Singapore passed the Civil Aviation Authority of Singapore (CAAS) (Amendment) bill in Parliament on 14 October, which will facilitate the implementation of sustainable aviation fuel (SAF) policies in the nation from 2026.
The bill was previously introduced for its first reading in September. It will empower CAAS to collect a SAF levy, which it announced in 2024 along with Singapore's SAF blending target, and set up a dedicated SAF fund to receive the levies collected. This will be used to buy SAF and SAF environmental attributes (EAs), in support of Singapore's aim for 1pc SAF use on flights departing the country from next year.
The fund will also include all interest and penalties imposed in relation to the SAF levies.
"In adopting SAF, we want to ensure that costs are manageable. Subsidies require large and recurring fiscal commitments, which are not sustainable for Singapore. We have therefore chosen a pragmatic and balanced approach, calibrated to our circumstances," senior minister of state for transport Sun Xueling said in Parliament on 14 October.
Singapore is adopting a fixed-cost envelope model where the total amount of money spent yearly on SAF will be pre-determined based on the SAF target and projected SAF price premiums, Sun added.
The sum needed will be collected upfront via SAF levies on passenger ticket prices, and the levy amount for that year will not change even if actual SAF prices differ from projections. Instead, SAF uptake volumes will be adjusted accordingly, which ensures cost certainty for airlines, passengers and shippers.
Singapore will also aggregate SAF demand across airlines, and centrally procure SAF using levies collected.
The levies were previously estimated to be around S$3-16 ($2.32-$12.35) to support a 1pc SAF blend, varying with flight distance and class of travel. But transfer and transit passengers through Changi Airport will not have to pay, to maintain Singapore's competitiveness as an air hub. Flights used for training, as well as charitable or humanitarian purposes will also not need to pay the levy.
The country's SAF mandate and levy will also be reviewed periodically, taking into account global developments in SAF supply, as well as prices and policies of other countries, Sun said.
Singapore's Economic Development Board (EDB) has also been in discussions with existing energy majors on retrofitting refinery units in the country — potentially to co-process SAF — and with new entrants for greenfield SAF production, she added.
