Sustainable aviation fuel policy at a crossroads: Implications for industry

The UK’s sustainable aviation fuel (SAF) industry is approaching a critical policy moment. The Revenue Certainty Mechanism (RCM) has long been seen as the missing link between mandate ambition and investable projects. The RCM allocation strategy has now been published, and the mechanism is moving towards finalisation. Decisions made in the coming months will determine which SAF projects reach Final Investment Decision (FID).

Getting policy design right will shape which technologies are deployed, how supply chains form, and ultimately how the UK’s SAF future evolves. Geopolitical instability in the Middle East has added further weight to these decisions, leading to a doubling in fuel costs for carriers.

Our survey of 600 aviation industry leaders found that 92 percent agree SAF is critical to decarbonisation. It’s also key to strengthening energy security and industrial strategy. This creates a fundamental policy tension. A cost-led approach will favour SAF pathways that rely on the cheapest global feedstocks, which may reduce near-term costs but create external dependencies. However, a more strategic approach would prioritise domestic feedstock capability, local supply chains, and home-grown intellectual property – trading short-term efficiency for long-term resilience and energy sovereignty.

The recently published RCM allocation strategy brings this tension into focus. It raises a fundamental question for policymakers: what should the RCM primarily optimise for? The lowest-cost SAF available today, or a market that also builds the domestic capabilities and supply chains needed to strengthen the UK’s long-term resilience?

As an early mover in SAF policy design, the UK’s policy choices will influence how other markets structure their frameworks. If energy sovereignty becomes embedded in policy globally, competition for feedstocks, renewable energy, and production capacity will intensify. For airlines, this isn’t a future policy debate. It’s a near-term commercial challenge. Against this backdrop, airline leaders should focus on three priorities.

1. Map SAF exposure across the network

The SAF policy landscape is disparate. The UK operates a certificate-based mandate system, while ReFuelEU moves towards mandatory physical blending at airports. These sit alongside broader carbon regimes such as the EU Emissions Trading System (ETS) and Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

These differences determine where SAF costs arise, how carbon liabilities are allocated, and how exposure evolves as mandates scale. As a result, SAF costs won’t be evenly distributed. Two similar routes may have materially different economics depending on jurisdiction, supply availability, and regulatory design.

Understanding this exposure at route level is a must-have capability. Knowing where exposure sits should guide every SAF-related decision, highlighting three immediate priorities for airline strategy teams:

• Build route-level visibility of SAF and carbon exposure across the network
• Model how future mandate increases could affect route profitability
• Integrate regulatory developments into network and fleet planning decisions.

2. Treat SAF sourcing as a strategic capability

Fuel procurement is shifting from a cost function to a strategic lever. As SAF markets develop, airlines that engage early in supply – through long-term agreements, partnerships, or participation in emerging projects – will gain greater certainty over both access and pricing. This is increasingly important as markets move towards greater energy sovereignty and constrained supply.

Early access to SAF is likely to become a competitive differentiator rather than simply a compliance requirement. Three key actions will drive strategically advantageous SAF:

• Secure long-term SAF supply agreements where commercially viable
• Build partnerships across the SAF value chain, including producers and project developers
• Assess opportunities to participate in emerging SAF projects and ecosystems.

3. Manage cost exposure through fleet and network decisions

SAF impact is realised at route level. The same mandate can generate very different cost outcomes depending on route economics, aircraft efficiency, and regulatory environment. A long-haul route into a constrained SAF market may carry significantly higher fuel and carbon costs than a comparable route elsewhere. Newer, more efficient aircraft can materially reduce this exposure through lower fuel burn and reduced carbon liability. This creates four practical levers for airline strategy teams:

• Deploy next-generation aircraft on SAF-intensive routes
• Optimise network design to reduce high-exposure flying
• Target SAF procurement where incentives are strongest
• Align pricing strategies with differentiated cost bases.

Individually, these are incremental decisions. Collectively, they reshape the economics of decarbonisation. Our Cost of Decarbonisation model quantifies these trade-offs. By integrating fuel burn, SAF pricing pathways, and carbon costs – including UK and EU ETS exposure – it enables route-level analysis of where intervention will have the greatest impact.

Navigating a fragmented market

Almost two decades since the first commercial SAF flight, the prospect of a uniform global market is giving way to regional realities. Policy approaches are diverging as countries balance cost, energy security, and industrial strategy. Navigating this fragmented landscape will require airlines to understand their route-level exposure, build strategic SAF sourcing capability, and align fleet and network decisions with the changing cost of decarbonisation. Together, these priorities will give leaders greater control over costs and supply, while strengthening resilience and competitiveness as SAF markets continue to evolve.