Who Gets Paid for Cleaner Aviation Fuel? The Global Economics of SAF and Low-Carbon Aviation Fuel
Updated: Aug 31
For most of aviation's history, fuel has been a relatively straightforward business calculation.
How much does it cost?
Is it available?
Can it get to the aircraft?
Does it meet the required technical specifications?
Now there is another question:
What is the carbon value of the fuel?
That may sound like a question for a sustainability team. Increasingly, it is becoming a question for the entire aviation value chain.
Around the world, governments and regulators are introducing incentives, carbon markets, fuel standards and aviation-specific compliance mechanisms designed to accelerate the transition toward lower-carbon fuels.
The result is a new economic layer developing alongside the physical fuel market.
And it raises a question that deserves more attention:
But who actually captures the value?
The answer is not always the airline.
It is not always the fuel producer.
And it is not necessarily the company that physically moves the fuel.
It depends on which value is being created, under which regulatory framework, and who is entitled to claim it.
That is what makes the emerging economics of Sustainable Aviation Fuel (SAF) and Lower Carbon Aviation Fuel (LCAF) so interesting.
The fuel is only part of the story
SAF is produced from eligible renewable or waste-derived feedstocks through approved production pathways. Depending on the feedstock and pathway, it can deliver significant lifecycle greenhouse gas emissions reductions compared with conventional aviation fuel.
But there is an important detail behind the word "lower-carbon."
Not all SAF has the same carbon intensity.
Lifecycle emissions can vary according to the feedstock, production pathway, energy inputs, transportation and other factors.
That means two fuels can both qualify as SAF while having very different lifecycle emissions profiles.
And once regulators begin assigning economic or compliance value to those emissions profiles, carbon intensity becomes more than an environmental metric.
It becomes part of the value of the fuel.
That shift has been building through a series of milestones.
Milestone 1: Carbon intensity becomes a market signal
One of the clearest examples comes from California.
The state's Low Carbon Fuel Standard established a system in which lower-carbon transportation fuels and other eligible activities can generate tradeable credits based on lifecycle carbon performance.
The program has now moved further into aviation. California's amended LCFS carbon-intensity benchmarks for jet fuel took effect July 1, 2025, and apply to credit-generation calculations for fuel supplied from the third quarter of 2025 onward.
The significance goes beyond California.
It demonstrates a fundamental change in how fuel can be valued:
The carbon characteristics of a fuel can have economic value.
A gallon of fuel is no longer necessarily valued only according to its physical characteristics and price.
Its carbon characteristics can matter too.
Milestone 2: Aviation links fuel emissions to regulatory obligations
International aviation created another layer through the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA.
CORSIA is the global framework developed by ICAO to address the growth in international aviation emissions.
Under the program, aircraft operators can use eligible SAF and LCAF to reduce their CORSIA offsetting requirements, subject to the applicable sustainability, eligibility, monitoring and verification requirements.
This creates a direct connection between the carbon performance of fuel and an aircraft operator's regulatory obligation.
And the calculation is not simply based on whether a fuel is called "sustainable."
Under CORSIA, emissions reductions from eligible fuels depend on their lifecycle emissions value, expressed in grams of CO₂ equivalent per megajoule. The value takes into account emissions across the fuel lifecycle, including feedstock, processing, transportation and fuel use.
ICAO also allows actual lifecycle emissions values to be calculated under prescribed methodologies when the required technical information can support them, rather than relying solely on default values.
That is a significant shift.
The carbon profile of aviation fuel can influence its regulatory value.
Milestone 3: Europe puts money behind the transition
Europe provides one of the clearest examples of a direct financial mechanism.
Under the EU Emissions Trading System, 20 million allowances have been reserved from 2024 through 2030 to support the uptake of eligible alternative aviation fuels.
The mechanism is designed to help cover some or all of the price difference between conventional fossil kerosene and eligible SAF used by commercial aircraft operators on flights covered by effective EU carbon pricing.
And this is no longer a future possibility.
For SAF used in 2024, the European Commission allocated approximately 1.3 million EU ETS allowances worth about €100 million to commercial aircraft operators. The Commission also estimated an additional benefit of approximately €25 million from the EU ETS treatment of SAF, bringing the total 2024 ETS incentive to around €125 million.
That is an important milestone in the development of the market.
The economic value of cleaner aviation fuel is already being allocated.
And, in this particular mechanism, aircraft operators are direct beneficiaries.
But Europe is also doing something else.
It is creating demand.
Milestone 4: Regulation creates a market for SAF
The EU's ReFuelEU Aviation regulation requires fuel suppliers to progressively increase the amount of SAF supplied at EU airports.
The requirement began at 2% in 2025, increases to 6% in 2030, and reaches 70% by 2050. The regulation also establishes specific requirements for synthetic aviation fuels.
This is a different economic mechanism.
The EU is not simply providing financial support for cleaner fuel.
It is helping create a market in which demand for SAF becomes a regulatory requirement.
That distinction matters.
One policy can create supply. Another can create demand. Another can put a price on carbon.
Together, these mechanisms can change the economics of a market.
Milestone 5: The United States puts incentives into production
The United States offers yet another model.
The federal Section 45Z Clean Fuel Production Credit provides an incentive for eligible producers of qualifying clean transportation fuel, subject to specific requirements. The credit is linked to the emissions profile of the fuel and the amount produced and sold.
This creates an important distinction.
An airline purchasing SAF does not automatically receive every economic incentive associated with producing that fuel.
Under a production-based mechanism, the economic benefit can arise at the producer level.
That does not mean an airline receives no value from lower-carbon fuel. Under CORSIA, for example, eligible fuel use can reduce an operator's offsetting requirements.
But it does mean there is no single "SAF benefit."
There are different types of value.
And different participants may be entitled to different pieces of it.
Milestone 6: Canada adds another layer
Canada's approach is different again.
The federal Clean Fuel Regulations use credits representing lifecycle greenhouse gas emission reductions. Primary suppliers can create or acquire credits to meet compliance obligations, while eligible activities can generate credits that participate in the market.
Canada is also continuing to develop its sustainable aviation fuel policy framework. Transport Canada's current 2026-27 plan includes finalizing a Sustainable Aviation Fuels Blueprint for Canada, while Canada's Aviation Climate Action Plan establishes an aspirational target for SAF use by 2030.
The Canadian model is not identical to the European or U.S. approaches.
And that is precisely the point.
There is no single global SAF incentive.
There is an increasingly complex collection of mechanisms that can create different forms of value in different markets.
For companies operating internationally, where the fuel is produced, supplied and consumed can matter enormously.
The global picture is becoming more complicated
The aviation industry now has multiple overlapping layers.
Global: CORSIA establishes a framework for eligible fuels used to reduce international aviation operators' offsetting requirements.
Europe: EU ETS and ReFuelEU Aviation combine carbon pricing, financial support and mandatory SAF demand.
North America: The United States and Canada have developed different incentive and credit mechanisms, while California
operates its own carbon-intensity-based fuel market.
Other markets: Governments and regulators around the world are developing additional policies as they seek to accelerate aviation decarbonization.
The result is not one global SAF market with one global incentive.
It is something much more interesting:
a global aviation fuel market increasingly overlaid with multiple carbon-value systems.
And that changes the strategic conversation.
The fuel has a supply chain. The carbon has one too.
Think about what happens before lower-carbon fuel reaches an aircraft.
There may be a feedstock producer.
A fuel producer.
A fuel supplier.
A blender.
A trader.
An airport.
And finally, an airline or other aircraft operator.
The physical fuel moves through one supply chain.
But another chain is developing alongside it:
the carbon-value chain.
Carbon intensity is calculated.
Lifecycle emissions are documented.
Environmental attributes are created or transferred.
Credits may be generated.
Regulatory obligations may be reduced.
And contractual arrangements determine who has rights to particular attributes or benefits.
This creates a new commercial question:
Who owns the carbon value associated with the fuel?
The answer depends on the specific regulatory framework and transaction.
It cannot simply be assumed that the company buying the fuel owns every environmental attribute associated with it.
Nor can a producer necessarily assume that every downstream customer can make the same emissions-reduction claim independently.
The carbon value has to be understood just as carefully as the physical fuel.
LCAF changes the conversation
There is another development that deserves attention.
The future of lower-carbon aviation fuel is not limited to SAF.
ICAO also recognizes Lower Carbon Aviation Fuel (LCAF) under CORSIA.
A CORSIA LCAF is a fossil-based aviation fuel that meets the applicable CORSIA sustainability criteria and achieves at least a 10% lifecycle emissions reduction compared with the aviation fuel baseline. ICAO identifies technologies and measures such as carbon capture and storage, lower-carbon hydrogen and lower-carbon electricity as potential contributors to LCAF pathways.
That matters because it broadens the strategic question.
The future may not be about finding one fuel that replaces conventional jet fuel.
It may be about measuring and rewarding lower-carbon pathways across an increasingly diverse aviation fuel landscape.
And that makes carbon intensity even more important.
The number behind the fuel
For decades, one of the most important numbers in aviation fuel management has been the price per gallon.
The emerging low-carbon fuel market introduces another:
carbon intensity.
Under CORSIA, lifecycle emissions values can be determined using prescribed default values or, where applicable, actual lifecycle emissions values calculated according to the relevant methodology and supported by the required information.
That creates both an opportunity and a challenge.
A producer may be able to demonstrate a lower actual lifecycle emissions value than a default value, provided the applicable methodology and evidence requirements are met.
But a valuable number needs to be credible.
Where did the feedstock come from?
How was it produced?
What energy was used?
How were lifecycle emissions calculated?
Which methodology applies?
Who owns the environmental attribute?
And can the result be independently supported?
These are no longer questions reserved for sustainability specialists.
They can affect commercial decisions, regulatory compliance and financial value.
When carbon becomes an asset
This may be the most important change taking place.
A lower-carbon fuel can potentially create value in several different ways.
It may qualify for a production incentive.
It may generate a tradeable credit.
It may reduce an operator's regulatory obligation.
It may help satisfy a fuel mandate.
It may support a verified emissions-reduction claim.
These are different mechanisms. They should not be treated as interchangeable.
But they share one underlying requirement:
credible carbon data.
The more economic value attached to carbon, the more important it becomes to know exactly how that carbon number was calculated and whether it can withstand scrutiny.
That is why carbon accounting, lifecycle assessment, traceability and verification are moving closer to the center of aviation fuel strategy.
Carbon can become a financial, regulatory and reputational asset.
But an asset needs to be measurable.
And it needs to be defensible.
The next competitive advantage may be carbon intelligence
The aviation industry has spent decades optimizing fuel efficiency, cost, availability and supply security.
The next phase of the transition may require organizations to optimize something else:
their understanding of carbon value.
A fuel producer may be evaluating production incentives.
An airline may be evaluating fuel cost and regulatory obligations.
A supplier may be managing environmental attributes and traceability.
An airport may be preparing for changing fuel requirements.
A sustainability team may be evaluating emissions claims.
All of them are looking at the same fuel.
But they may be looking at different forms of value attached to it.
That is the emerging opportunity.
From gallons to carbon value
SAF will play an important role in aviation's transition to lower-carbon fuel.
But the bigger story is what is happening around it.
Across Europe, North America and other major aviation markets — and through the global CORSIA framework — governments and regulators are creating increasingly sophisticated mechanisms to recognize, require or reward lower-carbon aviation fuel.
The result is an emerging market where the carbon characteristics of fuel can influence money, compliance and competitive positioning.
The strategic question is therefore evolving.
It is no longer simply:
Are we using SAF?
It is becoming:
What is the verified carbon value of our fuel, who is entitled to capture it, and can we demonstrate it?
For aviation companies, understanding that answer could become increasingly important as the global low-carbon fuel market matures.
Because the future of aviation fuel may not be measured only in gallons.
It may also be measured in carbon intensity, credits, regulatory value and verified emissions reductions.
Zenith Net-Zero: Aviation Experience Meets Carbon Expertise
With 25 years of aviation industry experience, Zenith Net-Zero understands the operational complexity behind aviation's transition to a lower-carbon future.
Our expertise in GHG accounting, lifecycle assessment and verification helps organizations understand the carbon data behind their operations and turn that information into credible, defensible environmental and regulatory information.
Because when carbon becomes part of the economics of aviation fuel, one thing becomes increasingly clear:
The value isn't only in the fuel.
It's in the carbon story behind it.
Navigating CORSIA and Low-Carbon Aviation Requirements?
As aviation's carbon landscape becomes more complex, understanding the requirements, data and verification behind eligible fuels is increasingly important. Zenith Net-Zero combines 25 years of aviation industry experience with expertise in GHG accounting, lifecycle assessment and verification.
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