Singapore's Civil Aviation Authority to centrally procure SAF for 2026 mandate

The Civil Aviation Authority of Singapore will centrally procure sustainable aviation fuel for aircrafts departing from the country to yield better purchase prices, as Singapore mandates SAF use for departing flights from 2026, CAAS Director General Han Kok Juan said Feb. 20 at the Singapore Airshow.

The mandate is part of the Singapore Sustainable Air Hub Blueprint launched Feb. 19, which also included funding SAF purchase using direct levies collected from travelers.

Singapore aims to uplift 1% SAF in 2026, with plans to raise this to 3%-5% by 2030, depending on global developments and the wider availability of SAF.

"One percent is a very small volume. It allows us in the initial years to achieve economies of scale and demand aggregation so that we get the best price for the amount of money that we are spending," Han said. "There are actually companies, MNCs (multinational corporations), that want to go beyond the 1%. We would allow them to ride on the central procurement mechanism to also buy their SAF through this mechanism, and hopefully that will also allow them to achieve a better price."

The central procurement function can also manage and allocate SAF credits generated from SAF use through central purchases, CAAS said in the blueprint.

SAF credits from fuel procured under the national targets will be allocated back to airlines based on the share of levies collected, while credits generated from additional voluntary SAF procurement by businesses will be allocated based on the amount of fuel bought, CAAS said.

According to Han, apart from SAF prices, supply resilience will be another major consideration for CAAS when procuring SAF centrally for Singapore.

"We would actually want to diversify the suppliers and supply source and have a mix of short-, medium- and long-term contracts," Han said. "[Central procurement] allows us to better work out the resilience and diversification strategy than leaving it to the market for individual companies to procure, because the Singapore market is actually quite a small one, and we are starting with just 1% [SAF uplift]."

When asked if Singapore will consider palm oil feedstock, Han said the country is guided by standards set by the International Civil Aviation Organization and Carbon Offsetting and Reduction Scheme for International Aviation.

"We take a science-based approach. And I think with better research into the area, with better science and better understanding, that will open up the sources of feedstock that is available for use, which is actually very critical in increasing the supply of SAF and stabilizing the cost," Han said.

The use of palm oil as a feedstock in renewable fuels and SAF is restricted in major consumers such as the EU and the US, even though palm by-products and residues are recognized under CORSIA.

Finland's Neste, which owns a major SAF production facility in Singapore, told S&P Global Commodity Insights previously that the company will stop using palm oil as a feedstock by end-2023.

In its Sustainable Air Hub Blueprint, Singapore said it "encourages the industry to adopt a feedstock-neutral approach and not exclude any particular feedstock, as long as it meets the CORSIA sustainability criteria and delivers the required carbon emissions reduction."

The blueprint will be submitted to the ICAO as Singapore's State Action Plan this month, and further details on the SAF levy will be announced in 2025.