‘There will be a cost’: Singapore’s green fuel levy set to push up airfares

The levy will vary depending on factors such as the length of the flight and whether the passenger is flying in economy or in premium class, Singapore’s government said on Monday at an aviation summit in the city state.

All flights leaving Singapore must depart with 1 per cent sustainable aviation fuel in their tanks from 2026, rising to between 3 per cent and 5 per cent by 2030, the government said. The levy is designed to fund this initiative.

The proposed tax indicates how passengers will foot at least part of the bill to clean up flying. An estimated US$5 trillion of capital investment may be needed to deliver on aviation’s goal of reaching carbon neutrality by 2050.

Speaking at the summit, Willie Walsh, head of the International Air Transport Association, reiterated that passengers can’t avoid the expense of cutting emissions. “Whichever way you look at this, there will be a cost,” he said.

The Singapore government, for example, said the fuel levy might add S$3 (US$2.20) to an economy fare from Singapore to Bangkok in 2026, while a flight to London would rise by S$16. More details will be announced in 2025.

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The Civil Aviation Authority of Singapore, which developed the plan in consultation with industry and other stakeholders, said in a statement that the use of sustainable fuel was “a critical pathway for the decarbonisation of aviation and is expected to contribute around 65 per cent of the carbon emission reduction needed to achieve net zero by 2050”.

Sustainable aviation fuel is about three to five times more expensive than conventional jet fuel and the available supply – about 0.2 per cent of the jet fuel market – is a tiny proportion of the industry’s requirements.

It can be made either through a synthetic processes or from biological materials, such as used cooking oil or wood chips.

The aviation industry says the fuel’s proportion of the market will rise to 65 per cent by 2050 as part of a plan to reach “net zero” emissions by then, though that will require an estimated US$1.45 trillion to US$3.2 trillion of capital spending.

Additional reporting by Reuters