EU's 'Green' Fuel Mandate Costly and Not Helping Environment, IATA Says

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July 18, 2025

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by Jun Yuan Yong (Reuters) The International Air Transport Association on Wednesday stepped up criticism of the European Union's sustainable aviation fuel mandate as a costly initiative that is not helping the environment as regional supplies there remain low.

"The idea that you're buying sustainable fuel and then transporting it to use in Europe isn't the right way to do it, because you're clearly increasing the carbon footprint of that fuel as a result of the transportation costs," IATA's director-general Willie Walsh said at a media roundtable in Singapore.

IATA estimated in June that production of SAF, which is considered a low-carbon replacement for traditional jet fuel, is expected to reach 2 million metric tons, or 0.7% of airlines' fuel consumption, in 2025.

"Mandating the use of a product that isn't available doesn't lead to any environmental benefit," Walsh said, adding that fuel companies that have an obligation to produce SAF are also increasing the cost of traditional jet fuel.

By IATA's assessment, he said "the cost that they're charging is way in excess of the actual cost of the limited supplies of sustainable fuel."

"The EU in effect has facilitated monopoly suppliers to increase prices with no environmental benefit," said Walsh, adding that the region needs to re-evaluate its SAF targets.

Under the ReFuelEU Aviation requirement, airlines need to have a 6% SAF blend in their jet fuel usage by 2030. The EU is offering some subsidies for SAF purchases by airlines, Reuters reported in June.

On the supply front, at least five SAF projects in Asia, outside of China, have started up or are earmarked to start production this year, targeting exports regionally and to Europe. Singapore is among key exporters of the green fuel to the EU.

Walsh also questioned the use of palm oil as a means to produce sustainable fuel.

"I think that you could argue there is sustainable palm oil and there is palm oil that wouldn't be considered sustainable, and I think in some parts of the world there it's too black and white," Walsh said.

We need to have a much more "nuanced approach" to the usage of palm oil as a feedstock and "much more detailed assessment of the sustainability of the feedstock", he added. READ MORE

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Excerpt from Bloomberg News/Financial Post: The shift to SAF is still minuscule, while growth in passenger air travel is drowning out any climate gains so far. For example, despite IAG’s world-leading status, cleaner fuel accounted for only about 1.9% of its overall fuel consumption last year, and its emissions from fuel combustion still rose by 5%.

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Globally, SAF is expected to increase to 0.7% from 0.3% of aviation fuel this year. But the International Air Transport Association expects air travel to climb 6%, causing another jump in emissions.

“We’re still at the very beginning of this market,” said Daisy Robinson, a BloombergNEF analyst who focuses on renewable fuels. “It’s going to take some time.”

New rules are springing up in different parts of the world to spur more use of SAF, which costs at least twice as much as conventional jet fuel. Starting this year, the European Union and the UK require jet fuel to include at least 2% SAF. Other requirements have been enacted or planned in British Columbia, Brazil, Indonesia and Singapore.

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Such rules help protect first movers from being undercut on prices by competitors. “As airlines, because of competition, we’re not great at doing this voluntarily,” said Aaron Robinson, IAG’s vice president for sustainable aviation fuels in the US. “Mandates in different geographies can play a really important role in moving the whole aviation industry forward.”

In the US, where no mandates are planned and where President Donald Trump’s recent tax bill reduced incentives for SAF, airlines have fallen behind the market leaders (despite some heavily advertising their pursuit of greener fuels).

Alaska Air Group Inc. leapt to the front of US carriers last year by increasing its SAF usage more than tenfold to 0.68% of its fuel. That’s about double the percentage of several other big US airlines, including JetBlue Airways Corp., United Airlines Holdings Inc. and Delta Air Lines Inc. It’s nearly 10 times the percentage of American Airlines Group Inc., which used only 0.07% SAF. (When including cargo carriers, DHL Group led the world by using SAF for 3.52% of its jet fuel last year.)

Businesses that spend a lot on corporate travel, such as tech firms and consulting companies, helped pay for more than half of Alaska’s SAF last year. This enables companies such as Microsoft Corp. and Autodesk Inc. to claim a smaller carbon footprint. Microsoft shaved its emissions by 65,000 tons last year by helping cover the cost of greener fuels, including for some employee flights on Alaska.

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A couple of new plants began churning out cleaner fuels last year, including a large Texas facility from Diamond Green Diesel, which is a joint venture between Valero Energy Corp. and Darling Ingredients Inc. Meanwhile, World Energy’s first-in-the-country SAF plant in Paramount, California, has been shut down for months following the loss of financial backing from Air Products and Chemicals Inc. A World Energy spokesperson said there’s no timetable for restarting the plant.

Perhaps the biggest disappointment for airlines has been the retreat of oil giants, which previously trumpeted massive commitments in this area. BP Plc, for instance, said two years ago that it was pursuing five projects around the world that would produce 50,000 barrels of renewable fuels per day, with a focus on SAF. The oil major has since scaled back most of these plans amid a renewed focus on fossil fuels. BP didn’t respond to requests for comment.

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Passenger air travel is expected to double by 2050, which will likely cause emissions to soar. While airlines are counting heavily on cleaner fuels to save the day — IATA anticipates SAF could be 80% to 90% of the fuel supply by mid-century — others are more pessimistic. BloombergNEF, for instance, predicts that scarce feedstocks and a lack of new plants will limit these cleaner fuels to about 7% of the industry’s propellant by 2050. READ MORE READ MORE

Excerpt from GreenAir: European aviation and fuel industry representatives have issued an “urgent call” for accelerated policy support for sustainable aviation fuel deployment across the EU. They say the current SAF market remains nascent, with HEFA-based fuels with a substantial price gap compared to conventional kerosene the only commercially available option today. In addition, they say, next generation SAF pathways such as e-SAF and advanced biofuels are struggling to access investment, in particular in reaching final investment decisions (FID). The industry partners, which include associations representing airlines, airports, cargo operators and fuel suppliers, have issued a 10-point action plan to address early-mover disadvantages and catalyse the scale-up of SAF production. The ‘call for action’ comes as the European Commission is planning to unveil its eagerly-awaited Sustainable Transport Investment Plan in the autumn.

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Although they agree that the ReFuelEU Aviation regulation “provides an essential and forward-looking framework for scaling up SAF production and uptake across the EU”, they say it must be complemented with mechanisms “that foster the long-term investment stability needed to develop a robust and competitive SAF value chain in Europe.”

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It proposes the Commission should:

Extend in volume and time the mechanism for fuels eligible under the EU ETS;
Hold dedicated calls under the Innovation Fund, Industrial Decarbonisation Bank and European Innovation Council to increase the uptake of advanced bio-SAF and e-SAF projects, as well as charging/refuelling stations, starting from 2025;
Ensure the European Investment Bank Group tailors its financial products to suit the risk profile and financing needs of e-SAF and advanced bio-SAF projects;
Accelerate initiatives bringing new SAF projects and plants to the market;
Create a revenue certainty instrument to overcome the offtake mismatch between long-term production and short-term uptake;
Explore the potential of a system allowing obligated parties under ReFuelEU to claim SAF environmental attributes through an EU virtual ticketing mechanism;
Create a level playing field for the European aviation industry and explore ways to boost EU production competitiveness;
Propose targeted simplification (Omnibus) measures to reduce the administrative burden on early movers and SMEs in SAF, while maintaining the level of ambition;
Take the necessary measures to increase the availability of European feedstocks for SAF production; and
Work together with industry to accelerate the testing and certification of e-SAF technologies like methanol-to-jet and advanced ethanol-to-jet.

“We urge policymakers at EU and national levels to take immediate action and work together with industry to ensure a timely and robust ramp-up of SAF in Europe,” say the industry partners.

“This call for action for SAF should form part of a more comprehensive and dedicated EU aviation and aeronautics strategy – including new aircraft and engine technology, ATM and carbon removals – to deliver a leading, competitive and sustainable European industry.”

Signatories to the call for action include FuelsEurope, Hydrogen Europe, Project SkyPower, European Express Association, European Cargo Alliance and Destination 2050 partners Airlines for Europe, ACI Europe (airports), ASD (aerospace manufacturing), CANSO Europe (ATM) and European Regions Airline Association. READ MORE