IATA Report Reveals Slow SAF Growth, High Costs, and Policy Hurdles Slowing Airlines’ Path to Decarbonization and Sustainable Aviation

Published on December 10, 2025

The International Air Transport Association (IATA) has recently updated its projections for Sustainable Aviation Fuel (SAF) production, showing a significant increase in output for 2025. However, despite the positive trend, the aviation industry is facing challenges in scaling up production quickly enough to meet sustainability targets. As the world focuses on sustainable travel and reducing aviation’s carbon footprint, SAF remains a key solution. However, the slow pace of growth and high costs associated with SAF continue to hinder its widespread adoption, keeping the aviation industry’s decarbonization goals out of reach.

SAF Production Growth: A Step Forward, But Not Fast Enough

IATA forecasts that in 2025, SAF production will reach 1.9 million tonnes (Mt), or 2.4 billion liters, which is a notable increase from 2024’s 1 Mt output. This doubling of SAF production shows positive momentum for the sustainable aviation industry. However, the growth rate for 2026 is expected to slow down, with production projected to reach 2.4 Mt. This slower growth is a concern for the aviation industry, which is heavily reliant on SAF to meet sustainability targets and decarbonize air travel.

In terms of total jet fuel consumption, SAF production in 2025 is expected to account for only 0.6% of the total demand, with that number rising to 0.8% in 2026. While these figures demonstrate a positive shift towards more sustainable fuel options, they still represent a small fraction of the overall aviation fuel market. The premium cost of SAF is estimated to add an additional $3.6 billion in fuel costs for the airline industry in 2025, further complicating efforts for airlines to shift towards more sustainable operations.

Policy Frameworks Falling Short of Sustainable Goals

IATA’s updated projections for SAF production are lower than previous forecasts, primarily due to insufficient policy support and limited investment to maximize the potential of existing SAF production capacities. SAF prices remain significantly higher than conventional jet fuel, with prices in some markets up to five times more expensive. These high costs are a significant barrier to airlines that are eager to transition to more sustainable fuel options, but unable to afford the premium SAF requires.

Willie Walsh, IATA’s Director General, has criticized the current policies designed to promote SAF production, arguing that poorly designed mandates have stalled progress in the SAF sector. While policymakers may have succeeded in raising costs, they have failed to provide the incentives necessary to scale SAF production effectively. To make meaningful progress toward aviation decarbonization, Walsh has called for more effective policy incentives that will encourage investment in SAF production, reduce fuel prices, and make SAF more affordable for airlines.

The Impact of SAF Mandates in Europe and the UK

The European Union (EU) and the United Kingdom (UK) have introduced SAF mandates with the aim of boosting production and reducing aviation’s carbon footprint. However, these mandates have not had the desired impact. The ReFuelEU Aviation initiative in Europe has led to sharp increases in fuel costs due to limited SAF capacity and oligopolistic supply chains. Fuel suppliers have exploited these market conditions, causing airlines to pay up to five times more for SAF compared to conventional jet fuel.

The UK’s SAF mandate has also triggered price hikes, further burdening airlines that are already struggling with high fuel costs. As a result, airlines are expected to pay a premium of $2.9 billion for the 1.9 Mt of SAF available in 2025, with $1.4 billion of this premium reflecting the higher SAF prices compared to conventional fuel.

Walsh emphasized that Europe’s fragmented SAF policies are distorting markets, slowing investment, and undermining efforts to scale SAF production. He urged European regulators to reassess their approach and correct the course to ensure the SAF sector can grow and meet its sustainability goals.

Airlines Reevaluate Their Sustainable Travel Commitments

The slow growth in SAF production has led many airlines to reconsider their SAF commitments. Several airlines that had pledged to use 10% SAF by 2030 are now realizing that those targets may be unattainable due to the limited supply of SAF. Despite these commitments being made in good faith, the lack of sufficient SAF availability and its high costs are forcing airlines to scale back their ambitions.

This situation underscores the need for policies that align with the current realities of the SAF market. Airlines need a predictable, sustainable supply of SAF at competitive prices to meet their sustainability goals. Without the necessary policy support and investment, the aviation industry will find it difficult to meet its decarbonization targets and continue advancing toward sustainable travel.

The Future of e-SAF and the Need for Policy Reform

Looking ahead, the aviation industry faces even greater challenges with the upcoming mandates for e-SAF (electro-fuel) in the UK (2028) and the EU (2030). E-SAF is expected to come with a significantly higher cost base, potentially up to twelve times the cost of conventional jet fuel. Without robust production incentives, the supply of e-SAF is likely to fall short of the targets, resulting in significant compliance costs for airlines. If the current policy frameworks remain in place, compliance costs for e-SAF mandates could rise to EUR 29 billion by 2032.

Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability and Chief Economist, highlighted the low levels of SAF production as indicative of broader policy failures. She warned that if the same mistakes are made with e-SAF, the financial burden on airlines could become unsustainable. She called on regulators to adopt more strategic approaches to incentivizing SAF and e-SAF production, ensuring that the aviation industry can meet its decarbonization goals without compromising its financial viability.

A Call for Effective Policy Design in Sustainable Travel

IATA’s report emphasizes the urgent need for a shift in how policymakers approach SAF and e-SAF production. The current framework, based on mandates and market interventions, has not yielded the desired results. To achieve the aviation industry’s decarbonization goals and ensure sustainable travel, a more effective policy environment is needed—one that incentivizes investment, reduces costs, and ensures a steady and scalable supply of SAF.

The aviation industry remains committed to reducing its carbon footprint, but achieving these goals requires a comprehensive strategy that aligns with market realities. Without meaningful changes to policy, the goal of achieving net-zero emissions by 2050 will remain an ambitious but unattainable target. As the travel and tourism industry increasingly shifts toward sustainability, a collaborative effort between airlines, governments, and regulators is crucial to realizing the potential of SAF and ensuring that sustainable travel becomes the norm.