SAF availability and incentives remain top priority, as momentum for other levers reduces.

 

The Forum’s survey of aviation executives asked them to rank the immediate risks directly affecting progress on aviation decarbonization, according to their impact. Three main groups of challenges were identified around technology, policy.

Technology challenges

Availability and cost of SAF Executives highlighted the availability and cost of SAF as the biggest challenge affecting progress on decarbonizing aviation during 2025. Many airlines typically highlight SAF’s availability and price as the key obstacles preventing them from signing firm, long-term offtake agreements; equally, investors view such offtake agreements as a “must have” before providing SAF plants with the capital they need to develop. The challenge is that the airline business is known for its small margins – and the COVID-19 pandemic resulted in significant losses and bankruptcy risks that threatened the growth of the sector and exacerbated its traditionally low creditworthiness. ICAO offers an online tracker of SAF offtake agreements, which shows that the number of agreements, as well as their volume and average tenor, has been reducing since they peaked in 2022 (see Figure 5). While data should be interpreted cautiously, as offtake agreements are usually multi-year and thus may not need re-signing on a yearly basis, there is a clear downward trend in the willingness to enter long-term deals. This is particularly true in emerging aviation markets looking to grow, such as Asia Pacific, the Middle East and Latin America, where carriers fear the higher ticket prices could have a big impact on competitiveness at a key growth moment.

Both SAF’s availability and costs, however, are on a positive trajectory, at least for HEFA (hydrotreated esters and fatty acids), after substantial market developments in 2024. The Forum’s 2025 white paper Financing Sustainable Aviation Fuels: Case Studies and Implications for Investment highlights that production capacity is expected to have reached 4.4 million tonnes per year (Mt/a) in 2024, doubling 2023’s capacity. Even so, demand is expected to outstrip supply by 2030. The price premium of SAF has also been reducing throughout 2024, at least in Europe, where the average cost differential between HEFA and conventional jet fuel has fallen from approximately 2x in September 2023 to 1.2x in November 2024. Where balance sheets allow it, some airlines are signing long-term contracts for SAF offtakes or taking an equity stake in developing SAF projects, demonstrating a willingness to invest and pay the SAF premium.

 The overall profitability of airlines is also increasing, according to the International Air Transport Association (IATA). A combined net profit of $30.5 billion and a record number of passengers are expected for 2024, revenue is forecast to top $1 trillion for the first time in 2025, while growth forecasts up to 2050 are bullish, especially in emerging aviation markets such as China and India. Some stakeholders therefore challenge the view that SAF is either too scarce or too pricey to purchase – they claim that a weak demand signal from buyers is the reason why more SAF is not currently used. However, given the sector’s low margins (IATA expects an average of $7 net profit per passenger in 2025), there is widespread acceptance that additional investment and derisking mechanisms for SAF are needed before airlines can show more commitment. Another challenge is that there is still a limited number of advanced SAF production technologies reaching financial investment decision worldwide, which in turn constrains the quantity of available suppliers. While investment in new HEFA capacity has continued throughout 2024, numerous projects in Europe and the US were paused or dropped during 2024 amid technical challenges. Similarly, some power-to-liquid projects were scrapped amid lack of demand or limited returns, even though the oil and gas sector distributed over $200 billion in dividends globally in 2024. Meanwhile, a couple of advanced low-carbon fuels projects went bust and some energy players exited the SAF production market to focus on potentially more profitable activities such as supply and resale.

Role of corporate buyers and partnerships 

With this chicken-and-egg situation persisting for a number of years, several stakeholders have highlighted the role corporate buyers (i.e. not airlines) can play in unlocking progress and stepping in to support both airlines and SAF suppliers. With the latest global election cycle generating policy uncertainty (see Chapter 3.1), private-sector initiatives and strong, voluntary commitments from scope 3 buyers could be powerful tools to attract capital towards SAF projects. An increasing number of corporates, including members of the Forum’s First Movers Coalition, concluded their first procurements of SAF in 2024. It is often where some of these private sector partnerships with investors and companies are in place that SAF projects are breaking ground: for example, developers like LanzaJet, Infinium and Twelve managed to secure a combined investment of up to $1.8 billion through such partnerships during 2024. 

This investment boost has had a positive impact on the perception of technology risk as well. Some financiers, who believe non-HEFA pathways are maturing, are becoming more comfortable with the technology risks associated with SAF plants, resulting in more investment into SAF projects worldwide. Not all energy players have pulled out of SAF investment, with some doubling down on capacity expansion without significant issues in securing financing. Where there are favourable policy conditions or the involvement of other players, such as scope 3 buyers and multilateral development banks to reduce risks, energy majors have also invested in the sector. Nearly four out of five SAF offtake agreements to date were signed by commercial airlines, while “corporates” signed the remaining 21%. Of these, about half were signed by logistics companies, cargo carriers and aerospace manufacturers (see Figure 7).

The number of scope 3 buyers stepping into corporate offtakes is increasing, both where the policy direction is unclear and where policy is becoming supportive of SAF or mandates are kicking in, even if they may not yet recognize bookand-claim mechanisms as a way to meet targets. Nevertheless, there is a risk in more established markets that some buyers may drop targets or reduce their involvement with SAF purchases in 2025, in light of the recent push-back against climate policies and commitments seen in other sectors (e.g. exit of members from the Net-Zero Banking Alliance). This may be counter-balanced by the potentially positive changes to carbon accounting guidance that many Airports of Tomorrow stakeholders expect from the Greenhouse Gas (GHG) Protocol’s upcoming Land Sector and Removals Guidance in the first quarter of 2025, although a few stakeholders interviewed for this report expect this be delayed.11 Uncertainty around the issue has left many corporate players in a wait-and-see position, holding off SAF investments.  

Asia Pacific is among the key markets where SAF offtakes are expected to rise in 2025, with an increasing number of Southeast Asia carriers and corporates looking at SAF procurement, as demonstrated by the collaboration between HSBC, Cathay Pacific and EcoCeres launched in Hong Kong SAR at the end of 2024.12 One market to follow closely will be mainland China: during 2024, local carriers began using SAF as part of a limited government trial; this may gradually encourage more airlines to commit to sustainable fuels in future. As more SAF gets blended, more airports, fuel suppliers and fuel producers are examining the kinds of infrastructure investments they need to plan for the years ahead, as well as how to comply with mandates when there are specific traceability or chain of custody requirements. In Europe, the RefuelEU initiative sets minimum blending requirements, such as for airports handling at least 800,000 passengers annually or over 100,000 tonnes of freight. There are additional sub-targets specifically aimed at increasing the use of powerto-liquid (PtL) fuels. European fuel suppliers and airports, where fuel is managed directly rather than via consortia, are expected to be increasingly grappling with logistics assessments to understand the most efficient ways of delivering, storing and supplying fuels at the airport and to the wing.

Clean hydrogen is an important enabler of aviation decarbonization, given its use as a process input or feedstock during SAF production, as well as its potential to power hydrogen-based aircraft and airport infrastructure. Last year saw notable clean hydrogen developments, although the extent to which these advances may be leveraged by the aviation sector remains unclear. The availability of clean hydrogen is increasing globally, with over 1,500 large-scale projects announced and significant investments being made, particularly in Europe, North America and China. During the first half of 2024, the pipeline had a net growth of 154 projects across different regions, with North America leading clean hydrogen capacity expansion, while Europe and Latin America focused specifically on renewable hydrogen. The United Kingdom, Germany. and France have all set ambitious targets for “clean” hydrogen production by 2030, although it is unclear whether the 10 GW target set by the previous UK government for 2030 has been maintained by the new government. Latin America continued to make gains due to its vast renewable energy resources. The International Energy Agency (IEA) reports that if all the clean hydrogen projects in the pipeline globally were to materialize, the sector would see an annual growth rate of 90% between 2024 and 2030, even faster than historical solar energy deployment. However, many believe this rate is unrealistic given that, as for SAF projects, clean hydrogen deployment has recently seen delays and setbacks amid unclear demand and financing hurdles, as well as regulatory uncertainty and complexity, including on additionality rules. In the US, the delayed 45V incentives guidance released by the previous Biden administration in January 2025 received mixed reactions due to its perceived complexity, with further uncertainty around the future of these incentives under the second Trump administration. Europe has seen similar regulatory challenges, with a proposed windfall tax in Spain (now discontinued) blamed for stalling electrolytic hydrogen projects. Such uncertainties can slow production, but experts believe supply will keep growing in 2025, alongside demand for the product. Hydrogen demand is likely to have reached almost 100 Mt in 2024, but most of this growth comes from the refining and chemicals sectors, rather than to fuel new aviationrelated technologies. The cost of clean hydrogen will impact both SAF adoption and its commercial feasibility for direct use in aircraft and ground-handling infrastructure. The latest BloombergNEF short- and long-term forecasts for clean hydrogen production costs, published in 2024, were revised upwards as a result of higher electrolyser costs, risk-free financing costs and power pricing agreement (PPA) prices. Despite these supply, demand and cost trends, the aviation executives interviewed for this report were not overly worried about the cost and availability of clean hydrogen at this stage. This may reflect the still limited uptake of this energy vector in aviation, both for airports use as well as for aircraft propulsion (see section below). Other than as an input for SAF production, hydrogen use in aviation as of 2024 has predominantly been limited to a number of airport trials for storing and liquefying hydrogen, or testing hydrogen refuelling systems. Among the airports looking into this, Toronto Pearson, Dubai, Kansai, Christchurch and Dallas Fort Worth continue to explore hydrogen production, storage, distribution and use. Meanwhile, Bristol Airport saw the first airside hydrogen refuelling trial ever to take place at a UK airport, in partnership with EasyJet. These airport efforts are connected to Airbus’s plans to develop a global ecosystem with airports to ensure the necessary infrastructure is in place for future hydrogen aircraft. Other activities include the exploration of colocating hydrogen production facilities within airport boundaries and partnerships across the value chain – one example is the collaboration between the Port of Rotterdam and Rotterdam The Hague Airport announced in 2024. Where preliminary assessments of hydrogen use at airports have been completed, stakeholders consulted for this report were more concerned with techno-economic feasibility, including the cost of conversion between ammonia, liquid and gaseous hydrogen, the potential safety hazards of operations and the energy lost in conversion processes. Many agreed that the business case for onsite hydrogen (or SAF) production would need to be supported by government policy to be profitable, as it will not benefit from process synergies typically found in traditional refineries. Respondents also suggested that co-location with renewable energy sources would improve electrolyser utilization, reduce electricity network costs and ultimately make hydrogen production more cost-effective. In 2025, it is uncertain whether airport trials looking to use hydrogen will expand further (see next section), but some of the stakeholders interviewed believe aviation will face growing challenges in securing hydrogen for both SAF production and refining, as well as for zero-emission propulsion and infrastructure. As countries grapple with higherthan-expected green hydrogen costs and increased competition across regions, many stakeholders expect that blue or even grey hydrogen will be seen as more acceptable, but this will have implications on the eligibility of fuels under government incentives. Some of the industry stakeholders interviewed mentioned geologic hydrogen as an upcoming area of interest for their business, alongside pink hydrogen from nuclear energy via small modular reactors (SMRs). As of 2024, 68 active SMR designs were being taken forward globally;25 meanwhile the European Union may assess – as soon as early 2025 – whether to relax current regulations to allow nuclear energy to produce hydrogen and fuels.

The aviation industry’s decarbonization roadmaps are contingent on the availability and cost of electricity and the availability of related transmission infrastructure. This is particularly relevant for powerto-liquid production pathways and for the scalability of green hydrogen, as electricity is a major component of the cost for e-fuels. The aviation sector’s growing demand for electricity coincides with increasing competition for power from other sectors. In its 2024 mid-year assessment, the IEA noted how demand for electricity is rising at its fastest rate in years, driven by electric vehicles (EVs), cooling and heat pumps, and artificial intelligence (AI). Increasing power consumption from data centres has already led countries such as Ireland to pause applications for grid connections. Grid connection and investment both remain critical factors: BloombergNEF reports that over $800 billion will be needed annually by 2030 to accommodate greater electrification of end uses. Executives interviewed for this report highlighted that the availability of low-cost renewable electricity is crucial for the economic viability of e-SAF and green hydrogen production, alongside factors that affect energy consumption such as the efficiency of the conversion process and the load factor of the electrolyser when producing hydrogen. As they looked towards 2025, interviewees expected regions with cheaper electricity and shorter connection delays to attract increasing interest from power-to-liquid developers.

Advanced air mobility, battery-electric and hydrogen propulsion developers are facing both headwinds and tailwinds. Rolls-Royce’s exit from the electrical propulsion business due to its inability to find a buyer, Universal Hydrogen’s failure to secure additional funding, Lilium’s new restructuring after fundraising efforts towards the end of 2024 and Embraer’s delay to the roll-out of hydrogen aircraft to 2040 all highlight the technoeconomic complexity of new propulsion. The most notable development in the zero-carbon emission propulsion agenda, however, comes from Airbus, which in February 2025 slowed down work on its ZEROe programme, with a reported delay of up to 10 years despite progress in signing partnerships with airports and the wider value chain in 2024. Until this announcement, there was some optimism within industry on the back of positive developments in 2024. Cranfield University in the UK received a £69 million boost for its hydrogen development programme, while American Airlines was one of the first major carriers to commit to purchasing ZeroAvia hydrogen engines. After some earlier delays, the US Air Force, working with NASA, started tests of a subscale “blended-wing body” (BWB) aircraft demonstrator in January 2025. Having received the green light from the Federal Aviation Administration (FAA) last year, the project is on track to deliver its first flight by the end of 2027. Meanwhile, Safran’s first electric motor was certified by the EU’s Aviation Safety Agency (EASA) in January 2025. However, these latest developments, changes in government, supply chain constraints and conventional aircraft roll-out delays, especially in the US but also in Europe, introduce uncertainty around the prioritization of zero-emission propulsion programmes and their timing, complicating airport master-planning and supply chain preparation. This is happening at a critical time, when SAF as well as other hard-to-abate sectors are all looking at hydrogen for offtakes, with nearly 70% of demand for green hydrogen in the US by 2050 coming from the chemicals, heavy industry, road transport and shipping sectors. Even though zero-carbon emission propulsion may progress, questions around the sector’s ability to secure timely supply of hydrogen and electricity remain.

Most decarbonization scenarios agree that carbon dioxide removals (CDR) will be needed to get to net-zero aviation, so as to offset residual emissions not yet mitigated through in-sector measures such as SAF or zero-carbon emissions propulsion. Yet the extent to which the industry agrees that carbon capture should be used for residual emissions only is unclear. Several energy majors that participated in Airports of Tomorrow roundtables pointed out that the additional steps involved with in-sector measures (e.g. capturing carbon and converting it into power-to-liquid fuels) would cost more than continuing to use conventional fossil jet fuel and capturing and storing carbon through CDR. Very few airlines publicly committed to CDR agreements in 2024, with British Airways spearheading investment in the technology,39 followed by SWISS40 and Japan Airlines. Some of the stakeholders interviewed, however, expect the number of CDR offtake agreements to continue in 2025, as more airlines start to complement their SAF strategy and diversify investment, so as to potentially reduce the cost of the net-zero transition, assuming the carbon abatement cost of CDR proves to be lower than the cost of SAF. On a similar note, interest in CDR from corporates already involved with scope 3 SAF procurement increased notably in 2024, with Microsoft, Salesforce and Google each signing several CDR agreements, including Google’s largest biochar CDR order announced in January 2025. While these agreements are often to mitigate the increasing environmental footprint of data centres and AI – rather than air travel emissions – they remain relevant to the aviation discussion, as corporates are increasingly taking a portfolio approach to investing in new technology – a trend expected to continue in 2025.

On the back of this increasing interest in carbon dioxide removals, some respondents expected competition between airlines and other sectors for CDR procurement to increase in 2025. Nevertheless, trends from late-2024 show that despite a significant increase in CDR offtakes, the number of first-time buyers has stalled,43 leaving an opportunity for more airlines to step in.