IATA: Why Sustainable Aviation Fuel Production is Falling Short of Global Targets

The International Air Transport Association (IATA) has released new Sustainable Aviation Fuel production estimates, revealing a significant shortfall against global climate targets. The organization reports that SAF output for 2025 will represent only 0.6% of total jet fuel consumption worldwide. This figure is a downward revision from earlier IATA forecasts. The association points to a lack of effective policy support as the core reason for the stalled momentum in the fledgling SAF industry.

IATA Director General Willie Walsh stated that current policies are hindering progress. He argued that if the goal of SAF mandates was to slow progress and increase prices, policymakers have succeeded. Walsh urged regulators to learn from these failures and work with the airline industry. The focus must shift to designing incentives that will actually scale production.

The Production Shortfall and Slowing Growth

IATA SAF estimates project 2025 output to reach 1.9 million tonnes (Mt), or 2.4 billion liters. This is double the 1 Mt produced in 2024. However, this growth rate is expected to slow significantly in 2026. Production is only projected to reach 2.4 Mt, representing just 0.8% of total jet fuel consumption.

The downward revision of the 2025 forecast highlights a crucial bottleneck. The industry is not taking full advantage of installed SAF capacities. This is primarily due to a challenging economic and regulatory environment.

Mandates Drive Up Costs and Market Distortion

The implementation of mandates in the European Union and the United Kingdom has failed to accelerate SAF adoption. Instead, they have sharply increased costs for airlines. SAF prices already exceed conventional jet fuel by a factor of two. In mandated markets, this premium can rise to a factor of five.

The SAF premium is expected to add an additional USD 3.6 billion to the industry’s fuel costs in 2025. The cumulative impact of these poorly designed mandates means airlines paid a premium of USD 2.9 billion for the limited 1.9 Mt of SAF available this year.

ReFuelEU Aviation and Oligopolistic Supply

In Europe, the ReFuelEU Aviation regulation has been particularly problematic. Limited SAF capacity and concentrated supply chains have allowed fuel suppliers to widen profit margins. Airlines are sometimes paying up to five times the price of conventional fuel. This is double the actual market price of SAF.

According to IATA, fuel suppliers are imposing compliance fees. These surcharges are often twice the prevailing market price premium of SAF. This occurs without guaranteeing supply or providing consistent documentation for environmental claims. This market distortion is a major concern for global carriers like Airbus customers.

Threat to Decarbonization Goals

The failure to rapidly expand Sustainable Aviation Fuel production capacity will have a direct impact on long-term sustainability goals. Many airlines had committed to using 10% SAF by 2030. They will now be forced to reevaluate these ambitious airline decarbonization goals.

• Airlines committed to 10% SAF by 2030 will likely miss their targets.
• Fragmented European policies are slowing investment in new production.
• Regulators must prioritize production incentives over punitive mandates.

The Looming e-SAF Challenge

Attention is now turning to the upcoming e-SAF mandates in the UK and EU. Electrolytic SAF (e-SAF) faces an even higher cost base. It is potentially up to 12 times the price of conventional jet fuel consumption.

IATA warns against repeating the same policy missteps. Without strong production incentives, supply will fall short of targets. Compliance costs could escalate to EUR 29 billion by 2032 if these e-SAF targets are not met.

Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability, emphasized the need for a course correction. She stated that current policies are not having the desired effect. Regulators must ensure the long-term viability of SAF production. This is essential to achieve the scale needed to bring costs down. The European Union Aviation Safety Agency (EASA) and other regulatory bodies must recognize the urgency of this policy shift, as reported by commercial aviation news at flying.flights.