Singapore Introduces Sustainable Aviation Fuel Levy

Centralized Procurement for Sustainable Aviation Fuel

To offset the additional costs associated with sustainable aviation fuel, the CAAS will centralize the procurement process, utilizing collected levies to aggregate demand and achieve economies of scale. This approach will enable businesses and organizations to participate in voluntary purchases of sustainable aviation fuel through the same mechanism.

Impact on Airfares

The size of the levy will be influenced by factors such as the distance of travel and the class in which the passenger is flying. According to CAAS estimates, implementing 1% sustainable aviation fuel could increase the price of an economy-class ticket on a direct flight to Bangkok from Singapore by approximately S$3 (US$2.23), while flights to longer destinations like London may experience a higher increase of around S$16. Premium-class passengers can expect to pay higher levies based on this structure.

A Critical Step Towards Decarbonization

Highlighting the significance of sustainable aviation fuel, the CAAS asserts that it is a vital element in decarbonizing the aviation sector and is projected to contribute approximately 65% of the carbon emission reductions required to achieve net zero by 2050. More specifics regarding the levy are anticipated to be disclosed in 2025.

This initiative marks a pivotal stride toward environmental sustainability in air travel.