Sustainable aviation fuel production is expected to reach 1.9 million tonnes in 2025, double last year’s output, but growth is slowing significantly as poorly designed mandates drive up costs and stall momentum, according to new estimates released by the International Air Transport Association (IATA) on 9 December.

The aviation industry body projects sustainable aviation fuel (SAF) output will increase to only 2.4 million tonnes in 2026, representing just 0.8% of total jet fuel consumption. The 2025 figure marks a downward revision from earlier forecasts, which IATA attributes to inadequate policy support despite installed production capacity.

Key Takeaways

  • SAF production doubles to 1.9 million tonnes in 2025, but 2026 growth rate decelerates
  • Airlines paid USD 2.9 billion premium for limited SAF supply in 2025
  • EU and UK mandates criticized for driving prices up to five times conventional jet fuel
  • Many airlines may abandon 10% SAF by 2030 commitments due to supply shortages

EU and UK Mandates Drive Price Spikes

The airline industry organization singled out European and British policies as counterproductive to scaling sustainable aviation fuel production. Under the EU’s ReFuelEU Aviation framework, limited capacity and concentrated supply chains have enabled fuel suppliers to charge premiums of up to five times conventional jet fuel prices.

“Europe’s fragmented policies distort markets, slow investment, and undermine efforts to scale SAF production,” said Willie Walsh, IATA’s Director General, in the press release. However, airlines currently have no guaranteed supply or consistent documentation under these mandates.

Of the USD 2.9 billion premium airlines paid for 1.9 million tonnes of SAF in 2025, USD 1.4 billion represents the standard price difference over conventional fuel. The remainder stems from market distortions created by policy frameworks, according to IATA’s analysis.

Airlines May Revise 2030 Commitments

The constrained sustainable aviation fuel production capacity is forcing airlines to reconsider voluntary sustainability targets. Many carriers committed to using 10% SAF by 2030, but IATA warns these goals may no longer be achievable given current supply trajectories.

“These commitments were made in good faith but simply cannot be delivered,” Walsh stated, adding that SAF is not being produced in sufficient volumes to meet airline demand.

e-SAF Mandate Concerns Mount

With synthetic e-SAF mandates approaching in the UK (2028) and EU (2030), IATA raised concerns about repeating what it characterizes as policy mistakes. The organization estimates e-SAF faces a cost base potentially 12 times higher than conventional jet fuel.

Without production incentives rather than consumption mandates, compliance costs could reach EUR 29 billion by 2032 if targets are not met, according to Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability and Chief Economist.

What’s Next

The aviation industry is calling for policy reforms prioritizing production incentives over consumption mandates to achieve scale and reduce costs. However, European regulators have not yet responded to IATA’s latest criticism, though the European Commission’s Strategic Technologies for Industrial Plan (STIP) announcement was acknowledged as a potential step forward, albeit without clear implementation timelines.

The sustainable aviation fuel production shortfall has implications for Saudi Arabia’s expanding aviation sector, which is targeting net-zero emissions under Vision 2030’s sustainability goals while significantly increasing flight capacity.