Singapore to fix SAF ticket levy quantum through 2028 amid global price volatility: CAAS

Singapore will hold its sustainable aviation fuel ticket levy at a fixed rate from 2026 through 2028, even if global SAF or jet fuel prices fluctuate significantly, a senior Civil Aviation Authority of Singapore (CAAS) official told S&P Global Commodity Insights on the sidelines of the MyAERO SAF Symposium in Malaysia.

"The SAF levy quantum -- based on a 1% SAF uplift target -- will remain unchanged throughout 2026, 2027 and 2028, regardless of how SAF or Jet A1 prices evolve," said Daniel Ng, Acting Third Deputy Director-General at CAAS, following his participation in the 'Asia Pacific SAF Ecosystem' panel.

"For instance, if the SAF price rises from $3,000 to $4,000 per kiloliter, or falls to $2,000, the levy that passengers pay in their air-ticket price will not change. What will change is the actual volume of SAF we are able to purchase and uplift -- that adjusts flexibly, not the levy," the CAAS official explained.

This fixed-quantum structure will now be locked in for three years, offering price certainty to passengers and airlines, even as SAF markets remain volatile and underdeveloped.

Ng clarified that while SAF may cost two to five times more than fossil jet fuel, the levy amount -- for 1% SAF content -- will be pre-set based on projected prices. Initial estimates from the blueprint indicate S$3 ($2.36) for Bangkok, S$6 for Tokyo, and S$16 for London for economy-class passengers.

The levy will vary by route distance and travel class, with higher charges applied to premium seats, according to the CAAF official. Revenues from the levy will fund central SAF procurement by CAAS at Changi Airport, with airlines continuing to pay for fossil jet fuel and passengers covering the SAF premium via the levy.

The confirmation of a fixed SAF levy structure through 2028 offers important cost visibility at a time when airlines are increasingly exposed to fuel price volatility amid geopolitical shocks, such as those affecting global refining output and supply chains this year.

Singapore's approach differs from hard blending mandates seen in parts of Europe or the US. Instead, CAAS has opted for a "moving target" model, where the 1% SAF uplift is not mandatory but is aspirational -- adjusted depending on actual contracted SAF prices.

"If prices come in below projections, we uplift more. If prices spike, we uplift less -- but always within the same levy revenue pool," said another CAAS official at the event.

The model is designed to stimulate SAF investment while protecting passenger affordability and the competitiveness of Singapore's global aviation hub.

3%–5% SAF targeted by 2030

Beyond the initial 1% target in 2026, Singapore aims to raise its SAF share to 3%-5% by 2030, contingent on global supply availability and industry maturity. The country has also positioned itself to anchor more SAF production and regional feedstock studies, including partnerships with Boeing and the Roundtable on Sustainable Biomaterials.

CAAS is also exploring how SAF credits -- generated through central procurement -- could be allocated back to airlines or monetized via carbon markets, and has begun dialogues with palm oil and waste feedstock producers across Southeast Asia.

According to CAAS, the SAF levy will vary by travel distance and cabin class. For a 1% SAF target, indicative levies for economy-class passengers are estimated at S$3 for Bangkok, S$6 for Tokyo, and S$16 for London. Premium-class passengers will incur higher levies.

All funds collected via the levy will be pooled and administered through central SAF procurement by CAAS, with SAF delivered and blended into fuel at Changi Airport. The levy supports Singapore's aim to raise the SAF uplift target to 3%-5% by 2030, subject to global supply and market readiness.

Investment pivot

Singapore's push to anchor SAF demand through a levy is complemented by parallel efforts to scale supply.

CAAS is working closely with the Singapore government and industry to increase domestic and regional SAF production capacity. Neste, which first invested in Singapore in 2007, has expanded its refinery operations to support 1.25 billion liters of SAF annually, making the city-state one of the world's largest SAF production hubs.

Still, this is only a fraction of future demand.

According to the International Air Transport Association, the aviation sector will need 450 billion liters of SAF annually by 2050 to meet net-zero targets -- a 750x scale-up from current output. In 2023, global SAF production was just over 600 million liters, albeit double that of 2022.

To support feedstock diversification and regional readiness, Singapore is participating in a regional SAF feedstock roadmap study with Boeing and RSB. The study aims to identify viable SAF production pathways aligned with CORSIA sustainability criteria, and unlock opportunities in Southeast Asia.

Singapore's SAF strategy also includes international collaboration. It has signed aviation sustainability memorandums of understanding with the US, Japan, Australia and the UK. Within ASEAN, Singapore spearheaded the ASEAN Sustainable Aviation Action Plan (ASAAP) -- a 10-year framework guiding regional efforts on SAF, air traffic modernization and decarbonization.

The government has also allocated S$50 million under the Aviation Sustainability Programme (ASP) to fund innovation pilots, and launched the International Centre for Aviation Innovation (ICAI) to support regional policy research and capacity building on sustainable flight.

Platts, part of Commodity Insights, assessed the Asia SAF-jet fuel spread at $1,109.99/mt on July 2, up 32 cents/mt from the previous assessment.