SINGAPORE -  A credit scheme for greener aviation fuels will be launched in July, so as to give businesses and travellers the choice of paying more to reduce their carbon footprint when they fly and transport goods by air.

The Civil Aviation Authority of Singapore (CAAS), Singapore Airlines (SIA) and Temasek on Wednesday (June 8) said they will begin selling 1,000 credits for purchasing sustainable aviation fuel – eco-friendly fuel made from waste materials such as used cooking oil and animal fats. 

The 1,000 credits together will supply all SIA and Scoot flights out of Changi Airport with a blend of sustainable aviation fuel and refined jet fuel for a year, starting from the third quarter of this year.

CAAS, SIA and Temasek did not reveal the cost of each credit, citing commercial sensitivities. 

Transport Minister S. Iswaran announced the scheme at Temasek’s Ecosperity conference on Wednesday (June 8). 

Sustainable aviation fuels currently cost about three times that of conventional jet fuel, and a credit scheme is one way for airlines and the authorities to defray costs. 

CAAS, SIA and Temasek said that in the longer term, it should also help to secure greater demand for sustainable aviation fuels from airlines, supporting the development of the nascent sustainable aviation fuel industry by giving producers more confidence in boosting production. 

In the first phase, the credits will be sold to SIA’s corporate customers and freight forwarders, who can purchase the credits directly from the airline. 

Freight forwarders, which help to shift air cargo from the airport to their customers, can in turn sell the credits to their downstream clients who wish to reduce carbon emissions from their business operations. 

This credit market will later be open to all SIA customers in the fourth quarter of the year. More details will be released then, said SIA. 

The aviation industry has committed to achieve net-zero carbon dioxide emissions by 2050. Projections suggest that widespread adoption of sustainable fuels will be key in reducing up to 65 per cent of the sector’s emissions by 2050, with the rest to come from efficiency gains and other potential new technologies. 

Temasek’s managing director of sustainable solutions Frederick Teo said the credits are essentially a way of crowd financing to reduce the cost of these cleaner fuels.

Mr Amurdalingam Durairajoo, managing director of freight forwarding company The National Forwarder, said he will be buying some of the credits to sell to his customers, who have shown interest in such a scheme despite the inflationary economy. 

“I will buy a little, not too much initially, to pass them on as the environment is very important. But I also can’t be sure of my customers’ demand. The most important thing for such credits is that they are easy to purchase. Don’t make people jump through hoops for it,” he said. 

Neste, the world’s biggest sustainable aviation fuel producer now, said credits also indicate voluntary demand from the market, which is especially important at the current stage of production, when many producers are still holding back on expensive investments.

Airlines used all of the available 100 million litres of sustainable aviation fuel last year. 

Neste added: “We see a growing interest arising from companies, which have set ambitious climate targets and want to reduce their business travel and air freight-related emissions.

“Sustainable aviation fuel credits enable actual reduction in the emissions from flying, unlike offsets.”

Before the Covid-19 pandemic, commercial aviation contributed about 900 million tonnes of carbon dioxide, or about 2 per cent of global carbon emissions, yearly.

Outlining Singapore’s efforts to green the aviation and maritime sectors, Mr Iswaran said the country is pursuing decarbonisation on three broad fronts.

These are: increasing the efficiency of Singapore’s planes, ships and its air and sea ports; electrifying ground vehicles and equipment; and using eco-friendly fuels in planes and ships. 

For instance, SIA has kept its fleet young with an average age of about six years, he noted at the event, which was held at Sands Expo and Convention Centre.

With every new generation of aircraft typically more fuel-efficient - up to 15 per cent to 25 per cent for Boeing aircraft - SIA's fleet is one of the most fuel-efficient in the world, he said.

On the shipping front, the Maritime and Port Authority of Singapore has streamlined port clearances to reduce wait time for ships, which in turn lowers their emissions.

The $155 million Global Centre for Maritime Decarbonisation set up last year is also actively testing and deploying green technologies and fuels, starting with research into ammonia, even as Singapore begins to electrify its 1,600 small harbour craft used to make shore-to-ship deliveries.

Singapore has also signed several multilateral agreements recently to work with other countries to green the aviation and maritime sectors, Mr Iswaran said, citing the Castor Initiative that brings together public and private partners to build the world's first ammonia-fuelled tanker by 2026.