The sustainable aviation fuel (SAF) market is entering a defining phase. Valued at approximately US$3.30 billion in 2026, the sector is forecast to grow at a compound annual rate of 28.8% through 2036. This expansion is driven by regulatory mandates, airline decarbonisation targets, and accelerating investment in production technologies that promise to slash costs and scale supply.
For freight forwarders and cargo operators, the implications are clear. SAF adoption is reshaping airline cost structures, route economics, and compliance risk. Understanding these shifts is essential to quoting competitive rates and managing client expectations on increasingly carbon-conscious trade lanes.
Market Foundations: Mandates, Pledges and Pricing Reality
SAF demand is now irreversible. Once airlines commit publicly to net-zero targets, backtracking damages reputation. Major carriers are signing multi-year offtake agreements to secure supply, treating SAF as a compliance and risk-management cost rather than a discretionary fuel expense.
Regulatory frameworks are tightening. ICAO’s CORSIA scheme generated demand for 58 million tonnes of eligible units to cover 2024 emissions, with an estimated 78 million tonnes needed for 2025. Aviation emissions grew 15% from CORSIA’s 2019 baseline to 2024, underscoring the urgency of decarbonisation.
Penalties for non-compliance are real. Air France-KLM incurred a €7.5 million bond penalty for missing its 2025 GHG emission intensity reduction target. Norwegian faced a NOK 400 million (US$40 million) penalty for EU Emissions Trading System non-compliance. These costs flow through to cargo pricing and route viability.
“Demand growth is increasingly voluntary, but it’s irreversible. Once airlines commit publicly, backtracking becomes a risk for damaging their reputation.”
Pricing and Infrastructure
SAF pricing will remain well above conventional jet fuel through 2026. Economics depend heavily on incentives and corporate willingness to pay. Heathrow increased its SAF incentive target to 5.6% for 2026, equating to around 350,000 tonnes of SAF, with £80 million (US$110 million) available to help airlines bridge the cost gap.
Infrastructure expansion is following demand rather than leading it. Airports, fuel suppliers, and logistics providers are scaling blending and storage capacity incrementally. Distribution to key hubs is improving, but bottlenecks persist on secondary trade lanes.
Technology Race: Cost Breakthroughs on the Horizon
Multiple companies are working to eliminate the green premium currently associated with low-carbon aviation fuels. The technology race focuses on two fronts: bio-based pathways and synthetic e-fuels.
Prometheus Fuels, a Californian start-up, claims its e-kerosene technology will drive SAF production costs below US$2.50 per gallon (US$827.40 per metric ton). The company says its approach will make Fischer-Tropsch (FT) SAF technology obsolete, a bold assertion that could reshape investment priorities if validated at scale.
Gevo, a US alcohol-to-jet (ATJ) producer, is developing ethanol-to-olefins (ETO) technology targeting up to 35% lower capital and operating costs for SAF and other renewable fuels compared to current technologies. Cost reduction at this magnitude would accelerate deployment and narrow the price gap with conventional jet fuel.
Production Pathways and Feedstock Constraints
The supply chain spans feedstock sourcing, fuel production, distribution to airports, storage, and blending infrastructure. Multiple fuel pathways are being examined, including:
- Bio-based fuels from waste oils, agricultural residues, and dedicated energy crops
- Synthetic e-fuels produced via power-to-liquid processes using renewable electricity
- Alcohol-to-Jet (ATJ) technologies converting ethanol and other alcohols
- Biogas-to-SAF projects leveraging methane from agricultural and municipal waste
Feedstock availability remains the most significant limiting factor for SAF scale-up. Competition is intense between SAF, renewable diesel, and other biofuels for low-carbon feedstocks. Policy uncertainty is influencing project timing, with developers delaying final investment decisions until incentive frameworks stabilise.
Market Activity: Partnerships, Projects and Penalties
Commercial momentum is building across multiple geographies and production pathways. Recent developments highlight the sector’s growing maturity.
European Leadership
Norwegian launched Europe’s first domestic route using a permanent 40% SAF blend between Aalborg and Copenhagen, supported by Denmark’s Green Aviation agreement. The route is expected to reduce emissions by more than 3,000 tonnes of CO2 on a lifecycle basis.
LanzaTech’s UK SAF project, valued at £600 million (US$800 million), targets 80,000-tonne capacity. The facility will convert carbon-rich industrial gases into sustainable fuel.
The Patagonia eSAF project is expected to cost US$2.5 billion at full build-out with capacity of 500,000 tonnes annually, one of the largest synthetic fuel projects announced to date.
Americas Expansion
LanzaJet secured US$47 million in new capital with a pre-money enterprise valuation of US$650 million. The equity investment round is targeting US$135 million total, signalling strong investor confidence in ATJ pathways.
Syzygy’s Brazil biogas-to-SAF projects target initial capacity of 100,000 tonnes per year, scalable to over 525,000 tonnes annually. The projects abundant agricultural waste feedstocks in Brazil’s agribusiness regions.
Montana Renewables and World Energy signed an agreement expected to deliver over 70 million gallons of SAF over three years, one of the largest offtake commitments in the US market.
Carbon Markets and Offsetting
Boeing signed a multi-year agreement for at least 40,000 tonnes of carbon dioxide removal credits with Carbonfuture, integrating direct carbon removal into its sustainability strategy.
The SAFc Registry surpassed 500,000 tonnes of CO2e abated through SAF certificates issued on the platform, representing over 164,000 tonnes of neat SAF. Demand for book-and-claim mechanisms is growing as airlines seek flexibility in meeting sustainability commitments.
“Our partnership with Future Energy Global strengthens the solutions available to our clients and we’re already seeing strong interest in integrating SAFc into net zero strategies.”
– Sheri Hickok, CEO, Climate Impact Partners
DelAgua’s African cookstove projects received eligibility for over 4.7 million CORSIA credits, expanding the pool of eligible offsets for aviation emissions.
What This Means for Freight Forwarders
SAF adoption is no longer a future scenario. It is reshaping airline economics, route profitability, and compliance risk today. Freight forwarders must factor these dynamics into quoting, routing, and client advisory.
Key considerations include:
- Route economics are shifting. Airlines operating on high-SAF-mandate lanes face higher fuel costs, which flow through to cargo rates.
- Compliance costs are real. Penalties for missing targets run into tens of millions. Airlines will pass these costs to shippers and forwarders.
- Infrastructure availability varies. SAF blending and storage capacity is stronger at major hubs. Secondary airports lag, affecting routing flexibility.
- Client expectations are rising. Shippers increasingly demand carbon footprint reporting and low-emission routing options.
“Incentives matter more than mandates in the short term. Where credits, tax incentives, or contract-for-difference mechanisms exist, projects move faster.”
2026 and Beyond: A Proving Ground
The comprehensive market study Sustainable Aviation Fuels (SAF) – Market and Technology Forecast to 2033, published in December 2024 across 173 pages, provides detailed segmentation by fuel type, feedstock, technology, and regional markets. The analysis helps stakeholders identify growth opportunities and investment priorities across the evolving supply chain.
Industry observers note that 2026 may not necessarily be the breakthrough year. But it will be the year the SAF market shows whether its foundations are strong enough to support scale. Policy credibility, feedstock strategy discipline, and airline procurement sophistication will all be tested.
For cargo professionals, the message is straightforward. SAF is not a distant transition. It is live, growing, and affecting your business today. Quote with this reality in mind. Build relationships with carriers investing in low-emission capacity. Track regulatory changes across key trade lanes. And keep clients informed about carbon cost pass-through and routing options.
The SAF market is entering high-growth mode. Freight forwarders who understand the cost drivers, infrastructure constraints, and policy landscape will quote faster, price smarter, and win more business.
