Filip Cornelis
Marjan Rintel Chief Executive Officer
Jimmy Samartzis Chief Executive Officer
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WELCOME
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EXECUTIVE SUMMARY
Carbon countdown: Aviation faces a critical carbon budget crisis—at current emission rates, the industry's 18.4 billion tonne carbon budget will be exhausted by 2032, while aircraft demand continues to grow.
Binding mandates in force: 2025 marks a watershed moment with both the EU's ReFuelEU and UK's SAF Mandate now legally binding, requiring 2% SAF in 2025, rising to 6% (EU) and 10% (UK) by 2030.
Production gap reality: Despite projected 216% growth in European SAF consumption in 2025, production capacity remains constrained.
Spain's strategic opportunity: The Iberian Peninsula is emerging as Europe's potential SAF powerhouse due to abundant renewable energy, strong refining capacity, and strategic location, potentially generating €56 billion in GDP by 2050.
Hydrogen bottleneck: Green hydrogen costs (currently $4-12/kg) represent 60% of e-fuel production costs, making synthetic SAF economically challenging, though alternative pathways like natural "white" hydrogen offer promising breakthroughs.
EXECUTIVE
Financial challenges persist: SAF projects require $19-45 billion in capital expenditure by 2030, but face high costs, uncertain returns, and regulatory risks that deter investment despite policy commitments.
UK leading on revenue certainty: The UK's new Revenue Certainty Mechanism with its Guaranteed Strike Price model offers a potential blueprint for Europe to de-risk SAF investments through price stability.
Passenger engagement growing: Airlines including Lufthansa, SAS, and British Airways are successfully embedding SAF contributions into loyalty programmes and fare structures, with over one million passengers choosing Lufthansa's Green Fares in the first year.
Industry credibility gap: Key industry leaders, including IATA's Director General, have begun questioning the feasibility of net-zero timelines, raising concerns about mandate enforcement and potential carbon leakage.
Urgent action required: The "Mandate Decade" demands immediate coordination across production capacity, financing mechanisms, and policy certainty to avoid regulatory failure and ensure aviation's sustainable future.
SUMMARY
INTRODUCTION: AVIATION'S CARBON COUNTDOWN
Picture this: aircraft grounded by extreme heat, runways buckling under record temperatures, and European airports forced to shut due to flooding. This isn't a scifi future—it’s already happening. Climate change is no longer a distant threat for aviation; it's becoming a direct operational challenge.
269 airports worldwide are already at risk of coastal flooding, including key European hubs. If the global temperature increase exceeds 2°C, over 360 airports will be at risk by 2100—with up to 20% of global air routes facing disruption, according to Newcastle University research.
The skies are changing too. Shifting jet streams and wind patterns are lengthening flight durations, increasing fuel burn and operational uncertainty. Clear-air turbulence is intensifying in both frequency and severity, now considered a serious and rising safety risk.
Yet even as the skies become more turbulent, the aviation industry is flying headlong into a carbon crisis.
Over 100,000 flights take off around the world every day. Global air traffic is projected to double by 2043, driven by growing demand in Asia, Africa, and the Middle East.
Europe is also set for growth. Drawing on data from Airbus and Boeing, environmental pressure group Transport & Environment (T&E) claims that Europe will double air passenger traffic by 2050. Moreover, T&E says that aircraft will burn 59% more fuel in 2050 than in 2019, despite improvements in efficiency.
All this means that time and aviation’s carbon budget is running out.
According to the International Council on Clean Transportation (ICCT), aviation has just 18.4 billion tonnes of CO2 left to emit if it is to meet net zero by 2050. At current rates, that budget will be fully exhausted by 2032. “Think of it as a carbon countdown,” said Dan Rutherford of ICCT, speaking on the Sustainability in the Air podcast. “We have a finite carbon budget—and by 2032, it will be gone.”
The problem isn’t just future growth—it’s already baked in. Aircraft in service today will consume 40% of that budget over their lifetimes. Meanwhile, manufacturers like Airbus and Boeing are forecasting demand for 44,000 new planes by 2043, locking in decades more of emissions. With existing backlogs already stretching into the 2030s, many aircraft ordered today will be flying in 2050 or beyond.
Source: Newcastle University
This creates a powerful lock-in effect, a term economists use to describe how today’s decisions constrain tomorrow’s options. For aviation, it means committing to carbonintensive infrastructure at the very moment emissions must decline sharply. Airbus, for example, has delayed plans for a hydrogen-powered A320 successor in favour of SAFcompatible conventional engines.
Source: Boeing
A European pressure point
Europe is emerging as the epicentre of aviation decarbonisation policy. The EU’s ReFuelEU Aviation regulation sets binding targets for sustainable aviation fuel use, including a submandate for Power to Liquid (PtL) or e-fuel use of 1.2% by 2030.
The UK’s SAF mandate has similar ambitions: a 10% SAF target by 2030, with an e-fuel subtarget and caps on SAF made from the ‘HEFA’ pathway (used fats and cooking oils) already in place.
These policies reflect a shift from voluntary offsets to compulsory carbon reductions, putting real pressure on airlines, airports, and fuel producers to act. However, with SAF currently making up less than 1% of total aviation fuel—and with green hydrogen (a key input for e-fuels) facing cost and infrastructure bottlenecks—there is a growing gap between regulatory ambition and industrial readiness.
Europe’s policy leadership is both an opportunity and a risk. While it could catalyse the global SAF market, compliance costs are rising, and concerns are mounting over competitiveness, leakage, and the feasibility of timelines. Some regional carriers warn of lost connectivity. Airlines, like SAS and KLM, are moving aggressively on SAF, while others lag behind.
The road to Amsterdam
As demand surges, a critical question remains: Can the industry produce enough fuel, fast enough—and affordably enough—to meet the moment. And the mandates?
This report, produced for SAF Congress Amsterdam (6 to 8 May), explores the state of play in 2025. It focuses on three urgent challenges shaping the next decade of decarbonisation:
• Mandates: The growing patchwork of UK and EU rules—and what they mean for airlines
• Finance: Why investment is still stalling despite political momentum
• The production gap: Why SAF supply lags behind demand, and how to close it
Drawing on the latest insights from industry, government, and innovators, the report aims to help stakeholders navigate this rapidly evolving landscape—and identify the breakthroughs needed to turn policy ambition into real-world impact.
Dirk Singer Head of Sustainability, SimpliFlying dirk@simpliflying.com
MANDATES AND MOMENTUM: THE SHIFT FROM AMBITION TO OBLIGATION
In 2025, the decarbonisation of aviation in Europe crossed a critical threshold. For the first time, mandates for Sustainable Aviation Fuel (SAF) became binding, replacing a decade of voluntary commitments with enforceable legal obligations. This marks a new era for an industry that has long depended on offsets and future technologies to deflect pressure to change in the short term.
The European Union’s ReFuelEU Aviation regulation, which came into force on January 1, 2025, is at the heart of this regulatory wave.
Under this legislation, all aviation fuel supplied at EU airports must include a minimum percentage of SAF—starting at 2% in 2025, rising to 6% by 2030, 20% by 2035, and eventually 70% by 2050.
Crucially, the regulation includes a submandate for synthetic fuels, requiring 1.2% of all aviation fuel to be e-fuels, such as Power-to-Liquid (PtL) fuels, by 2032, increasing to 35% by mid-century. This sends a clear signal to fuel producers: the clock is ticking on fossil kerosene.
The regulation goes beyond blend ratios. Airlines are also required to refuel at least 90% of their jet fuel needs at the departure airport, a rule designed to prevent "tankering"—the cost-saving but emissionsheavy practice of carrying extra fuel from cheaper jurisdictions.
And the penalties for non-compliance are steep: fuel suppliers and airlines that fall short must pay at least double the price gap between SAF and fossil jet fuel. Importantly, paying the fine does not clear
Source: OMV Solutions GmbH
the deficit; it must still be made up the following year, reinforcing the regulation’s bite.
Across the Channel, the UK has implemented its own SAF Mandate, which also began in January 2025. While it starts at the same 2% blend level as the EU, the UK is charting a slightly different course. The target climbs to 10% SAF by 2030— outpacing the EU’s 6%—but with a separate and lower PtL sub-target of 0.5% by 2030 and 3.5% by 2040.
The UK has introduced a buy-out mechanism, allowing suppliers to pay a fee instead of meeting the SAF target: £4.75 per litre for general SAF and £5.00 for synthetic fuel. Rather than being a loophole or get-out-of-jail card, these high buy-out rates are designed to stimulate market investment by placing a hard floor on SAF value.
The UK government is also developing a revenue certainty mechanism to derisk investments in new SAF production facilities. Modelled loosely on schemes used in the renewable power sector, the mechanism will guarantee a fixed price for SAF, with the government or industry making up the difference if market prices fall below an agreed strike price. This mechanism is expected to launch after 2026 and will be funded through a levy on jet fuel suppliers.
Understandably, demand is already surging in response to the mandates. According to S&P Global Commodity Insights data, European consumption of SAF in 2025 is projected to increase by 216% year-over-year to 1.9 million mt.
Meanwhile, EASA says that meeting the EU’s 2030 6% target is certainly possible but not guaranteed, publishing three different scenarios for European aviation, with the bottom one not meeting the mandate.
In particular, EASA has raised a warning flag about e-fuels, stating in its 2024 end-ofyear report that “There is a strong pipeline of synthetic aviation fuel projects in the EU, estimated at 1.1 million tonnes by 2030, but at the time of assessment none of these facilities had gone through FID. They were, therefore, not included in the realistic capacity estimation.”
Beyond governments, corporate and voluntary demand for SAF is starting to build real momentum.
The book-and-claim model, which allows companies to purchase SAF certificates unlinked from specific flights, has created a pathway for large emitters to address their scope 3 emissions from business travel. In 2024, the Sustainable Aviation Buyers Alliance (SABA) announced nearly $200 million in SAF certificate commitments—proof that voluntary markets are beginning to take shape.
Source: Elaine Thompson / Associated Press
Some airlines have taken the lead in creating programmes to engage both passengers and corporate clients. SAS’s EuroBonus Conscious Traveler initiative has already tripled the percentage of passengers opting to contribute to SAF purchases, while Microsoft’s partnership with OMV enables direct emission reductions from its European air travel. These examples show how stakeholder engagement can turn regulation into opportunity.
Yet for all the optimism, 2025 marks just the beginning of the implementation phase. The rules are now in place. The mandates are clear. But airlines, fuel producers, and investors alike must now grapple with
Source: SAS Scandinavian Airlines the hard economics of scaling a new energy system from an extremely low base—under immense time pressure and public scrutiny.
The SAF revolution is no longer a matter of if, but how fast. And whether regulation alone will be enough to bridge the chasm between what is promised and what is possible.
REGION IN FOCUS: THE IBERIAN GREEN INDUSTRIAL
OPPORTUNITY
As European nations scramble to meet binding SAF targets under ReFuelEU and RED III, attention is shifting from policy ambition to production reality.
With many countries facing significant supply-demand gaps, the question is no longer just about how much sustainable aviation fuel is needed—but where it will come from.
In that context, the Iberian Peninsula—particularly Spain—is emerging as a potential cornerstone of Europe's SAF supply chain and deserves more detailed consideration within this report.
With abundant renewables, a strong refining base, and government support, the region is uniquely positioned to scale production faster and more affordably than many of its northern neighbours.
For policymakers, airlines, and investors across the continent, understanding Spain and Portugal’s role is critical to navigating Europe's SAF future.
Spain's emerging position in the European SAF landscape
By 2030, Spain is projected to be the third-largest SAF market in Europe, with demand exceeding 400,000 tonnes per year, and the sixth-largest for renewable diesel, reaching 1.6 million tonnes annually.
This demand is being driven by a combination of EU mandates, the UK SAF Mandate, and voluntary airline commitments. International Airlines Group (IAG)—which includes Iberia and Vueling—has pledged to reach 10% SAF usage by 2030, significantly exceeding the 6% ReFuelEU mandate.
Recent analysis from PwC suggests the new SAF industry could generate investments of €22 billion in Spain, create 270,000 direct and indirect jobs, and contribute €56 billion to the country's GDP by 2050.
Source: Solarig
Why the region can lead
What sets the region apart is its natural alignment with SAF production requirements across multiple pathways:
• Renewable energy abundance: High solar irradiation and strong wind potential make Spain and Portugal ideal for generating renewable electricity—critical for producing PtL e-fuels. While Northern European countries sometimes struggle with renewable capacity factors below 30%, Spanish solar projects routinely achieve 40%+ capacity factors at costs 30-40% lower than Germany or the Netherlands. This translates to potentially lower costs for green hydrogen production—the foundation of e-SAF.
• Industrial infrastructure: Spain boasts Europe's third-largest refining capacity, with facilities that rank in the top quartile of European performance. These existing assets can be retrofitted for SAF production at significantly lower capital costs than greenfield projects, accelerating time-to-market while reducing investment requirements. According to industry sources, brownfield SAF conversions in Spain can be 30-40% less capital-intensive than building entirely new infrastructure.
Source: Markel Redondo for Greenpeace
• Feedstock availability: For wastebased HEFA SAF, Spain has substantial untapped potential in used cooking oil (UCO) collection. While currently only 8% of household UCO is collected (compared to 50-60% in Belgium), Spain has implemented nationwide programmes to dramatically increase collection rates. The agricultural sector also provides significant volumes of waste lipids and biomass that could support both HEFA and lignocellulosic SAF pathways.
• Strategic location: With extensive port infrastructure and established marine fuel hubs in Barcelona, Bilbao, and Algeciras, Spain is perfectly positioned to import SAF feedstocks and export finished fuel throughout the Mediterranean and Atlantic trading corridors. This provides unique flexibility in optimising supply chains as the SAF market evolves.
Emerging ecosystem: Industry moving at speed
Momentum is building rapidly across the value chain:
• Moeve (formerly Cepsa) is investing €3 billion in its "Positive Motion" strategy, which includes transforming its refineries in Huelva and San Roque into biofuel hubs capable of producing 2.5 million tonnes of SAF and renewable diesel annually by 2030.
• Repsol has announced plans to reach 1.3 million tonnes of SAF production capacity across multiple Spanish sites, combining both HEFA and advanced biofuel pathways.
• Newcomers are entering the market, with BIOCIRC developing waste-to-SAF facilities, and innovative startups like SkyNRG establishing operations focused on novel production pathways.
• Major airlines, including Iberia, Vueling, and Air Nostrum, have formed dedicated sourcing partnerships, often backed by government offtake guarantees to derisk early investments.
Spanish and Portuguese technology institutes like CSIC and LNEG are also becoming renowned for biofuel innovation, particularly in gasification, alcohol-to-jet, and feedstock pretreatment technologies that can unlock more abundant and sustainable SAF feedstocks.
Source: elEconomista
Policy framework: A mixed picture with growing support
Spain's regulatory environment for SAF has evolved significantly. Initially focused on conventional biofuels, Spain has sharpened its focus on advanced and synthetic fuel pathways. The Spanish government's commitment to phase out palm oil-derived biofuels by 2025 (five years ahead of EU requirements) signals its prioritisation of truly sustainable fuel pathways.
The recently published National Plan for SAF Development proposes a €300 million annual fund to finance production plants and incentivise consumption, using income from emission rights auctions. Beyond direct funding, the Spanish government is streamlining permitting for SAF facilities with "express lanes" for projects meeting strategic objectives. However, gaps remain. Unlike the Netherlands, Sweden, and Germany, Spain lacks strong price support mechanisms like tradable credits or tax exemptions specific to SAF. This has resulted in average trading values of Spanish certificates (approximately €0.25 per liter of renewable diesel) significantly lower than in other EU markets (for example, €0.41 per liter in the Netherlands).
Lessons for Europe
The Iberian Peninsula experience offers several critical lessons for European SAF development:
• Geographic logic matters: The most competitive SAF production will likely concentrate in regions with abundant renewables, existing infrastructure, and lower costs, not necessarily where demand is highest. This suggests a future of significant intra-European SAF trade flows.
• Multiple pathways in parallel: Spain is demonstrating that pursuing HEFA, gasification, AtJ, and PtL routes simultaneously creates resilience and accelerates the overall transition. Rather than betting on a single "winning" technology, Europe needs a portfolio approach.
• Integrated planning required: SAF development is most successful when integrated with broader industrial strategy. Spain's SAF growth is embedded within its reindustrialisation efforts, hydrogen strategy, and circular economy initiatives— creating mutually reinforcing benefits.
• Regulatory certainty drives investment: While Spain has natural advantages, regulatory uncertainty beyond 2030 and the lack of road transport targets beyond 2026 create investor hesitation. Longterm demand signals have proven critical for securing capital.
• Feedstock innovation is essential: As HEFA feedstocks become constrained, investment in new collection systems (like Spain's UCO initiatives) and alternative feedstock pathways will be necessary to scale SAF production.
Source: Moeve Global
Challenges and the path forward
Despite its advantages, Spain faces significant hurdles. For the Iberian Peninsula to fully realise its potential as Europe's SAF powerhouse, stakeholders must collaborate to:
• Establish stronger demand-side incentives to match natural supply-side advantages
• Accelerate feedstock certification and collection infrastructure
• Create cross-border partnerships to share technological learning
• Develop innovative financing mechanisms to unlock broader capital markets
• Coordinate SAF infrastructure with hydrogen backbone and sustainable electricity expansion
Conclusion: A strategic opportunity for European energy security
According to McKinsey, Spain's SAF production capacity could reach up to 0.9 million tonnes per year by 2030, with a potential surplus of 0.3 to 0.5 million tonnes. This would make it one of the few countries in Europe with meaningful export capacity, providing a buffer for the rest of the continent as demand outpaces local supply.
Source: Project Cargo Journal
The economic upside extends beyond direct jobs and investment. By positioning itself as a SAF exporter, Spain gains energy security, technological leadership, and industrial revitalisation in regions facing demographic challenges.
For Europe as a whole, the Iberian peninsula's emergence as a SAF hub represents a critical opportunity to reduce dependence on non-EU suppliers at a time when aviation decarbonisation is becoming an economic and strategic imperative. The question is no longer whether Spain can become a SAF powerhouse, but whether Europe will fully leverage this strategic asset within its borders.
If Spain and Portugal can overcome regulatory fragmentation, accelerate technology development, and align industrial policy with climate goals, the Iberian peninsula could become Europe's sustainable fuels engine room—a critical piece in solving aviation's decarbonisation puzzle.
THE HYDROGEN BOTTLENECK:
UNLOCKING THE FUTURE OF E-FUELS
As Europe moves from first-generation SAF mandates to scaling up production, synthetic fuels (e-fuels or PtL SAF) are emerging as the critical long-term solution. Unlike biofuels, which face feedstock limitations, e-fuels rely on two abundant resources: CO2 and hydrogen.
This is why both the EU and UK have introduced specific sub-mandates for synthetic fuels within their broader SAF requirements—1.2% PtL in the EU and 0.5% in the UK by 2030, scaling up to 35% and 3.5% respectively by 2040–2050. These ambitious targets recognise that e-fuels can deliver 90% or more CO2 reductions compared to conventional jet fuel.
Source: PierNext
The hydrogen rainbow
But a critical bottleneck threatens this vision: the cost and availability of clean hydrogen.
"The cost of SAF is the cost of hydrogen," says Viacheslav Zgonnik, a pioneer of hydrogen exploration. "If we get the hydrogen right, everything else falls into place."
The hydrogen industry uses a colour-coding system to distinguish between different production methods:
• Grey hydrogen: Produced from natural gas via steam methane reforming, this is the cheapest but most carbon-intensive method, emitting 9-12kg of CO2 for each kilogram of hydrogen produced.
• Blue hydrogen: Uses the same process as grey hydrogen but incorporates carbon capture and storage to reduce emissions by 60-90%.
• Green hydrogen: Created by splitting water molecules using renewable electricity in a process called electrolysis. While carbon-free, it's currently 5-7 times more expensive than grey hydrogen.
• Pink hydrogen: Produced via electrolysis using nuclear power, offering carbon-free production with 24/7 reliability.
• White hydrogen: Naturally occurring hydrogen found in underground deposits, requiring extraction rather than production.
• Orange hydrogen: A newer concept using underground chemical reactions to generate hydrogen in situ.
The green hydrogen reality check
Green hydrogen has long been positioned as the ideal solution—offering carbon-free production using renewable electricity. But despite billions in investments and policy support, the economics remain challenging.
According to industry analyses, green hydrogen production costs remain stubbornly high at $4-12 per kilogram, compared to just $1-2 for fossil-based grey hydrogen. This price gap directly impacts e-fuel economics, with EASA's SAF 2025 briefing noting that synthetic aviation fuels can cost 8-10x times more than conventional Jet A.
The scale challenge is equally daunting. A recent IEA report revealed that only 25-30% of announced global hydrogen projects are expected to reach Final Investment Decision (FID) by 2030. Major electrolyser manufacturers like Nel have paused gigafactory plans and reduced workforces as market growth falls short of projections.
Meanwhile, Corre Energy, a Dutch/Irish clean-tech firm that aimed to pair renewable storage with green hydrogen, saw its market cap collapse from €240 million to just €7 million in two years due to capital constraints and lengthy project timelines.
And even if technical and cost challenges were solved, the energy requirements would still be enormous.
Lufthansa CEO Carsten Spohr noted that powering his airline with e-fuels made from green hydrogen would consume half of Germany's total current electricity production—an impossible ask as the country simultaneously works to decarbonise other sectors.
With hydrogen accounting for approximately 60% of PtL SAF production costs, this bottleneck isn't merely a technical hurdle—it's an existential challenge for the entire synthetic fuel mandate.
Source: F. Andrieu/Agencepeps
Source: Alamy Stock Photo
Expanding the hydrogen palette beyond green
Pink hydrogen
The most controversial—but potentially transformative—alternative may be pink hydrogen: hydrogen generated using nuclear power. Unlike green hydrogen, it is not weather-dependent and can provide 24/7 electricity to power high-capacity electrolysers.
Emirates President Sir Tim Clark has been one of the most prominent industry voices backing this route. He has argued that aviation's climate goals simply won't be met without large-scale nuclear investment.
According to Clark, "Modular nuclear reactors around the coastlines of Australia or the United Kingdom would give you the power to drive the processes that allow you to extract green hydrogen."
Across Europe, that vision is slowly becoming a reality. In 2024, the European Commission launched its Industrial Alliance on Small Modular Reactors (SMRs), selecting nine projects for accelerated development, including Newcleo in France, and lead-cooled reactors in Belgium and Romania. These compact, next-generation nuclear systems are designed to integrate with industrial use cases like hydrogen production and could help decouple PtL projects from grid constraints.
White hydrogen
Source: OERLive
Perhaps the most unexpected development is growing interest in naturally occurring or "white" hydrogen—geological hydrogen trapped underground that requires no electrolysis or fossil fuels to produce.
Early discoveries in Mali and France suggest the resource may be more abundant than previously thought. The U.S. Geological Survey estimates there could be enough naturally occurring hydrogen to power the world for centuries, and recent geological surveys have identified potentially vast deposits across multiple continents.
The village of Bourakebougou in Mali provides a practical proof of concept, having been powered by natural hydrogen since 2012 after accidental discovery during water well drilling. In France, geologists recently discovered what could be the largest known deposit to date—potentially 250 million tons of nearly pure hydrogen. "Natural means you don't need to manufacture it. If you don't need to manufacture it, you don't need to spend energy. The only expense of energy or money is to extract this hydrogen from the Earth's crust," explains Zgonnik, whose expertise builds on decades of research, including overlooked Soviet-era discoveries.
The most compelling aspect of white hydrogen is its cost potential. According to explorers like Zgonnik, white hydrogen could potentially be extracted for approximately $1 per kilogram—a game-changing price point that would make synthetic aviation fuels economically competitive with fossil jet fuel for the first time.
Major investors are taking notice. Bill Gates's Breakthrough Energy Ventures joined a $91 million investment in Koloma, a Colorado-based startup exploring for hydrogen along a 1,200-mile geological formation. Overall, Koloma has raised more than $350 million since 2021, with United Airlines Ventures among its strategic investors, highlighting aviation's interest in this potential breakthrough.
Orange hydrogen
Bridging the gap between exploration and production, a new approach called "orange hydrogen" is gaining traction. Unlike white hydrogen, which requires finding existing deposits, orange hydrogen creates hydrogen underground using a process called Stimulated Geologic Hydrogen.
Vema Hydrogen, which raised $13 million in 2025, is pioneering this method. Their technology accelerates the same natural reaction that produces white hydrogen—ironrich rock interacting with water to release hydrogen gas—but instead of waiting millennia, Vema uses targeted injections and inexpensive catalysts to produce hydrogen in real-time. "We're not looking for hydrogen—we're producing it," explains Vema's CSO and CoFounder, Florian Osselin. "The earth is doing all the work. We're just helping it along."
Source: Carbon Credits
The approach sidesteps many challenges that have held green hydrogen back:
• It doesn't need massive amounts of clean electricity
• It doesn't depend on government subsidies to be cost-competitive
• It doesn't rely on rare underground hydrogen deposits
• It doesn't need to transport hydrogen across continents
If successful, Vema's technology could produce hydrogen for under $1/kg without subsidies, potentially transforming the economics of e-fuels. The company plans to drill its first test wells in summer 2025, with commercial-scale production possible by 2027.
Why it all matters
Hydrogen accounts for 60% or more of PtL SAF production costs. Without a radical shift in how we source and scale hydrogen, synthetic fuels will remain scarce and prohibitively expensive. That threatens not just cost parity with fossil jet fuel, but the very credibility of long-term SAF targets under ReFuelEU and the UK's SAF mandate.
The challenge is no longer chemistry. It's infrastructure, scale, and political will.
Despite the promise of alternative hydrogen pathways, significant challenges remain. Sceptics like Stuart Haszeldine, a geologist at the University of Edinburgh, question whether large-scale natural hydrogen accumulation is even possible, arguing that "hydrogen is very leaky" and unlikely to form significant deposits over geological time.
Transportation and storage present another significant hurdle.
Hydrogen's low density and highly diffusive nature make it expensive to move over long distances. This has led companies like Koloma and Vema to propose co-locating hydrogen production with synthetic fuel manufacturing—bringing the carbon to the hydrogen rather than vice versa.
Regulatory frameworks are also playing catch-up. Only a handful of countries—such as France, Kosovo, and Poland—provide specific prospecting licenses for natural hydrogen. This regulatory uncertainty could slow investment and exploration efforts for both white and orange hydrogen.
The path forward
It's becoming increasingly clear that there won't be a single solution to clean hydrogen. Multiple pathways will need to coexist in the race to decarbonise aviation and other hardto-abate sectors.
To close the gap, Europe must:
• Support multiple hydrogen technologies (green, pink, white, orange)
• Accelerate infrastructure: hydrogen corridors, SMRs, export terminals
• De-risk PtL projects through policy guarantees and price support
• Create industrial clusters where clean power and SAF demand converge—like Iberia, the North Sea coast, or Eastern Europe
Europe's SAF future may depend less on what colour the hydrogen is—and more on whether we can get enough of it, fast.
Source: Natural Hydrogen Energy
FINANCING SAF: TOO BIG TO SCALE?
If mandates are the fuel for sustainable aviation policy, financing is the engine that will either propel or stall the entire transition.
According to the World Economic Forum and Kearney, the world will need to invest between $150 billion and $250 billion by 2030 to meet expected SAF demand. Global SAF demand is projected to reach 17 million tonnes per year by 2030, constituting approximately 4-5% of total jet fuel consumption.
Despite 43 airlines already committing to utilising approximately 16.25 billion liters of SAF by 2030, most SAF projects are striving to achieve the final investment decision (FID) stage—caught in a limbo of high capital costs, uncertain returns, and regulatory risk.
Source: Getty
At the heart of the problem is a vicious cycle: fuel producers can't scale without offtake certainty, but airlines won't commit to buying SAF unless it's affordable. Governments, for their part, are wary of subsidies without guaranteed delivery. This has left many SAF developers in a holding pattern—just as mandates begin to bite and when it is needed most.
As we’ve demonstrated, the cost of producing SAF—especially via synthetic pathways—can be up to ten times higher than fossil jet fuel. Even HEFA, the most mature SAF pathway, faces rising feedstock prices and tightening sustainability criteria. A combination of public support and longterm contracts is needed to raise capital at competitive rates.
The UK's revenue certainty mechanism leading by design
Amid these investment challenges, the UK is emerging as a first mover. In March 2025, the government finalised plans for a Revenue Certainty Mechanism (RCM) to support domestic SAF production—a long-awaited step that addresses one of the biggest obstacles to private sector investment: price volatility.
At its core is a Guaranteed Strike Price (GSP) mechanism. Structured as a private law contract between SAF producers and a government-backed counterparty, the system offers two-way price protection. If market SAF prices fall below the strike price, the counterparty pays the producer the difference. If prices rise above the strike price, the producer pays back the excess. It's a model already proven in the power sector—and now adapted for aviation fuel.
The RCM is particularly notable for targeting emerging technologies. Initial support will focus on non-HEFA pathways—such as Fischer-Tropsch, Alcohol-to-Jet, and PtL— diversifying the SAF supply chain beyond waste-based feedstocks, which are both constrained and increasingly costly.
Crucially, the mechanism will be industry-funded via a levy on jet fuel producers, following the "polluter pays" principle. This ensures that costs are not passed directly to passengers while preserving public fiscal prudence.
"This will power up SAF production in the UK, support thousands of green jobs, and bolster expansion plans," said Aviation Minister Mike Kane, highlighting the RCM's potential to stimulate a domestic clean fuel ecosystem
Industry stakeholders have broadly welcomed the move. Airlines UK, AirportsUK, and the Renewable Transport Fuel Association have all backed the mechanism, calling it essential to turning mandate compliance into market reality. The UK government estimates that SAF investment could contribute £5 billion to the economy and create up to 15,000 jobs by 2050.
The RCM is currently being finalised in legal form, with the Sustainable Aviation Fuel (Revenue Support Mechanism) Bill expected to be introduced to Parliament by late 2026. Implementation is anticipated shortly thereafter, making the UK the first country in the world to offer a dedicated price guarantee for SAF production.
European approaches: progress, but no uniform playbook
On the continent, momentum is growing— but no equivalent mechanism is yet in place across the EU. Discussions are ongoing at both EU and national levels around leveraging the Innovation Fund, EIB green bonds, and blended finance structures to catalyse SAF projects. Germany and the Netherlands are exploring price floors and long-term contracts for e-fuel producers, while Spain is focusing on concessional financing and permitting streamlining. This fragmented approach creates both challenges and opportunities. Unlike the UK's uniform national mechanism, European producers face varying levels of support depending on their location, potentially leading to market distortions and capital flight to regions with stronger incentives.
Source: Pace
However, the European Commission's RePowerEU plan has identified SAF as a strategic priority, allocating dedicated funding through the Innovation Fund and European Investment Bank. These instruments could be leveraged to create pan-European financing solutions, potentially with greater scale than national approaches.
For European SAF stakeholders, several key lessons can be derived from the UK's approach:
• Design matters: The two-way price guarantee model provides downside protection while limiting taxpayer exposure to windfall profits, making it politically sustainable across electoral cycles.
• Industry funding reduces fiscal constraints: By using a levy on conventional jet fuel suppliers rather than general taxation, the UK has created a dedicated funding stream that aligns with the "polluter pays" principle while avoiding competition with other budget priorities.
• Technology-specific support is crucial: The UK's focus on non-HEFA pathways acknowledges that different SAF technologies have distinct risk profiles and cost structures, requiring tailored support rather than a one-size-fits-all approach.
• Timing coordination with mandates: The RCM's deployment alongside the UK mandate creates a balanced regulatory ecosystem where supply-side support meets demand-side requirements.
Source: Green Air News
Source: Vinge
Key barriers to SAF investment scale-up
There is a huge amount of opportunity, willingness, and necessity, to scale SAF, but challenges need to be addressed and overcome to achieve this. The WEF-Kearney report "Financing Sustainable Aviation Fuels" identifies ten critical barriers to scaling SAF investment and proposes specific enablers to address each:
• High production costs and uncertain revenues: SAF currently costs two to five times more than conventional jet fuel, with prices fluctuating based on feedstock costs, energy prices, and policy changes.
• Technological risks: Many SAF production technologies are still in development or early stages of commercialisation, creating uncertainty around performance and reliability.
• Feedstock availability and cost volatility: Securing sustainable feedstocks in sufficient quantities remains a challenge, with increasing competition from other sectors.
• Policy inconsistency: The lack of longterm policy certainty makes investors hesitant to commit capital to projects with 20+ year lifespans.
• Offtake uncertainty: Airlines face their own financial constraints, limiting their ability to commit to long-term, premiumpriced offtake agreements.
• Infrastructure challenges: SAF production requires substantial infrastructure investment, from feedstock collection to specialised refining equipment.
• Supply chain complexity: Coordinating across multiple stakeholders from feedstock providers to airlines creates transaction costs and integration risks.
• Market fragmentation: Regional differences in policies and incentives create an uneven playing field for producers.
• Capital intensity: First-of-a-kind plants require significant upfront investment, often exceeding €500 million for commercial-scale facilities.
• High cost of capital: Lenders demand significant risk premiums for SAF projects due to the factors above, further eroding economic viability.
Financial enablers for SAF investment
To overcome these barriers, the WEF-Kearney report identifies different enablers that policymakers and industry stakeholders should consider. These include:
• Research and innovation grants for early-stage, high-risk SAF technologies to reduce upfront costs.
• Guarantees and insurance, such as loan guarantees, first-loss capital, and insurance solutions to reduce lender risk.
• Strategic investments and partnerships between airlines, airports, OEMs, and energy players to provide demand assurance and foster a supportive ecosystem.
• Green bonds tied to SAF production offer a powerful tool for raising impact-driven capital.
• Private equity capital and operational expertise to accelerate commercialisation and scale SAF projects.
• Tolling models that can mitigate market risks by charging a fixed fee for refinery capacity while customers supply feedstock and retain ownership.
As a result, for the EU to match and potentially exceed the UK's approach, stakeholders should consider:
• Developing a dedicated EU-level SAF financing facility that complements national programmes while ensuring a level playing field.
• Standardising contract structures and risk allocation frameworks to reduce transaction costs and enable portfolio approaches.
• Creating dedicated SAF "investment zones" where multiple incentives converge (regulatory, fiscal, permitting) to create investment hotspots.
• Leveraging existing programmes like the EU Innovation Fund with dedicated SAF windows and tailored criteria.
• Establishing state-backed guarantees for first-of-a-kind projects to reduce the cost of capital without violating state aid rules.
Conclusion
As one investor, quoted in the WEF-Kearney report, told the World Economic Forum: "There's a wall of capital ready to move—but the risk-return profile doesn't work. We need certainty before money moves."
That certainty can take many forms—guaranteed prices, credit generation systems, or airline-backed offtake agreements—but in all cases, someone has to absorb the risk. Without that early backing, mandates risk becoming a regulatory cliff rather than a runway.
The UK's model offers a blueprint for Europe. But for SAF to meet its 2030 and 2050 goals across the continent, the focus must shift from political ambition to financial de-risking at scale. The European Commission's proposals for a SAF "alliance" combining public and private capital could be a start, but implementation speed is now critical.
As a result, the next phase of aviation decarbonisation is no longer about feasibility. It's about financeability.
Source: Neste
However, while unlocking billions in investment is critical to scaling supply, it's only one side of the equation.
For the SAF ecosystem to thrive, demand must also be nurtured—not just through mandates and corporate offtake, but by engaging the very people who board planes every day.
Increasingly, airlines are turning to their passengers as partners in climate action, designing loyalty programmes and incentives that make sustainability personal. The era of the passive flyer may be coming to an end.
ENGAGING PASSENGERS IN THE SAF JOURNEY TO MAKE SUSTAINABILITY
PERSONAL
As the aviation sector scrambles to decarbonise through regulation, innovation, and investment, one often overlooked piece of the puzzle is beginning to gain traction: the passenger. A growing number of airlines are finding that when given the right tools and incentives, travellers are not only willing to engage—but eager to participate in aviation’s sustainable transition.
Across Europe, programmes by airlines including Lufthansa Group, SAS, and British Airways are reimagining the customer experience by embedding SAF contributions and sustainability actions directly into loyalty programmes, fare structures, and brand engagement.
Lufthansa Group’s Green Fares, launched in February 2023, have quickly become an industry benchmark. These fares include CO2 offsetting through a combination of 20% SAF and 80% certified climate protection projects. Added perks—such as status miles and free rebooking—make the proposition more than just a feel-good gesture.
The results speak for themselves: more than one million passengers opted in within the first year, with 11% of business class bookings on Lufthansa’s direct channels now coming via Green Fares. Corporate travellers in particular have embraced the programme, signalling a shift in procurement behaviour.
Meanwhile, SAS has gone deeper with behavioural design. Its EuroBonus Conscious Traveler programme, launched in early 2024, rewards members who complete at least ten sustainability actions per year.
These actions span education, SAF purchases, waste reduction, and charitable giving. Rather than simply purchasing offsets after the fact, SAS’s approach builds long-term engagement, reframing sustainability as an identity and lifestyle rather than a transaction.
Source: Lufthansa
Source: Scandinavian Airlines
British Airways is turning SAF contributions into a direct pathway to elite status.
Launching in April 2025, the new British Airways Club programme will award Tier Points for every pound spent on SAF— allowing passengers to progress toward Silver or Gold status even outside of flight activity. Avios points can also be redeemed for SAF purchases, creating a self-reinforcing loop where loyalty rewards fuel environmental action.
What unites these initiatives is their ability to translate sustainability into value. Rather than guilt-based messaging or abstract carbon metrics, passengers are offered status miles, recognition, flexibility, and a sense of co-ownership in the climate journey. This creates a powerful psychological shift—from being part of the problem to being part of the solution.
As these programmes scale, they offer proof that passenger engagement isn’t just possible—it’s essential. Building a sustainable aviation industry will require not only mandates and megatonnes of SAF, but also millions of travellers who feel empowered to take part in the transition. Done well, these initiatives can transform sustainability from a corporate responsibility exercise into a shared journey between airline and passenger—one flight at a time.
CONCLUSION: THE “MANDATE DECADE” HAS BEGUN
The aviation industry has long relied on aspiration—net-zero targets, innovation pipelines, and the promise of future fuels. But the era of good intentions is ending. With the arrival of legally binding SAF mandates in both the UK and EU, the 2020s are no longer a runway—they’re the main event.
This is the “mandate decade”. And its success or failure will define the future of aviation.
Across Europe, the scaffolding for transformation is being assembled: clear targets, revenue mechanisms, hydrogen infrastructure, and early signs of demand. Spain is stepping forward as a production hub. The UK is leading on policy innovation. Airlines are activating passengers through loyalty programmes and SAF contributions.
Source: EuroNews
Hydrogen remains the key bottleneck for synthetic fuels. Financing, while accelerating, needs more stakeholders to come forward to support the level of build-out required. Permitting delays, feedstock competition, and investor hesitancy challenges to be reviewed and overcome.
In this landscape, what’s needed now is execution, coordination, and staying power from all sectors of the aviation and energy industries
To succeed, the aviation sector must stop treating SAF as a parallel project—and start treating it as a central pillar of operations and business planning. Governments must deliver not only mandates, but mechanisms. Investors must stop waiting for perfect clarity and begin backing first movers. And fuel producers must rise to the challenge with both scale and speed.
Done right, SAF can become more than a compliance strategy, it can be the foundation of a cleaner, more competitive, and more connected European aviation system.
The next five years will determine whether SAF remains a niche solution or becomes the backbone of a sustainable flight future. The building blocks are in place. What’s needed now is boldness, urgency, and the courage to scale.
The mandate decade has begun. There’s no turning back—only moving faster.
FROM WORDS TO ACTION: THE ROLE OF SAF CONGRESS AMSTERDAM
The challenges outlined in this report—from mandates and financing to hydrogen bottlenecks and the risk of failure—are not theoretical. They are immediate, pressing, and demand urgent collaboration across the aviation and energy value chains.
That’s why the SAF Congress Amsterdam, held from 6–8 May 2025 at the Beurs van Berlage, couldn’t come at a more critical time.
Now in its largest and most ambitious edition yet, SAF Congress will bring together over 1,000 senior stakeholders, including 200+ expert speakers across four dedicated content streams focused on:
• Scaling SAF production and technology pathways
• Building investable SAF projects and financing mechanisms
• Unlocking hydrogen and e-fuel supply chains
• Delivering robust sustainability certification, book-and-claim systems, and ESG alignment
Delegates will hear directly from the European Commission, leading SAF developers, airlines like KLM, IAG, and WizzAir, energy majors, OEMs, financiers, and sustainability strategists. The goal: to move projects from FEED to FID, to build confidence in the mandate landscape, and to align around credible roadmaps to 2030 and beyond.
Workshops on revenue certainty, SAF certification, and contrail mitigation will dig into the technical and policy nuances, while networking sessions—including 1-2-1 meetings, roundtables, and the signature Premium Dinner—will help participants forge partnerships critical to scaling production.
Whether you’re shaping SAF policy, building refineries, buying fuel, or flying planes, SAF Congress is the place to align strategies, pressure-test assumptions, and co-create the future of flight.
The decade of ambition is over. The decade of action is here—and Amsterdam is where it begins.
Listen to more insights on our podcast
Hosted by SimpliFlying CEO and Founder Shashank Nigam, Sustainability in the Air is the world’s leading sustainable aviation podcast.
Over the past year, aviation guests have included Scott Kirby (United Airlines), Marie Owens Thomsen (IATA), Tim Clark (Emirates), Amelia DeLuca (Delta Air Lines), Amy Burr (JetBlue Ventures), Adam Goldstein (Archer), Bonny Simi (Joby) and Nathan Millecam (Electric Power Systems).
Listen and subscribe to the podcast here:
green.simpliflying.com/podcast
Meanwhile, our Sustainability in the Air website includes weekly articles on sustainable aviation tech startups; reports on subjects as diverse as SAF and eVTOLs; and regular newsletters read by thousands of industry professionals to understand the ever-evolving space of sustainable aviation and the industry’s potential pathways to net zero by 2050.
Climate change concerns are making the aviation industry turn to sustainable aviation fuel (SAF), electric, and hydrogen-powered aircraft to cut emissions. However, scaling these technologies requires significant innovation.
Sustainability in the Air highlights the journeys of entrepreneurs, executives, and investors who are navigating these challenges and paving the way for the future of aviation. Learn more at sustainabilityintheair.com
Access to Main Conference Days (07 - 08 May)
Access to SAF Intelligence Day (06 May)
Access to premium networking dinner experience (06 May)
Access to expertise and insights from over 200 speakers
Access to 40+ hours of expert-led panel discussions featuring the entire aviation value chain
Opportunity to network and do business with over 1,000 aviation industry professionals, including airlines, fuel producers, policymakers and corporates
Access to the exclusive SAF networking app and meeting planner
Access to all networking lunches and coffee breaks
Access to Main Conference Days (07 - 08 May)
Access to SAF Intelligence Day (06 May)
Access to expertise and insights from over 200 speakers
Access to 40+ hours of expert-led panel discussions featuring the entire aviation value chain
Opportunity to network and do business with over 1,000 aviation industry professionals, including airlines, fuel producers, policymakers and corporates
Access to the exclusive SAF networking app and meeting planner
Access to all networking lunches and coffee breaks
Access to Main Conference Days (07 - 08 May)
Access to expertise and insights from over 200 speakers
Access to 40+ hours of expert-led panel discussions featuring the entire aviation value chain
Opportunity to network and do business with over 1,000 aviation industry professionals, including airlines, fuel producers, policymakers and corporates
Access to the exclusive SAF networking app and meeting planner
Access to all networking lunches and coffee breaks
