2025 has already been a busy year for the UK’s aviation industry. On January 1, the UK became one of the first countries to implement a Sustainable Aviation Fuel (SAF) mandate. Now, the UK government has voiced its support for runway expansion at Heathrow and other UK airports. The two events are closely linked: while further aviation growth will drive connectivity, trade, and economic prosperity, it seems it will only be permissible if that growth comes hand in hand with efforts to meet sustainability targets.
The industry knows this. In October 2021, at the 77th International Air Transport Association (IATA) conference, a resolution was passed by member airlines committing them to achieving net-zero carbon emissions from operations by 2050, with a further estimate that 65 per cent of the carbon reduction would need to come from adoption of sustainable aviation fuel. According to IATA reporting, approximately one million tons of SAF were produced in 2024, with projections that this is expect to more than double to reach 2.1 million tons in 2025. However, considering that annual production would need to reach approximately 400–500 million tons to meet 2050 decarbonisation targets, it is evident that significant progress is needed to establish the necessary market conditions to attract investment and scale production of the industry’s only viable low-carbon solution.
Why SAF?
There is not one single answer to the challenge of decarbonising aviation, and all the levers that are available will have to be pulled for the sector to achieve its net-zero objective. Efforts will continue to optimise airframes, to improve engine efficiency, and to enhance flight paths to further reduce fuel burn. But the nature of the fuel that is burnt – kerosene – is stubbornly resistant to change. Whilst battery-electric engines and hydrogen-powered aircraft are being developed, they remain at early stages of development. And - at maturity - they may only represent a paradigm shift for short- and medium-haul travel, leaving open the question of how to decarbonise longer-haul journeys. SAF, in contrast, provides a ‘drop-in’ solution that works with today’s engines and airframes. It is currently the only scalable option that the aviation industry has today.
Key barriers to SAF adoption
While the transition to SAF presents significant opportunities for a more sustainable aviation industry, there are a number of key challenges to address, including:
- Constraints on feedstock availability
- High production cost
- The required investment in infrastructure
- Technological maturity of the production pathways
- Regulatory support required to build investor confidence
- Supply chain coordination
- Market adoption
To speak to just a few of these:
- Today, SAF is two to three times more expensive than traditional kerosene, with established technologies like hydroprocessed esters and fatty acids (HEFA) costing significantly more, and more novel pathways, such as alcohol-to-jet, gasification, and Power-to-Liquid (PtL), being even more costly. In aggregate, it is estimated that scaling SAF to 2050 may cost an incremental $3.5-5.5 trillion more than a ‘No SAF’ reference case.
- In contrast to other areas of the energy transition – such as solar, and wind technology – we do not expect to see equivalent and dramatic marches down a cost curve. Indeed, our own analysis supports that the cost of SAF will remain high, as constraints on feedstocks for more-mature pathways cause incremental demand to have to be met by higher-cost, more-novel pathways, offsetting the benefits of technological advancement and scale economies achieved.
- In these circumstances - and if industry targets are to be met - it follows that regulatory support will be needed both to drive uptake of SAF, and to drive development of novel means of generating SAF. In the UK, the SAF mandate has been specifically targeted to channel investment in the more expensive and more novel pathways, both by placing limits on the proportion of SAF that can be drawn from HEFA, and by creating a sub-target for the proportion of SAF that must be drawn from the – more-expensive - Power-to-Liquid pathway.
Unlocking new opportunities for innovation
Although the aviation industry has significant challenges to overcome before reaching its sustainability goals, the introduction of the SAF mandate opens the door to exciting opportunities for innovation and growth.
● Collaboration Across the Value Chain: Airlines, fuel producers, investors, governments, and customers are collaborating closely to achieve their decarbonisation targets. Although SAF’s widespread use faces challenges, effective partnerships are accelerating progress toward meeting decarbonisation goals.
● Book and Claim: One of the critical enablers for the scale deployment of SAF is the maturing of book and claim systems, which enable the environmental benefit of SAF to be separated and traded independently from the physical fuel asset. Decoupling these elements enables a dramatic enhancement in the efficiency of SAF markets, significantly reducing the costs associated with fuel logistics, blending and distribution.
● Evolving Airports into Energy Hubs: Airports will play a critical role in the transition to sustainable aviation. As the demand for SAF grows, airports will need to adapt to become energy hubs capable of supporting SAF production, storage, and distribution. This includes optimising logistics, determining optimal production sites, and reconfiguring airport infrastructure to accommodate SAF.
Charting a path to a sustainable aviation future
While significant challenges remain, they are not insurmountable. The new UK mandate will likely not only accelerate decarbonisation of the sector, but also drive innovation, creating new growth opportunities and creating further confidence in SAF investment. With continued effort and industry-wide cooperation, aviation can play a pivotal role in the global transition to a sustainable future, reducing its environmental footprint while remaining a vital part of the global economy.
Jack Duckworth, partner, L.E.K. Consulting
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