The International Air Transport Association (IATA) raised concerns about the "disappointingly slow" growth in the production of Sustainable Aviation Fuel (SAF), which is currently significantly below previous estimates.
The airline organisation said in 2024, SAF production volumes reached 1 million tonnes (1.3 billion litres), double the 0.5 million tonnes (600 million litres) produced in 2023.
However, this is "significantly below" previous estimates that projected SAF production in 2024 at 1.5 million tonnes (1.9 billion litres), as key SAF production facilities in the US have pushed back their production ramp-up to the first half of 2025.
This year, SAF accounted for only 0.3% of global jet fuel production and 11% of global renewable fuel.
IATA noted that in 2025, SAF production is expected to reach 2.1 million tonnes (2.7 billion litres), or 0.7% of total jet fuel production and 13% of global renewable fuel capacity.
"SAF volumes are increasing, but disappointingly slowly. Governments are sending mixed signals to oil companies, which continue to receive subsidies for their exploration and production of fossil oil and gas. And investors in new-generation fuel producers seem to be waiting for guarantees of easy money before going full throttle," said Willie Walsh, director-general of IATA.
"With airlines, the core of the value chain, earning just a 3.6% net margin, profitability expectations for SAF investors need to be slow and steady, not fast and furious," he added.
Nonetheless, Walsh pointed out that airlines are eager to buy SAF, and there is money to be made by investors and companies who see the long-term future of decarbonization.
"Governments can accelerate progress by winding down fossil fuel production subsidies and replacing them with strategic production incentives and clear policies supporting a future built on renewable energies, including SAF," he said.
Aviation is part of the global energy transition
Marie Owens Thomsen, senior vice president of sustainability and chief economist at IATA, said the airline industry's decarbonization must be seen as part of the global energy transition, not compartmentalized as a transport issue.
"That's because solving the energy transition challenge for aviation will also benefit the wider economy, as renewable fuel refineries will produce a broad range of fuels used by other industries, and only a minor share will be SAF, used by airlines," she said.
"We need the whole world to produce as much renewable energy as possible for everybody. Airlines simply want to access their fair share of that output," Owens Thomsen added.
To reach net zero CO2 emissions by 2050, IATA analysis shows that between 3,000 to over 6,500 new renewable fuel plants will be needed. These will also produce renewable diesel and other fuels for other industries.
The annual average capex needed to build the new facilities over the 30-year period is about US$128 billion per year in a best-case scenario — but IATA noted that this amount is "significantly less" than the estimated total sum of investments in the solar and wind energy markets at US$280 billion per annum between 2004 and 2022.
"Governments must quickly deliver concrete policy incentives to rapidly accelerate renewable energy production," Walsh said.
"There is already a model to follow with the transition to wind and solar power. The good news is that the energy transition, which includes SAF, will need less than half the annual investments that are realizing wind and solar production at the scale required."
"And a good portion of the needed funding could be realized by redirecting a portion of the retrograde subsidies that governments give to the fossil fuel industry," Walsh added.
In the meantime, IATA enumerated ways to expand SAF production, including the increase in co-processing, where existing refineries can be used to co-process up to 5% of approved renewable feedstocks alongside the crude oil streams.
IATA pointed out that this solution can be implemented quickly and requires minimal material investments.
The market could also move to diversify SAF production. IATA said there are 11 certified pathways to make SAF, but the HEFA method (hydrotreated esters fatty acids (used in cooking oil, animal fats, etc.) accounts for around 80% of production in the next five years.
"SAF volumes could be boosted by increasing investments to scale up production through the other certified pathways, in particular Alcohol-to-Jet (AtJ) and Fischer-Tropsch (FT), which use biological and agricultural wastes and residue," the analysis added.
Moves should also be taken to create a global SAF accounting framework.
IATA said it is essential to have a registry that allows airlines to benefit from the environmental attributes of their SAF purchases and to claim these against their obligations transparently, preventing double counting.
"Such a registry is necessary for achieving a global SAF market where all airlines can buy SAF, and all SAF producers can sell their fuel to airlines."