Global Investment Surge: Will New Funding Finally Scale Sustainable Aviation Fuel?

The commercial aviation sector is seeing a major influx of capital. This new funding targets the Sustainable Aviation Fuel (SAF) industry. The goal is to rapidly increase SAF production capacity and lower costs. SAF is crucial for the industry’s goal of achieving net-zero carbon emissions by 2050.

SAF is a liquid fuel that can reduce lifecycle CO2 emissions by up to 80%. It is a "drop-in" solution, compatible with existing aircraft and airport infrastructure. However, SAF currently accounts for less than 1% of global jet fuel use. The recent investments aim to close this significant supply gap.

Global Production and Regulatory Drivers

Production is currently experiencing exceptional growth. The International Air Transport Association (IATA) expects SAF production to reach 1.9 million tonnes in 2025. This is roughly double the amount produced in 2024. However, this volume still represents only 0.6% of total global jet fuel needs.

Government mandates are the primary driver for this investment surge. The European Union’s ReFuelEU Aviation Regulation is a key example. It requires fuel suppliers to blend a minimum of 2% SAF starting in 2025. This mandate will rise to 70% by 2050. Similarly, Singapore will require a 1% SAF blend for all departing flights starting in 2026. The US has also set an ambitious SAF Grand Challenge target. The US goal is to scale domestic production to three billion gallons by 2030.

Major Investment Commitments

Energy companies and governments are leading the SAF investment landscape.

• Repsol is significantly expanding its capacity in Spain. Its Cartagena Industrial Complex launched a renewable fuel plant in 2024. The facility has a current production capacity of 250,000 tonnes per year. The company plans to expand this capacity to 2.7 million tonnes by 2030.
• The UK Government announced a £43 million green aviation fund. This includes £63 million to accelerate new SAF production plants.
• Airbus and Qantas have jointly invested AUD$15 million. This funding supports a venture capital fund focused on SAF start-ups.
• LanzaJet's Freedom Pines facility in Georgia began production. It is the first ethanol-to-SAF plant operating at commercial scale.

The Challenge of Lowering SAF Costs

Despite the significant SAF production capacity growth, major challenges remain. The most critical issue is the cost of SAF. SAF is currently three to ten times more expensive than traditional jet fuel. This high cost pressures airline operating margins.

Feedstock and Policy Risks

Another key challenge is feedstock availability challenge. Current SAF production relies heavily on used cooking oil and animal fats. Experts believe demand for SAF will exceed the supply of these materials by around 2030. This requires investment in newer production methods, such as alcohol-based conversion and synthetic SAF.

Policy certainty is also vital for sustained SAF investment landscape. In the US, the short timeline of the federal tax credit is a concern. Industry executives warn that the credit expiring in 2029 could stall future growth. Continued government incentives are needed to help the sector scale up. Airline decarbonization efforts depend heavily on these long-term policy signals. The industry must turn ambitious pledges into measurable, sustained climate progress.

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