IATA: SAF Crisis and Jet Fuel Shock Threaten Aviation's Green Goals

Tashkent, Uzbekistan (UzDaily.com) — The global aviation industry is simultaneously running out of affordable jet fuel and failing to build the green alternatives fast enough to avoid billions in regulatory fines — and the window to fix either problem is closing fast.

That was the stark assessment delivered at IATA's Annual General Meeting in Rio de Janeiro, where senior officials warned that the industry's 2030 sustainability milestones are now effectively out of reach without urgent policy intervention.

SAF: A Market In Name Only

Priti Jain, IATA's Head of Net Zero Research and Programs, told reporters that despite growth in production capacity, sustainable aviation fuel output remains critically low — under 1% of global jet fuel demand. Global SAF production in 2026 is estimated at 2.4 million tonnes against installed capacity exceeding 9 million tonnes, a gap she attributed primarily to policy failures that make renewable diesel commercially more attractive to producers than SAF.

Of approximately 370 SAF projects tracked by IATA worldwide, only those currently operational, under construction, or with credible development prospects will bring capacity to around 20 million tonnes by 2030 — a fraction of the 500 million tonnes IATA calculates will be needed by 2050 for aviation to reach net zero.

The technology mix is equally lopsided. HEFA — hydroprocessed esters and fatty acids — will account for roughly 95% of SAF production capacity by 2030, while advanced pathways including e-SAF, alcohol-to-jet, and gasification will collectively contribute just 5%.

"If we can't achieve technology diversification, we risk falling significantly short of our targets," Jain warned.

The e-SAF Cliff Edge

The sharpest warning concerned e-SAF — synthetic fuel produced from green hydrogen and captured CO₂ — which carries its own sub-mandate under the EU's ReFuelEU regulation and a parallel requirement in the UK.

As of May 2026, global e-SAF production capacity barely exceeds 20,000 tonnes. Yet mandates require the industry to supply approximately 600,000 tonnes by 2030 — a thirty-fold increase requiring roughly 20 commercial plants to be built in four years.

"The window for building those e-SAF capacities has largely closed," Jain said flatly.

The financial consequences could be severe. Without e-SAF supply, non-compliance penalties under ReFuelEU alone could reach €8 billion in 2030, rising exponentially to €16 billion by 2031. Those costs would ultimately fall on airlines — and their passengers — with no actual environmental benefit delivered.

"Airlines will be paying for compliance without receiving a product or an environmental benefit," Jain said. "This is a textbook case of what happens when you ignore a systems approach and introduce demand-pull policy before a technology is at industrial scale."

The Hormuz Effect

The SAF crisis is unfolding against the backdrop of a severe conventional jet fuel shock triggered by the effective closure of the Strait of Hormuz following the outbreak of conflict with Iran in late February 2026.

Hemant Mistry, IATA's Director of Energy Transition, reported that average global jet fuel prices have roughly doubled in five months — from $96 per barrel in November 2025 to a peak of $188 in April 2026 — before stabilising at an elevated level of around $156 per barrel. The Brent crude benchmark, by comparison, has held in the $95–115 range.

Europe and Africa face the greatest exposure: before the strait's closure they sourced 24% and 33% of their jet fuel respectively from the Persian Gulf. Jet fuel production in Europe has fallen 13% below pre-COVID levels, with the UK down a striking 42%.

Mistry flagged a perverse side effect: as fossil jet fuel prices surged, SAF market prices followed upward — despite the fact that SAF production costs are structurally independent of oil prices.

Brazil: Potential and Squandered Opportunity

The Rio setting lent particular weight to IATA's Brazil-specific analysis. Jain described Brazil as a country with transformational potential — more than 120 million tonnes of SAF feedstock by 2030, rising to 180 million tonnes by 2050, with the capacity to produce 12 million tonnes of SAF annually using existing, proven technologies.

"Brazil can write a transformational SAF story of up to 60 million tonnes by 2050," Jain said.

Yet the country's actual SAF project pipeline stands at just 2.2 million tonnes — a negligible share of what is achievable.

IATA Chief Economist Marie Owens Thomsen separately criticised Brazil's jet fuel pricing formula, which sets prices as if all fuel were imported from the US Gulf Coast despite only 16% actually being imported. She estimated the formula has cost Brazilian airlines around $220 million in unjustified overcharges, with an additional $105 million in losses accumulated during the current crisis.

"This is completely unacceptable," Owens Thomsen said.

Sequence, Not Just Policy

On the broader question of blending mandates — the EU and UK regulatory tools requiring airlines to mix a minimum percentage of SAF — IATA stopped short of calling for their abolition, but issued a sharp critique of sequencing.

"If you mandate a market where there is no product, the price will go up. That's exactly what happened in Europe and the UK," Owens Thomsen said, drawing a parallel with the wind and solar transition. "Solar panels were produced before there was a mandate to use them. That's perfectly logical."

IATA's preferred policy sequence begins with harvesting easy-win opportunities — co-processing at existing refineries could add up to 2.6 million tonnes of SAF by 2030 — before building market infrastructure including book-and-claim systems, and only then introducing mandates once supply chains are established.

On book-and-claim, IATA announced that its CADO SAF Registry — already counting 146 participating organisations — is being advanced as a global compliance tool, with Singapore, Japan, and Brazil exploring the creation of government accounts in the system.

CORSIA: 175 Million Units Short

On carbon offsetting, IATA disclosed that CORSIA — the sole global market mechanism for international aviation — faces a supply shortfall of around 175 million Emissions Eligible Units in the current 2024–2026 phase, with projected demand of 213 million units against only 38 million available on the market. Ten countries have so far delivered units, with Guyana the largest contributor at approximately 25 million.

IATA attributed the shortfall to a structural misalignment between ICAO, which obliges airlines to offset emissions, and the UNFCCC process, under which host countries bear no symmetrical obligation to supply credits.

"Airlines are caught between two systems and expected to bear all the burden themselves," Owens Thomsen said. "That's clearly not a viable model."