Singapore, home to Southeast Asia's busiest airport, will impose a sustainable aviation fuel tax on flights departing from and arriving in the country starting this year. The levy will range from 75 US cents to 32 US dollars per ticket, with the funds raised dedicated to developing sustainable aviation fuel. This move will result in a slight increase in travel costs for flights to and from Singapore.

The tax is designed to help Singapore scale up the use of this cleaner fuel. Sustainable aviation fuel is typically produced from waste cooking oil or agricultural residues. The global aviation industry is actively promoting its adoption to significantly reduce climate-changing carbon emissions from air travel without requiring modifications to existing aircraft.

With new projects being launched and supportive policies introduced across Southeast Asia, the region is poised to become a global hub for sustainable aviation fuel (SAF) production. Meanwhile, the rollback of environmental policies during the Trump administration in the United States has created new opportunities in the global fuel production landscape.

Singapore hosts the largest sustainable aviation fuel plant in Southeast Asia and will commence construction of a new-generation production facility this year. It has already signed fuel supply agreements with major carriers such as JetBlue and Singapore Airlines (SIA). Thailand plans to open a new SAF plant in Bangkok by 2025. Malaysia and Vietnam achieved domestic production milestones last year, while Indonesia, like Singapore, recently announced plans to expand its existing production capacity.

"This industry is just getting started," said Wu Dachuan, from the Chicago-based fuel development company Aether Fuels, which is responsible for building Singapore's new plant. "But we are definitely sensing that momentum is building noticeably."

Singapore's new tax policy will apply to flights from Changi International Airport departing on or after October 1, 2026, for tickets sold from April 1 onwards. Changi Airport handled a record 70 million passengers last year.

Passengers will pay a surcharge based on travel distance and class. The lowest levy is for economy class flights within Southeast Asia, set at 1 Singapore dollar (approximately 75 US cents). The highest levy applies to premium class flights to the Americas, set at 41.6 Singapore dollars (approximately 32 US dollars).

Cargo flights will be taxed based on distance flown and weight. To ensure transparency, this fee will be listed separately on airline tickets and air cargo contracts.

The Chief Sustainability Officer of the Civil Aviation Authority of Singapore, Wu Wenhui, stated that this tax will enable "all aviation participants to contribute to sustainable development at a cost manageable for the aviation hub."

According to Aether Fuels' Wu Dachuan, Southeast Asia possesses abundant resources for fuel feedstocks, such as agricultural and forestry waste, describing the region as sitting on a "gold mine" ready for large-scale development.

Vietnam supplied domestically produced blended sustainable aviation fuel to local airlines like Vietjet Air as early as 2025. Malaysia also made its first deliveries of related products to local carriers such as Malaysia Airlines and European customers last year.

Indonesia plans to expand its domestic fuel production capacity, while other countries in the region, such as the Philippines, are streamlining approval processes to attract investment from fuel developers.

"If managed properly, we can support a competitive and scalable sustainable aviation fuel production sector," said Aung Somo, a senior official for ASEAN air transport. ASEAN estimates that the region could achieve a daily SAF production of 8.5 million barrels by 2050.

"It is only natural that there is intense global focus on sustainable aviation fuel production in this region," said Kevin Li, Head of Sustainability for Asia-Pacific at the International Air Transport Association (IATA).

"However, we still need substantial government support to maintain this momentum," Li added.

According to data from the International Energy Agency, aviation carbon emissions account for approximately 2.5% of global annual carbon emissions, and their growth rate outpaces that of any other transport sector.

With growing air travel demand, the International Civil Aviation Organization (ICAO), a UN-backed body, has set a target for the aviation industry to achieve net-zero carbon emissions by 2050. The organization states that using sustainable aviation fuel could reduce the industry's carbon emissions by about 65%, which has prompted some airlines and countries to mandate its use.

However, doubts remain about whether SAF can be scaled up quickly enough, partly due to the reversal of clean energy policies by the Trump administration.

Global sustainable aviation fuel production had been growing steadily, with US output nearly doubling last year to reach a record high. However, the rapid production growth seen previously has been dampened following the Trump administration's revocation of climate policies promoted during the Biden era.

Since large-scale production began in 2018, the growth rate of global sustainable aviation fuel production is expected to slow for the first time.

The reversal of US policies is "certainly a topic of discussion," said Preeti Jain, Head of Net Zero Research at IATA. But she also noted that "the good news is that the related policy incentives have not completely vanished; they have just entered a period of uncertainty."