SINGAPORE: Singapore's recent move for airlines departing the country to use at least one per cent of sustainable aviation fuel (SAF) from 2026 has caught industry players by surprise although they believe that it is the first step in the right direction.
The Association of Asia Pacific Airlines (AAPA) director general Subhas Menon said the decision is a demand signal to SAF manufacturers to produce more of the alternative fuel while providing clarity to consumers on the airfares increment once airlines use more SAF.
"It provides clarity to airlines. It provides clarity to suppliers and it provides clarity to consumers. I think the main intention of this policy is to make SAF available for airlines. It's a proactive way of generating supply," he told Business Times last week.
The current production of SAF globally is about one per cent while the price is some three to five times higher than jet fuel.
The Civil Aviation Authority of Singapore (CAAS) plans to introduce an SAF levy to airlines and travellers for the purchase of the alternative fuel.
The levy would be based on various factors including distance travelled and class of travel.
The AAPA member airlines themselves have also agreed in November 2023 to use a five per cent of blended SAF by 2030.
The member airlines include Malaysia Airlines Bhd, Air Astana, Singapore Airlines, Garuda Indonesia, Royal Brunei Airlines, Thai Airways, Cathay Pacific, All Nippon Airways, Air India, Bangkok Airways, Eva Air, Philippines Airlines, Japan Airlines and China Airlines.
Malaysia Airlines' parent Malaysia Aviation Group (MAG) viewed that Singapore's recent decision marks a significant step forward in the region's sustainability efforts as SAF remains a critical lever in achieving the aviation industry's goal for net-zero emissions by 2050.
It also said incentive programmes to foster innovation, increase SAF production and ensure affordability should be introduced following the mandate introduced.
"MAG believes that with improvements in technology, increased demand and wider availability, SAF can be scaled up to commercially viable levels for wider adoption with improved unit cost of production overtime."
"We believe it's important for partners across the value chain to take a long-term outlook and approach towards the adoption of SAF, and we remain committed to collaborating with governments and industry stakeholders to accelerate the aviation industry's decarbonisation efforts and meet shared goals," MAG spokesman said.
Subhas said the AAPA has not been in favour of mandates and taxes especially when in the case of SAF there is not enough supply of the alternative fuel.
"But this one they're actually making it available, so airlines have only themselves to blame if they don't take up the supply because it'll made available in Singapore," he said, adding that other governments in the region should follow Singapore's example of being proactive and incentivise the production and supply of SAF.
FlightGlobal Asia managing editor Greg Waldron said Singapore's recent announcement helps create demand for SAF investment and infrastructure.
Singapore is home to Neste, the world's largest renewable diesel and jet fuel producer in Asia. Its refinery could produce up to one million tonnes of SAF per year.
Waldron said airlines have been calling governments for years to make decisions on SAF that would help boost up its production.
"Maybe this isn't the move that airlines quite expected but something did happen. Maybe it's a case of 'be careful of what you wish for' but it does stimulate demand and it'll help the industry to get off the ground. We'll have to see where it goes," he added.