Escalating conflict in the Middle East has disrupted shipping through the Strait of Hormuz — the chokepoint through which one-fifth of the world’s oil supply passes — sending crude prices spiraling and triggering airline fare increases across global markets. As jet fuel costs surge, attention is turning once again to sustainable aviation fuel as a structural hedge against fossil fuel price volatility.
The case is compelling on paper. SAF can reduce lifecycle carbon dioxide emissions by up to 80% compared with conventional jet fuel, and unlike spot crude, it is not priced against Gulf oil infrastructure. But the near-term reality is more complicated. SAF currently costs three to five times more than traditional jet fuel, and production capacity is a fraction of global aviation demand. “SAF as a tool to buffer the industry against jet fuel price fluctuations is significantly more challenging because it’s still going to be more expensive in general,” said Ji Yang Lum, biofuels analytics associate director at S&P Global Commodity Insights.
“SAF is the main solution for now, at least for this decade, to ensure that carbon emissions from engines remain as low as possible.”
Europe and the US have driven SAF adoption so far, but Asia-Pacific is closing the gap. Singapore’s SAF levy takes effect October 1, 2026, and Japan has set a 10% SAF target by 2030. Mandate-driven necessity is increasingly replacing voluntary commitments as the primary driver of airline procurement.
Feedstock producers are scaling to meet the demand signal. EcoCeres, a Hong Kong-based biofuels producer, sources from over 350,000 restaurants in China alone and is expanding internationally into multiple waste streams including animal fats, palm oil mill effluent, and grease trap brown grease. CEO Matti Lievonen: “Europe is a forerunner in SAF but others are following. Asian markets are increasing, based on announcements of what governments are doing in different countries.”
Ken Lau, head of sustainability at ACI Asia-Pacific and Middle East, representing over 600 airport members, put the structural case plainly: “Carbon emission from engines accounts for more than 95% of overall airport emissions. SAF is the main solution for now, at least for this decade, to ensure that carbon emissions from engines remain as low as possible.”
China is positioning itself as a future heavyweight in SAF production. Beijing recently established a National Low-Carbon Transformation Fund to back hydrogen and green fuel investments. But near-term constraints remain: high costs, limited waste-based feedstocks, and export quota controls. Meanwhile global passenger traffic is projected to grow 4.9% this year, with Asia-Pacific leading at 7.3%.
The Strait of Hormuz disruption will not make SAF cheap. But it is making the strategic cost of oil dependency visible in a way that quarterly earnings calls rarely do. Airlines that have not locked in long-term SAF offtake agreements are facing price spikes and mandate pressure simultaneously — and the two problems are now reinforcing each other.
Source: Channel NewsAsia
Correction: This article was initially published with the following sentence, which has been removed: “Analysts now forecast SAF could account for 5–8% of global jet fuel consumption by 2028 — a significant increase from current levels — as airline procurement shifts from voluntary commitments toward mandate-driven necessity.” This claim was not supported by the cited source material and has been corrected.
