Short-term price dynamics are creating unusually strong margins
Fuel markets remained tight throughout early 2026, keeping conventional jet fuel benchmarks elevated across Europe and Asia. In the same period, SAF prices have stayed high even as the additional bio‑premium has narrowed. This environment of high SAF prices has sustained strong margins for producers into mid‑2026.

In North Asia, production costs for SAF made from used cooking oil have shown only limited movement, while market prices accelerated sharply during the first quarter of 2026. This divergence between relatively stable input costs and rising SAF prices has extended a profitability window that remains significant for producers evaluating new capacity.

However, no investment should rely solely on temporary market spikes. Oil prices fluctuate, geopolitical tensions come and go, and spot markets can shift quickly. What matters for long-term capital decisions is whether SAF remains economically sound once markets normalize.

Regulatory mandates are creating durable, long-term demand
The strongest case for SAF lies not in commodity cycles but in policy. Across the world, governments are moving from voluntary frameworks to binding blending mandates that require airlines to use SAF at increasing levels over the next decades.

In Europe, the ReFuelEU Aviation regulation establishes mandatory blending, starting at 2 percent in 2025 and rising to 70 percent by 2050. South Korea has confirmed a 1 percent blending requirement for international flights beginning in 2027. Japan has set a 10 percent SAF target for domestic flights by 2030, and Taiwan has begun trial production to prepare for its initial obligations. Brazil is expected to finalize its SAF regulation later in 2026 ahead of a 2027 mandate.

These policies create an enforceable floor under SAF demand. Airlines that fail to comply face financial penalties, making SAF procurement a regulatory requirement rather than a discretionary purchase. Aviation also has no near-term alternative to liquid fuels, unlike road transport where electrification is steadily reducing diesel demand. As global air traffic continues to grow, SAF consumption is set to grow with it.

Feedstock availability is influencing where plants are being built
A major shift underway in the SAF market is the move toward producing fuel closer to feedstock sources. Historically, Southeast Asia and China exported large volumes of bio-based feedstocks to Europe for refining. Today, regional governments are introducing policies that encourage producing finished SAF domestically to capture more economic value.

In the United States, new federal incentives, including production tax credits linked to domestically sourced feedstocks, are pushing developers to locate SAF capacity within North America. This trend is redistributing production globally and expanding the range of viable project locations.

Different regions rely on different primary feedstocks, from Palm Oil Mill Effluent (POME) in Southeast Asia to distillers’ corn oil in the U.S. Midwest. This variability makes process flexibility a critical factor for new plants.

A realistic view of viable SAF plant sizes
There is a common perception that SAF facilities require large-scale investments similar to full refineries. While economies of scale do improve at higher capacities, the entry point is more attainable than expected.
A HEFA-based SAF facility of around 15,000 metric tons per year can already be economically viable, especially for North American ethanol producers who have access to distillers’ corn oil as a co-product. Capital requirements at this scale remain manageable, opening SAF production to a broader pool of developers.

Sulzer’s BioFlux™ technology is designed to support this range of projects, offering a complete solution from feedstock pretreatment through hydrotreating to final product separation. The system is built to handle a wide variety of feedstocks and can flexibly produce either SAF or renewable diesel (RD) depending on the market environment. Optional supply as modular, skid-mounted units further reduce on-site construction time and complexity as well as significantly lower project risk.

What developers must evaluate today
Developers assessing a new SAF or RD project face a broader set of considerations than simply current market prices. They must understand the regulatory trajectory of their target market, confirm feedstock availability and certification pathways, and evaluate long-term production costs against forecasted SAF prices. Equally important is ensuring that the chosen process technology can adapt to changing market conditions and switch between SAF and renewable diesel without major reinvestment. Sulzer’s BioFlux Technology enables this level of flexibility and resilience, and we welcome discussions with developers evaluating their next SAF or RD investment Sulzer’s BioFlux™ technology is designed to deliver this level of flexibility and resilience. We welcome discussions with developers evaluating their next SAF or RD investment - building on today’s strong price environment as an attractive entry point, while anchoring the long‑term investment case in mandates, structural demand, and the global roll-out of sustainable aviation.