Who will lead? Hesitation loop threatens SAF ramp up

opinion

by Fayaz Hussain

April 8, 2025

Which came first the chicken or the egg? The question has puzzled humanity for a long time. Plutarch asked it in 100AD in his book Moralia. The sustainable aviation fuel (SAF) industry is caught in a similar, frustrating loop: which comes first, production or demand?

A survey by Boston Consulting Group of more than 500 executives across about 200 companies in the global aviation ecosystem has found that while stakeholders acknowledge the importance of SAF, few are really looking to lead the way.

“Roughly two-thirds of companies across the value chain are taking a measured approach to SAF, and most anticipate being an observer, rather than a market leader, by 2030,” the BCG report found.

Without sufficient demand from airlines, fuel producers remain reluctant to commit the substantial capital required for new SAF facilities. Airlines are hesitant to make binding offtake agreements without assurance of reliable and cost-competitive supply.

In its industry analysis, BCG found that SAF produced from HEFA pathway is projected to fall 30% short of 2030 targets. While e-SAF supplies are forecast to be 45% lower than the 2030 targets.

The lower-than-expected production is a consequence of the sluggish pace of project approvals Less than 30% of SAF projects achieved final investment decisions (FIDs) in 2024. Since facilities can typically take three to five years after being funded to start producing at-scale, the risk of failing to meet 2030 targets is rising.

BCG’s survey found that while aircraft OEMs and project developers are currently investing the highest percentage of their revenue in developing the SAF market, airlines and aircraft lessors, despite being the end-users, are investing comparatively less.

“The lack of a clear business case for expanding the use of SAF is the biggest barrier to investment,” the BCG findings showed. These challenges are particularly acute in Europe. Airlines 4 Europe (A4E), while reaffirming its commitment to reaching Net Zero by 2050, has expressed concerns about the implementation of Refuel EU mandates citing high SAF prices.

“We are deeply concerned that the ReFuel legislation is failing to create the affordable SAF market it promised,” said A4E which represents 16 airlines across Europe, in a statement. A4E pointed to BCG’s forecast of “a shortfall of up to 45% in eSAF and 30% in biofuel supply by 2030,” urging European policymakers to take decisive action.

A4E’s statement places responsibility on fuel suppliers and regulatory authorities: “The European Commission and Member States must now take responsibility: fuel suppliers are not delivering.” The organisation warns that “without urgent action in the coming months, the credibility of the mandate will be severely undermined—and a reassessment of the mandates will be needed.”

Industry experts recommend several strategies to accelerate SAF adoption. Governments can provide clear, consistent regulations and incentives that reduce investment risk and create long-term market certainty. Airlines, fuel producers, OEMs and financial institutions can establish partnerships that share risk and align interests.

“Success will require coordination among many moving parts in the aviation ecosystem. By working together, all participants can create a stronger business case for future investment in SAFs and ultimately for cleaner skies,” concludes BCG.

The answer to the chicken and egg paradox lies in evolution. Meanwhile, the SAF dilemma also needs to be solved.