Investing in an Accessible and Affordable Future for SAF
Julien Manhes
Head of Sustainable Aviation Fuel and Carbon Dioxide Removal Development
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Airbus
Much has been written recently about the prohibitive pricing and lagging growth of sustainable aviation fuel (SAF) production. But while progress across the value chain may not be quite as advanced as initially expected, we are still far from reaching dire straits. The open secret is that despite the best efforts of individual companies, governments and institutions, no single entity can finance this transition alone. For SAF to fulfill its role in achieving the aviation industry’s net-zero goals, unprecedented collaboration is needed to raise the required capital: $1.45 trillion, according to the Air Transport Action Group’s Waypoint 2050 report, or about $48 billion a year.
To secure the required investment and create stability for long-term growth, a far-sighted and varied strategy is required. Although not a SAF producer, Airbus has already started investing in SAF production in a number of regions, and has committed to using at least 30% SAF in internal operations by 2030. But while investing directly in production and purchasing SAF is important, the industry must go further to foster investment by favouring long term demand guarantees and financial strategies that remove some of the risk from SAF projects, attracting more investors and ultimately accelerating the accessibility and affordability of SAF.
Public-private partnerships and blended finance models
Governments have a pivotal role to play in derisking and accelerating investments in SAF. Their investments are critical to fund the capital-intensive early phases of projects, like infrastructure development and R&D. Government buy-in also reassures investors that the long-term SAF strategies of countries or regions are relatively stable, and it reduces risk and costs. Governments play a key role in ensuring the designed regulatory framework will provide stable and predictable demand for SAF production projects. This is very much the spirit of mechanisms such as contract for difference (CFD) or revenue certainty mechanism, as is currently being explored by the UK Government.
The EU Innovation Fund, backed by the EU Emissions Trading System, is channelling billions of euros into clean energy research, including SAF. This fund helps de-risk innovative and expensive technologies by covering up to 60% of the relevant project costs. The Fund has also earmarked €220 million for the EU-Catalyst partnership, which aims to develop comprehensive green tech projects, including e-SAF production. These large-scale grants are instrumental in pushing the needle forward on innovative and potentially risky projects. The European Commission plans to issue a sustainable transport investment plan (STIP) later in 2025, which may make access to the Innovation Fund even easier for project developers. Similarly, the EU might look to include a market intermediary mechanism in the STIP proposal to allow private investment to support first-of-a-kind SAF plants to reach their operational stage by providing a degree of demand – and therefore revenue – certainty.
In a similar vein, blended finance models are also an effective way to reduce risk for investors by combining government capital with private investments. This approach can unlock higher budgets for projects that otherwise may struggle to obtain enough funding. An example of this is the 2023 joint investment made by Airbus, Qantas and the Queensland government in a Queensland biofuel facility, developed by Jet Zero Australia in partnership with LanzaJet.
Strategic investments in specialised funds
Another powerful tool for accelerating SAF production are specialised funds, which can be used to direct capital towards SAF startups, and the development of SAF technology, vital infrastructure and production facilities. While traditional funds are often risk-adverse, specialised funds are designed to capitalise on early-stage and growth-phase risks. They can more quickly deploy capital into promising ventures, accelerating the time needed to go from concept to commercialisation, which is especially pertinent considering the long timelines in SAF development projects.
Airbus has recognised the strategic importance of specialised funds, and in 2024, we became the anchor investor in the $200 million Sustainable Aviation Fuel Financing Alliance investment fund (SAFFA). SAFFA’s mandate is to make investments that support mature SAF-producing projects, and ensure that they are eligible for SAF certifications like RefuelEU Aviation or CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). By aligning the fund with key regulatory frameworks and reduction schemes, SAFFA ensures that the funded projects will contribute to the aviation industry’s net-zero ambitions.
Use-of-proceeds instruments
Use-of-proceeds instruments represent a transparent way of channeling investment towards sustainability initiatives by directing capital to projects with potential to reduce environmental negative impacts. These instruments provide investors with clarity as to how the funds are deployed and their impact. Considering the capital-intensive, lengthy development timelines for SAF projects, Airbus believes the inherent visibility and transparency offered by use-of-proceeds instruments can boost investor confidence. For SAF specifically, such instruments could be leveraged to secure long-term capital for biogas or biofuel manufacturing, as well as for different aspects of manufacturing hydrogen-based synthetic e-fuels.
Recognising the potential of these instruments, in January 2025, Airbus established a robust “use-of-proceeds” Green Financing Framework that allows us to align our funding strategy with our sustainability mission and objectives. Under this framework, Airbus is able to issue a variety of financial instruments, including covered/secured or unsecured bonds, convertible bonds, loans and commercial paper, designed to fund select sustainability projects.
A collective flight plan for our industry
While the financial challenges to scaling SAF globally are daunting, we believe that diversifying SAF financing models can help mobilise the necessary capital – provided they are supported by smart and stable policy frameworks. The entire aviation industry must work hand-in-hand with both governments and the financial sector to accelerate these efforts. By fostering an environment where SAF funding can thrive and risks are strategically managed, we can ensure that SAF becomes a globally accessible and affordable reality