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Singapore to impose green fuel levy on departing flights
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Move from 2026 will raise ticket prices for travellers
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Aviation industry growth faces environmental challenges-IATA
By Lisa Barrington and Brenda Goh
SINGAPORE, Feb 19 (Reuters) - Singapore on Monday said travellers would need to bear the cost of the transition toward green jet fuel, announcing plans for a levy that would lift ticket prices on departing flights as the aviation industry searches for a viable funding model.
Introduced by Singapore's transport minister at an industry summit on the eve of the Singapore Airshow, the city-state said it aimed for all departing flights to use 1% sustainable aviation fuel (SAF) from 2026 and planned to raise that to 3-5% by 2030, subject to global developments and the wider availability and adoption of SAF.
"It will hurt our air hub and our economy, and raise the cost of travel for passengers if we are overly ambitious with our sustainability goals," Transport Minister Chee Hong Tat said of the need to give modest targets initially.
Aviation produces about 2% of the world's emissions but is considered one of the hardest sectors to decarbonise.
European regulators have to date been the most active in trying to boost the use of SAF, introducing rules that force airlines to meet minimum requirements for its use such as 2% in France by 2025 and 5% by 2030.
Under the European model, the carrier pays for the SAF and decides whether to pass the cost onto passengers in the ticket price.
Singapore's levy will vary based on factors such as the flight's distance and travel class.
For example, in 2026 the price of an economy class ticket on a direct flight from Singapore to Bangkok, Tokyo and London by an estimated amount of around S$3 ($2.23), S$6 and S$16 respectively to pay for the SAF, said the Civil Aviation Authority of Singapore, which developed the plan in consultation with industry and other stakeholders.
SAF, which can be made either through synthetic processes or from biological materials like used cooking oil or wood chips, currently accounts for 0.2% of the jet fuel market and costs up to five times more than conventional jet fuel.
"A big challenge that we are facing that is contributing to the high costs is actually securing bio-derived feed," said Ong Shwu Hoon, Asia Pacific fuels vice president at ExxonMobil Asia Pacific.
HIGH COSTS
Singapore's only current SAF producer Neste has the capacity to produce up to 1 million metric tons of the fuel annually at its refinery in the country that started operating last year, a company representative said, more than 10 times the volume required for the target of 1% by 2026. Neste produced 251,000 tons of SAF globally in 2023, according to its most recent financial report.