SAF: When the Takeoff
Dream Hits Turbulence
25 April 2025
Paradoxically, the sustainable aviation fuel (SAF) bubble seems on the verge of bursting… before it
has even truly taken off. While the first physical flows of HEFA-type SAF only emerged about a year
ago—driven by enthusiasm for decarbonizing air transport and major voluntary programs like CORSIA
and the Paris Agreements—the market is struggling to find solid economic footing.
Europe's unique approach to walking makes it unique in that it limits its political and global
agglomeration forces.
A Market Almost Entirely Dependent on Regulatory Mandates
Today, the only structured market for SAF is European, supported by an incorporation mandate set at
2% in 2025, and expected to reach 6% in 2030 under the ReFuelEU program. Outside of this
regulatory framework, almost no viable outlet exists for SAF, the cost of which remains significantly
higher than that of fossil kerosene (Jet fuel-A1: USD 670 per ton vs. SAF: USD 1,800 per ton). In
October 2023, the official adoption of ReFuelEU Aviation confirmed this trajectory: European fuel
suppliers will have to integrate 2% of SAF into aviation fuel from 2025, with a target of 6% by 2030.
This represents approximately 0.9 million tonnes by 2025, then 2.8 million tonnes in 2030. The
United Kingdom, for its part, unveiled the final details of its own mandate on April 30, 2024: 2% in 2025,
with a ramp-up to 10% in 2030, representing an estimated demand of 1.2 million tonnes. These two
areas are currently the only markets where demand for SAF is truly regulated, although it remains
limited in view of the colossal investments launched worldwide. In the rest of the world, there is
currently no region with stated objectives.
A Booming Supply in every continent, but a Nascent Demand
Yet, the production capacities announced by industry players for the coming years far exceed the
needs driven by European mandates. In Asia, existing SAF production capacity already surpasses
European demand, and new investments continue to pour in. Execution speed is striking: in many
cases, less than 24 months separate the investment decision from the commissioning of a SAF plant.
The result is a latent overcapacity, with facilities that could soon become underutilized—or even
significantly loss-making—in the medium term. In response to this imbalance, the entire
industry is betting on the development of a voluntary market… which is struggling to take off.
The Voluntary Market Reaches Its Limits it even makes sense to ship volumes to Europe.
The outcome? A global oversupply of SAF, with
In the context of the voluntary market, a
insufficient demand to absorb it in the near term.
company can choose to pay more for air
transport in order to reduce its carbon
emissions, as part of a compensation strategy or
An Imminent Zone of Turbulence
corporate social responsibility approach.
However, this dynamic faces two major What do you do when turbulence is clearly
obstacles: it either directly reduces the ahead? The SAF market is very likely heading
company’s margins or increases the price paid toward overproduction over the next five years.
by the end customer. In an uncertain economic Investments have been massive, buoyed by
climate, this approach appears neither upcoming regulatory mandates and the hope of
sustainable nor scalable in the short term, a robust voluntary market. Several more
especially with a fuel that costs more than 2.5 projects are still being financed or built. But the
times the price of kerosene. The lack of firm industry is about to enter a phase of financial
"take-or-pay" contracts in most of the SAF tension. For some, this will be an opportunity: to
partnerships announced so far adds to the acquire distressed assets at reduced prices, or
uncertainty: many of these agreements are to forge strategic partnerships under favorable
merely statements of intent, with no concrete terms. For others, the years ahead may be
commercial commitments. As investors become particularly painful. How can they hold out until
increasingly aware of the disconnect between demand finally catches up? Cost reductions,
public messaging and commercial reality, the temporary shutdowns, asset sales, or capital
risk of a market backlash is growing. raises—every option will be on the table
Warning Signs Also Emerge from the United
States
Across the Atlantic, uncertainties are piling up.
Recent changes to the 45Z tax credit could
transform the U.S. into a net exporter to Europe
and the UK. A scenario that would further strain
an already fragile European market, where SAF
demand remains marginal. Producers who had
banked on U.S. exports must now rethink their
strategies, while U.S. players question whether
A Two-Speed Sector: Between Consolidation and Repositioning
In this landscape, pure SAF players—those specialized exclusively in sustainable aviation fuel—are
likely to face significant financial challenges. Some may be forced to suspend operations or seek
consolidation.
In contrast, oil majors, better equipped financially and supported by diversified business portfolios, are
well positioned to emerge as winners during this turbulent phase.
Their business models are not solely dependent on the immediate profitability of SAF assets.
Moreover, they already control the kerosene supply chain in most airports—a decisive strategic
advantage, since owning the downstream means owning the demand, and securing SAF offtake.
A Potential Bright Spot: RED III Implementation
The only tangible near-term glimmer of hope lies in the national implementation of the RED III directive,
which could boost mandatory demand starting in 2026. A blending rate increase to 3% could slowly
revive momentum. But this scenario will require patience and resilience from investors, as margins are
likely to remain thin until at least 2030.
Between Thwarted Takeoff and Tarmac Realities
At a time when SAF embodies both climate hopes and industrial ambitions, the industry is
facing a harder truth: constrained demand, limited markets, and an already oversaturated
supply. The green promise of sustainable aviation fuel risks turning into an economic
letdown unless market players quickly adjust their course.
In this uncertain context, GREENEA stands alongside producers, investors, airlines, and
institutions to help them navigate with clarity—analyzing trends, identifying weak signals,
and fine-tuning procurement strategies in line with actual market dynamics.
