Singapore will introduce a green fuel levy on all flights departing from the country starting in 2026. This initiative, a first of its kind, aims to promote the use of sustainable aviation fuel (SAF) and reduce the environmental impact of air travel.

Singapore’s decision shows the country’s commitment to sustainable practices. The green fuel levy will not only encourage airlines to switch to SAF but will also fund the bulk purchase of this eco-friendly alternative. It’s anticipated that the levy will lead to a slight increase in ticket prices, but the long-term benefits to the environment cannot be overlooked.

Why It Matters

Transport Minister Chee Hong Tat emphasized the importance of setting realistic sustainability goals to avoid negatively affecting Singapore’s air hub and economy. The aviation industry, responsible for approximately 2% of global emissions, faces significant challenges in decarbonization. European regulators have led efforts to mandate SAF usage, setting progressive targets for its inclusion in fuel supplies at EU airports.

SAF, produced from biological materials or synthetically, remains a costly alternative, currently priced up to five times higher than conventional jet fuel. The high cost is partly due to challenges in securing bio-derived feedstock. Singapore’s only SAF producer, Neste, has significantly boosted its production capacity, yet the global demand and requisite investment for achieving “net zero” emissions by 2050 are immense.

How Much Will It Be?

The International Air Transport Association (IATA) warns that transitioning to net zero will inevitably increase ticket prices, potentially dampening industry growth. The association anticipates a slower growth rate for the global airline industry, influenced by environmental and supply chain challenges.

The plan mandates that all departing flights use at least 1% SAF from 2026, with the percentage expected to rise to 3-5% by 2030. This sets a new standard for the global aviation industry and could potentially influence other countries to follow suit.

The cost of integrating SAF into airline operations will be reflected in ticket prices, with the Civil Aviation Authority of Singapore estimating increases for flights from Singapore to Bangkok, Tokyo, and London in two years.

Image Source: Singapore Airlines