Aside from China, around 5 SAF projects are lined up this year across Asia, and production will likely begin shortly, with regional and European markets marked as targets.
As the demand for barrels of sustainable aviation fuel (SAF) has exceeded expectations, good news has enveloped Asia during this time of global economic uncertainties. As production becomes more rampant, Asian SAF supply can surpass regional demand this year and next. Oil experts believe that this increase in exports can potentially lower the price.
According to industry sources, the proposed production could decline if regional demand declines and prices fall below the cost of production. However, the continent’s increased ability to produce SAF is a positive sign, particularly for airlines, as complaints regarding the price and difficulty in sourcing it have persisted within the aviation industry.
Aside from China, around 5 SAF projects are lined up this year across Asia, and production will likely begin shortly, with regional and European markets marked as targets. In Europe, flights departing from the EU and the UK are mandated to use 2% SAF, while Asia demand remains low as the compulsory use of renewable fuel in some countries is expected to start only later in the decade. Reuters reported that once Singapore and Thailand enforce a 1% mandate by 2026, SAF demands from these countries will increase to 14% of their production capabilities.
Aviation consultants explained that Asian airlines remain focused on increasing flight connectivity, and SAF, which is more expensive than jet fuel, is not prioritised as airlines would make lesser profits. In 2023, 2.5% of global carbon emissions came from the aviation industry alone. SAF, which is made from waste oil and biomass only accounted for 0.3% of global jet fuel production, despite being important to reduce emissions.
The International Air Transport Association (IATA) has explained that the projected production capacity is not the actual amount of SAF which will be produced, taking into account the industry focus on profitability and actual demand. In 2024, 1 million tonnes of SAF was produced globally, despite forecasts predicting 1.5 million tonnes, and this volume has been described as disappointingly low.
Aviation analysts are also warning that recent delays can actually result in SAF production to fall, even if demand expands. Particularly Chinese manufacturers are pushing back production as there are no government policies in place yet, and they are therefore restricted from domestically marketing the fuel or exporting it.
Although SAF production in China attracted nearly $1 billion in investments in 2024, the government is yet to make its use mandatory in the country. Companies which were hopeful that the government would issue a 2-5% mandate of SAF mixed with traditional jet kerosene by 2030 have been left disappointed and compelled to postpone production.
The absence of such policies is not only in China, but a common problem across Asia, and demand is likely to remain lower than supply until a mandate is announced. South Korea’s 1% SAF use is set to begin in 2027, and Japan has set 2030 as the target to enforce a 10% mandate.
Although airlines are under no compulsion to use SAF, some Asian airlines are already using it to gain green points among their customer base and to uphold their sustainability commitments. The Association of Asia Pacific Airlines has a target of 5% SAF usage by 2030. Many airlines do not disclose their SAF consumption, and to that effect, while Hong Kong’s Cathay Pacific Airways shared its 2024 consumption, it has not made its 2025 predictions public.
As the climate crisis inches closer every day, countries are looking at every available option to reduce emissions and adopt more sustainable practices. SAF production is a viable and long-term option, and countries are increasing their investments to expand their manufacturing and consumption.
Asia exported more than 370,000 tons of SAF in 2024 and investments from Southeast Asia into its production are more than $500 million. Japan, Thailand, Singapore and Taiwan are all set to begin SAF production and take the much needed plunge into making the aviation industry more sustainable.
