IATA warns slowing SAF growth will raise costs and risk future targets

The International Air Transport Association (IATA) has warned that sustainable aviation fuel (SAF) production growth is slowing, and urgent action is needed ahead of upcoming e-SAF mandates in Europe and the UK. IATA’s latest estimates show that SAF output will reach 1.9 million tonnes in 2025, double the 1 million tonnes produced in 2024, but will grow more slowly to only 2.4 million tonnes in 2026.

Despite the increase, SAF will represent just 0.6% of global jet fuel consumption in 2025, rising to only 0.8% the following year. At current prices, the SAF premium will add USD 3.6 billion to industry fuel costs in 2025. IATA said this year’s estimate for 1.9 million tonnes is lower than earlier forecasts because policy support has been lacking. SAF is priced at up to five times the cost of fossil jet fuel in mandated markets.

Willie Walsh, IATA’s Director General, said poorly designed mandates were slowing progress. He said the EU and UK policies had reduced momentum in the industry and increased prices. “If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park. But if the objective is to increase SAF production to further the decarbonisation of aviation, then they need to learn from failure and work with the airline industry to design incentives that will work,” he said.

IATA said Europe’s ReFuelEU Aviation initiative had sharply increased costs while supply remained limited. Fuel suppliers were widening profit margins, meaning airlines paid up to five times more than conventional jet fuel and double the market price of SAF, without guarantees on supply or documentation. In the UK, the SAF mandate has led to price spikes, with airlines absorbing the increases.

Airlines paid a premium of USD 2.9 billion for the limited 1.9 million tonnes of SAF available in 2025, of which USD 1.4 billion was the standard premium over conventional fuel. Walsh said Europe’s fragmented policies were distorting markets and slowing investment. He said the recent European Commission STIP announcement was a step forward, but added that actions were needed urgently.

The slow expansion of SAF production capacity will also affect airline targets. Many operators that planned to use 10% SAF by 2030 will now have to reconsider, as supply is not sufficient. “These commitments were made in good faith but simply cannot be delivered,” Walsh said.

Looking ahead, IATA warned that e-SAF mandates due from 2028 in the UK and 2030 in the EU must not repeat mistakes seen with SAF. E-SAF is expected to cost up to 12 times more than conventional jet fuel, and without strong incentives for production, supply may fall short. Compliance costs could reach EUR 29 billion by 2032 if targets are not met.

Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability and Chief Economist, said current policies were not achieving their goals. “Regulators must course-correct, ensure the long-term viability of SAF production, and achieve scale so that costs can come down. Mandates have done just the opposite, and it is outrageous to repeat the same mistakes with e-SAF mandates,” she said.