It is now widely recognised that achieving net zero emissions in the aviation sector by 2050 will depend heavily on the widespread adoption of Sustainable Aviation Fuels (SAF). These alternative fuels, which can be derived from various feedstocks ranging from biomass to renewable energy sources, have the potential to dramatically reduce lifecycle emissions from air travel. This enables the continued operation of existing aircraft and infrastructure. Higher SAF utilisation could work towards reducing Scope 3 emissions for airport operators. Concurrently, SAF create opportunities to expand operations and accommodate growing air travel demand without a corresponding increase in environmental impact.
Governments around the world have introduced a range of policy incentives to encourage the uptake of these fuels, including regulatory mandates in the EU and the UK. However, significant barriers to crowding in further investment persist.
The regulatory landscape
Under the EU’s ‘ReFuelEU’ initiative, blending mandates require jet fuel suppliers to incorporate defined proportions of SAF into the fuel they deliver to EU airports. Applied since early 2024, these obligations increase over time from 2% in 2025 to 6% in 2030, creating a steadily rising demand profile for low-carbon fuels. The targets will be formally reviewed by January 2027 to assess the feasibility of the regulation’s targets.
This approach has been mirrored in the UK, where the SAF mandate, introduced in 2025, also sets rising blending requirements. These start from 2% of total jet fuel demand in 2025, to 10% by 2030 and 22% by 2040. Whilst additional mandates are starting to emerge globally, the EU and UK remain unique in having dedicated sub-targets for e-fuels.
These mandates have established clear demand for SAF. However, they have not yet translated into full market creation, and SAF faces the same market barriers as other ‘first-of-a-kind’ projects. Technology risk and a wide financing gap continue to bar investments that require high upfront capital expenditure.
Investment barriers
A key hurdle to broader investment is the reluctance of offtakers to sign long-term agreements; SAF developers require commitments of at least 15-20 years to secure financing. This means airlines and fuel suppliers are hesitant to sign with risk of being at a competitive disadvantage as early adopters, otherwise known as first mover risk.
For nascent forms of SAF, such as e-fuels, feedstock availability remains a primary concern. Inputs like green hydrogen and renewable energy are not yet available at the scale or maturity required to reach Final Investment Decision (FID). This limited availability highlights the need for coordinated policy and market support measures.
Aligning incentives
Governments have recognised the need for targeted incentives to help absorb the green premium associated with SAF. In the EU, the Sustainable Transport Investment Plan (STIP) aims to mobilise at least EUR 2.9 billion targeted towards e-fuel development, providing crucial support for projects that remain in their infancy.
In the UK, a Revenue Certainty Mechanism (RCM) is in development to offer producers a guaranteed strike price per litre of SAF through long-term contracts, funded by a levy on fuel suppliers. Akin to the Contracts for Difference (CfD) scheme, this mechanism is designed to provide the price stability developers need to reach Final Investment Decision (FID).
However, wider policy uncertainty continues to pose a significant barrier to investment. Proposed increases in UK airport business rates, for example, risks undermining the sector’s overall investment capacity and weaken efforts to meet existing SAF mandates. To attract the scale of private investment needed, governments must adopt a coordinated and stable policy framework. This includes recognising the strategic role of airports as critical nodes in the SAF supply chain and creating the right conditions to give investors the confidence to commit to long-term projects.
The road ahead
SAF adoption will only scale if governments act in a coordinated, systemic way. Mandates and incentives alone are not enough: long-term alignment across policy, financing, and infrastructure is essential to give investors the certainty needed to deliver commercial-scale projects. Without this, the sector risks falling short of its net zero ambitions.