Singapore sets first ever sustainable aviation fuel levy, as Southeast Asia's fuel industry grows

SINGAPORE, Singapore (AP) — Flying in and out of Singapore, home to Southeast Asia's busiest airport, will get slightly more expensive this year as the city state begins imposing a levy of between 75 cents to $32 per ticket to fund sustainable aviation fuel.

The tax will support Singapore's growing use of the cleaner burning fuel, which is often made from used cooking oil or agricultural waste. The global aviation industry is encouraging its use as it tries to slash rising emissions that contribute to climate change without altering current aircraft.

Southeast Asia is poised to become a hub for global production of sustainable aviation fuel, or SAF, as new facilities and policies launch across the region, while environmental backpedaling in the United States under President Donald Trump creates an opening in global fuel production.

Singapore has the region's largest SAF plant and is beginning construction of a next-generation facility this year, with set agreements to supply fuel to major carriers like JetBlue and Singapore Airlines. Thailand launched a brand-new SAF plant in Bangkok in 2025. Malaysia and Vietnam hit domestic production milestones last year and Indonesia, like Singapore, recently announced plans to expand current operations.

The industry is just getting started, said Tat Chuan Goh, with Aether Fuels, the Chicago-based fuel development company building Singapore's new plant. “But we do sense the momentum is clearly building up," he said.

Singapore sets its new levy

Singapore's levy will affect flights departing after Oct. 1 and sold after April 1 from Changi International Airport, which handled a record 70 million passengers last year.

Passengers will pay a surcharge based on their trips' distance and cabin. The lowest levy of 1 Singapore dollar (about 75 U.S. cents) will apply to economy flights within Southeast Asia. Those traveling in premium cabin flights to the Americas will pay the most, 41.60 Singapore dollars (about $32).

For cargo, the levy is based on distance travelled and weight. To ensure transparency, the tax will be shown on tickets and air cargo contracts.

Daniel Ng, chief sustainability officer at the Civil Aviation Authority of Singapore, said the levy will allow “all aviation users to do their part to contribute to sustainability at a cost which is manageable for the air hub.”

Southeast Asia's fuel industry grows

With Southeast Asia's abundant access to fuel ingredients, like agricultural and forest waste, the region is sitting on a “pot of gold that can really be scaled up," said Goh with Aether Fuels.

Vietnam delivered domestically-made SAF mixes to local carriers like VietJet Air in 2025. Malaysia's first deliveries to local carriers like Malaysia Airlines and customers in Europe also took place last year.

Indonesia plans to increase its domestic fuel production and others in the region, like the Philippines, are cutting red tape to entice fuel developers.

“We can, if managed responsibly, support competitive and scalable SAF production,” said Aung Soe Moe, a senior officer for air transport for the Association of Southeast Asian Nations. ASEAN estimates the region could produce 8.5 million barrels of SAF per day by 2050.

Kelvin Lee, who leads sustainability in the Asia-Pacific region for the International Air Transport Association, the leading group of global airlines, said it's “natural that people are paying quite a bit of attention to SAF production in this part the world."

“But we do still need quite a bit of government support to have that momentum continue," Lee said.

U.S. pullback slows global production

Aviation contributes about 2.5% of annual global carbon emissions, according to the International Energy Agency, which says emissions from aviation are growing faster than those from any other transportation industry.

With aviation demand rising, the UN-backed International Civil Aviation Organization set a goal of zero net carbon emissions for 2050. Using SAF could cut about 65% of the industry's emissions, it says. That prompted some airlines and countries to set SAF mandates.

But there are doubts that SAF can scale up quickly enough, partly because of the Trump administration's reversal of clean energy efforts.

Global SAF production was steadily growing, with the U.S. output nearly doubling to a record last year. That was before Trump rolled back climate policies denting production that had surged under former President Joe Biden.

The global growth of SAF production is forecast to slow for the first time since large-scale output began in 2018.

Preeti Jain, who leads IATA’s net zero research, said the U.S. rollbacks are “definitely a topic of discussion.” But she said “the good thing is that those policy incentives have not totally evaporated, but there is some period of uncertainty."

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