certification frameworks, storage infrastructure, blending capabilities, and distribution networks.

Each element of this value chain must progress together.

While SAF demand is theoretically secured through mandates, additional regulatory mechanisms are needed to close the price gap, de-risk investments, and safeguard the competitiveness of EU airlines and airport hubs against non-EU counterparts. Mechanisms such as Contracts for Difference (CfDs) or two-sided auction schemes could help bridge the cost gap between e-SAF and conventional kerosene. In addition, a SAF Border Adjustment Mechanism (SAF-BAM) could mitigate potential competitive distortions between EU and non-EU airlines and hubs. Without such measures, projects are likely to remain stalled before reaching final investment decision (FID). 

The next phase of SAF development will not be defined by policy announcements or production targets alone.

It will be determined by execution.

The industry's success will depend on its ability to align regulation, industrial investment, technology development, infrastructure, financing, and long-term commercial agreements into an integrated ecosystem.

The projects that succeed will not necessarily be those announced first. They will be the ones capable of securing financing, accessing sustainable feedstocks, building resilient supply chains, and delivering competitive production at scale.

For governments, producers, airlines, airports, investors, and technology developers, the challenge is increasingly shared.

At Sia, we help aviation, energy, and infrastructure stakeholders navigate this evolving landscape through market intelligence, strategic planning, policy analysis, and implementation roadmaps that support informed investment and industrial decision-making.