IATA Warns SAF Costs Threaten Airline Decarbonization
The International Air Transport Association has forecast that global production of Sustainable Aviation Fuel will double to 2 million tonnes in 2025, yet it will still account for just 0.7 percent of the airline industry’s total fuel consumption. Despite the increase, IATA Director General Willie Walsh cautioned that the scale and cost of this growth remain major concerns. The estimated $4.4 billion price tag for supplying this limited amount of SAF signals the financial strain facing the industry as it tries to meet decarbonization goals.
Walsh emphasized that although the rise in SAF production is a positive development, the pace is far too slow, and costs remain prohibitively high. He called on governments and industry stakeholders to accelerate efforts to scale production while finding mechanisms to reduce prices. Without this, the aviation sector’s push toward sustainability could become financially unsustainable.
A significant share of the current SAF supply is heading to Europe, where mandates from the European Union and the United Kingdom went into effect at the start of 2025. These regulations require airlines to incorporate SAF into their fuel mix, but they have also triggered a dramatic rise in costs. Airlines are now paying more than double the regular fuel price for SAF due to supplier markups and compliance fees.
In Europe alone, the one million tonnes of SAF expected to be used to satisfy these mandates will cost an estimated $2.9 billion. Of that, $1.7 billion will go to extra compliance charges imposed by suppliers, a figure Walsh called “unreasonable” given the still-limited availability of the fuel. He argued that the premature enforcement of mandates, without adequate supply or pricing safeguards, is placing an unfair burden on carriers.
Walsh criticized Europe’s policy approach, warning that it risks derailing the industry’s climate goals by making decarbonization financially unfeasible. He called for better market conditions and protections to prevent exploitative pricing as SAF demand grows. Without such changes, he said, policies that are meant to accelerate sustainability could instead become roadblocks.
The broader transition to sustainable aviation is already expected to cost $4.7 trillion, and IATA warns that rising SAF prices could further strain airlines as they work toward net zero emissions by 2050. Walsh urged regulators to rethink strategies that increase costs without delivering meaningful environmental benefits.
As it stands, the aviation sector is committed to using SAF as a central tool in reducing carbon emissions, but the supply chain and pricing structure need major reform. Without intervention, the cost of compliance may outpace the environmental gains, undermining global efforts to achieve carbon neutrality.
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