Demand for sustainable aviation fuel SAF should see a long-sought boost after regional airline hub Singapore said it would require SAF on flights from 2026, but high costs and uncertain raw material supply will mean barriers to wider adoption remain.
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00:00 Singapore says it will require sustainable aviation fuel, or SAF, on all departing flights
00:07 from 2026. The shift to SAF is crucial for the aviation sector to reach its goal of net
00:14 zero carbon emissions by 2050. But barriers including high costs and uncertain raw material
00:22 supply could stand in Singapore's way. SAF is an alternative fuel made synthetically
00:28 from hydrogen or from biological materials such as used cooking oil or wood chips. But
00:34 it can cost five times as much as conventional fuel and accounts for just 0.2 percent of
00:40 the jet fuel market. That's a relatively small percentage compared to the global size
00:46 of the biofuel market, according to Sami Jauhienen, Asia-Pacific's vice president in renewable
00:52 aviation business at Finnish fuel refinery Neste. "What is good to recognize is how early
01:00 stages the whole sustainable aviation fuel market is and also in how early stages the
01:07 aviation industry is in deploying such solutions for emission reduction." Singapore's authorities
01:15 announced they will initially require flights to use 1 percent SAF, possibly rising to between
01:20 three and five percent by 2030, depending on wider availability and adoption. This will
01:26 be paid for by a levy on tickets, according to Singapore's transport minister. At the
01:32 current rate of global production, analysts believe there isn't enough SAF to keep up
01:37 with demand or policy. Based on Singapore's targets, consultant Wood McKenzie estimates
01:44 its SAF demand will rise to about 2,000 barrels per day in 2026, increasing up to 10,000 BPD
01:52 in 2030. Neste recently expanded its renewable fuel plant in Singapore, which the company
01:58 says could meet the SAF demand. But Jauhienen says the current demand for SAF just isn't
02:05 driving producers to ramp up production. "All of this we have been so far lacking in aviation.
02:13 And that's explaining why the production and the volumes and the availability up until
02:19 now has been so limited. I think to solve this situation we need to tackle the demand
02:25 side of the problem first and then the investments will follow." There are also concerns that
02:30 the contents of SAF itself are not entirely made from sustainably sourced materials. Palm
02:36 oil is an example. The EU does not consider palm oil to be a sustainable fuel because
02:42 of deforestation in top palm oil-producing countries in Southeast Asia. Jauhienen says
02:49 Neste has completely moved away from the use of palm oil to produce renewable fuels. In
02:55 response to questions to Reuters on Singapore's new SAF policy, Shell said SAF is the only
03:00 scalable in-sector option to help materially reduce emissions from flights by 2050. But
03:07 it requires greater availability of raw materials, better supply chains, improved production
03:13 technologies, stronger demand and clearer policies.
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