Sustainable aviation fuel costs €2,085 per tonne to produce. Conventional jet fuel costs €734. That is a 2.84x premium — according to EASA’s 2024 reference data, before downstream blending, distribution, and supplier margins are added. The ICCT puts the range wider: 2.1x for mature HEFA biofuels, up to 10.6x for power-to-liquid e-fuels. IATA’s 2025 projection is starker still — a 4.2x average multiple, translating to $4.5 billion in additional fuel costs absorbed by airlines globally this year alone.

These are not transitional growing pains. They are structural features of a market where production is expensive, feedstock is scarce, and mandates are accelerating faster than cost curves are declining. Understanding who pays, how much, and for how long is essential for anyone making capital allocation, procurement, or policy decisions in SAF.

What SAF Actually Costs Today

The headline premium obscures significant variation by production pathway. Each technology carries a different cost structure, a different feedstock dependency, and a different trajectory.

HEFA-SPK (hydroprocessed esters and fatty acids) is the dominant pathway, accounting for approximately 85% of announced 2030 capacity. EASA puts current production cost at €1,461–1,800 per tonne. Feedstock — primarily used cooking oil and animal tallow — represents 60–70% of the cost of goods sold, making HEFA acutely sensitive to UCO price volatility ($580–900 per tonne in 2024). CAPEX accounts for 15–20%, operating expenses 10–15%. Neste, the world’s largest SAF producer at roughly 600,000 tonnes per year, retails HEFA SAF at approximately €1.80–2.10 per litre.

ATJ-SPK (alcohol-to-jet) runs at approximately $2.40–2.70 per litre, with feedstock — ethanol or isobutanol — representing 45–55% of costs. CAPEX is higher than HEFA at 25–30%. LanzaJet and Gevo are the leading developers, with LanzaJet targeting commercial-scale ATJ production in the UK by 2026–2027 through its partnership with British Airways.

Fischer-Tropsch SPK from gasification of waste or residues costs $2.10–2.50 per litre at nth-plant assumptions, but FT is uniquely capital-intensive: CAPEX accounts for 35–45% of the minimum selling price. Unit capital costs run $6,000–12,000 per tonne of annual capacity — two to four times the HEFA equivalent.

Power-to-liquid e-SAF sits in a different cost universe. EASA’s 2024 estimate: €7,695 per tonne. The Argus eSAF index puts market pricing at 13x conventional jet fuel. Renewable hydrogen via electrolysis accounts for 40–50% of costs. PtL requires renewable electricity below $30 per MWh to become viable — current European costs run $50–80 per MWh.

Why the Price Won’t Close as Fast as Promised

Three structural constraints limit how quickly SAF costs can decline, regardless of policy ambition.

The feedstock ceiling. Global UCO supply is capped at approximately 2–3 million tonnes per year. That feedstock already faces competition from renewable diesel, which absorbs roughly 60% of available supply. HEFA cannot scale beyond this ceiling without shifting to virgin oils or algae-based feedstocks — neither of which is commercially available at scale.

CAPEX intensity. HEFA plants require $200–300 million in capital expenditure for 100,000 tonnes per year of capacity. FT plants require $300–600 million for 50,000 tonnes. PtL facilities require $1–2 billion for 50,000 tonnes — unit CAPEX of $20,000–40,000 per tonne of annual capacity. These are not costs that disappear with learning curves.

The renewable energy cost floor. PtL economics are dominated by electricity price. At $50 per MWh, green hydrogen costs $6–8 per kilogram. At $30 per MWh, it drops to $3–4. But $30 per MWh renewable electricity is available in very few places globally. Bridging pathways like methanol-to-jet are being explored, but the energy cost floor for PtL remains structurally high for most geographies.

No credible forecast shows SAF reaching cost parity with fossil jet fuel before 2045. The question is not whether the premium persists — it is whether the cost is allocated honestly enough to sustain the market that long.

Who Is Absorbing the Premium

Airlines bear 70–75% of the cost. IATA reports that airlines absorbed approximately $1.6 billion in SAF premium costs in 2024 and projects $4.5 billion in 2025. EU airlines alone paid a $2.9 billion premium for 1.9 million tonnes of SAF. This is hitting an industry with a projected net margin of 3.9% in 2026. Most airlines do not separately itemise SAF costs on passenger tickets.

Government subsidies cover 15–20%. In the US, the 45Z Clean Fuel Production Credit provides $0.35–1.75 per gallon to producers, reducing effective SAF costs by $150–850 per tonne. In Europe, EU ETS allowances worth approximately €125 million in 2024 offset 50–70% of the SAF cost premium for eligible fuels. The UK’s forthcoming Revenue Certainty Mechanism will fund producer price guarantees through an in-sector levy.

Corporate buyers account for 5–10%. RMI survey data shows corporates are willing to pay approximately $300 per tonne of CO₂ abated. The largest disclosed offtake: Aemetis holds a $3.8 billion contract with 10 airlines over 7–10 years.

Passengers pay almost nothing directly — perhaps 0–2% through voluntary SAF surcharges offered by a handful of carriers.

Three Policies, Three Approaches

US: The 45Z production tax credit. A per-gallon credit of $0.35 (baseline) to $1.75 (with prevailing wage and apprenticeship compliance), multiplied by an emissions factor. Duration: 2023–2032. Effective reduction: roughly $150–850 per tonne. Limitation: it expires before most advanced pathways reach commercial scale.

EU: Mandate plus allowances. ReFuelEU mandates escalating SAF blending — 2% by 2025, 6% by 2030, 70% by 2050. The ETS provides partial cost relief: advanced biofuels qualify for allowances covering 70% of the cost differential; other SAF pathways receive 50%. In 2024, approximately €125 million in allowance value, or roughly €0.30–0.50 per litre of subsidy.

UK: Revenue certainty via strike price. The Revenue Certainty Mechanism offers SAF producers 15-year guaranteed strike price contracts. If the market price falls below the guaranteed level, the government compensates the producer; if it exceeds it, the producer rebates the difference. Expected operational by end of 2026. The RCM directly de-risks first-of-a-kind plant financing.

The Honest Parity Timeline

No credible forecast shows SAF reaching unsubsidised cost parity with fossil jet fuel before 2045.

HEFA is projected to reach approximately 2.5x fossil cost by 2030, declining to roughly 1.8x by 2040. IATA’s Finance Net Zero Roadmap puts HEFA at $1,700–1,900 per tonne by 2035, against fossil jet at $700–900. Parity probability by 2045: approximately 20%.

ATJ has the most favourable learning curve, projected at 1.2–1.5x by 2040, benefiting from feedstock diversification into cellulosic ethanol. Parity probability by 2045: approximately 40%.

PtL is the outlier. At 9–13x fossil cost today, even aggressive projections put it at 4–6x by 2035 and 2–3x by 2040. Parity before 2050 requires renewable electricity costs to converge below $25 per MWh globally.

The World Economic Forum stated in July 2025 that SAF prices are “projected to remain 2–3x higher than jet fuel until 2030.” BloombergNEF and Roland Berger place HEFA parity at 2035–2040 under aggressive policy scenarios. The middle-ground analyst consensus: HEFA reaches approximately 1.8x by 2040; ATJ approximately 1.5x by 2042; PtL not until 2048 or later.

Key Takeaways

• The premium is real and rising in the near term. The SAF cost multiple is increasing from 3.1x in 2024 to 4.2x in 2025. Airlines will absorb $4.5 billion in SAF premium costs in 2025 — on an industry net margin of 3.9%.
• Feedstock scarcity is the binding constraint, not technology. UCO supply is capped at 2–3 million tonnes per year globally. Every tonne of SAF above that line must come from ATJ, FT, or PtL — all of which cost more and require more capital.
• Policy is covering 15–20% of the premium; airlines absorb the rest. The US 45Z credit, EU ETS allowances, and UK RCM each reduce the gap by $150–850 per tonne — insufficient to close a $1,350 per tonne average premium.
• No credible forecast shows parity before 2045. IATA, ICCT, BloombergNEF, and WEF projections converge on HEFA at approximately 1.8x by 2040 and PtL at 2–3x by the same date.
• The question is not whether SAF will be expensive, but whether the cost is allocated honestly. Today, airlines absorb 70–75% of the premium while passengers see almost none of it. That opacity is unsustainable as mandates scale from 2% to 70% by 2050.