Flying greener will come at a price, industry players warn
Because of limited availability and the high cost of production, sustainable aviation fuel is two to three times pricier than normal jet fuel.
SINGAPORE – Consumers will need to accept that there is added cost to flying greener, as the price of less polluting jet fuel made from waste materials, such as used cooking oil, will not fall to that of regular fossil fuels any time soon.
But if investments in sustainable aviation fuel are not made today, there could be more to pay later as the planet warms.
DHL Express Singapore managing director Christopher Ong made this point during a media visit on Aug 7 to the parcel delivery giant's facility in Changi Airfreight Centre which was jointly hosted by Finnish renewable fuel producer Neste.
The two companies inked a deal in July for DHL Express to use sustainable aviation fuel made in Neste's refinery in Singapore on cargo flights out of Changi Airport until June 2026.
Similar moves have been made by carriers like Singapore Airlines Group and Dubai-based Emirates previously, but on a smaller scale.
In total, 7,400 tonnes of sustainable aviation fuel, or around 9.5 million litres, will be supplied to DHL Express, accounting for 35 to 40 per cent of the total fuel used by its fleet of five Boeing 777 freighters here.
This is the largest purchase of sustainable jet fuel in Asia by volume so far.
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Mr Ong said sustainable fuels are a key lever to reduce DHL Express' emissions, 90 per cent of which come from its aviation activities.
He believes that the price premium for greener fuels will narrow over time as production grows, but he said there are no estimates today that suggest that sustainable fuel will ever get to the same price as regular jet fuel.
'I think it is a future we need to accept – that this will be more expensive,' he said.
The cost of sustainable aviation fuel is among the major barriers that have limited its widespread adoption.
Because of limited availability and the high cost of production, such fuels are two to three times pricier than normal jet fuel today.
Neste's Asia-Pacific head of public and regulatory affairs, Mr Steven Bartholomeusz, said sustainable fuels have environmental attributes that fossil fuels do not.
For instance, apart from having a lower carbon footprint, sustainable aviation fuel has been shown to produce less soot than conventional jet fuel.
In the past couple of years, Neste has faced a more challenging market amid weak demand and increased production capacity from other firms.
This has pushed the price of renewable fuels down and raised demand for the raw materials needed to produce such fuels, squeezing earnings.
Mr Bartholomeusz called for more 'demand certainty', noting the €1.6 billion (S$2.3 billion) Neste invested into expanding its Singapore facility.
'You can't make that kind of investment purely on the basis that you will have a company like DHL come along and (voluntarily) take our volume,' he added.
Neste's refinery in Tuas can produce up to a million tonnes of sustainable aviation fuel, making it the largest of its kind in the world.
But this capacity has not been fully utilised. In the first half of 2025, Neste produced 497,000 tonnes of sustainable aviation fuel across all of its refineries globally.
Things are set to change in Singapore in 2026, when all flights departing the city-state
must
use sustainable jet fuel , with an initial national target of 1 per cent use.
Passengers will be charged a levy, which will be used by the Government to buy the fuel needed to meet this target.
Early government estimates suggest that economy-class passengers may have to pay $3 more for short-haul flights, $6 more for medium-haul flights, and $16 more for long-haul flights.
Mr Bartholomeusz said the reality is that the world needs more sustainable fuel manufacturing to reach its 2050 net-zero goal, and policies like Singapore's 1 per cent target help drive the industry forward.
In response to earlier queries, CAAS chief sustainability officer Daniel Ng told The Straits Times that the authority is developing the legislative framework and operational details for the levy, in consultation with the industry.
Asked if Neste plans to expand into other locations in South-east Asia, Mr Bartholomeusz said the company has no such investment plans for now.
'We have capability here to meet the sort of demand that we see at present in this part of the world,' he added.
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