Why is the Airline Sector Falling Behind on the Crucial Clean Fuel Switch?

The global airline industry’s shift to cleaner energy is lagging. The International Air Transport Association (IATA) Director-General Willie Walsh issued this warning. He stated that the airline sector green transition is moving too slowly. The primary issues are the high cost and limited output of Sustainable Aviation Fuel (SAF).

The SAF Production Lag

SAF is the core technology for aviation decarbonization. However, SAF production is not meeting earlier forecasts. Mr. Walsh, speaking at the Changi Aviation Summit, confirmed this. SAF output reached 1.9 million tonnes in 2025. This volume represented only 0.6% of total jet fuel consumption worldwide. This figure is a downward revision from IATA’s previous estimates.

Growth is expected to slow further in 2026. IATA forecasts production will only reach 2.4 million tonnes. This means SAF will account for just 0.8% of global jet fuel consumption next year. The current pace is insufficient to meet the industry’s long-term climate targets.

The Cost Barrier

The high cost of SAF remains a significant hurdle. SAF prices generally exceed fossil-based jet fuel by a factor of two. This price premium can increase dramatically in mandated markets. In some regions, SAF prices are up to four or five times higher.

These high costs translate directly into higher operating expenses. SAF purchases are projected to add $3.6 billion to airline fuel bills in 2025. This cost burden is expected to rise to $4.5 billion in 2026. Airlines operate on thin margins, making this premium challenging to absorb.

Policy and the Net-Zero Challenge

The industry is committed to a Net-Zero 2050 goal. IATA’s roadmap relies heavily on SAF. The plan calls for SAF to provide 65% of the necessary carbon abatement. This requires a massive, rapid scale-up of Sustainable Aviation Fuel production.

Mr. Walsh criticized current regulatory policies. He argued that "poorly designed mandates" are stalling momentum. Specifically, he pointed to the EU’s ReFuelEU Aviation regulation. Mandates force airlines to buy expensive, scarce fuel. This increases compliance costs without stimulating enough new supply.

IATA believes that policy focus must shift. The organization urges governments to prioritize production incentives. This approach would encourage investment and drive down costs. The goal is to correct the course of the SAF supply chain issues. This is critical for the aviation decarbonization challenge.

• SAF Production: Only reached 1.9 million tonnes in 2025 (0.6% of jet fuel consumption).
• Cost Premium: SAF is two to five times more expensive than conventional jet fuel.
• IATA’s Goal: SAF must account for 65% of carbon reduction for the Net-Zero 2050 target.
• Policy Critique: Mandates are blamed for increasing costs and failing to spur new supply investment.

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