Aviation is not just a climate challenge, says International Air Transport Association Chief Economist Marie Owens Thomsen. The future of sustainable aviation fuel hinges on aligning economic viability with policy, especially amid geopolitical friction, softening oil prices, and uneven global climate priorities.
Thomsen joined IATA in 2022 as chief economist. Since 2023, she has also been vice president for sustainability and environment. Her three-decade career spans roles across global financial institutions, including HSBC, Merrill Lynch, Indosuez and Lombard Odier, alongside experience with IKEA and an entrepreneurial stint in the equine industry.
In this Insight Conversation, Thomsen speaks with S&P Global Commodity Insights Editor Samyak Pandey about policy recalibration, co-processing, trade frictions, SAF pricing and why aviation’s decarbonization should be viewed as a whole-of-government economic development strategy.
How are geopolitical uncertainties, low oil prices and policy recalibration affecting SAF investments and mandates?
The energy transition has lost momentum, especially with the recent shifts in US policy and broader geopolitical volatility. Climate priorities are slipping, even in advanced economies, and developing countries never placed them at the top to begin with — understandably so, as they wrestle with poverty, energy access and infrastructure gaps.
But aviation remains unique. In 2021, IATA committed the global airline industry to net-zero by 2050. ICAO (International Civil Aviation Organization) followed in 2022. We’re still the only sector with alignment at both the UN and industry levels on such a long-term goal. The commitment is there, but the investment environment has shifted.
Trade friction is also intensifying, with the EU and UK scrutinizing biofuel imports from Asia. How could this impact SAF supply chains and pricing?
It’s misguided. We’re talking about a tiny, emerging market, and already we see trade barriers, antidumping investigations and regional fragmentation.
Europe’s SAF-for-Europe approach favors domestic production and certain airports. That creates inefficiencies, raises costs and disadvantages European airlines globally. Instead of growing the pie, we’re slicing it too early.
On one hand, they want scale. On the other, they block cost-effective Asian feedstocks. This kind of policy inconsistency hinders global SAF growth. We should prioritize affordable feedstocks, not penalize them.
With jet fuel around $85/b and SAF still two to five times more expensive, does the spread threaten SAF adoption?
It definitely does. Cheap oil weakens SAF’s economic case. Historically, clean energy boomed — wind and solar, for example — when oil was expensive. We’re in an oversupplied oil market that could last into 2026, further lowering incentives.
Refineries also complicate matters. Jet fuel is only 8% of total output. It competes with diesel internally, and diesel itself competes with gas externally. But with the diesel market shrinking due to electrification, jet fuel — and SAF by extension — may gain more room long-term.
Given SAF’s cost, can airlines feasibly insource fuel production to manage long-term compliance costs?
That’s my fantasy: that every airline could produce its own SAF. But realistically, most airlines can’t afford it. With forecast net margins of just 3.7%, aviation isn’t investment-grade by banking standards. Only a few large carriers with strong balance sheets can take that leap.
If not insourcing, then what’s the most viable way to scale SAF fast?
Co-processing. Refineries already have the infrastructure. ASTM (American Society for Testing and Materials) allows 5% SAF via co-processing today and some believe it could safely go up to 30%. The UK is moving in that direction. It’s the cheapest way to scale without major capital expenditure, and yet uptake remains slow. That’s baffling…
