Achieving the global aviation industry’s decarbonization objectives by 2050 necessitates unified and strategic actions to facilitate the widespread adoption of SAFs. To reach net-zero emissions, all industry stakeholders—including governments, airlines, fuel producers, and investors— must align their efforts. Addressing the cost disparity between SAF and traditional fuels requires innovative financial mechanisms and policies that account for the carbon footprint of each fuel type. While many countries have yet to establish definitive policies to advance SAF adoption, there is a gradual shift towards implementing blending targets. This trend highlights the importance of reviewing SAF policies and regulations at the country or regional level.

This chapter introduces the policy and regulatory strategies that are fostering the growth of SAFs along with carbon pricing and market mechanisms. This is followed by region-specific details, focussing on leading regions for SAF-specific policy-making: Canada, European Union, and USA.

Mandates and Targets: Governments play a crucial role in setting clear mandates for SAF blending ratios, which are expected to increase incrementally over time. Establishing long-term targets for SAF adoption that align with net-zero goals provides certainty and direction for all stakeholders involved. Figure 7 shows a global map of adopted and in-development mandates and targets related to SAF as of March 2024.

Incentives and Subsidies: Financial incentives are vital for bridging the cost gap between SAFs and traditional jet fuels. These may include tax credits, grants, and subsidies aimed at both SAF producers and airlines. Implementing carbon pricing mechanisms that reflect the environmental impact of traditional fuels can also enhance the competitiveness of SAFs. Governing bodies may also effect policy to fund and support R&D needed to advance SAF production technologies. PPP can help share the investment risks associated with new SAF facilities, while simplified regulatory approval processes can accelerate their establishment. Regulation requiring sustainable feedstock sourcing ensures a steady and environmentally responsible supply for SAF production. Incentives encouraging the development of diverse feedstock types can mitigate supply chain risks and enhance sustainability.

International bodies like the International Civil Aviation Organization (ICAO) establish global standards and guidelines for SAF usage. Collaboration between countries is crucial to harmonize policies and avoid regulatory fragmentation that could hinder SAF adoption, whilst robust certification systems ensure SAFs meet stringent sustainability criteria. Initiatives such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) can incentivize emissions reductions and support SAF adoption.

Carbon Pricing: Carbon pricing mechanisms internalize the environmental costs of traditional aviation fuels, making SAFs more attractive by comparison. Revenue generated from carbon pricing can fund SAF development and adoption initiatives.

Market Mechanisms: Developing and supporting carbon markets allow airlines to trade emissions credits, providing financial incentives for using SAFs. Encouraging voluntary commitments and corporate pledges to use SAFs leverages corporate social responsibility to drive demand.

The remainder of this chapter covers region-specific SAF policy and regulatory frameworks in sub-sections covering Canada, Europe, USA, and Other Countries.

Canada has taken significant strides towards the adoption and integration of SAFs as part of its broader commitment to reducing GHG emissions and achieving a net-zero economy by 2050. The country’s approach to SAF policy and regulatory frameworks includes a mix of mandates, incentives, and collaborative efforts with industry stakeholders.

Canada’s federal government has set ambitious targets for reducing GHG emissions across all sectors, including aviation. The Aviation Climate Action Plan, released by Transport Canada, outlines specific targets for reducing aviation emissions, with a clear emphasis on the role of SAFs.

The Clean Fuel Regulations (CFR) are a cornerstone of Canada’s strategy to mitigate transportation sector emissions, including aviation. The CFR requires fuel suppliers to gradually reduce the lifecycle emissions of their products from 2023 to 2030, replacing the previous Renewable Fuels Regulations (Canada Government, 2023). A key feature of the CFR is the introduction of a voluntary credit system for emissions reductions achieved by suppliers. These tradeable credits aim to create a market for lifecycle emission reductions and attract investments in clean fuels. From January 2024, suppliers can also contribute to the Emissions Reduction Funding program to meet up to 10% of their annual carbon intensity reduction requirements, although credits from such contributions are not tradeable and are subject to an expiry date.

While Canada has yet to implement specific federal SAF blending mandates, discussions are ongoing to establish mandatory blending ratios similar to those seen in other jurisdictions. However, the provincial governments have taken the lead in this regard, with British Columbia notably issuing the first SAF mandates in North America under its Low Carbon Fuels Act (LCFA) (Carbon Pulse, 2023).

Canada offers a range of financial incentives to support the production and use of SAFs. The Clean Fuel Standard (CFS) aims to reduce the carbon intensity of fuels used in Canada, providing credits for SAF producers to make their products more competitive against traditional jet fuels. In 2021, the Canadian government allocated C$1.5 billion to promote clean fuel production, which includes potential benefits for the SAF sector. This funding supports various initiatives, including R&D, to advance SAF technologies and improve their commercial viability.

Canada promotes collaboration between government agencies, research institutions, and private companies to foster innovation in SAF production. These partnerships aim to share risks and leverage combined expertise to accelerate the development of viable SAF solutions. The country employs rigorous monitoring and reporting mechanisms to track the progress of SAF adoption and its impact on emission reductions. Annual reports and sustainability assessments ensure transparency and accountability, enabling continuous improvement of policies and practices. Regular reviews of SAF policies and frameworks are conducted to reflect technological advancements and market developments. This adaptive approach ensures that Canada’s SAF strategies remain effective and aligned with both national and international environmental goals.

The Canadian aviation industry has shown proactive engagement with SAF adoption. Airlines such as Air Canada and WestJet have participated in SAF trials and pilot programs, demonstrating the feasibility and benefits of using sustainable fuels. These initiatives are often supported by government funding and regulatory facilitation.

British Columbia has been at the forefront of SAF policy development with the introduction of the LCFA in January 2024. The LCFA mandates a graded and escalating structure for the required share of renewable fuels in total jet fuel use: 1% in 2028, 2% in 2029, and 3% in 2030 and subsequent periods . Additionally, the LCFA requires a reduction in carbon intensity for jet fuels, starting at 2% from 2026 and increasing by two percentage points each year until reaching 10% in 2030 (BC Government, 2023).

In Manitoba, significant efforts are being made to support SAF production. In January 2024, the provincial government, along with the federal government and the Canada Investment Bank (CIB), invested C$12.3 million in a front-end engineering and design study by Azure Sustainable Fuels to assess the feasibility of producing SAF from local feedstocks such as canola and soybean oil (Airport Technology, 2024).

To conclude, Canada’s comprehensive approach to SAF policy and regulatory frameworks demonstrates a strong commitment to sustainable aviation. Through a combination of mandates, incentives, collaborative efforts, and regional initiatives, Canada is creating a conducive environment for the adoption and growth of SAFs. This multi-faceted strategy not only supports the country’s decarbonization goals but also positions Canada as a leader in the global effort to reduce aviation carbon emissions.

The European Union (EU) has established a comprehensive policy and regulatory framework to promote the adoption of SAFs as part of its ambitious climate goals. With the overarching objective of achieving net-zero emissions by 2050, the EU has implemented a range of mandates, incentives, and collaborative efforts to drive the aviation sector towards sustainability.

The European Green Deal is the EU’s strategic plan to become climate neutral by 2050. This comprehensive framework addresses all sectors, including aviation, and emphasizes the crucial role of SAFs in reducing emissions.

A cornerstone of the EU’s SAF strategy is the ReFuelEU Aviation initiative, part of the broader “Fit for 55” package aimed at reducing GHG emissions by 55% by 2030 compared to 1990 levels. The ReFuelEU regulations of 2023 stipulate volume-based blending mandates for SAF, through a phased structure between 2025 and 2050. This initiative applies to the entire EU aviation industry and has emerged as a pivotal regulatory direction globally for the SAF sector. The targets for SAF blending are shown in Figure 8.

In addition to overall SAF blending targets, there is a 70% 42% 35% 34% 20% 15% 10% 6% 2% 1.2% 6% 2% 5% 2035 2040 Synthetic fuel 2045 2050 sub-quota for synthetic aviation fuels, based largely on the nascent Power-to-Liquid (PtL) technology. Penalties for non-compliance are significant, with fines at least twice the difference between the annual average price of fossil jet fuel and SAF, multiplied by the relevant targeted quantity. The fines collected will finance low-emission aviation technologies and systems through a Sustainable Aviation Fund.

The EU’s Emission Trading Scheme (ETS) has recently been revised to better incorporate SAF. As of February 2023, the European Council and Parliament agreed to revise ETS rules for the aviation industry, making EU ETS applicable only for intra-European flights (European Council, 2023). The revised rules involve phasing out free emission allowances for aviation: 25% in 2024, 50% in 2025, and fully auction-based thereafter. A separate allocation of 20 million free allowances is available to incentivize fuels instrumental in decarbonization.

Under the revised ETS, all fuels eligible under the ReFuelEU initiative are also eligible for SAF allowances. Airlines can deduct the cost of SAF (and other eligible fuels) from their total ETS bill, with varied price differentials defined by fuel types (e.g., 95% of the price for RFNBOs, 70% for advanced biofuels, and 50% for other eligible fuels). This mechanism will be valid until 2030.

The EU provides substantial funding to support the development and adoption of SAFs. The Horizon Europe program allocates significant resources for research and innovation in sustainable aviation technologies, including SAFs. Additionally, the Connecting Europe Facility (CEF) supports projects that enhance the EU’s transportation infrastructure, including those related to SAF production and distribution.

The European Investment Bank (EIB) plays a crucial role in financing projects that contribute to the EU’s climate goals. The bank offers loans and investment support for SAF production facilities, infrastructure development, and research initiatives. Separately, the €40 billion EU Innovation Fund, based on ETS credit auctions, provides grants for innovative low- carbon technologies, including SAF projects. This fund supports the scale-up of SAF production and the commercialization of new technologies. For instance, a Swedish SAF production plant is one such project in line for support from the EU Innovation Fund (European Commission, 2023).

The EU promotes collaboration between government agencies, industry stakeholders, and research institutions to advance SAF adoption. Initiatives like the Clean Sky Joint Undertaking and the SESAR Joint Undertaking foster PPP to develop and implement sustainable aviation technologies.

European airlines and fuel producers are actively participating in SAF development and deployment. Major airlines, including Lufthansa, Air France-KLM, and British Airways, are involved in SAF trials and pilot programs, supported by EU funding and regulatory frameworks.

EU member states are required to develop national implementation plans that align with EU-wide SAF mandates and targets. These plans detail the specific measures each country will take to promote SAF production and use, tailored to their unique circumstances and capabilities. Several EU countries have already taken significant steps to advance SAF adoption. For instance, the Netherlands has established a dedicated SAF production plant and implemented policies to support its growth. Similarly, France has introduced incentives for SAF production and committed to increasing SAF usage in its aviation sector.

Nordic Cooperation: The Nordic countries, including Sweden, Finland, and Norway, are leaders in promoting SAFs. These countries have implemented ambitious national targets for SAF blending, supported by robust financial incentives and strong industry collaboration.

UK: Although the UK is no longer a part of the EU, it plays a significant role in the region’s SAF landscape through its independent policies and regulations. The UK has established its own SAF mandates and incentives, aligning closely with EU objectives. The UK government has committed to a SAF strategy, including a “Jet Zero” plan that sets ambitious targets for SAF adoption. The UK is investing in SAF production facilities and providing substantial funding to support R&D in this field. Collaborative efforts between the UK and EU member states continue to bolster the overall SAF market in Europe, creating a cohesive approach towards decarbonizing the aviation industry.

The comprehensive approach to SAF policy and regulatory frameworks in Europe demonstrates a strong commitment to sustainable aviation. The major European policies, regulations and targets are summariesed in Figure 9 – Major European SAF Policy Directives.Through a combination of mandates, incentives, collaborative efforts, and member state initiatives, the EU is creating a conducive environment alongside its European neighbours for the adoption and growth of SAFs. This multi-faceted strategy not only supports the EU’s decarbonization goals but also positions the region as a leader in the global effort to reduce aviation’s carbon footprint. The UK’s parallel efforts further complement this regional momentum, highlighting the importance of cooperative and aligned strategies across Europe.

The US has taken significant strides in developing and implementing policies to promote the adoption of SAFs as part of its broader strategy to decarbonize the aviation sector. In this section the relevant federal level schemes are introduced followed by state-level policies that have specifically targeted local growth in the SAF industry.

Sustainable Aviation Fuel Grand Challenge (SGC): Launched in 2021, the SAF Grand Challenge is a collaborative initiative between the U.S. Department of Energy (DOE), the Department of Transportation (DOT), and the Environmental Protection Agency (EPA). The goal of this initiative is to produce 3 billion gallons of SAF per year by 2030 and achieve 100% SAF by 2050. The Grand Challenge outlines a multi-agency approach to accelerate the research, development, demonstration, and deployment of SAF technologies. Various tax incentives complement the SGC policy’s goals, although it does not entail any binding targets for the industry and instead relies on voluntary SAF purchases.

Inflation Reduction Act (IRA): The flaghip US legislation that took effect in August 2022 seeks to incentivize domestic clean energy investments. The IRA categorizes SAF fuels as fuel mixtures that emit less than 50% GHG than petroleum-based jet fuel. Based on GHG emissions reduction, there is a production tax credit ranging from $1.25 to $1.75 per gallon. The tax credit provision is graded by the GHG improvements, with an incremental credit worth $0.1 per gallon (up to $0.50) for every additional percentage point of GHG reduction. SAF producers must register with the Internal Revenue Service to avail of the IRA’s incentives. The offered tax benefit for 2023 and 2024 is limited to SAF blenders, while for 2025- 2027, the coverage is for all producers of low-carbon fuels, including SAF. This latter phase of the tax credit, estimated to be worth $3 billion, is critical for expanding the local SAF production base (WSJ, 2022) (US Govt Treasury, 2023).

The U.S. DOE ’s GHG, Regulated Emissions, and Energy Use in Transportation (GREET) model lays down the IRA methodology to calculate lifecycle GHG emissions related to SAF. An updated version of this model, originally targeted for March 1, 2024, is awaited. The GREET model will determine tax credit eligibility and corresponding disbursement for 2023 and 2024. The country’s biofuel producers and agricultural feedstock suppliers are significantly impacted by the delayed GREET model update (Farmweek Now, 2024).

Administered by the EPA, the Renewable Fuel Standard (RFS) mandates the blending of renewable fuels into the nation’s fuel supply. While primarily focused on biofuels for road transportation, recent amendments have started to recognize SAF as part of the renewable fuel categories, providing additional incentives for its production and use.

The Federal Aviation Administration (FAA) allocated $244.5 million under Fuelling Aviation’s Sustainable Transition (FAST) to support facilities in SAF production, blending, storage, and transportation. Additionally, there is a $47 million allocation for organizations engaged in the development of low- emission aviation technology and enhanced test and demonstrate capabilities (Aviation Week, 2023). The FAA also supports the Commercial Aviation Alternative Fuels Initiative (CAAFI), fostering PPP to promote SAF development and commercialization.

In addition to federal level-policies, supportive to the growing of the USA SAF industry, there are several state-level Regulations and Initiatives. California leads the nation in SAF policy with its Low Carbon Fuel Standard (LCFS). Implemented by the California Air Resources Board (CARB), the LCFS incentivizes the production and use of low-carbon fuels, including SAF, by setting carbon intensity reduction targets. SAF producers can generate LCFS credits, which can be traded in the market, providing a financial incentive for SAF production. California’s early start in this direction has significantly impacted biofuel production and supply, with the state showing a high concentration of biofuel production and distribution. Washington state has introduced the CFS, similar to California’s LCFS, which sets carbon intensity reduction targets for transportation fuels. This standard encourages the production and use of SAF by allowing producers to generate credits for compliance. Other states like Illinois and Oregon are also leading in SAF-related policies and regulations. These states are developing frameworks and incentives to support SAF production and adoption.

In summary, the United States has established a robust framework to support SAF adoption through federal initiatives, state-level regulations, and financial incentives. However, the success of these efforts depends on continuous collaboration among stakeholders and addressing the financial and technological challenges in SAF production