Singapore will add to already rising costs of air travel as it introduces a world-first green levy on flights departing the city-state.
Passenger fares booked starting October 1 for services departing from January 1 will be subject to the additional charge of between S$1 (78 cents) and S$41.60 per ticket, dependent on the class and destination of travel. The fees are intended to fund measures to boost adoption of sustainable aviation fuel, or SAF, and help reduce the industry’s climate impact.
While the extra charge — which won’t apply to transit passengers — is minimal, the levy is being introduced as the airline sector grapples with higher prices of jet fuel as a result of the impact of the Iran war. Ticket prices will “inevitably have to rise,” the International Air Transport Association industry group said in a June report.
The Civil Aviation Authority of Singapore previously delayed the planned April introduction of the charges because of rising fuel costs, and has deferred the measure for cargo flights until next October.
Singapore’s approach to directly charge air passengers to finance work to accelerate adoption of less-polluting aviation fuel is in contrast with usage mandates in Europe and U.S. tax incentives. The sector needs additional policy support with global production of SAF this year likely to be 2.4 million tons, equivalent to just 0.8% of jet fuel demand, according to IATA.
The new levy will provide funds to a centralized agency tasked with purchasing sufficient volumes to hit an immediate target for SAF to meet 1% of Singapore’s overall demand. The country aims to increase that share to 3% to 5% by 2030.
About S$82.5 million ($64.4 million) would be raised next year by the charge, according to BloombergNEF estimates using 2026 flight data. Based on a premium for SAF of $5 a gallon over conventional fuel, that would allow the purchase of about 12.9 million gallons, less than the roughly 15 million gallons needed to meet the 1% goal.
While SAF is regarded as the major tool to decarbonize international aviation — which accounted for almost 1.2% of all greenhouse gas emissions in 2025 — high costs are a constraint and likely to limit uptake without further policy support, BloombergNEF said in its annual New Energy Outlook report.
Efforts by Singapore will provide a boost to SAF suppliers, and the plan offers transparency “to all producers about how we could compete with the logistics, pricing and the traceability of the feedstock,” said Matti Lievonen, chief executive officer of Bain Capital-backed EcoCeres Ltd., which supplies renewable fuels.
Neste Oyj, which operates the world’s largest SAF refinery in Singapore, argues governments also need to continue to stimulate demand. Mandates being introduced in Asian markets will support the supplier’s plans to increase production to 2.2 million tons by the end of 2027, said Mario Mifsud, vice president for renewable fuels sales and trading for Asia Pacific and EMEA.
