The global Sustainable Aviation Fuel (SAF) market has reached a pivotal turning point by mid-2025, evolving rapidly in both scale and strategic importance. Initially propelled by decarbonization mandates, SAF is now positioned as a core element in global energy security strategies.
This shift is driven by increased volatility in conventional jet fuel markets, tightening feedstock availability, fragmented regulation, and growing supply chain risk across major geographies.
By mid-2025, SAF has moved beyond its role as an environmental compliance tool and is now integral to risk mitigation and energy diversification in aviation.
The market is structurally imbalanced: Europe is short, North America is long, and Asia is gaining capacity but remains fragmented. Market penetration remains below 1% of global aviation fuel consumption, but long-term fundamentals point to rapid growth as regulatory momentum builds, corporate net-zero targets accelerate, and geopolitical risks continue to pressure fossil jet fuel logistics.
Key growth drivers for the next 6–18 months include
Recent geopolitical shocks in the Middle East, particularly the June airstrikes in Iran, have intensified disruptions across traditional jet fuel supply routes. Volatility in global jet fuel markets is being amplified by bottlenecks in refining and transport infrastructure.
Global aviation players are accelerating the adoption of SAF not only to meet emissions targets, but to secure fuel supply against price shocks, sanctions, and logistics constraints. Jet fuel derivatives in Singapore saw a sharp rise of over 41% in traded volumes in June, while inventories at the Port of Fujairah increased for a fourth consecutive week to over 19.15 million barrels.
Middle distillate inventories, including jet fuel, reached their highest levels since March 31, reflecting regional stockpiling in anticipation of trade risks. SAF is now recognized not just as an emissions compliance mechanism, but as a strategic hedge for energy diversification. Airlines and refiners are recalibrating procurement strategies to accommodate SAF as a permanent fixture in fuel supply chains.
The Asia-Pacific region has emerged as the fastest-growing SAF production hub, with total capacity now approaching 2.0 million metric tons annually. Singapore, South Korea, Japan, and Malaysia are leading investments in HEFA-based and co-processing SAF facilities. However, structural constraints continue to limit growth.
Blending mandates are still largely absent, with only a few countries announcing voluntary or future SAF targets. Feedstock sourcing remains a critical weakness, particularly in used cooking oil (UCO), which dominates regional feedstock supply but suffers from poor traceability and informal supply chains.
Export restrictions on raw feedstocks from Indonesia and China are further complicating regional balance. Advanced feedstocks such as municipal waste and agricultural residues are being explored but remain commercially underdeveloped. Scaling such feedstocks would require investment in waste segregation, pre-treatment infrastructure, and refining technologies that are still immature in the region.
Europe remains the policy front-runner due to the ReFuelEU Aviation regulation mandating a 2% SAF blending requirement from 2025. Total SAF production in the region is estimated at 1.6–1.8 million tons, falling short of expected demand exceeding 2.5 million tons in 2025.
As a result, Europe is structurally dependent on imports, especially from North America and Asia. Local feedstock availability is limited due to EU waste regulations, indirect land use change (ILUC) constraints, and high demand for UCO.
Europe is investing in advanced feedstocks, but scale remains a long-term challenge. Supply tightness is expected to persist, sustaining premium price levels and import flows into the region.
North America continues to lead in SAF production volume, with capacity estimated between 2.4 and 2.7 million metric tons in 2025. Growth is supported by strong policy incentives through the Inflation Reduction Act (IRA), including SAF-specific tax credits.
Despite supply strength, domestic SAF adoption remains low due to the absence of federal blending mandates. Most demand is concentrated in California and Washington, supported by state-level programs. Export flows are rising, but recent tightening of credit eligibility criteria has created uncertainty around long-term international trade.
Feedstock availability remains robust, particularly in soybean oil and tallow, but competition with renewable diesel producers is escalating input costs.
The Middle East and Africa remain in early development stages for SAF. Limited production exists, but both regions have significant long-term potential. The Middle East is positioning itself for downstream investment via national oil companies, while several African nations possess strong feedstock fundamentals but lack industrial-scale refining infrastructure. Regional demand remains low, hindered by high production costs, absence of mandates, and minimal government engagement with SAF adoption frameworks.
Latin America is resource-rich in SAF-relevant feedstocks, particularly UCO, soybean derivatives, and ethanol for alcohol-to-jet pathways. However, policy frameworks remain underdeveloped. Brazil has launched its ProBioQAV roadmap, but adoption is still in early phases and there are no enforceable SAF mandates across the region.
Production remains small, and uptake is constrained by macroeconomic volatility and regulatory inertia.
Europe is currently the world’s largest SAF-consuming region due to binding policy mandates. Demand is estimated at 2.3–2.6 million metric tons in 2025. Airlines are executing long-term offtake agreements, and book-and-claim platforms are being scaled up to meet both regulatory and voluntary corporate sustainability goals.
Despite being the largest producer, the U.S. demand footprint is limited to 700–900 thousand metric tons in 2025. Adoption is concentrated in states with clean fuels programs.
Corporate demand from cargo and passenger airlines is gradually increasing, supported by sustainability-linked procurement.
Regional SAF demand is still low, estimated between 450–600 thousand metric tons in 2025. However, market momentum is building, driven by strategic risk assessments and early-stage pilot programs. Infrastructure gaps, feedstock uncertainty, and cost premiums continue to limit broader adoption.
Demand across the Middle East and Africa remains negligible. The region has initiated SAF demonstration flights, but commercial use is not yet scaling due to the absence of incentives and the high cost differential relative to fossil jet fuel.
Latin American SAF demand is still in the pilot stage. Limited uptake from regional carriers is supported by voluntary programs but lacks policy enforcement and cost competitiveness.
As of July 3, 2025, the Asia SAF-jet fuel spread was assessed at $1,109.99 per M/T, reflecting a modest rise from the previous day. SAF continues to trade at a premium between 3.5 to 4.5 times the price of fossil jet fuel, depending on region and feedstock source.
SAF certificate trading (book-and-claim) is gaining traction as a mechanism to bridge adoption gaps caused by infrastructure limitations.
Futures and derivatives linked to SAF remain thinly traded but are drawing increasing interest from hedging desks seeking to manage exposure to compliance-driven volatility.
GrainFuel Nexus® are closely monitoring:
We expect expects SAF to evolve into a major traded commodity class by 2028, with structured financial instruments, cross-border certificate trading systems, and vertically integrated supply chains defining the competitive landscape.
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