As the aviation industry faces intensifying pressure to decarbonise, sustainable aviation fuel remains both the most immediate lever for emissions reduction and one of the sector’s most complex challenges. While mandates, incentives and public commitments continue to multiply, there is caution that expectations around cost reductions, technology maturity and supply growth need to remain grounded in operational reality.
The cost profile of SAF is expected to remain elevated, reflecting a combination of limited production capacity, feedstock constraints, and policy-driven factors. Airlines and cargo operators should anticipate persistent premiums relative to conventional jet fuel. “We expect SAF to retain a significant premium over conventional jet fuel into 2026, often two to five times fossil, depending on region of supply and incentives,” Travis Cobb, EVP Global Network Operations and Aviation at DHL Express, said. “Limited capacity, feedstock constraints, and policy design drive this, with scale-up offering only modest relief.”
Even as industry players recognise the high cost barrier, there is growing pressure for greater transparency on pricing structures. Investors and the public increasingly demand realistic disclosure before backing projects. “Cost is one of the biggest challenges for SAF adoption, and that won’t magically disappear in 2026,” Alexei Beltyukov, CEO and co-founder of Universal Fuel Technologies, explained. “We expect increasing public and investor pressure on SAF projects to disclose realistic production costs before they receive support.”
Mature production pathways like HEFA are widely relied upon, yet they carry their own structural limitations that hinder rapid expansion. Feedstock availability, certification timelines, and blend restrictions all influence how these fuels can be deployed at scale. “HEFA will remain dominant, supported by waste oils and fats availability and ASTM certification maturity,” Cobb outlined. “Alcohol-to-jet and Fischer-Tropsch pathways will grow slowly due to technology and financing risk, and co-processing is limited by approved maximum blend limits.”
However, dependence on HEFA also introduces risks linked to feedstock scarcity and slow qualification of emerging alternatives. Even when new technologies reach qualificationcertification milestones, commercial readiness may lag. “In 2026, HEFA will definitely continue dominating,” Beltyukov said. “The feedstock deficit will keep SAF prices high, and even if new technologies receive ASTM qualification, they will not be ready for commercial deployment so soon.”
Electricity-intensive synthetic fuels highlight a critical bottleneck, particularly where renewable power is limited or grids are inflexible. Operators and developers alike face regional disparities in project feasibility. “Power-to-liquid SAF is highly electricity-intensive, making access to low-cost renewable power the gating factor,” Cobb says. “Regions without abundant renewables or grid flexibility face delays and underperformance risk.”
The economics of e-fuels are further complicated by rising electricity demand, making large-scale deployment challenging. Few projects are expected to meet cost targets without significant technological or policy support. “Spiking power demand and the expectation of further growth will make most e-fuel projects uneconomical,” Beltyukov added. “There will be very few, if any, exceptions where the numbers work in the foreseeable future.”
Government mandates and incentives continue to be decisive levers for sustaining SAF investment. Airlines and developers alike rely on these policies to make projects viable in the near term.
“Mandates and incentives are decisive,” Cobb says. “EU blending rules raise compliance costs, while US tax credits, RVOs and LCFS credits drive investment, but revenue certainty remains critical for advanced projects.”
At the technology level, policy frameworks remain indispensable for even promising innovations. While structural improvements will gradually emerge, they cannot yet replace the certainty provided by incentives. “For the foreseeable future, any SAF production will rely on government incentives and mandates,” Beltyukov echoed. “New cost-reducing technologies will come, but they will not be commercialised fast enough to stand on their own in the near term.”
Pathways, ambitions and implications
Beyond cost, the industry’s longer-term ambition is fully drop-in SAF that can replace fossil jet fuel without blend limits or operational compromises. However, technical and regulatory hurdles will slow progress. “100 percent drop-in SAF remains unlikely for broad use by 2026,” Cobb says. “All pathways are capped at 50 percent blends pending ASTM approvals, and aromatic content and material compatibility remain unresolved hurdles.”
The path to fully synthetic fuels is multi-stage and complex, reflecting both compositional challenges and standardisation processes. Certification bodies must first establish general standards before addressing more nuanced chemical requirements. Beltyukov offers a detailed explanation: “ASTM issuing a standard for 100 percent drop-in fully synthetic fuels is only the first stage. Grappling with fully formulated aromatic-containing products blending several synthetic components will take timedelay the second part of the standard, making this a multi-stepyear process rather than something that flips overnight.”
These limitations directly shape airline operational strategies, including decisions on route planning, fleet utilisation, and emissions accounting. Operators must balance physical supply constraints with regulatory compliance requirements. “SAF cost and availability will influence how airlines optimise uplift locations based on mandates and incentives,” Cobb explains. “Given physical supply constraints, book-and-claim systems will remain essential for emissions accounting.”
Recent SAF qualification trends also emphasise the importance of fuel compatibility with existing fleets. Achieving molecular similarity to fossil jet fuel reduces qualificationcertification friction and eases adoption. “An important trend is the convergence of SAF candidate fuels towards the chemical composition of fossil jet fuel,” Beltyukov says. “When developers replicate the molecular makeup of fossil jet, obtaining OEM approval becomes significantly easier.”
Transparency in feedstock pricing is another critical factor affecting buyer confidence and procurement strategies. Industry standards aim to provide clarity and comparability across different SAF supply chains. “Opaque feedstock pricing can erode buyer confidence,” Cobb warned. “Industry efforts under frameworks like CORSIA and the Science Based Target Initiative aim to improve trust and comparability, particularly for book-and-claim mechanisms.”
Financial scrutiny is rising, and capital allocation is increasingly tied to clear cost structures. Projects lacking transparent economics risk underinvestment, even with policy support. “There is growing pressure on projects to demonstrate credible, disclosed cost structures,” Beltyukov says. “Without that, even policy-backed projects will struggle to secure long-term support.”
Regional acceleration of SAF production varies according to policy strength, infrastructure, and feedstock access. While some hubs lead, uncertainty elsewhere constrains growth. “The US, EU and Singapore are leading acceleration due to strong policy frameworks, feedstock access and infrastructure hubs,” Cobb says. “China has facilities under construction, but production remains limited by policy uncertainty, which could change rapidly.”
Yet ultimately, policy remains more decisive than geography alone. “Most advances in SAF are policy-driven, and we do not expect a significant change in this in 2026,” Beltyukov says. “What will change is the level of scrutiny around costs, which will eventually favour more efficient technologies.”
From an investment perspective, financiers continue to favour established and predictable SAF pathways, with risk assessments often underestimating volatility. “They favour HEFA and alcohol-to-jet projects with strong offtakes and policy support,” Cobb says. “Feedstock volatility and policy uncertainty are often underestimated, while long-term demand risk is overstated.”
Similar investor behaviour from the technology side, noting the limited near-term prospects for e-fuels. “E-fuels will not be competitive with bio-based SAF or SAF made from gasified waste for a long time,” he says. “Capital will flow to pathways that can demonstrate both compatibility with existing fleets and a credible path to lower costs.”
Taken together, the two perspectives present a consistent picture: SAF growth will continue through 2026, but premiums will persist, technical progress will be incremental, and policy frameworks will remain decisive. For airlines, cargo operators, and investors, the path to decarbonisation is clear, but it requires patience, transparency, and realistic expectations rather than optimism alone.
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Author: Edward Hardy
