Sustainable aviation fuel (SAF) will be pivotal in aviation decarbonisation, with early signs of momentum emerging in South-East Asia.
According to the International Air Transport Association (IATA), SAF, as a drop-in-fuel compatible with today’s aircraft and infrastructure, could contribute around 65% of the emissions reductions required for the sector to reach net zero by 2050. But can ambition turn into genuine action?
South-East Asian nations are already introducing policies to progress this goal. Singapore has a binding 1% SAF mandate from 2026 coupled with an SAF levy, rising to 3% to 5% by 2030. Thailand targets 1% SAF from 2026, while Indonesia and Malaysia are planning 1% SAF blending requirements for international flights by 2027.
While implementation details are still being discussed, these targets offer a pathway for South-East Asia to pioneer a more sustainable aviation landscape.
Production capacity is also expanding. Neste’s refinery in Singapore, operating since 2010, has around 2.6 million tonnes per annum (mtpa), producing approximately 40% SAF and 60% hydrotreated vegetable oil (HVO) or renewable diesel (RD) following a 2023 expansion. In Thailand, Bangchak has begun SAF production, with a capacity of roughly 315 kilo-tonnes per annum (ktpa). In Malaysia, export-oriented projects are under development, including EcoCeres’ 420 ktpa SAF/HVO facility recently commissioned and PETRONAS’ announced SAF/RD project with up to 650 ktpa feedstock processing capacity.
Global SAF demand
SAF demand is accelerating, but projections indicate growth will scale unevenly across regions.
In the EU, mandates have locked in demand that will rise in stepwise increments through 2050. Yet Europe’s supply of Renewable Energy Directive III (RED III) compliant SAF is constrained by limited feedstock availability and relatively less competitive production economics. This leaves Europe structurally short of compliant SAF and HVO and reliant on imports in the near-term.
Elsewhere, new SAF and HVO capacity has come online ahead of local demand, tipping short-term global balances into oversupply. Geopolitical uncertainty, trade restrictions and logistics constraints further amplify these mismatches on a regional basis.
Success in SAF will be defined by three distinct capabilities:
> the ability to enable eligible feedstock value chain at scale, reliably and cost effectively;
> the optionality to flex production between SAF and HVO as demand and market signals evolve, and;
> the market flexibility across regions including physical and credit-based trading.
Global market relevance
In the short- to medium-term, SAF supply will be dominated by the hydro processed esters and fatty acids (HEFA) pathway, making South-East Asia’s compliant feedstock base, refining capacity and export logistics a core source of competitive advantage in serving mandate-driven markets.
Competitiveness also depends on flexibility – particularly for large-scale plants. In the near term, producers must be able to flex output between SAF and HVO to manage demand volatility and improve asset utilisation. Over time, as standards tighten and volumes scale, South-East Asia will need to diversify beyond current oil-based feedstocks (used cooking oil, tallow and first-generation vegetable oils) toward alternative and advanced second-generation feedstocks and new technology pathways.
The key consideration is future proofing by prioritising export-led infrastructure that can also be the backbone of a future domestic SAF market – storage, blending and certification – while phasing export-only logistics that could lose utilisation if market shifts.
Supply chain readiness
Scaling SAF in South-East Asia will require coordinated action across the value chain.
Policymakers and regulators could prioritise clear, credible compliance frameworks aligned with import-market requirements, while laying the groundwork for future domestic demand through binding, long-term mandates backed by transparent rules and standards. This sequence will sustain near-term exports while enabling a smooth and financially sustainable transition to domestic adoption.
Feedstock producers, plantation companies, food processors and waste collectors need to consider addressing the region’s most immediate constraint – fragmentation. This requires formalising collection and aggregation systems, standardising quality specifications and embedding traceability and chain of custody from the point of origin to the offtakers.
Investments in structured collection networks, as well as in pre-treatment, testing and audit or verification under recognised schemes such as International Sustainability and Carbon Certification and Roundtable on Sustainable Biomaterials, will be essential to turning dispersed residue and waste streams into certified, export-eligible feedstock pools.
Production, storage, blending and distribution capabilities are needed through HEFA-SAF and HVO feedstocks and processing routes, allowing new capacity to serve both aviation and road markets and de-risking investment as market conditions evolve. Over the longer term, sustaining growth will also require diversification across feedstocks and conversion technologies translating in need for tech innovation and scale-up.
End-users also play a critical role. Airlines, cargo operators and logistics players can help anchor SAF demand through multi-year offtake agreements, book-and-claim mechanisms or co-investment structures that de-risk projects and improve bankability. Airports, meanwhile, could support this not only with SAF-ready infrastructure, but also with robust procedures and tracking systems that lend to creditable, auditable use.
South-East Asia’s SAF opportunity combines regional scale in feedstocks, standards and early project development with country-anchored mandates, infrastructure and offtake. A practical path is coalitions of the willing – aligning standards and mutually recognising certification, audits and test results first, before selectively co-investing in shared backbone infrastructures where it lowers system costs.
Malaysia is well positioned to steer this regional collaboration. It combines deep experience in biomass and residue supply chains, established refining and logistics infrastructure and growing policy momentum on SAF.
Capturing the prize
A coordinated regional SAF ecosystem offers numerous benefits, unlocking export revenues, attracting long-term investment and supporting the development of skilled capabilities across the SAF value chain.
These benefits extend to upstream. Feedstock producers and collectors will energise socioeconomic benefits in rural areas through stable, higher-value demand for agricultural residues and waste streams.
At the same time, pre-treatment, testing and verification providers can embrace a durable growth opportunity, underpinned by recurring demand for export-ready services as SAF markets tighten sustainability and traceability requirements.
Fuel production, storage, blending and distribution players also stand to gain. They can improve asset utilisation and derisk investments, supported by sustained export and local demand, operational flexibility and cost reduction as capacity scales over time.
End-users and off-takers gain access to credible SAF supplies through long-term offtake agreements, recognised certification frameworks and book-and-claim mechanisms that support early market development.
Moving early, therefore, positions South-East Asia ahead of the curve. Building export-ready capabilities today enables the region to serve global markets immediately while laying the foundation for local SAF adoption.
The strategic question is not whether SAF should be oriented toward exports or local use, but whether the region can build the scale, credibility and integration required to support both as markets evolve. The window for take-off is clear, and South-East Asia must move quickly to get the industry up to speed.
Alessandro Zampieri (BCG partner and associate director, decarbonisation solutions), Marco Giberti (BCG Vantage manager) and Pei Shan Phung (BCG project leader) contributed their insights to this article.
