• SAF adoption remains limited – currently under 1 percent of global jet fuel, constrained by high costs, limited sustainable feedstocks, and fragmented global policies.
• Production challenges – HEFA is scalable but feedstock-limited; advanced pathways like Power-to-Liquid face high technology and capital costs.
• Airline involvement is key – long-term fixed-price contracts, equity stakes, and co-investment in production and infrastructure help de-risk projects and secure supply.
• Global strategies and procurement – book-and-claim systems, consortia like SAFUG, and hedging mechanisms allow airlines to optimise costs, manage risk, and meet regulatory mandates like ReFuelEU and CORSIA.
• Scaling SAF sustainably – requires technological innovation, economies of scale, government incentives, and integrated demand signaling to move SAF from niche adoption to mainstream use and support net-zero goals by 2050.

As the aviation industry races toward ambitious net-zero emissions goals by 2050, Sustainable Aviation Fuel (SAF) stands at the forefront of decarbonising air travel. Yet, despite its promise, SAF currently accounts for less than 1 percent of global jet fuel demand, with steep cost premiums and production challenges limiting widespread adoption. 

Overcoming production barriers

The most significant obstacles to large-scale SAF production stem from both supply constraints and economic factors. “SAF currently makes up less than 1 percent of global jet fuel demand,” Roland Berger, the global management consultancy firm, explained, underscoring how early the market still is. The cost disparity remains stark, with SAF priced four to five times higher than conventional jet fuel, deterring broad uptake.

The predominant SAF pathway today, Hydroprocessed Esters and Fatty Acids (HEFA), is relatively cost-effective but faces scalability limits due to finite sustainable feedstocks. “HEFA is the most cost effective today, but faces scalability challenges because of limited availability of sustainable feedstocks,” the company continued. Emerging technologies like Power-to-Liquid (PtL) and other advanced pathways show promise for greater scalability but are burdened with high production and technology costs, slowing commercialisation.

The inconsistent global policy environment compounds these challenges. While regions such as Europe have strong mandates like ReFuelEU driving SAF uptake, others, notably the U.S., lack federal mandates, creating a fragmented market landscape.

Airlines have a critical role in breaking through these barriers. “Partnering with suppliers and exploring appropriate contracting frameworks is essential,” the source explained. Airlines can adjust contract structures to longer timeframes — 10 years or more — which helps de-risk long-term capital projects for producers. Fixed-price contracts, rather than pricing tied to fluctuating Jet-A fuel costs plus premiums, provide revenue certainty, encouraging more investment.

Strategic co-investment also plays a vital role. “By investing into production, airlines can secure offtake volumes and reduce capital costs,” the consultancy outlined. Additionally, airlines can facilitate collaboration among infrastructure and debt investors, alongside regulators, to accelerate technology readiness and bring down costs for advanced SAF pathways. 

Financing SAF

To lower SAF costs, the aviation industry must develop a full value chain approach — from feedstock sourcing through production to offtake agreements. “The key to lowering SAF costs is to build and invest across the full supply chain and pair this with long-term fixed price contracts,” the organisation laid out . This model attracts infrastructure-style investors who can provide capital at lower costs, essential to scaling the industry.

Increasing certainty across the supply chain reduces overall production costs. “Ideally, these arrangements should be shareable to clearly showcase the strength of the demand signal.”

Investment returns vary by project stage. Airlines can invest in early-stage projects, targeting levered internal rates of return (IRRs) similar to other growth equity investments. Projects nearing final investment decisions, where construction and offtake are more secure, typically target lower returns similar to other infrastructure investments to reflect the lower risk. Fully operating assets with contracted offtake represent the lowest risk and thus lower IRR thresholds. Airlines can also invest in complementary infrastructure, such as blending and delivery systems, with variable returns. 

Such involvement is not without risk, but it also offers airlines an opportunity to influence production scalability directly. “Increasing stability and certainty to offtake chains helps bring down costs,” the firm stated, highlighting the importance of equity stakes and long-term contracts.

Global strategies

With SAF pricing and policy support varying widely by geography, airlines must leverage their networks and procurement mechanisms like book-and-claim systems to optimise costs. “In Europe, ReFuelEU mandates blending, which leads to higher SAF prices, whereas US incentives reduce local production costs, resulting in lower price premiums,” Roland Berger expressed.

European airlines face geographic constraints under regional mandates, limiting book-and-claim use to some extent. Yet, book-and-claim systems are effective for exceeding mandatory blending targets through voluntary commitments, enabling airlines to leverage corporate willingness to pay for emissions abatement. Airlines can also source SAF from regions with cost advantages and apply those credits toward compliance with global frameworks like CORSIA.

Innovative procurement strategies are proving vital in securing supply and lowering risk. Early in the SAF market, consortia such as SAFUG helped airlines commit volumes and align sustainability standards. “Initiatives like SABA have pushed market education and voluntary SAF adoption by connecting corporate customers with SAF certificate providers,” the organisation said. These platforms have promoted book-and-claim systems that decouple environmental attributes from physical fuel delivery, helping close the cost gap for voluntary demand.

Contract structures also matter. Traditional short-term deals with floating prices are giving way to longer-term fixed-price contracts with risk-sharing mechanisms linked to incentives like those in the U.S. “Some contracts include price collars with floors and ceilings, easing project financing risks,” they noted. Equity deals represent the highest form of risk sharing, attracting more generalist investors and de-risking the sector.

Together, these innovations strengthen supply chains and offer airlines tools to manage price volatility. Hedging strategies, including contracts pegged to power prices for PtL or ethanol futures for alcohol-to-jet pathways, are gaining traction and expected to evolve as the market matures.

Scaling SAF 

The path to scaling SAF sustainably without eroding airline profitability involves several integrated steps. Reducing production costs through technological innovation and economies of scale is fundamental. “This includes lowering electrolyser costs, expanding renewables, and improving bio-feedstock availability,” the firm said. Government subsidies and support also play a pivotal role, not only through mandates but also via fuel production incentives and funding for technology development.

Airlines, in turn, must secure scalable production by backing advanced technologies and accessing low-cost capital. They need to send strong demand signals with long-term contracts and equity stakes, monetise SAF through differentiated customer offerings, and leverage global policy frameworks to approach cost parity with conventional fuels. Risk management through structured contracts and financial tools is essential.

This multifaceted strategy ensures SAF moves from a niche sustainability solution toward becoming a mainstream, financially viable fuel — a vital step if aviation is to meet its net-zero commitments by mid-century.