IATA Lowers SAF Forecast, Criticizes EU and UK Mandates for Raising Costs

Tashkent, Uzbekistan (UzDaily.com) — The International Air Transport Association (IATA) has downgraded its forecast for sustainable aviation fuel (SAF) production in 2025, warning that EU and UK policies are effectively slowing market development and increasing airlines’ operating costs.

According to updated estimates, SAF output in 2025 will reach only 1.9 million tonnes — twice last year’s volume but below IATA’s previous forecast due to insufficient government support and underutilization of existing capacity. Production is expected to rise moderately to 2.4 million tonnes in 2026.

Even with this growth, SAF will cover just 0.6% of jet fuel consumption in 2025 and 0.8% in 2026. The SAF price premium will increase the industry’s fuel costs by USD 3.6 billion in 2025.

“The growth in SAF production has fallen short of expectations because poorly designed mandates have slowed the nascent industry. If regulators aimed to raise prices and hinder progress, they have succeeded. But if the goal is scaling SAF production and promoting decarbonization, lessons must be learned, and effective incentives developed jointly with airlines,” said IATA Director General Willie Walsh.

Negative Impact of European Mandates

IATA notes that EU and UK SAF mandates have not accelerated production but have led to higher prices and supply chain instability.

In Europe, the ReFuelEU Aviation mandate has increased fuel costs due to limited production capacity and the market’s oligopolistic structure: airlines are paying five times the price of conventional jet fuel and twice the market price for SAF, often without delivery guarantees. The UK SAF mandate has similarly caused price spikes, with costs fully passed on to carriers.

In 2025, airlines will overpay USD 2.9 billion for a limited SAF volume of 1.9 million tonnes, of which USD 1.4 billion is the standard fuel premium.

“Europe’s fragmented policy distorts the market, slows investment, and undermines efforts to scale production. Regulators need to acknowledge that their approach isn’t working and urgently adjust course,” Walsh emphasized.

Risk of Revising Airline Targets

Low SAF output threatens carriers’ plans to increase SAF usage.

“Many airlines committed to using 10% SAF by 2030 will have to revise their targets. SAF is simply not produced in sufficient quantities. These commitments were made in good faith, but meeting them is impossible,” said Walsh.

Looking Ahead: e-SAF Mandates

IATA warns that upcoming mandates for synthetic e-SAF — in the UK from 2028 and in the EU from 2030 — risk repeating past mistakes. e-SAF costs could reach 12 times the price of conventional jet fuel, and compliance costs may rise to EUR 29 billion by 2032.

“Current policies are not delivering results. Regulators must change their approach, ensure long-term SAF production sustainability, and achieve scaling that reduces costs. Repeating the same mistakes with e-SAF mandates is unacceptable,” said Marie Owens Thomsen, IATA Senior Vice President for Sustainability and Chief Economist.