In the world of sustainable aviation fuel (SAF), the year 2025 marked a major turning point. Regulatory mandates came into force that require fuel suppliers to deliver prescribed amounts of SAF in certain geographies, thereby turning SAF use from an option into an obligation. Air transport companies, in turn, have had to factor mandatory SAF purchases into their efforts to comply with emissions rules all with an eye toward enhancing business value.
With still more countries announcing SAF mandates, the regulatory landscape is getting more complicated – but also more favourable, in important respects, to producers and users of SAF. For fuel suppliers and energy companies in the Middle East, the changes could expand opportunities to engage in SAF production and supply. Even if local authorities do not institute SAF mandates, mandates elsewhere might help create demand for fuels such as bio-SAF and eSAF that may be attractive to Middle Eastern producers.
These prospects underscore the need for companies to analyse their myriad regulatory commitments and to build capabilities for tracking and managing them. Here, we describe regulatory considerations that affect a company’s ability to create value through the production or use of SAF and we offer practical recommendations to help leaders realise opportunities in a complex, changing environment.
Surveying the SAF regulatory landscape
Existing and emerging SAF regulations don’t just create compliance requirements and paperwork. They can also have significant implications for a company’s operating costs, capital programmes, route and location profile and procurement activities. Managers who understand these considerations can make better decisions about day-to-day operations as well as long-term strategies and investments.
Regulations related to SAF generally take one of two forms: fuel mandates and emissions limits. Each form places requirements directly on particular stakeholders, necessitating moves that ripple across their value chains.
Fuel mandates and emissions rules can make it complicated for air traffic companies to realise the full business value of their SAF use. The complicating factors include these:
- Fuel mandates and emissions rules set different standards for which aviation fuels count as sustainable. (Those standards vary according to what feedstocks and what production processes are used.) A given gallon of SAF uplifted at a particular airport might help its supplier fulfill the locally applicable fuel mandate. But if the SAF doesn’t also conform to standards established by the emissions regulator, then the airline can’t take credit for using the lower-emissions fuel.
- Emissions rules also establish different methods for measuring a fuel’s lifecycle emissions, verifying their accuracy and documenting how the fuel was made and how its emissions were calculated. That means the same gallon of fuel might register as emitting different amounts of greenhouse gases under different emissions rules.
- Fuel mandates oblige suppliers to deliver SAF, but air traffic companies bear most of the added cost. The air traffic companies must also rely on their fuel suppliers to provide acceptable documentation for emissions-rule compliance. These divisions of responsibility can create tension in contracting, especially in locations where SAF supplies are tight.
Under these conditions, SAF players must take great care when designing their business models and production systems. Fortunately, experience points to certain management practices that enable players to expand their opportunities and make the most of them.
Management practices for today’s SAF market
For energy companies in the Middle East, building knowledge of international SAF regulations is essential to maximising returns from their SAF businesses. This knowledge allows companies to engineer SAF products that not only meet technical standards but also meet multiple regulatory requirements, so that products can be sold where prices are attractive and regulatory savvy will continue to be important. More mandates are being established and they are expected to drive a significant share of the overall fuel market. Airlines based in the Middle East have different tasks. They stand to benefit from factoring the mandatory SAF purchases into their financial plans and adjusting their pricing structures and route maps to optimise their overall financial results.
Fuel suppliers
Fuel suppliers operating in the SAF market find themselves in an unusual situation. While SAFs are functionally interchangeable – they can all be used to power aircraft engines – the variety of feedstocks and production pathways means that SAFs can be very different in the eyes of regulators and standard setters. Mastering those regulatory nuances is what enables suppliers to produce and deliver SAF that satisfies particular eligibility criteria, to ensure correct certification and traceability and to align volumes, timing and documentation with air carriers’ needs.
Potential actions for fuel suppliers to achieve these goals include the following.
- Building regulatory, certification and documentation capabilities to achieve compliance under multiple systems. These compliance-oriented skills represent a new domain of expertise for the many fuel providers who have historically concentrated on developing the technical and engineering capabilities to produce high-quality fuel in a cost-effective manner. Compliance capabilities not only involve providing regulators with data and documentation for certification, registration, tracking and tracing purposes. They also involve providing customers with the product information they need to demonstrate their compliance with regulations and voluntary standards.
- Understanding customers’ needs as the basis for an effective business model and product mix. Unlike conventional aviation fuel, which can be bought and sold in the same manner as other energy commodities, SAFs have distinguishing properties, as defined by regulators and standard setters. To compete, fuel suppliers can work with their customers to figure out how much SAF the customers need, with which qualities, in which locations. Assessing SAF demand in these terms – and anticipating how regulatory developments might change it over time – will allow fuel suppliers to invest in sourcing and production pathways which will meet their own regulatory requirements and allow their customers to maintain their compliance.
Airlines
Fuel mandates alone may appear operationally simple for airlines, insofar as fuel suppliers are responsible for offering compliant SAF. But with many regulations to comply with, airlines must be attuned to where SAF purchasing obligations arise (by airport, by leg and by jurisdiction), whether SAF bought because of fuel mandates also helps airlines fulfill emissions obligations or voluntary emissions pledges and how they need to measure and report SAF use under multiple accounting and claims frameworks.
Possible actions for airlines to manage this complexity include the following.
- Integrating SAF costs into network and fleet planning, recognising that routing, hub structure and refueling strategies influence compliance exposure. European carriers, for example, have historically offered a range of direct international flights. SAF mandates could put some of those direct routes at a cost disadvantage to routes that stop over outside Europe: whereas the direct flight must uplift SAF for the entire journey, the stopover flight can uplift SAF for the first leg and less expensive conventional fuel for the second leg. Airlines may want to consider adjusting their route maps or offering alternative routes, perhaps through partnerships with other airlines, to compete on price as mandates require more and more SAF to be blended into the fuel mix.
- Aligning mandated SAF use with emissions compliance and voluntary commitments, so that efforts to address one set of requirements also contribute to other efforts. For example, certain types of SAF made from municipal solid waste are eligible under EU mandates but not under CORSIA – such that a carrier using these SAFs might still need to take other emissions-reduction measures to meet their CORSIA obligations. By contrast, SAF made from palm oil and palm oil residues is ineligible under EU mandates but eligible in several SEA mandates. To derive maximum value from their SAF purchases, airlines will benefit from seeking SAF products that also help them fulfill emissions commitments in an economical way.
- Building capabilities to manage SAF regulation, certification and claims. Effectively sourcing SAF and reporting its use under applicable regulations and standards can make the difference between creating value and destroying it. And the regulatory environment will get more complicated as more mandates and voluntary programmes are put in place. Until these systems are harmonised, airlines will likely need to devote considerable resources – both people and technology – to tracking their requirements, maintaining documents, records and statistics and providing proof that allows them achieve compliance across the board.
Lufthansa, a large European airline, illustrates one approach to coordinating regulatory compliance with operations management and commercial decision making. Leaders there have tasked the corporate responsibility department with overseeing and monitoring the development of clean technologies, including SAF, and managing sustainability initiatives to ensure that compliance requirements and voluntary goals are met. Equipped with insights from those activities, the corporate responsibility department works closely with the fuel procurement team on aligning SAF sourcing and purchasing with the airline’s compliance needs and environmental commitments.
For leaders across aviation and energy, the message is clear: managing SAF regulation is now essential to managing enterprise value. Fuel mandates, emissions rules and voluntary programmes will keep evolving, and they will not harmonise quickly enough to simplify near-term decision-making. Companies that build strong governance for tracking requirements, align operations with compliance exposure and strengthen certification and traceability will be better able to compete as demand and usage scale.
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