00:00 Singapore says it will require sustainable aviation fuel, or SAF, on all departing flights
00:07 from 2026. The shift to SAF is crucial for the aviation sector to reach its goal of net
00:14 zero carbon emissions by 2050. But barriers including high costs and uncertain raw material
00:22 supply could stand in Singapore's way. SAF is an alternative fuel made synthetically
00:28 from hydrogen or from biological materials such as used cooking oil or wood chips. But
00:34 it can cost five times as much as conventional fuel and accounts for just 0.2 percent of
00:40 the jet fuel market. That's a relatively small percentage compared to the global size
00:46 of the biofuel market, according to Sami Jauhienen, Asia-Pacific's vice president in renewable
00:52 aviation business at Finnish fuel refinery Neste. "What is good to recognize is how early
01:00 stages the whole sustainable aviation fuel market is and also in how early stages the
01:07 aviation industry is in deploying such solutions for emission reduction." Singapore's authorities
01:15 announced they will initially require flights to use 1 percent SAF, possibly rising to between
01:20 three and five percent by 2030, depending on wider availability and adoption. This will
01:26 be paid for by a levy on tickets, according to Singapore's transport minister. At the
01:32 current rate of global production, analysts believe there isn't enough SAF to keep up
01:37 with demand or policy. Based on Singapore's targets, consultant Wood McKenzie estimates
01:44 its SAF demand will rise to about 2,000 barrels per day in 2026, increasing up to 10,000 BPD
01:52 in 2030. Neste recently expanded its renewable fuel plant in Singapore, which the company
01:58 says could meet the SAF demand. But Jauhienen says the current demand for SAF just isn't
02:05 driving producers to ramp up production. "All of this we have been so far lacking in aviation.
02:13 And that's explaining why the production and the volumes and the availability up until
02:19 now has been so limited. I think to solve this situation we need to tackle the demand
02:25 side of the problem first and then the investments will follow." There are also concerns that
02:30 the contents of SAF itself are not entirely made from sustainably sourced materials. Palm
02:36 oil is an example. The EU does not consider palm oil to be a sustainable fuel because
02:42 of deforestation in top palm oil-producing countries in Southeast Asia. Jauhienen says
02:49 Neste has completely moved away from the use of palm oil to produce renewable fuels. In
02:55 response to questions to Reuters on Singapore's new SAF policy, Shell said SAF is the only
03:00 scalable in-sector option to help materially reduce emissions from flights by 2050. But
03:07 it requires greater availability of raw materials, better supply chains, improved production
03:13 technologies, stronger demand and clearer policies.
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