Sustainable Aviation Fuel in 2026: A Mandate Wall Without a Molecule Cushion

The mandate stack and what 2026 actually requires #

ReFuelEU Aviation, binding from 1 January 2025, requires fuel suppliers at every EU airport handling more than 800,000 passengers or 100,000 tonnes of freight to deliver an annual minimum SAF share: 2 percent in 2025, 6 percent in 2030, 20 percent in 2035, 34 percent in 2040, 42 percent in 2045, and 70 percent in 2050. A separate synthetic sub-mandate begins at 1.2 percent in 2030 and reaches 35 percent in 2050, isolating power-to-liquid from competition with crop-based alternatives. Non-compliance triggers a buy-out fee set at twice the price differential between SAF and fossil jet for the missing volume, which caps how far the green premium can move before obligated suppliers simply pay the penalty.

The United Kingdom runs a parallel mandate from 1 January 2025: 2 percent SAF in 2025, 10 percent in 2030, and 22 percent in 2040, denominated in carbon intensity savings, with a power-to-liquid sub-target of 0.5 percent in 2028 and 3.5 percent in 2040. Suppliers can buy out at 4.70 pounds per litre for the main obligation and 5.00 pounds per litre for the PtL sub-target, set above expected production cost to push compliance through delivery. ICAO CORSIA exits its voluntary pilot phase at the end of 2026, and from 1 January 2027 all member states whose international carriers fly to or from a Phase II participant are obligated, covering roughly 90 percent of international aviation CO2 emissions. SAF earns CORSIA credits only if it meets the life-cycle greenhouse gas threshold of at least 10 percent below conventional jet, with full eligibility at 50 percent or greater reduction.

In the United States, the Inflation Reduction Act's Section 40B SAF blender's tax credit, worth 1.25 to 1.75 dollars per gallon, expired at the end of 2024. It was replaced by the technology-neutral Section 45Z Clean Fuel Production Credit, running through 2027 at up to 1.75 dollars per gallon for SAF meeting a 50 percent life-cycle reduction floor under GREET. Treasury and IRS final guidance, issued in January 2025 and updated in April 2026, tightened indirect land use change penalties on soy and canola, materially compressing the producer economics for several announced US plants.

Production today and the 2030 build-out #

Global SAF production reached 1.0 to 1.3 million tonnes in 2024, and IATA forecasts 2.0 to 2.5 million tonnes for 2026. Against global jet fuel consumption of about 350 million tonnes per year, the qualified SAF share sits at 0.3 to 0.7 percent. Roughly 85 percent of current and announced 2026 capacity is HEFA, dominated by Neste, World Energy, Diamond Green Diesel, Phillips 66 Rodeo, and TotalEnergies La Mede. Neste's Singapore expansion, completed in 2023, lifted that single site to 1 million tonnes of renewable products capacity with the option to direct up to 1 million tonnes of SAF annually; combined with Rotterdam and Porvoo, group SAF nameplate reached roughly 1.5 million tonnes by end-2024. World Energy's Paramount, California refinery, the longest-operating dedicated SAF site globally, is mid-expansion to 340 million gallons of renewable fuels per year, of which roughly 150 million gallons would be SAF.

The non-HEFA pipeline is real but smaller and slower. LanzaJet commissioned its 30,000 tonne Freedom Pines facility at Soperton, Georgia in early 2024, the first commercial alcohol-to-jet plant globally; Project Speedbird with British Airways and Nova Pangaea targets a UK ATJ plant by 2028. Power-to-liquid moves slowest: Twelve's AirCompany commissioned a 1,000 tonne per year demonstration at Moses Lake, Washington in 2024, and Norsk e-Fuel targets 25,000 tonnes per year at Mosjoen, Norway by 2027. The table below maps capacity by certified pathway under ASTM D7566, the standard governing SAF approval at blend ratios up to 50 percent with conventional jet.

Feedstock ceilings and the HEFA bottleneck #

HEFA processes used cooking oil, animal tallow, distillers corn oil, and to a lesser extent virgin vegetable oils into hydrocarbons indistinguishable from kerosene. Global UCO collection in 2024 was 9 to 10 million tonnes, with roughly half flowing into renewable diesel rather than SAF. Tallow availability sits at about 8 million tonnes globally, again with biodiesel and oleochemical industries competing for the same molecule. Combined waste oil supply is unlikely to exceed 25 to 28 million tonnes by 2030. Argus Media and S&P Platts both estimate that even aggressive reallocation to aviation caps HEFA SAF at roughly 12 to 15 million tonnes per year by 2030, equivalent to 4 percent of jet demand.

The math forces non-HEFA pathways to absorb essentially all incremental compliance volume above the HEFA ceiling. ATJ requires either ethanol that survives indirect land use change scrutiny or cellulosic alcohol not yet demonstrated at commercial scale. FT-SPK requires MSW or forest residue gasification, which has a poor record of project delivery. PtL requires green hydrogen below 2 dollars per kilogram and concentrated CO2 sources, neither of which exists at scale today. ReFuelEU explicitly excludes feed and food crops, palm oil derivatives, and soy oil; the April 2026 GREET update tightened the ILUC penalty on soybean oil so that most soy-based SAF projects no longer clear the 50 percent life-cycle reduction floor without carbon capture or ultra-low-carbon hydrogen. The EU and US are now converging on a feedstock definition that leaves waste oils, ethanol with strict ILUC accounting, MSW, and PtL as the only routes to 2030 scale.

Green premium economics and the buy-out anchor #

Conventional jet fuel traded in the 700 to 850 dollars per tonne range through the first quarter of 2026. HEFA SAF spot quotes sat at 1,800 to 2,200 dollars per tonne CIF Northwest Europe, a multiple of 2.4 to 2.8 times. ATJ SAF prices reported by LanzaJet offtakers cluster at 2,400 to 2,800 dollars per tonne, while Twelve and Norsk e-Fuel published indicative PtL pricing at 3,500 to 5,000 dollars per tonne under long-term offtake. Blended SAF at 2 percent adds 25 to 35 dollars per tonne to the airline's per-departure fuel bill. At 6 percent in 2030 the premium grows to 100 to 140 dollars per tonne, equivalent to 8 to 11 dollars per passenger on a typical narrowbody European sector.

ReFuelEU's buy-out fee is the single most important price anchor. Because the fee equals twice the SAF to fossil jet differential for missing volume, it both penalizes non-compliance and caps how far producers can push prices. The UK's 4.70 pounds per litre buy-out, equivalent to roughly 5,800 dollars per tonne, sits well above current spot but below early PtL contract levels, confirming that the policy expects PtL to remain partially unmet through buy-out for several years. A US producer with 45Z, low-carbon intensity feedstock, and a long-term airline offtake can clear a 1,400 to 1,700 dollar per tonne all-in cost. A European producer without a comparable production credit faces a higher break-even and relies more heavily on the obligated counterparty and on free EU ETS allowances, which since 2024 have been allocated to airlines specifically to subsidize SAF uptake on a declining schedule through 2030.

Airline procurement: who is buying and on what terms #

Lufthansa Group disclosed roughly 250,000 tonnes of SAF offtake commitments through 2030, primarily HEFA from Neste and OMV with a smaller PtL volume from Norsk e-Fuel. The group introduced a SAF surcharge across its passenger network in 2024, recovering 1 to 8 euros per ticket depending on origin and destination. International Airlines Group, parent of British Airways and Iberia, signed a 1.2 million tonne ATJ offtake with LanzaJet over 10 years in 2022, supplemented by Project Speedbird with Nova Pangaea and a 785 million dollar SAF investment commitment reaffirmed in 2024. Air France-KLM committed to 1 million tonnes per year of SAF use by 2030, with HEFA from TotalEnergies and DG Fuels and an early PtL contract with Twelve.

Delta Air Lines, the lead operator on the GREET-eligible US side, signed offtake with Gevo, LanzaJet, Aemetis, and DG Fuels totaling roughly 200 million gallons per year by 2030. United Airlines remains the most vocal North American buyer through United Airlines Ventures, with positions in Cemvita, Dimensional Energy, and Twelve, plus offtake from World Energy at Paramount. SkyNRG, the Dutch SAF aggregator backed by KLM and Boeing, runs a procurement layer between producers and airlines that absorbs much of the contracting friction for smaller carriers.

Demand-supply gap math through 2030 #

EU jet fuel demand is projected at 55 million tonnes in 2030. The 6 percent ReFuelEU obligation requires 3.3 million tonnes of SAF physically delivered, of which 1.2 percent must be synthetic, equivalent to 660,000 tonnes of PtL. UK demand at 12 million tonnes against a 10 percent mandate adds another 1.2 million tonnes. US voluntary uptake under 45Z and the SAF Grand Challenge target of 3 billion gallons by 2030, roughly 9 million tonnes, completes the picture. Total OECD-region SAF demand in 2030 is therefore 13 to 14 million tonnes.

Announced 2030 capacity totals 8.25 million tonnes nameplate, against a realistic delivered output of 60 to 70 percent of nameplate given commissioning delays and feedstock variability. Credible 2030 delivery is 5 to 6 million tonnes globally against OECD demand of 13 to 14 million tonnes. The gap, 7 to 9 million tonnes, must be filled by some combination of buy-out payments, ETS allowance retirement, accelerated commissioning, and HEFA imports from non-OECD producers diverting waste oil from biodiesel uses. The PtL sub-mandate is tightest: required EU PtL volume in 2030 is 660,000 tonnes against 450,000 tonnes of announced global nameplate. Even at full utilization and full European allocation, PtL supply will be short by roughly 200,000 tonnes against the EU obligation alone, which is why the early signal from Brussels is that the PtL buy-out will be paid rather than supplied through 2030.

Strategic implications for airlines and producers #

For airline groups the binding choice is between locking in long-tenor offtake at premium prices to secure physical compliance, or budgeting for buy-out and ETS exposure and competing on ticket price. Lufthansa, IAG, and Air France-KLM have chosen the first path; Ryanair and easyJet, with thinner SAF books, are closer to the second, exposing their 2030 cost base to whichever buy-out level Brussels enforces. North American carriers benefit from 45Z but face a less binding mandate environment, leaving them more flexibility but also less commercial urgency to anchor PtL development through long contracts.

For producers the strategic question is feedstock and pathway diversification. Neste retains the deepest waste-oil aggregation network globally and the lowest cost HEFA position, but its growth ceiling is set by the UCO and tallow supply curve. World Energy and Diamond Green Diesel face the same constraint with a US tilt. The producers that survive into the 2030s as price setters rather than price takers will be those that combine HEFA cash flow today with credible ATJ and PtL platforms by 2028, which is why LanzaJet's licensing model and Twelve's reactor architecture matter more than their 2026 tonnage. The 2026 to 2027 window decides which announced projects clear final investment decision and which join the long list of SAF press releases that never produced a molecule.

Sources #

• ReFuelEU Aviation Regulation 2023/2405 implementation reports
• SAF Mandate (UK) Order 2024 and 2025 implementation update
• CORSIA implementation guidance and Phase II eligible fuels list
• Section 45Z Clean Fuel Production Credit final regulations and GREET update
• SAF Grand Challenge Roadmap progress report 2025
• World Energy Outlook 2025 and Renewables 2025: aviation chapter
• IATA SAF Production Outlook 2026 and Net Zero Roadmap update
• SAF spot price assessments and feedstock balances Q1 2026
• Biofuels and SAF price assessments and methodology Q1 2026
• Renewable Products Q4 2025 results and 2030 capacity guidance
• LanzaJet Freedom Pines Fuels commissioning update and offtake disclosure
• Sustainable aviation fuel: scaling pathways and feedstock economics