Bankers say APAC SAF projects risk serving foreign mandates amid uncertain policies

Sustainable aviation fuel projects across the Asia-Pacific region face a structural bankability gap without regional mandates or offtake guarantees comparable to the EU's ReFuelEU or the UK's SAF mandate, industry participants said, cautioning that the region's SAF supply chain risks being built to serve export markets rather than its own aviation demand.

Panelists at a financing session at the MYAero Sustainable Aviation Asia-Pacific Symposium on July 2 said global SAF production stood at roughly 2.5 million metric tons in 2026, just 0.8% of global aviation fuel use, far short of the International Air Transport Association's net-zero trajectory, and framed the session about what gives lenders confidence to fund projects through to financial close.

Offtake, feedstock and governance as core filters

The panelists converged across three bankability pillars: contracted offtake providing predictable cash flows, secure and traceable feedstock supply, and proven technology.

Joel Khaw, Head of Group Sustainability at RHB Bank, said that governance is frequently underweighted.

"A lot of the time when projects go to a credit committee, it gets rejected because of governance issues, who are the sponsors, what's the shareholding structure, do they have the track record to construct and operate these plants," Khaw said, adding that projects seeking loans when they actually need equity injection is a common mismatch.

Isabella Santos, founder of SAF commercial advisory Stratex, said Asia-Pacific's lack of binding regional mandates leaves lenders unable to model a reliable revenue floor.

"Refuel EU and the UK SAF mandate aren't just creating demand, they're creating a volume floor," Santos said. "In Asia-Pacific, we have neither. What we have is a patchwork of national ambition and airline sustainability commitments, but neither is good enough to provide a 15-year offtake agreement."

Santos added that near-term Asia-Pacific projects will likely target export to Europe and the UK, leaving the region "supplying someone else's mandate, not its own."

Financing structures diversifying beyond project finance

Khaw said Malaysian SAF projects that have reached financial close or have gone operational have largely relied on corporate balance-sheet financing rather than pure project finance, with sustainability-linked loans that adjust interest rates to emissions outcomes gaining traction across sectors, although not yet specifically for SAF locally.

He also pointed to blended finance, where multilateral development banks absorb first-loss or junior-tranche risk to de-risk projects for commercial lenders taking senior tranches.

Santos added that feedstock economics are where bankability most often breaks down, even for well-established hydroprocessed esters and fatty acids pathways.

"Are you able to secure volumes big enough for the full utilization of your plant that will last the 10 years of your debt? And is your project's financing model resilient if feedstock prices change by 20%? Many contracts I see do not have that protection built in," she said, noting that feedstock price pass-through in offtake agreements is becoming a bankability requirement rather than a negotiating point.

Platts, part of S&P Global Energy, assessed sustainable aviation fuel, basis hydroprocessed esters and fatty acids-synthetic parrafinic kerosene FOB Straits at $2,405/metric ton on July 8, unchanged from July 7.