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Europe Faces Growing SAF Supply Gap, May Need Policy Flexibility, S&P Says

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Europe may need greater policy flexibility as its sustainable aviation fuel market develops, with ambitious blending mandates likely to outpace available feedstocks and production capacity, S&P Global reported on Wednesday.

Under the firm's base-case outlook, the EU faces a SAF supply shortfall of more than 17 million metric tons by 2050 relative to the bloc's mandated 70% blending target. Supply gaps could begin to emerge as early as 2030, particularly for synthetic aviation fuel, or eSAF, Nathan Nguyen, S&P Global's Global Energy Horizons principal analyst for biofuels analytics, said.

"I think all of these points point to a need for policy flexibility," Nguyen said. "As the industry matures, that will be essential to managing compliance."

Nguyen cited potential adjustments to quotas, enforcement mechanisms, incentives, and feedstock eligibility rules.

EU SAF demand is expected to rise from about 1 million metric tons in 2025 to 3 million mt by 2030 and 21 million mt by 2050, driven by the ReFuelEU Aviation mandate, which requires suppliers to blend at least 2% SAF this year, increasing progressively to 70% by 2050.

Feedstock availability remains the industry's biggest challenge. Supplies of used cooking oil and other waste-based feedstocks are constrained, while competition from road and maritime transport sectors is intensifying.

Europe is projected to require 8 million to 8.5 million mt of waste-based Annex IX-A biofuels by 2030, more than double 2025 levels, with much of the supply already committed to renewable diesel production. The region is expected to remain a net importer of both renewable diesel and SAF.

Airlines have raised concerns over costs, as SAF remains significantly more expensive than conventional jet fuel. Platts assessed SAF in Northwest Europe at $2,629.25/mt on June 23, compared with $923.25/mt for jet fuel on an equivalent basis.

Despite the challenges, Europe maintains a strong pipeline of renewable diesel and SAF projects, including refinery conversions and new developments. Renewable diesel supply is expected to double over the next five years.

Tensions in the Strait of Hormuz have had only a limited impact on global SAF flows, with higher transportation costs rather than major supply disruptions affecting the market.

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