Like it or not, flying is going to become more expensive as the global aviation industry steps up efforts to cut greenhouse gas emissions. And that means greater use of more expensive sustainable aviation fuel (SAF). The International Air Transport Association (Iata) says SAF will be aviation’s main tool to reach net-zero emissions by 2050. And here lies a major problem. SAF production, though set to increase quickly, is still tiny compared with the aviation industry’s needs. In 2023, global SAF production was just over 600 million litres. This is set to triple in 2024, Iata says, yet this will represent only 0.53 per cent of global aviation’s fuel needs. So there is demand but not enough supply. And the fuel is about three times as costly, meaning SAF will be a sizeable and growing cost to be passed on to customers until prices for the fuel come down.

Singapore has adopted a prudent effort to stimulate demand and accelerate emissions reductions while being careful on the additional costs. The decision to apply a passenger surcharge from 2026 gives it a bit more time to lock in stable sources of supply. And the 2026 target of using 1 per cent SAF in all jet fuel used at Changi and Seletar airports is also a prudent starting point. The exact levy, depending on the passenger’s destination, will be finalised closer to the time, and it will depend on the price of SAF and availability of supplies. Crucially, the money collected from the levy will go towards buying SAF, incentivising its adoption and providing certainty to suppliers. The government’s goal is to reach between 3 per cent and 5 per cent sustainable fuel use by 2030.