Britain’s airlines could face an annual bill of more than £400 million by the end of the decade as they seek to comply with government rules requiring the use of a sustainable aviation fuel that is currently produced in very limited quantities worldwide.
According to analysis highlighted by The Telegraph, the International Air Transport Association (IATA) estimates that meeting the UK’s electro-sustainable aviation fuel (e-SAF) mandate could cost airlines around £434 million a year by 2030.
The fuel, which is viewed as a key component of efforts to reduce aviation emissions, remains scarce. Industry figures say there is currently only one commercial-scale facility producing e-SAF globally.
Under UK regulations, airlines will be required to begin incorporating e-SAF into their fuel mix from 2028. By 2030, at least 0.5 per cent of aviation fuel used by carriers must consist of the synthetic alternative.
The requirement forms part of a wider sustainable aviation fuel (SAF) mandate that will require airlines to source at least 10 per cent of their fuel from sustainable alternatives by 2030. Industry representatives have described the target as one of the most demanding in the world.
IATA has warned that the costs associated with the policy could ultimately fall on airlines through fuel purchases or penalties for failing to meet the required thresholds.
Preeti Jain, IATA’s Head of Net Zero Research, criticised the approach, arguing that governments had introduced mandates before the necessary production capacity and infrastructure were in place.
She said: “This is a classic example of what happens when you impose policies through a mandate without establishing the technology and the supply chain.”
Marie Owens Thomsen, IATA’s chief economist, was similarly critical of the targets.
She said Britain’s 2030 requirements were “beyond unrealistic – they are utterly detached from reality”.
Industry estimates suggest that meeting both UK and European e-SAF targets would require annual production to increase to around 600,000 tonnes, supported by roughly 20 dedicated production facilities.
At present, production remains far below that level. IATA estimates that only around 20,000 tonnes of e-SAF are produced globally each year, with the Era One facility in Frankfurt currently the only commercial-scale site in operation.
Ms Jain described the challenge of increasing output as “a huge task” and suggested there was little time left to build sufficient capacity before the mandates take effect.
The UK’s sustainable aviation fuel policy was originally proposed under the previous Conservative government before being implemented by Labour. Airlines that fail to meet the required levels may face financial penalties linked to the cost of the fuel.
The push towards e-SAF is partly intended to reduce the aviation sector’s dependence on fuels derived from waste cooking oils, much of which is imported from overseas. Policymakers have raised concerns about long-term supply levels and the environmental credentials of some imported feedstocks.
Unlike conventional SAF made from waste oils, e-SAF is produced using hydrogen generated through electrolysis powered by renewable electricity. That hydrogen is then combined with carbon dioxide captured from the atmosphere to create a fuel with significantly lower lifecycle emissions.
Government plans also aim to reduce the proportion of sustainable fuel produced from recovered oils. Current policy envisages limiting such feedstocks to 75 per cent of total SAF production. However, IATA believes the industry will remain heavily reliant on them, with the figure likely to remain closer to 95 per cent.
The aviation industry continues to argue that sustainable fuel production is nowhere near the level required to meet future demand. IATA forecasts that total global SAF production of all types will reach just 2.4 million tonnes this year, accounting for only around 0.8 per cent of aviation fuel consumption.
Ms Owens Thomsen said existing production volumes remained too small to support a fully functioning market.
“Current volumes are puny and uneconomic,” she said. “It’s erroneous to even call it a market. It’s a bunch of local, private deals behind closed doors.”
The debate is likely to intensify as governments pursue ambitious net-zero targets while airlines continue to question whether the necessary technology, infrastructure and fuel supplies can be delivered at the pace required.
Worth reading in full: https://www.telegraph.co.uk/business/2026/06/22/britains-airlines-face-400m-bill-to-hit-green-fuel-targets/
