News / Singapore plans SAF levy as global supply tightens

© Alexander Donin

Singapore has introduced a plan for a levy on flights in a bid to create a predictable demand market for sustainable aviation fuel (SAF) amid procurement issues surrounding a fuel seen as essential for greener aviation.

Cargo customers on all flights departing Singapore from 1 October will pay 1-15 Singaporean cents (up to 12 US cents) per kg of freight flown, depending on destination. Passengers also face a levy.

The levy follows a damning indictment of the state of play in Asia-Pacific SAF uptake, a report from the Asia SAF Association (ASAFA) warning that “business as usual” will not deliver sufficient levels of green fuel to meet ever-increasing demand.

Calling on carriers to “invest early”, the report stresses that “bold, coordinated policy action, combining mandates, incentives, flexibility and feedstock investment, is essential for APAC’s energy transition” – Singapore having set a target of 3%-5% SAF usage by 2030.

The city-state has paired its new levy with a 1% SAF blend mandate, with revenue generated to be used to procure SAF centrally, creating what it hopes will be a predictable demand environment and encourage upstream investment.

“Globally, every region is interested in procuring SAF,” said Conor Madigan, CEO and co-founder of Aether Fuels. “However, due to the mandates now in place in Europe, we see a lot of SAF being sent there even if it is produced somewhere else, as most current SAF projects – producing and planned – are outside the EU and UK.”

That dynamic has exacerbated supply constraints in Asia-Pacific, where policy frameworks have generally been slower to crystallise.

A spokesperson for Aether Fuels noted that cost remained a fundamental barrier.

“SAF is more expensive than jet fuel. Airlines cannot absorb long-term premiums, and producers won’t build new plants without policy certainty and confidence that it will remain beyond the next five to ten years.”

According to Mr Madigan, the structural constraint lies even deeper in the value chain.

“There are many technical and policy factors at play, but the biggest challenge for the SAF sector is the search for the right sources of sustainable feedstocks – which is what really determines a ceiling on SAF,” he said.

Today, SAF is overwhelmingly produced via the hydro-processed esters and fatty acids (HEFA) process, which converts fats, oils and greases from sources such as used cooking oil (UCO) and animal fats.

“HEFA-based SAF has paved the way for the industry, but supply is seriously constrained,” Mr Madigan explained. “HEFA fuels have created the foundation for the industry – but those looking to scale up SAF production are struggling to meet demand using waste streams like UCO alone.”

He added that alternative pathways remained commercially and logistically challenging.

“There are many alternative waste carbon streams the industry can use – from industrial waste gases to agricultural and forestry waste to biogas, through to combinations of green hydrogen and captured CO2,” he said. “Each of these streams has challenges to adoption – but taken as a whole, we can see there is an abundant, diverse range of alternatives to HEFA ready to help the sector scale up.

“Collectively, these feedstocks can provide enough SAF for the entire fleet; the challenge is to unlock them economically.”

Using these feedstocks presents further complexity, he noted.

“They are typically dispersed, both geographically and throughout different industries, increasing transport and logistics costs. Some come with extra complications and added energy requirements,” Mr Madigan explained.

Singapore, which houses Asia-Pacific’s largest SAF plant, appears willing to push ahead regardless of shifting global political winds, including renewed uncertainty in the US and the rollback of certain environmental commitments.

Meanwhile, construction has begun on a second 2,000 tonne per year SAF plant, to be operated by Aether Fuels, which recently secured a further $15m in funding to accelerate development. Head of Asia-Pacific business development Tat Chuan Goh told reporters “momentum is clearly building up”.

And Mr Madigan argued that technology and policy must move in tandem.

“Breakthrough technology like ours plays a key part of the solution by lowering the cost and energy required to turn this broader range of feedstocks into fuel,” he said. “Alongside this, the industry needs consistent and clear policy guidance to support the long-term investment needed to scale SAF production.”

Aether’s spokesperson said: “It’s a prime example of how the conditions for capital deployment, technological advancement and regional supply chains can be developed without leaving passengers markedly out of pocket.”