IATA warns of critical SAF shortfalls as jet fuel crisis deepens

Tashkent, Uzbekistan (UzDaily.com) — The global aviation industry faces a dual crisis of soaring jet fuel costs and a dangerously inadequate supply of sustainable aviation fuel, a senior official at the International Air Transport Association warned Saturday, cautioning that the window to meet key 2030 green fuel targets has all but closed.

Speaking at IATA's Annual General Meeting in Rio de Janeiro, Preeti Jain, Head of Net Zero Research and Programs at IATA, said that despite growing production capacity, sustainable aviation fuel (SAF) output remains critically low — representing less than 1% of global jet fuel demand — while an emerging e-SAF shortage threatens to saddle airlines with billions in compliance penalties.

"We need all solutions, and in the absence of the right policy landscape, we are missing on two important solutions," Jain told reporters. "Co-processing and lower-carbon aviation fuel can be transition solutions for the industry, which we should not miss."

SAF: A Market in Name Only

Global SAF production is estimated at 2.4 million tonnes in 2026, against an installed capacity of more than 9 million tonnes — a striking gap that Jain attributed primarily to policy failures that make renewable diesel more commercially attractive than SAF for fuel producers.

Of the roughly 370 SAF projects monitored by IATA worldwide, only those that are operational, under construction, or with a credible development pipeline are expected to yield approximately 20 million tonnes of capacity by 2030 — still a fraction of the 500 million tonnes IATA says will be needed by 2050 to achieve net-zero aviation.

The technology picture is equally lopsided. The HEFA (Hydroprocessed Esters and Fatty Acids) pathway is projected to account for around 95% of 2030 SAF capacity, leaving advanced technologies such as Power-to-Liquid (e-SAF), Alcohol-to-Jet, and gasification pathways contributing just 5%.

"If we are not able to see technology diversification, we may be far behind the target which should be met," Jain said.

e-SAF: A Mandate Without a Market

The most urgent warning concerned electro-SAF, or e-SAF — a synthetic fuel derived from green hydrogen and captured CO₂, which is subject to a dedicated sub-mandate under the European Union's ReFuelEU regulation and a parallel UK scheme.

As of May 2026, barely 20,000 tonnes of e-SAF production capacity exists globally. Yet mandates require the industry to supply approximately 600,000 tonnes by 2030 — a 30-fold increase that would demand the construction of roughly 20 commercial-scale facilities within four years.

"The window to produce e-SAF by these facilities has largely been closed," Jain said flatly.

The financial consequences could be severe. In the absence of e-SAF supply, non-compliance costs under ReFuelEU alone could reach 8 billion euros in 2030, escalating exponentially to as much as 16 billion euros by 2031, costs that would ultimately be passed on to airlines — and their passengers — without delivering any actual environmental benefit.

"Airlines end up paying the cost of compliance without having access to either the product or the associated environmental benefits," Jain said. "This is a classic example of what happens when you ignore a system-wide approach and implement demand-pull policies before the technology is deployed at scale."

The Strait of Hormuz Effect

The SAF crisis is unfolding against the backdrop of a broader jet fuel emergency 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, told the briefing that average global jet fuel prices had roughly doubled in five months — from $96 per barrel in November 2025 to a peak of $188 per barrel in April 2026 — before settling at an elevated $156 per barrel. By contrast, oil benchmark Brent crude has stabilized in a range of $95–$115 per barrel.

Europe and Africa are most exposed, with 24% and 33% of their jet fuel respectively previously sourced from the Persian Gulf. European jet fuel production has declined 13% compared to pre-pandemic levels, and by 42% in the United Kingdom specifically.

Mistry noted a troubling side effect: as fossil jet fuel prices surged, SAF market prices moved in tandem — even though SAF production costs are structurally decoupled from crude oil. "It is really important that as we are working to ramp up SAF, the pricing is competitive," he said.

Brazil in the Spotlight — and Under Scrutiny

The Rio setting gave particular salience to IATA's focus on Brazil, which Jain described as holding transformative potential: over 120 million tonnes of SAF biomass 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 transformative journey to produce SAF which can go up to 60 million tonnes by 2050," Jain said.

However, the country's actual SAF capacity pipeline stands at only 2.2 million tonnes — a fraction of what is achievable.

Separately, IATA's Chief Economist Marie Owens Thomsen took aim at Brazil's jet fuel pricing formula, which sets prices as if all fuel is imported from the U.S. Gulf Coast, even though only 16% actually is. The arrangement has cost Brazilian airlines an estimated $220 million in unjustified premiums, a figure that rose by a further $105 million during the current crisis.

"This is quite unacceptable," Owens Thomsen said.

Fix the Order, Not Just the Policy

On the broader question of mandates — the EU and UK regulatory instruments that compel airlines to blend minimum SAF percentages — IATA stopped short of calling for their abolition, but mounted a pointed critique of the sequencing.

"If you mandate a market where the product doesn't exist, the price will go up. That's exactly what's happened in Europe and in the UK," said Owens Thomsen, drawing a parallel with the wind and solar energy transition. "They made the solar panels before they mandated the use of solar energy. That makes perfect sense."

IATA's preferred policy ladder begins with exploiting low-hanging fruit — co-processing in existing refineries could add up to 2.6 million tonnes of SAF by 2030 — before moving to market-building measures such as 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 — now housing 146 participating organizations — is being pursued as a global compliance tool, with Singapore, Japan, and Brazil exploring state accounts within the system.

CORSIA: 175 Million Units Short

On carbon offsetting, IATA disclosed that the CORSIA scheme — the only global market-based carbon measure for international aviation — faces a supply shortfall of approximately 175 million Eligible Emissions Units for its current 2024–2026 phase, with only 38 million units currently available against a projected demand of 213 million.

Ten countries have supplied units to date, led by Guyana with nearly 25 million. IATA called the gap a result of a structural disconnect between ICAO, which obligates airlines to offset emissions, and the UNFCCC process, which has not correspondingly obligated host countries to supply credits.

"Airlines get squeezed in the middle of all of this and told to be the ones to carry the burden," Owens Thomsen said. "That obviously will not work.