Singapore Mandates Sustainable Aviation Fuel Funded by New Passenger Levy

Singapore's decision to implement a Sustainable Aviation Fuel (SAF) mandate backed by a passenger levy represents a pivotal moment for the global aviation industry. As one of the world's busiest international transit hubs, Singapore is moving beyond aspirational goals toward a concrete regulatory framework. The policy requires all flights departing from Singapore to use a minimum of 1% SAF starting in 2026, with the ambition to scale this to 3% to 5% by 2030, subject to global market developments and SAF availability. This move is a cornerstone of the Singapore Sustainable Air Hub Roadmap, which aims to decarbonize the aviation sector while maintaining the city-state's status as a premier global gateway.

The introduction of a ticket levy is the most distinctive feature of this plan and sets a unique precedent in aviation policy. Unlike the European Union’s approach, which places the compliance burden directly on airlines through mandates like ReFuelEU, Singapore’s model centralizes the cost through a fixed levy. This levy will be used by the Civil Aviation Authority of Singapore (CAAS) to purchase SAF on behalf of the industry. This mechanism is designed to provide price certainty for both travelers and airlines, mitigating the volatility of SAF prices, which currently trade at three to five times the cost of conventional kerosene. By pooling demand, the government hopes to negotiate better pricing and ensure a steady supply for all carriers operating out of Changi Airport.

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The policy requires all flights departing from Singapore to use a minimum of 1% SAF starting in 2026, with the ambition to scale this to 3% to 5% by 2030, subject to global market developments and SAF availability.

This regulatory move is strategically timed to leverage Singapore’s domestic industrial strengths. The city-state is home to Neste’s largest SAF refinery, which recently completed a major expansion to produce up to 1 million tonnes of SAF annually. By creating a guaranteed domestic demand through the mandate, Singapore is effectively 'future-proofing' its status as a premier aviation hub. It ensures that as global carbon regulations tighten—particularly with the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) framework—Singapore-based operations remain compliant and competitive. The policy also signals to fuel producers that there is a long-term, stable market in Southeast Asia, potentially attracting further investment in SAF production facilities.

However, the policy carries risks regarding regional competitiveness. Aviation is a price-sensitive industry, and the addition of a levy could potentially drive budget-conscious travelers toward competing hubs in the Middle East or other parts of Southeast Asia that have yet to implement similar green surcharges. To counter this, Singapore is betting that the global shift toward ESG (Environmental, Social, and Governance) standards will eventually force all major hubs to adopt similar measures. By moving first, Singapore establishes the infrastructure and supply chain maturity that others will eventually have to replicate, giving it a 'first-mover' advantage in the green transition.

Looking ahead, the success of this initiative will depend heavily on the global supply of sustainable feedstocks. Most current SAF is produced from used cooking oil and animal fats, which are in limited supply. For Singapore to reach its 2030 and 2050 targets, the industry must transition to 'Power-to-Liquid' (PtL) fuels or advanced biofuels derived from agricultural waste. Investors and stakeholders should watch for further government incentives aimed at local SAF production and the potential expansion of the levy if SAF prices remain stubbornly high. The Singapore model will likely serve as a blueprint for other nations looking to balance environmental mandates with economic stability in the aviation sector.