Singapore sets first ever sustainable aviation fuel levy, as Southeast Asia’s fuel industry grows

Singapore Introduces New Aviation Levy to Fund Sustainable Fuel Initiative

Flying through Singapore’s Changi International Airport, Southeast Asia’s busiest aviation hub, will soon cost passengers a bit more as the city-state implements a new environmental tax designed to accelerate the adoption of sustainable aviation fuel (SAF).

Starting October 1, passengers departing from Changi will pay a surcharge ranging from 1 Singapore dollar (about 75 U.S. cents) for economy flights within Southeast Asia to 41.60 Singapore dollars (approximately $32) for premium cabin flights to the Americas. The levy, which applies to tickets sold after April 1, will be clearly displayed on tickets to ensure transparency.

Cargo operations will also face new fees based on distance traveled and weight. The Civil Aviation Authority of Singapore’s chief sustainability officer, Daniel Ng, emphasized that the levy enables “all aviation users to do their part to contribute to sustainability at a cost which is manageable for the air hub.”

This initiative comes as Southeast Asia positions itself as an emerging powerhouse in sustainable aviation fuel production, with significant developments across multiple countries in the region. Singapore already hosts the region’s largest SAF plant and plans to begin construction of a next-generation facility this year, with supply agreements already secured with major carriers including JetBlue and Singapore Airlines.

The momentum extends beyond Singapore’s borders. Thailand launched a new SAF production facility in Bangkok last year, while Malaysia and Vietnam both reached important domestic production milestones, delivering locally-produced SAF to their national carriers. Indonesia has announced plans to expand its current operations, reflecting the region-wide push toward sustainable aviation solutions.

Tat Chuan Goh from Aether Fuels, the Chicago-based company building Singapore’s new plant, described the industry as “just getting started” but noted that “momentum is clearly building up.” The region’s abundance of potential SAF ingredients, particularly agricultural and forest waste, positions Southeast Asia favorably in the global race to develop sustainable aviation solutions.

“We can, if managed responsibly, support competitive and scalable SAF production,” said Aung Soe Moe, a senior officer for air transport at the Association of Southeast Asian Nations. ASEAN’s optimistic projections suggest the region could produce 8.5 million barrels of SAF daily by 2050, a significant contribution to global supply.

This regional development comes at a critical time for the global aviation industry, which contributes approximately 2.5% of annual global carbon emissions according to the International Energy Agency. More concerning, aviation emissions are growing faster than any other transportation sector. With increasing air travel demand, the UN-backed International Civil Aviation Organization has set an ambitious goal of achieving net-zero carbon emissions by 2050, with SAF expected to eliminate about 65% of the industry’s emissions.

However, the global landscape for sustainable aviation fuel faces uncertainty, particularly due to policy shifts in the United States. After nearly doubling to record levels last year, U.S. SAF production now faces headwinds following the Trump administration’s rollback of climate policies that had accelerated production under the Biden administration.

For the first time since large-scale production began in 2016, global SAF growth is projected to slow. Preeti Jain, who leads net zero research at the International Air Transport Association, acknowledged that U.S. policy changes are “definitely a topic of discussion” in industry circles, though she noted that “those policy incentives have not totally evaporated.”

This uncertainty in American policy potentially creates opportunities for Southeast Asia to fill the production gap. Kelvin Lee, who heads sustainability in Asia-Pacific for the International Air Transport Association, said it’s “natural that people are paying quite a bit of attention to SAF production in this part the world,” though he cautioned that continued government support remains essential to maintain momentum.

As Changi Airport, which handled a record 70 million passengers last year, implements its new levy structure, the initiative represents both a practical funding mechanism for sustainability efforts and a signal of the region’s commitment to playing a leading role in aviation’s green transition.