Sustainable aviation fuel may cost 2-3 times more than conventional jet fuel: Centre’s draft policy

India’s draft policy aims to create a domestic market for sustainable aviation fuel, or SAF. It combines gradually increasing blending requirements with financial and research support. The initial mandate would cover international flights under the International Civil Aviation Organization’s CORSIA framework. Only SAF manufactured in India would qualify.

Fuel suppliers would need to provide a 1% SAF blend in 2027, rising to 2% in 2028, 3% in 2029 and 5% in 2030. The SAF would be blended with conventional aviation turbine fuel at a production facility, refinery or storage point. Proposed support includes GST relief, import-duty waivers, tax holidays and accelerated depreciation.

The policy also proposes a ₹500-crore SAF Innovation Seed Fund and a National SAF Registry managed by the DGCA. The registry would record production, blending and transactions through digital certificates. Longer-term targets, including 20% by 2040, remain indicative until the National Council on SAF reviews market and supply conditions.

The draft policy estimates that sustainable aviation fuel could cost at least two to three times as much as conventional jet fuel. This is a major challenge because airlines already face large fuel costs, while SAF production is still developing. The higher price could slow adoption without government support or stronger supply.

For example, if conventional jet fuel cost 100 units, SAF could cost at least 200 to 300 units at the draft’s stated comparison. Suppliers would still need to meet the proposed blending targets of 1% in 2027 and 5% in 2030. The extra cost would enter the blended fuel supplied to airlines.

The draft therefore mentions GST reductions or exemptions, import-duty waivers, income-tax holidays, accelerated depreciation, green bonds and other schemes. These measures could reduce producers’ costs and encourage investment. The National Council on SAF will assess supply chains, technology and market conditions before deciding future mandatory targets.

Sustainable aviation fuel is an alternative aviation fuel made from non-petroleum feedstocks. The US Department of Energy describes it as a fuel that reduces air pollution from air transportation. Its importance comes from the possibility of lowering aviation’s lifecycle carbon dioxide emissions while continuing to fuel aircraft.

The article identifies several possible feedstocks for India, including surplus agricultural residue, used cooking oil and ethanol. These materials can be processed into fuel and then blended with conventional aviation turbine fuel, or ATF. The blending would occur at a production facility, refinery or intermediate storage point before the fuel reaches airports.

Conventional jet fuel is the benchmark against which SAF’s price and emissions are compared. The draft says SAF can reduce lifecycle carbon dioxide emissions by up to 80% compared with conventional jet fuel. However, SAF is expected to cost at least two to three times more, making production incentives and a reliable domestic supply chain important.

The draft proposes a phased increase in SAF blending for international aviation. Suppliers would ensure a 1% blend in 2027, followed by 2% in 2028, 3% in 2029 and 5% in 2030. The requirement therefore increases by four percentage points over the period.

In relative terms, the 2030 target is five times the 2027 target. The change is not an equal percentage increase every year: it rises by one percentage point in each of the first two steps, then by two percentage points between 2029 and 2030. These targets apply initially to flights covered by ICAO’s CORSIA framework.

Targets after 2030 are not yet fully mandatory. The draft mentions 20% by 2040 as an indicative target. The National Council on SAF will decide which future targets become mandatory after considering supply-chain readiness, technology and market conditions. This approach links the pace of regulation to the availability of domestic SAF.

A large SAF price premium would make compliance more expensive for fuel suppliers and airlines. Suppliers would need to obtain eligible fuel and blend it at the required percentages. Airlines could then face higher fuel bills, especially as the mandate rises from 1% in 2027 to 5% in 2030.

For example, a supplier blending 5% SAF into aviation turbine fuel would include some fuel that costs at least two to three times more than conventional jet fuel. The overall blended-fuel cost would depend on prices and operating arrangements. Airlines might absorb the increase, seek efficiency savings or pass some of it through ticket prices.

The article does not state how airfares would change. The draft’s proposed GST relief, tax concessions, import-duty waivers, green bonds and other support could limit cost pressure. The National Council on SAF will also consider market conditions and supply readiness before making longer-term targets mandatory.

The draft requires SAF used to meet the blending mandate to be manufactured in India. This would support the policy’s goal of building a domestic supply chain rather than relying on imported fuel. It also gives Indian producers, refineries and related facilities a defined role as the mandate expands.

India has an estimated 230 million tonnes of surplus agricultural residue that could produce SAF. Other possible feedstocks include used cooking oil and ethanol. The resulting SAF would be blended with conventional ATF at a production facility, refinery or intermediate storage point before being supplied to airports.

The domestic rule also makes tracking important. The proposed National SAF Registry would record production, blending and transactions. Each transaction would have a digitally secured certificate showing the batch, feedstock origin, producer and emissions reduction. Financial incentives and a ₹500-crore innovation fund are proposed to help develop the technology and supply chain needed for production.

Lifecycle carbon emissions measure the greenhouse gases associated with a fuel across its full journey. This includes obtaining or growing the feedstock, processing it, transporting it, making the fuel and burning it in an aircraft. The measure is broader than exhaust emissions during a flight, so it helps compare fuels more completely.

Fuel made from waste or other non-petroleum feedstocks can produce fewer lifecycle emissions when those materials require less carbon-intensive production than extracting and processing fossil resources. Used cooking oil, agricultural residue and ethanol are examples named in the article. Their treatment and transport still create emissions, so the total depends on how the fuel is made.

The draft states that SAF can reduce lifecycle carbon dioxide emissions by up to 80% compared with conventional jet fuel. This is a potential maximum, not a guarantee for every SAF batch. The proposed registry would record feedstock origin and emissions reduction for each transaction.