New Research on Strategic Industries
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SAF Policies in Various Countries
Many countries worldwide have introduced policies on SAF blending ratios, with the European Union and Australia implementing more stringent measures.
According to the Sustainable Plastics and Fuels public account, compared to traditional aviation fuels, Sustainable Aviation Fuel (SAF) can reduce carbon dioxide emissions by over 80%, making it a key factor in achieving net-zero carbon emissions for the global aviation industry by 2050.
The International Air Transport Association (IATA) and the Air Transport Action Group (ATAG) have committed to achieving net-zero emissions in the aviation industry by 2050. Achieving net-zero emissions is crucial for the green development of aviation, and the adoption of SAF will be the primary means of decarbonization. As of the end of January 2025, many countries have introduced policies on SAF blending ratios, with the European Union and Australia implementing more stringent measures.
Development Status of SAF Overseas
By 2030, the European Union, the United Kingdom, Japan, and others are expected to be SAF importers, while China, the United States, Indonesia, and others will be SAF suppliers.
European Union: Short-term SAF supply slightly exceeds demand, but a long-term supply gap remains.
SAF Blending Ratio: According to EASA data and the ReFuelEU Aviation Regulation simulation, SAF content must reach 2% by 2025, 6% by 2030, and 70% by 2050. Among these, advanced pathways such as PtL or E-Fuels must account for no less than 1.2%, 5%, and 35% of the total SAF in 2030, 2035, and 2050, respectively.
According to ING and EASA data, EU aviation fuel demand in 2023 was 65 million tons. With improved fuel efficiency, aviation fuel demand is expected to decrease to 45 million tons by 2050. The EU's SAF demand is projected to be 1.3 million tons, 2.8 million tons, and 31.5 million tons in 2025, 2030, and 2050, respectively.
Feedstock Requirements: The ReFuelEU Aviation Regulation stipulates that SAF produced from agricultural or forestry residues, algae, biowaste, used cooking oil (UCO), or certain animal fats qualifies as green fuel. The cap on crop-based fuels will be gradually reduced, accounting for 3.8% of the total biofuel feedstock required by the EU by 2030. Intermediate crops, palm and soybean materials, and soapstock and its derivatives are excluded due to their association with reduced agricultural land.
Subsidies: According to the CERS Green Low-Carbon Technology public account, the EU provides economic support to SAF producers and users, with subsidies totaling approximately €1.6 billion for producers. According to "Spotlight on the European SAF Market: Countdown to 2025" (Argus), between January 1, 2024, and December 31, 2030, 20 million carbon allowances from the EU Emissions Trading System (ETS) will be allocated to incentivize SAF use, covering all or part of the price difference between SAF and conventional jet fuel. Non-biological renewable fuels (RFNBOs), advanced biofuels, and other eligible fuels will receive subsidies covering 95%, 70%, and 50% of the price difference, respectively.
Penalties: Under the ReFuelEU plan, EU member states must set and enforce penalties for non-compliance by fuel suppliers, EU airport management agencies, and aircraft operators.
Minimum penalty requirements:
For aviation fuel suppliers: Penalty = 2 × [annual average price difference per ton between SAF and conventional kerosene] × quantity of aviation fuel not meeting the minimum quota.
For aircraft operators: Penalty = 2 × annual average price of aviation fuel × quantity not refueled.
For aviation fuel suppliers, if the price difference between SAF and conventional kerosene is $2,000/ton, the minimum penalty is $4,000/ton. For aircraft operators, if the annual average price of aviation fuel is $1,000/ton, the penalty for unmet refueling volume is $2,000/ton. Thus, the EU imposes high minimum penalties on suppliers and aircraft operators failing to meet SAF requirements.
Supply: According to predictions by the European Aviation Safety Agency (EASA), the ReFuelEU Aviation Regulation, and S&P Global, EU SAF production capacity is expected to be 2.3 million tons, 3.2 million tons, 14.8 million tons, and 28.7 million tons in 2025, 2030, 2040, and 2050, respectively. In 2025, NESTE and Eni are expected to have SAF production capacities of 1.9 million tons and 400,000 tons, respectively.
Supply-Demand Calculation: The EU's SAF supply-demand gap is projected to be +1 million tons, +400,000 tons, -840,000 tons, and -2.8 million tons in 2025, 2030, 2040, and 2050, respectively. In the short term, SAF demand will take time to increase, but companies like NESTE and Eni have already planned SAF production capacity, resulting in supply exceeding demand. However, in the long term, as EU SAF demand continues to grow, industry supply will remain insufficient.
United Kingdom: Rapid growth in SAF demand, with over half of demand relying on imports in the short term.
The UK has proposed a clear plan to increase SAF blending ratios, with London Heathrow Airport requiring higher ratios. According to ICF's "Roadmap for the Development of the UK SAF Industry," UK aviation emissions will be 39 million tons of CO2 equivalent in 2030 and decrease to 29.5 million tons by 2050. Both industry (SAF) and non-industry (carbon removal) mechanisms must address remaining CO2 issues to achieve net-zero emissions.
According to the GOV.UK website, the UK's SAF regulations officially took effect on January 1, requiring SAF blending ratios to gradually increase from 2% in 2025 to 10% in 2030 and 22% in 2040. According to the Ningbo Air Transport Association public account, London Heathrow Airport's SAF policy requirements are stricter than the UK government's, with planned SAF blending ratios of 3% in 2025 and 11% in 2030.
The UK's SAF blending ratios are expected to reach 2%, 10%, and 22% in 2025, 2030, and 2040, respectively.
The UK's SAF demand is projected to be 1.2 million tons, 2.2 million tons, and 7 million tons in 2030, 2040, and 2050, respectively. According to USDA data, UK SAF demand was 48 million liters and 138 million liters (approximately 38,400 tons and 110,400 tons) in 2022 and 2023, respectively.
According to the UK Department for Energy Security and Net Zero, UK aviation fuel demand in 2023 was 11.1 million tons. Assuming UK aviation fuel demand reaches 12 million tons in 2025, with a 2% blending ratio, UK SAF demand is expected to be 240,000 tons in 2025. According to ICF, UK aviation fuel demand is projected to be 12.3 million tons, 10.9 million tons, and 9.3 million tons in 2030, 2040, and 2050, respectively, corresponding to SAF demand of 1.2 million tons, 2.2 million tons, and 7 million tons.
The UK has limited SAF production capacity under construction and will rely on imports in the future. According to the "Roadmap for the Development of the UK SAF Industry" and USDA data, the UK currently has only one SAF production plant, Phillips 66, which uses the HEFA process with an annual capacity of 50 million liters (approximately 40,000 tons).
The UK has publicly announced plans to build eight additional plants, which will begin production in the coming years. By 2030, these facilities are expected to produce up to 600,000 tons of SAF annually. Compared to the projected SAF demand of 1.2 million tons in 2030, a 50% demand gap will still need to be met through imports.
As of the end of 2023, the UK had only one SAF production plant, Phillips 66, with plans to build eight additional SAF plants.
In the short term, insufficient feedstock supply in the UK will limit SAF production capacity expansion. The UK will focus on developing SAF production through other pathways.
The UK currently primarily uses the HEFA process to produce SAF, with feedstock such as UCO. However, the UK heavily relies on UCO imports, limiting HEFA-based SAF production capacity.
According to T&E data, UCO usage in UK biodiesel was approximately 1.93 million tons in 2023, with domestic collection capacity of about 130,000 tons and potential collection capacity of 160,000 tons, indicating that domestic collection falls short of demand.
According to ICF, the UK government has decided to gradually reduce the proportion of HEFA-based SAF from 100% in 2025 and 2026 to 71% in 2030 and 35% in 2040. Ultimately, HEFA-based SAF will account for about 7.8% of the UK's total aviation fuel demand, with other SAF demand supplemented by processes such as Alcohol-to-Jet (ATJ), Fischer-Tropsch (FT), and Power-to-Liquid (PtL).
After 2035, HEFA-based SAF is expected to account for approximately 7.8% of the UK's total aviation fuel demand.
The UK's SAF demand is growing rapidly, with over half of demand relying on imports in the short term.
On the demand side, as analyzed above, the UK officially implemented a 2% SAF blending policy starting January 2025, with blending ratios increasing to 10% in 2030, 22% in 2040, and potentially 75% in 2050. Corresponding SAF demand is calculated to be 1.23 million tons, 2.4 million tons, and 6.98 million tons, respectively. London Heathrow Airport has proposed blending ratios of 3% and 11% for 2025 and 2030, respectively, meaning actual UK SAF demand may be higher than calculated.
On the supply side, as of the end of 2024, the UK had only one SAF production plant, Phillips 66, with an annual capacity of approximately 40,000 tons. Total supply is expected to reach 600,000 tons by 2030. The limitation on UK SAF production capacity expansion is due to heavy reliance on imported waste oil feedstock. Although the UK hopes to increase non-HEFA pathway SAF production in the future, non-HEFA pathways are not yet mature and have higher production costs. In the short term, HEFA-based SAF will remain dominant, meaning over half of SAF demand will rely on imports.
United States: Policies supporting SAF development are unclear. If support policies continue, future demand for oils and other feedstocks may partially rely on imports.
Before President Trump took office in 2025, the U.S. provided strong support for SAF development. According to the U.S. Department of Energy's "Pathways to Commercial Liftoff: Sustainable Aviation Fuel" (2024), the U.S. aviation industry contributes over 200 million metric tons of CO2 emissions, accounting for approximately 11% of U.S. transportation-related emissions or 3% of total U.S. emissions.
The U.S. plans to achieve SAF production capacities of 3 billion gallons and 35 billion gallons by 2030 and 2050, respectively, approximately 9.08 million tons and 106 million tons, meeting 10% and 100% of U.S. aviation fuel demand.
Before President Trump took office in 2025, U.S. policies supporting SAF development included:
RFS Standard: The Renewable Fuel Standard (RFS) program requires specific volumes of renewable fuel to replace certain quantities of transportation fuel, heating oil, or aviation fuel. SAF producers can generate Renewable Identification Numbers (RINs) and sell them for additional revenue.
IRA Act: The Inflation Reduction Act (IRA), signed in August 2022, provides tax credits of $0.20 per gallon for non-aviation fuels and $0.35 per gallon for SAF, applicable from 2025 to 2027.
State-Level Incentives: Producers can stack state-level incentives with federal incentives. Several states, including California, Washington, and Oregon, have implemented Low-Carbon Fuel Standards (LCFS), providing credits for low-carbon fuel production or sales.
These policies provided strong support for U.S. SAF development, making SAF more competitive against fossil aviation fuels. According to the U.S. Department of Energy, SAF subsidies ranged from $2.23 to $4.03 per gallon in 2024 and $1.09 to $3.57 per gallon from 2025 to 2027, depending on carbon reduction levels.
With the new Trump administration, the continuity of U.S. support policies for SAF is highly uncertain.
According to Wood Mackenzie, the new Trump administration has halted all payments under the IRA and the Infrastructure Investment and Jobs Act (IIJA), including funding for electric vehicle charging stations.
According to the Global Times public account, President Trump signed an executive order on his first day in office, January 20, 2025, announcing the U.S. withdrawal from the Paris Agreement. The future of U.S. support policies for SAF remains highly uncertain.
By 2030, the U.S. planned SAF production capacity is 3.48 billion gallons, but the U.S. Department of Energy expects actual production capacity to be 1.84 billion gallons.
According to the U.S. Department of Energy, the U.S. produced 14 million gallons of SAF (approximately 42,400 tons) and imported 12 million gallons (approximately 36,300 tons) in 2023, resulting in total SAF consumption of 26 million gallons (approximately 78,700 tons). As of August 2024, the U.S. had produced 16.5 million gallons of SAF (approximately 50,000 tons) and used 62 million gallons (approximately 187,800 tons).
Despite significant progress in 2024, production must further increase to meet the 2030 target of 3 billion gallons. As of August 2024, planned U.S. SAF production capacity was expected to reach 3.48 billion gallons by 2030. However, due to the immaturity of non-HEFA technologies and challenges such as high production costs, lack of long-term offtake agreements, high capital costs, policy uncertainty, and limited biofeedstock supply, the U.S. Department of Energy expects actual production capacity to be 1.84 billion gallons by 2030.
U.S. SAF plants are located in states with policy support or feedstock supply advantages.
The rapid development of the U.S. biodiesel and SAF industries may be constrained by insufficient domestic feedstock supply.
According to U.S. Department of Energy data, HEFA feedstock prices, including canola oil, corn oil, palm oil, soybean oil, tallow, yellow grease, and brown grease, increased by 10-15% between 2016 and 2022, reaching $1,200-$2,000 per ton equivalent in 2022.
As the U.S. prioritizes biodiesel and SAF development, imports of these feedstocks have rapidly increased. In 2023, U.S. imports of soybean oil, canola oil, other vegetable oils, UCO, and animal fats increased by 65.6% compared to 2022, with UCO imports rising from 5,000 tons in 2022 to 1.3374 million tons.
According to U.S. Department of Energy estimates, by 2030, the U.S. plans to produce 3 billion gallons of SAF. At that time, biodiesel and SAF demand for oils and other feedstocks will exceed 94% of total domestic supply, potentially requiring imports of SAF or feedstocks such as UCO.
The U.S. plans for SAF self-sufficiency, which may significantly increase demand for oils and other feedstocks.
In summary, U.S. support policies for SAF development are currently unclear. If subsidies for domestic SAF producers are canceled, it may dampen production and expansion enthusiasm, affecting U.S. SAF industry development.
From current U.S. plans, the country aims for SAF self-sufficiency, meaning future SAF imports will be limited. If support policies continue, planned SAF production capacity will gradually come online, significantly increasing demand for oils and other feedstocks.
Other Regions: ASEAN has export potential for SAF, while Japan may import SAF to meet domestic demand.
ASEAN: Abundant feedstock, with potential SAF production capacity exceeding 40 million tons/year. According to RSB's "Sustainable Feedstock Assessment: Sustainable Aviation Fuel Production in Southeast Asia" (2024), ASEAN countries such as Indonesia, Malaysia, and Singapore have proposed clear SAF blending policies.
The ASEAN biofuel industry heavily relies on crop feedstocks. In the Philippines, biodiesel production primarily uses coconut oil; in Indonesia, Malaysia, and Thailand, palm oil is used; in the Philippines and Thailand, ethanol feedstock is molasses from sugarcane or sugar beets; Singapore is the only ASEAN member using waste materials such as UCO and animal fats.
According to RSB estimates, ASEAN has abundant crop feedstock resources, with potential SAF production capacity exceeding 40 million tons/year, allowing for export capacity after meeting domestic SAF demand.
Japan: Limited feedstock supply may lead to increased imports of UCO or SAF to meet domestic demand.
According to GREENAIR, the Japanese government proposed a policy in 2023 requiring 10% SAF use by 2030, implying SAF demand of approximately 1.4 million tons. According to the Biodiesel Network public account, Japan's first large-scale domestic SAF production project was completed on December 25, 2024, with an annual production capacity of 30 million liters (approximately 24,000 tons), using 100% UCO as feedstock.
The limiting factor for Japan's SAF production capacity expansion is oil feedstock. Japan's UCO production is limited, with most already utilized. According to the Weber Industry Think Tank public account, Japan produced approximately 500,000 tons of UCO in FY2022, of which 180,000 tons were used for animal feed, 110,000 tons were exported to Singapore, South Korea, and European countries for SAF and biodiesel production, 50,000 tons were used for chemical manufacturing (e.g., soap and detergents), and 20,000 tons were allocated to Japanese biodiesel companies.
Therefore, Japan may increase imports of UCO or SAF to meet domestic demand.
Development Status of SAF in China
Sufficient feedstock supply will drive gradual SAF production capacity deployment in China, with broad prospects for the SAF industry.
China's SAF industry is still in its early stages, with no SAF blending ratio policy yet implemented. According to the "14th Five-Year Plan for Civil Aviation Green Development," China aims to achieve SAF consumption of 50,000 tons during the "14th Five-Year Plan" period, with annual SAF consumption reaching 20,000 tons by 2025. This is the first quantitative SAF usage target proposed at the government level, but a blending ratio policy has not yet been implemented.
According to the Chinese government website, on September 18, 2024, the National Development and Reform Commission and the Civil Aviation Administration held a SAF application pilot launch ceremony in Beijing. According to the pilot work arrangement, starting September 19, 2024, 12 flights from Air China, China Eastern Airlines, and China Southern Airlines departing from Beijing Daxing, Chengdu Shuangliu, Zhengzhou Xinzheng, and Ningbo Lishe airports will officially use SAF.
The pilot is divided into two phases: Phase 1 from September to December 2024, involving Air China, China Eastern Airlines, China Southern Airlines, and the aforementioned airports; Phase 2 throughout 2025, with participating units gradually increasing.
As a member of the International Civil Aviation Organization (ICAO), China may implement a SAF blending ratio policy by 2027.
According to the Environmental Protection Alliance, Petrochemical Industry Going Global Alliance, and Yi Tan Green Finance public accounts, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a global market-based mechanism proposed by ICAO to reduce international aviation carbon emissions, aiming for net-zero emissions in international aviation by 2050.
Phase 1 (2024-2026): Voluntary participation by countries, with specific carbon offset requirements. As of January 2025, 126 countries have voluntarily participated (China has not yet participated).
Phase 2 (2027-2035): Mandatory participation from 2027, with all member states bearing offset responsibilities. Least developed countries, small island states, landlocked developing countries, and countries with minimal international aviation can participate voluntarily.
As an ICAO member, although China did not participate in Phase 1, it will be subject to mandatory participation starting in 2027. By then, China may implement a SAF blending ratio policy.
According to "Analysis Report on the Sustainable Aviation Fuel Industry-Technology, Industry, Policy, and Development Trends in China, Europe, and the U.S." by Fang Qi'an, China's international flights generated 40.6 million tons of carbon emissions in 2019, accounting for 35% of China's total aviation emissions. Under CORSIA definitions, China's emission reduction responsibility for international flights will reach 16.18 million tons of CO2 by 2033, requiring reliance on SAF for decarbonization. China's SAF demand is projected to be 5.06 million tons by then.
China's greatest advantage in SAF development is sufficient feedstock supply. According to Deloitte's "China's Sustainable Aviation Fuel: The Path to Carbon Neutrality in Aviation" (2023), China's available UCO volume was 3.4 million tons in 2023, sufficient to produce 1.36 million tons of SAF. If emerging processes such as Fischer-Tropsch (FT) mature, China's SAF production capacity could reach 46.41 million tons, effectively supporting industry development.
China has numerous planned SAF production capacities, which may intensify industry competition and increase demand for UCO.
According to Longzhong Information data, as of the end of 2024, China's SAF production capacity was 1.02 million tons/year, all using the HEFA process. An additional 2.68 million tons/year of SAF production capacity is expected in 2025 and 2026. There are also 2.58 million tons/year of planned production capacity without clear commissioning dates, including 550,000 tons using non-HEFA processes.
If all these capacities are realized, China's total SAF production capacity will reach 6.28 million tons/year, potentially intensifying industry competition and making China a major SAF exporter.
According to the "Environmental Impact Report for Shandong Haike Chemical's 500,000 Tons/Year Bio-Based Aviation Fuel Technical Transformation and Supporting Project," producing 1 ton of SAF requires 1.43 tons of UCO. Thus, the existing 1.02 million tons of SAF capacity corresponds to 1.49 million tons of UCO demand. The long-term HEFA-based SAF production capacity of 5.73 million tons/year corresponds to 8.19 million tons of UCO demand, indicating continued growth in UCO demand.
SAF products require different certifications for sales in different regions.
SAF products certified by the Civil Aviation Administration of China (CAAC) can be used in Chinese aircraft. Currently, companies with CAAC certification include Sinopec Zhenhai Refining, Haixin Energy, and Henan Junheng Bio.
The ISCC certification system requires feedstock sustainability. ISCC CORSIA certification meets CORSIA requirements, while ISCC-EU meets EU requirements.
RSB (Roundtable on Sustainable Biomaterials) certification promotes the sustainability of biomaterials, including biomass and biofuels, and has expanded to include non-biological recycled materials.
As of February 6, 2025, among Chinese SAF producers, 3 have obtained CAAC certification, 12 have obtained ISCC/RSB CORSIA certification, and 12 have obtained ISCC-EU certification.
SAF certification systems impose high requirements on feedstock. For example, ISCC certification requires feedstock sustainability, including biological feedstocks, bio-circular waste/residues, petrochemical circular materials, and renewable non-biological feedstocks.
ISCC certification covers the entire supply chain, starting from collection points (with origin point certification required in special cases). All downstream entities, including traders and production plants, must be certified.
For the EU, SAF feedstocks cannot include intermediate crops, palm and soybean materials, or soapstock and derivatives due to high iLUC (indirect land-use change) emissions risks. China's UCO largely meets these certification requirements, facilitating certification for Chinese SAF producers.
Companies率先布局 in the SAF field and those with UCO production capabilities are expected to benefit. We believe global demand for SAF will continue to grow, with key milestones including:
2025: EU, UK, and other countries implement 2% SAF blending policies.
2027: CORSIA requires mandatory participation in aviation emission reductions.
2050: IATA and ATAG commit to net-zero emissions in aviation.
Although global SAF supply is expected to be substantial, the HEFA process will dominate in the short term. Limited UCO supply will constrain SAF production capacity expansion. China's abundant UCO resources will enhance the competitiveness of its SAF products, benefiting companies率先布局 in the SAF field and those with UCO production capabilities.
Relevant Chinese Companies:
SAF: Jiaao Environmental Protection, Haixin Energy, Pengyao Environmental Protection,卓越新能 (Excelent New Energy), etc.
UCO: Shandong Highlander Environmental, Langkun Environmental, etc.
The SAF industry will flourish in the future, and China is expected to become a major global SAF supplier leveraging its UCO资源优势.
In summary, global SAF production capacity remains limited in 2024. However, starting in 2025, with the EU and UK officially implementing 2% SAF blending policies, global SAF demand will significantly increase, driving gradual SAF production capacity deployment.
By 2027, CORSIA will require mandatory participation in aviation emission reductions, prompting most countries to implement clear SAF blending policies. Looking further ahead, IATA and ATAG's commitment to net-zero emissions in aviation by 2050, along with ambitious SAF usage targets in the EU, UK, U.S., and other countries, suggests SAF may replace a significant portion of conventional jet fuel.
From a supply-demand perspective, regions with insufficient feedstock supply, such as the EU, UK, and Japan, will import SAF, while regions with abundant feedstock supply and significant SAF production capacity plans, such as China, the U.S., Indonesia, and Malaysia, will be major SAF suppliers.
China's advantages in low-cost, high-carbon-reduction UCO resources will make its SAF products highly competitive in the international market.