APPEC: Singapore’s SAF levy to only apply to air ticket sales from 2026

Singapore’s sustainable aviation fuel levy will only apply to plane tickets sold after the levy kicks in from 2026, the Civil Aviation Authority of Singapore’s Chief Sustainability Officer Daniel Ng said on the sidelines of S&P Global Commodity Insights’ APPEC 2024 conference Sept. 11.

Air tickets bought in 2025 for travel in 2026 will be exempted from the levy, he said.

“The levy will only apply to tickets sold after date of implementation. There will not be any retrospective charge on tickets sold before,” Ng told Commodity Insights.

Ng’s clarification comes amid confusion on the timeline of levy implementation, as it was unclear if the levy would apply to all flights departing Singapore in 2026, when the levy’s pricing mechanism will only be ready next year.

In February, Singapore had announced that it will target 1% SAF uplift from 2026, and this target will go up to 3-5% by 2030. The procurement of SAF will be funded by levies imposed on air travelers through plane ticket prices, and CAAS will centrally procure the greener aviation fuel using the collected levies.

“So, to be clear, this is not a blend mandate. We are not doing a hard 1% mandate. We are doing a SAF target… a moving target subject to actual [SAF] prices that are contracted,” Ng said in his presentation at APPEC.

In a bid to shield passengers and airlines from the volatility in SAF prices, when the levy is fixed and incorporated as part of the air ticket price, it will remain unchanged for the year regardless of changes in global SAF prices.

“So, if prices are higher than what we projected, that's fine, we will just pay what we can. We will not chase a 1% target if prices exceed our projection, but if prices fall, we will buy what we can,” said Ng.

“This model, we believe will be perhaps more appropriate for Singapore because we are an international air hub, we are fully exposed.”

Levy as a solution

The decision for Singapore to implement a SAF levy model came after considering learning points from past SAF-related trials, including a pilot to sell SAF credits launched in 2022, said Ng in his presentation.

The pilot -- which involved CAAS, national carrier Singapore Airlines and GenZero -- had sold about two-thirds of the 1,000 credits initially generated to freight forwarders, corporate and individual travelers, CAAS said in a joint statement last year.

“The commercial trial wasn't as successful as we thought. Demand wasn't as strong, people were not too familiar with the product, and ultimately, because it was a more expensive product, there was no willingness,” said Ng in his presentation.

“It was probably not easy for us to wait until the market responds. So, in this case, we are making [SAF use] compulsory.”

Supply investment

Beyond a regulated demand through the uplift target and levy, CAAS is also looking at anchoring greater SAF production both in Singapore and in the region, Ng said.

“We look at encouraging more investments to improve understanding of certain feedstock,” he said.

For instance, the Boeing Company and the Roundtable on Sustainable Biomaterials had launched its Southeast Asia SAF feedstock report in Singapore last week, which identified rice husk and straw as the top feedstock in the region.

“We're also working with other partners to look at how we can encourage more production in the region,” said Ng.

“We are very clear that in the case of SAF, in the case of sustainable aviation, CAAS cannot do this alone. We require partners.”

Ng added that his team is also engaging with palm producers to understand how palm-related waste could be used, as well as carbon credit markets and platforms to understand how SAF credits can be transferred and monetized.

Beyond SAF, the Singapore’s sustainable air hub blueprint had also laid out plans to reduce energy consumption and opt for renewables at Changi Airport, as well as improving efficiency in air traffic management, as Singapore moves ahead with its air hub expansion plans.

Singapore aims to achieve net zero domestic and international aviation emissions by 2050, in line with the International Civil Aviation Organization’s long-term global aspirational goal.