Singapore’s green jet fuel levy roll-out could boost production growth: IATA

GENEVA – The roll-out of the green jet fuel levy for passengers flying out of Singapore will be closely watched to see if it can effectively stimulate production of the fuel, said the International Air Transport Association’s (IATA) chief Willie Walsh.

He said that while he instinctively does not like levies, he is optimistic that Singapore’s approach could result in the desired outcome of stimulating production of sustainable aviation fuel (SAF).

The airline industry body is also watching to see if such a model can be replicated in other parts of the world, Mr Walsh said during IATA’s global media day in Geneva, Switzerland, on Dec 9. “I think we’re all looking to see what happens in Singapore because it would be great if it proved to be an effective model for stimulating the growth of production. So I remain optimistic that we will see a positive outcome from the levy,” he said.

Passengers flying out of Singapore from October 2026 will pay a levy of between $1 and $41.60 that will go towards the purchase of SAF, which is typically made from waste materials such as used cooking oil and animal fat and can cost two to five times more than traditional jet fuel.

The levy will apply to tickets sold from April 1, 2026, for flights departing Singapore from Oct 1 that year.

The SAF will be blended with traditional aviation fuel and used to refuel planes at Changi and Seletar airports. The target is for SAF to constitute 1 per cent of all jet fuel used at the two airports in 2026, with the goal of reaching 3 per cent to 5 per cent by 2030.

Mr Walsh stressed that robust accounting measures must be in place to prevent the double counting of different types of emissions.

Scope 1 emissions are produced directly by a company’s operations while Scope 2 emissions result from its purchase of electricity. Scope 3 emissions arise indirectly from a company’s supply chain, including its suppliers and customers.

Mr Walsh gave the example of a corporate customer claiming an SAF-related reduction for its Scope 3 emissions while the same reduction also counts towards an airline’s Scope 1 emissions.

If the reduction in emissions is double counted, it would undermine the credibility of these schemes, he added.

Dr Marie Owens Thomsen, IATA’s senior vice-president for sustainability and chief economist, said Singapore’s SAF levy was “probably better” than a mandate.

The association does not “necessarily appreciate monopoly buyers” as this removes the possibility for airlines to negotiate their own fuel purchases on their own terms, she added.

But Dr Thomsen said that as the production and adoption of SAF is not making much progress globally, IATA will “see if this (levy) can actually work” in Singapore and trust that the country will course-correct if it does not deliver the desired results.

IATA said on Dec 9 that SAF production is projected to rise to 2.4 million tonnes in 2026, constituting 0.8 per cent of total fuel consumption. In 2025, 1.9 million tonnes of such fuel is expected to be produced, slightly lower than the initial forecast of 2 million tonnes, as planned production has faltered.

Planned maintenance at major refineries, including at Finnish biofuel producer Neste’s facility in Singapore, is also temporarily reducing available supply.

Dr Thomsen said more capital should be pumped into emerging technologies to boost SAF production, such as synthetic fuels and alcohols like ethanol, as most SAF output in 2026 is expected to be made from waste materials.

On Singapore as an aviation hub, Mr Walsh said that while the country is very convenient as an intermediate point, it is becoming more expensive in terms of operational costs. He cited higher airport charges and continuing challenges in recruiting and retaining people to support the expansion of the airport and airlines as potential risks for Singapore.

Passengers and airlines at Changi Airport are

set to pay higher fees and levies in the coming years,

which will fund a $3 billion improvement plan across its four terminals and cover rising operating costs in areas such as energy and labour.

“I don’t think it’s a particular problem that we face today, but I think based on what we’re seeing, it could be a challenge for Singapore in the years ahead,” Mr Walsh said.