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SAF Mandates Loom in the EU as Policies Remain Unclear

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SAF Europe

SAF Mandates Loom in the EU as Policies Remain Unclear

Sustainable aviation fuel (SAF) mandates will take effect across the EU in less than two months. This marks the first time anywhere in the world that a region or country will require fuel suppliers and airlines to use SAF.

Until now, SAF use has been voluntary. They are adopted through a variety of credits and certificates, including:

Renewable Identification Numbers (RINs) – US
Blender's Tax Credit (BTC) – US
Renewable Transport Fuel Certificates (RTFCs) – Europe
Hernieuwbare Brandstofeenheden (HBEs) – Europe

While these programs helped offset SAF’s green premiums, they were tied into broader road fuel blending initiatives. The upcoming SAF mandates will now need to stand alone.

How Impending Mandates Will Work

What we do know so far about these mandates includes the qualifying feedstocks allowed. Crop-based feedstocks and energy or cover crops are excluded. Instead, eligible feedstocks include the following:

Biofuels from oils and fats, as listed in Annex IX Part B
Advanced biofuels sourced from wastes and residues, as noted in Annex IX Part A
Recycled carbon aviation fuels, as defined in RED
Synthetic aviation fuels made with renewable hydrogen and captured CO₂
Fuels achieving at least a 70% greenhouse gas (GHG) savings

The International Civil Aviation Organization (ICAO) has approved some production pathways. These pathways describe both acceptable processes and blend limits.

The mandates also specify the required percentage of jet fuel supply that must come from renewables. This framework defines the blend percentage and associated demand for standard SAF.

Furthermore, a sub-mandate for synthetic aviation fuels (often called eSAF) will begin in 2030. It will require a blend of 1.2% which translates to a demand of over 600,000 tons of eSAF.

Many Points of Policy Still Unclear

Based on current guidelines, the groundwork of feedstock qualifications and demand projections is clear. However, several other aspects of the policy remain uncertain—particularly in determining approved pathways and how to forecast demand.

Case-in-point: the differing rates of adoption among EU member states have created trading ambiguities. They include GHG savings targets of 2.5% by 2026 rising to 5.3% by 2030.

Although similar to the EU mandate, these figures are not quite the same. To align fully, the Netherlands assumes SAF development will achieve average GHG savings of 80% by 2026 and reach 88% by 2030.

Policy differences also raise questions about cross-border trading of credits or "tickets." These systems may be necessary to facilitate mandates in the most cost-effective way. However, exactly what these tickets will represent is an open question.

The EU mandate suggests tickets will be governed by their energy content. Specific countries follow differing standards, however. For example, in the road markets:

The UK uses a volumetric system
The Dutch use total energy content
Germans use GHG saved

In short, these disparities need to be clarified to successfully move forward on a cross-border scale.

Penalty Enforcement Also Unclear

Another unresolved issue pertains to how penalties will be enforced. Specific to fuel suppliers, the penalty mechanism ties its size to the cost of SAF.

Several factors could directly impact this price. For instance, if SAF supply falls short, prices could rise uncontrollably. Penalties would follow suit and could become unsustainable if these shortages persist.

Unlike the UK’s buyout system, suppliers failing to meet obligations must pay the penalty and make up the difference by the following year. This would add delays to any unmet demand and create even more pressure. Over time, this greatly reduces the likelihood of prices jumping even higher.

The consequences could spiral out of control as no price cap exists for SAF. High SAF prices would impact ticket costs, discouraging air travel and risking public backlash. If governments intervene at this point, the market could lose credibility.

Investors and producers might perceive such regulatory changes as jeopardizing profits while offering no protection against losses. To mitigate the risks, this imbalance needs immediate attention.

Market Stability at Stake Until Ambiguities Are Resolved

As a whole, the SAF market will need clarity across all these points of confusion to continue to grow and strengthen. Otherwise, its overall stability could suffer.

With the SAF mandate’s launch rapidly approaching, failing to address such glaring issues as penalty enforcement risks destabilizing the market. And this could erode confidence in policy before it even takes effect.

2025 SAF Market Insights Now Available in On-Demand Webinar

While several elements of the EU’s SAF mandates will need clarification, the changes are nevertheless taking effect at the start of 2025. Accordingly, understanding the SAF market’s current state is absolutely crucial to all stakeholders.

To guide you through the uncertainty, ResourceWise has an on-demand webinar available to help.