Singapore defers sustainable aviation fuel levy for air cargo; levy on travellers to proceed as planned

SINGAPORE: Singapore will delay the introduction of a sustainable aviation fuel (SAF) levy for air cargo by another year, while going ahead with the rollout for travellers from January 2027, according to the Civil Aviation Authority of Singapore (CAAS) on Thursday (Sep 3).

As previously announced, origin-destination passengers who buy tickets from Oct 1 this year for flights departing Singapore from Jan 1, 2027, will have to pay the SAF levy. The same timeline will apply to general and business aviation flights, and the levy must be reflected as a distinct line item in the fare breakdown, said CAAS in a media release.

The levy on air cargo shipments, however, will be deferred by one year following industry feedback. It will now apply to services sold from Oct 1, 2027, for flights departing Singapore from Jan 1, 2028.

"Compared to airlines’ passenger operations, cargo operations are more diverse and involve a wider range of stakeholders - such as airlines, air express companies, freight forwarders and shippers - and varying commercial arrangements," said CAAS.

The deferment will thus give CAAS more time to work with the industry to develop and implement a "robust" mechanism for collecting the levy, it added.

Sustainable aviation fuel is jet fuel made from organic or waste-derived material known as feedstock, instead of petroleum. It can reduce emissions by up to 80 per cent compared to its fossil-based counterpart, giving it a smaller carbon footprint.

The SAF levy was first announced in November 2025 and initially due to apply to tickets sold from April for flights departing Singapore from October, but it was deferred due to the impact of the ongoing Middle East conflict on airlines and passengers, CAAS said in a previous statement.

HOW THE LEVY WILL BE USED

CAAS on Thursday also laid out how the levies will be used.

Money collected through the levy will be channelled to a statutory fund known as the SAF Fund and used to purchase sustainable aviation fuel and its related "environmental attributes", as well as cover administrative costs.

SAF environmental attributes refer to a value representing the difference in carbon dioxide emissions of SAF throughout its life cycle and those from the same quantity of conventional aviation fuel.

The environmental attributes may be used to meet offsetting requirements under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), developed by the International Civil Aviation Organization (ICAO), or other similar programmes.

It can also be reported as carbon emissions reduction from the use of sustainable aviation fuel, which can in turn be used by businesses to report environmental sustainability efforts to stakeholders, investors or regulators.

The Singapore Sustainable Aviation Fuel Company (SAFCo), a non-profit wholly owned by CAAS, will be the designated collection agent for the levies and will also procure, manage, account for and allocate sustainable aviation fuel and its environmental attributes.

SAFCo has been working with airlines and industry stakeholders to develop the operational processes and systems for levy returns and collection, said CAAS.

Additionally, the environmental attributes associated with the fuel will be managed separately from the physical SAF and allocated to eligible users.

"CAAS has worked closely with airlines and other global industry partners to set up a robust regime for SAF levy collection, procurement and environmental attributes management. In doing so, CAAS seeks to lay the foundation for Singapore to serve as a trusted hub for SAF-related economic activities in the region,” said Mr Han Kok Juan, director-general of CAAS.