Supply shortage means airlines have no chance of meeting a 10% SAF by 2030 target, says IATA chief

Targets set by airlines to have a 10% mix of sustainable aviation fuel in their fuel consumption by 2030 will be impossible to achieve, believes Willie Walsh, Director General of industry body IATA. Following a year of SAF not being produced in the volumes expected, the pace of progress towards the industry’s net zero emissions by 2050 ambition was disappointing and worrying, he briefed journalists. While the net zero target was still possible and the airline industry remained committed, it was becoming more and more challenging and more expensive, he said. He was particularly critical of regulators imposing mandates on the use of SAF that was not available and “price gouging” jet fuel suppliers that passed on their mandate compliance fees to airline customers. IATA revealed SAF output is expected to reach 1.9 Mt in 2025, nearly double that in 2024, but growth is projected to slow to 2.4 Mt in 2026, making up 0.8% of total jet fuel consumption, up from 0.6%.

Walsh said those early mover airlines that had already secured supplies of SAF could well meet their 10% by 2030 target but other airlines that had similar aims and had gone to the market looking for SAF were finding no supply available.

“I said when we committed to net zero that it was going to be extremely challenging but what we are facing now is even greater than we expected because we’re not making the progress that we had anticipated in terms of SAF production,” he remarked at IATA’s annual Global Media Day in Geneva.

“The demand for SAF continues to be strong but we’re not seeing a corresponding increase in the development of SAF and I think the regulatory framework, particularly in Europe, has been unhelpful.

“We have not seen the mandate the EU introduced leading to greater production of SAF but it has led to a huge increase in the price of SAF as fuel suppliers, in my opinion, abuse their position to extract additional money from the airline industry through compliance fees that they have introduced, which are artificially increasing the price of SAF for airlines that are trying to comply with their mandate obligations.

“There are quite a lot of airlines who made the 10% SAF by 2030 commitment in good faith but I believe this is beyond the reach of the vast majority, through no fault of their own.”

He commended Air New Zealand for suspending their 2030 carbon intensity target over the unavailability of SAF and fleet renewal delays. “I suspect you will see a lot of airlines go through this re-evaluation as we go through 2026, particularly where they have obligations to report non-financial measures,” he said. “It’s going to be a difficult issue for these airlines but I think it’s important to highlight that it’s a failure of supply that has caused this.”

He said EU regulators had stood back and watched fuel suppliers abuse their position by significantly increasing prices “under this false label of compliance fees so that they’re protecting their profitability, while at the same time failing to deliver on SAF production.”

He added: “We’ve got to shine the spotlight on the people at fault – the regulators for introducing a mandate that has driven this behaviour and the fuel suppliers who, quite honestly, are just price-gouging and ripping us off because they can get away with it.

“These compliance fees are in anticipation of additional costs they will face because they’re not meeting the obligations of the mandates. And that’s just going to escalate.

“I don’t think the regulators anticipated fuel suppliers would utilise the mandate to increase prices. I’d be amazed if that’s what they thought would happen.”

Walsh said the EU had got the separate eSAF mandate “completely wrong” because of the insufficient supply of renewable energy required in the production of these fuels.

“My clear assessment of the situation is these mandates are not having the desired effect. We need governments to recognise this with regard to these policy decisions they have taken. They have an opportunity to stand up and say, actually, we’ve got a better idea. And that better idea should be to fundamentally review the mandates they have put in place.”

IATA says the mandate under ReFuelEU Aviation has sharply increased costs for airlines from the compliance surcharges being passed on by fuel suppliers, so doubling SAF premiums and making SAF up to five times more expensive than conventional jet fuel. The UK’s SAF mandate had also triggered price spikes, it states.

“The cumulative impact of poorly designed policy frameworks is that airlines operating to, from and within Europe and the UK paid a premium of $2.9 billion for the limited 1.9 Mt of SAF available in 2025,” said IATA’s Chief Economist and SVP Sustainability Marie Owens Thomsen.

“Of this, $1.4 billion reflects the standard SAF price premium over conventional fuel. The remaining $1.5 billion was incurred as compliance fees, which are nothing more than costs passed on to airlines to shield fuel suppliers from their penalties for not meeting mandated SAF production targets.”

The main reason for the shortage of SAF supply is that it is not generating the kind of returns to attract enough investors, she said.

Oil stocks have significantly outperformed clean energy since 2021, she reported, and European mandates had failed to accelerate SAF production and adoption.

“While renewables show modest growth potential with returns under 10%, SAF faces a major challenge with expected returns below 5% and a 15-percentage point handicap compared to the oil sector, which are habitually around 20%,” she explained. “This gap underscores the need for policy support and cost reductions to make SAF competitive in the energy market.

“We need help to get the investment to go into SAF, given the lower profit margins, and we also need to think more about the energy transition in general and a lot less about each individual industry. We are obviously asking policymakers to do some course correction when they see that things are not working out.”

Overall conventional jet fuel costs for the industry are expected to decline slightly to $252 billion in 2026 from $253 billion in 2025, helped by lower crude oil prices, so accounting for 25.7% of total operating expenses, down from 26.8% in 2025.

Owens Thomsen said jet fuel accounts for only 8.7% of average refinery output in OECD Europe, which limits aviation’s ability to influence refinery economics or negotiate prices, leaving airlines exposed to market dynamics driven by larger fuel segments. As overall transport fuel demand falls over the next decade, she believes refiners will likely optimise for higher-volume products, limiting incentives to produce jet fuel and creating a risk of tighter supply and price volatility for airlines.

IATA estimates about 55 Mt of renewable fuel capacity will be available in 2030, with 170 projects expected to produce SAF by then, as well as other products such as renewable diesel. This, it says, would translate into a potential global SAF capacity of around 20 Mt by 2030. However, only 12% of projects are under construction and 29% are operating, leaving a gap of 59% of announced projects needing to progress to final investment decision (FID) and then entering the construction phase to deliver renewable fuel by 2030.

Of the 55 Mt renewable fuel capacity in 2030 with SAF output, 84% of production will come from HEFA and co-processing technology, anticipates IATA. The slow progress in technology diversification to next generation SAF (for example, alcohol-to-jet, gasification Fischer-Tropsch and power-to-liquid) is problematic, it says, as HEFA is feedstock constrained.

As well as the shortage of SAF supply, the growing backlog of deliveries of new-generation, more fuel efficient aircraft and fleet renewal is also affecting the airline industry’s net zero ambition. Even though aircraft deliveries are projected to increase significantly in 2026, the pace of new orders is outstripping production, causing the backlog to reach new highs and persist well beyond the near term.

The order backlog has now surpassed 17,000 aircraft, a number equal to almost 60% of the active fleet, up from a historical average of 40%, and equivalent to nearly 12 years of the current production capacity. “If an airline orders an aircraft today, it’s going to take roughly 6.8 years to be delivered – that’s significant,” said Stuart Fox, Director, Flight and Technical Operations at IATA.

The impact means fuel efficiency gains are expected to be just 1.0% in 2026 as the average age of the aircraft fleet rises to above 15 years, the highest ever, with airlines having to hold on to older aircraft. Historically, fuel efficiency improved by 2.0% per year but this slowed to 0.3% in 2025.

On the positive side, aircraft shortages mean load factors are forecast to set a record high with airlines expected to fill 83.8% of all seats over the year 2026.

Factoring in industry growth – passenger numbers are anticipated to reach 5.2 billion in 2026, up 4.4% on 2025 – fuel consumption is expected to increase by 2.7% to 106 billion gallons in 2026, leading to CO2 emissions from the industry of over 1 Gt.

IATA reports the cost of compliance with the ICAO CORSIA carbon offsetting scheme is anticipated to grow to $1.7 billion for 2026, up from $1.3 billion for 2025.

In CORSIA’s First Phase (2024-26), IATA expects airlines to purchase upwards of 200 million credits (called Eligible Emissions Units) for cancellation and compliance by late 2027, costing an estimated $4-5 billion and increasing to nearly 2 billion EEUs through to 2035, the end year for the scheme.

The current supply of EEUs is scarce, warns Owens Thomsen. “Therefore, there’s a massive opportunity for host countries to step up their supply of CORSIA credits and benefit from both emissions reductions and finance,” she said.

“Host countries can meet and enhance their climate goals, and IATA encourages countries to explore and implement benefit-sharing strategies to maximise the advantages of participating in CORSIA and Paris Agreement Article 6 carbon markets.”

Photo (L-R): Willie Walsh, Stuart Fox and Marie Owens Thomsen at the IATA Global Media Day 2025

Christopher Surgenor
Editor