Latvia and Estonia: Unlocking strategic pathways to sustainable aviation fuel in Baltic region
Dirk Niemeier
Director, Clean Hydrogen and Alternative Fuels Lead
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Strategy& Germany
Valters Kriškāns
Senior Consultant, Management Consulting
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PwC Latvia
As the aviation industry faces mounting pressure to decarbonize, Sustainable Aviation Fuel (SAF) continues to be a critical solution for reducing greenhouse gas emissions. Latvia and Estonia, two Baltic nations with distinct energy landscapes and market dynamics, are actively shaping their strategies to enhance SAF access and even explore SAF production. This article explores their respective plans, challenges, and opportunities, drawing on a detailed comparative assessment.
The Article is developed within the project “Developing Technological Solutions and Production Possibilities for Sustainable Aviation Fuel in Estonia and Latvia” organized in cooperation with the European Commission's Reform and Investment Task Force (SG REFORM), the Ministry of Transport of the Republic of Latvia and the Ministry of Climate of the Republic of Estonia. The project was carried out by PwC EU Services, in a close collaboration with between the PwC member firms in Latvian, Estonian, along with PwC's global strategy consulting division Strategy&.
Latvia: Supporting Regional SAF Production Hub
Latvia’s approach to SAF is rooted in leveraging existing feedstock resources, which are currently used for lower value-add projects. The country sees significant potential in redirecting these resources toward SAF initiatives. Notably, Latvia is well-positioned for Power-to-Liquid (PtL) projects due to favorable market conditions and the availability of non-biological feedstocks.
Two major SAF production projects have been announced: Pars Terminals in Riga, utilizing the HEFA pathway with rapeseed oil, and NorSAF in Liepāja, which combines Alcohol-to-Jet (AtJ) and e-fuel production.
Infrastructure and Policy Support
Latvia boasts well-developed fuel supply infrastructure at airports, operated by direct suppliers. Ports and Special Economic Zones (SEZs) are under continuous development, with infrastructure being adapted to support SAF production.
Policy-wise, SAF project development benefits from mechanisms like green corridors, SEZs, and free ports. Yet, the national regulatory framework is still evolving, with gaps in production, transport, refueling, and reporting rules that are planned to be addressed in upcoming months.
Economic Feasibility and Strategic Role
Latvia faces challenges such as high capital costs and limited access to capital, which constrain investment. Although a relatively small market, Latvia’s strategic position in the Baltics - supported by two major harbors, strong feedstock availability, and a rising share of renewable power generation - creates favorable conditions for SAF production.
Latvia plays a central role in regional SAF uptake. AirBaltic, the largest airline in the region, is headquartered in Riga and is expected to be one of the biggest SAF consumers. Latvia’s policy instruments and active industry interest position it as a production and export hub for SAF in the Baltic region.
Estonia: Pragmatic Focus on SAF Import
Estonia generates significant quantities of wood-based waste and carbon emissions from its industrial activities, both of which present potential feedstock sources for sustainable aviation fuel (SAF) production. Despite this theoretical availability, several challenges impede the practical use of these resources. High electricity prices in Estonia increase operational costs, making local SAF production economically challenging. Additionally, strict regulatory standards for e-fuels further complicate the feasibility of domestic SAF manufacturing. These obstacles, combined with limited investor interest to date, have prevented the effective utilization of Estonia’s industrial byproducts and emissions as SAF feedstocks.
Economic Feasibility and Strategic Role
Estonia faces significant challenges regarding the economic feasibility of local SAF production. Elevated electricity prices and a limited labor pool drive up operational costs, while the country's small market size and relatively high capital costs further undermine competitiveness. As a result, Estonia is primarily plans to position itself as a SAF importer.
Regulatory Framework and Demand
SAF demand in Estonia is largely shaped by the ReFuelEU regulation, which mandates that aviation fuel suppliers incorporate a SAF blend. The economic impact of SAF in Estonia is projected to be most significant toward the end of the regulation’s implementation period. To meet these requirements, the government must continue aligning national policies with ReFuelEU and consider potential avenues for SAF industry development.
Comprehensive analysis of regulatory factors, demand forecasts, available feedstocks, infrastructure, and stakeholder input confirms that Estonia’s most viable scenarios revolve around supporting SAF imports. Factors such as low local demand, more competitive production costs abroad, and anticipated SAF production capacity in neighboring Baltic states all contribute to the conclusion that domestic SAF production is currently not economically justified.
To summarize
Latvia and Estonia are charting distinct paths toward SAF adoption. Latvia is positioning itself as a regional production and export hub, supported by active industry interest and strategic infrastructure investments. Estonia, on the other hand, is focusing on SAF import, recognizing the economic and political realities that limit local production feasibility. Both countries are aligning their regulatory frameworks with EU mandates, but face unique challenges and opportunities shaped by market size, feedstock availability, and geopolitical factors. Their evolving strategies will play a crucial role in the Baltic region’s contribution to sustainable aviation and the broader transition to greener fuels.
To learn more about SAF in Latvia, please reach out to Artūrs Kokars, Aviation Department Director Ministry of Transport, arturs.kokars@sam.gov.lv
To learn more about SAF in Estonia, please reach out to Taivo Linnamägi, Director General Aviation Department, Ministry of Climate, Taivo.Linnamagi@kliimaministeerium.ee
