What Sustainable Aviation Fuel Really Costs: Investment and Incentives

Sustainable Aviation Fuel: disclosed figures

Sources: the numbered public sources listed below.

What makes up the cost

The cost of Sustainable Aviation Fuel is primarily driven by capital expenditure for production facilities, feedstock acquisition, and operational expenses. Neste's Singapore refinery expansion, completed in May 2023, involved a €1.6 billion ($1.7 billion) investment to increase total output capacity, with 1 million tons per year dedicated to SAF [1][2][3][4]. Similarly, Neste's Rotterdam refinery expansion saw its estimated investment cost rise from €1.9 billion to €2.5 billion by March 2025 [7]. Gevo's Net-Zero 1 plant in South Dakota had a forecasted total installed cost of approximately $850 million in October 2022, a 33% increase from an earlier estimate due to rising material and supply chain costs [15]. These figures highlight the substantial upfront capital required for SAF production infrastructure. The market was worth $2.5 Bn in 2025 and is forecast to reach $23.3 Bn by 2035, a CAGR of 25.0%.

Disclosed prices and cost points

Disclosed figures offer insights into SAF pricing and cost components. Neste reported a comparable sales margin for its renewable products segment of $479 per ton in the fourth quarter of 2025, an increase from $242 per ton during the same period of 2024 [23]. This indicates improving profitability for established producers. The U.S. Inflation Reduction Act introduced a SAF tax credit of $1.25 per gallon, with an additional $0.01 for each percentage point of greenhouse gas reduction exceeding 50%, up to $0.50 per gallon, for fuel sold or used during 2023 and 2024 [12][13]. From 2025 through 2029, the U.S. Clean Fuel Production Credit offers up to $1.75 per gallon for SAF producers, tied to carbon intensity [14]. These incentives directly impact the effective cost for buyers and the revenue for producers.

How costs are moving and why

SAF production costs are influenced by inflation, technological advancements, and policy support. Gevo's Net-Zero 1 plant saw its estimated cost increase by 33% to $850 million by October 2022 due to higher steel, equipment, and supply chain costs [15]. Neste's Rotterdam refinery expansion also experienced a cost increase from €1.9 billion to €2.5 billion by March 2025 [7]. Conversely, Velocys announced in February 2026 that manufacturing and delivery efficiencies reduced the total investment cost for its microFTL™ technology by over 30 percent [27]. Government incentives, such as the U.S. Inflation Reduction Act's SAF tax credit of up to $1.75 per gallon, aim to reduce the effective cost of SAF and stimulate production [12][13][14]. These factors create a dynamic cost environment for SAF. In August 2026, Gevo reported a $176 million impairment charge related to its ATJ-60 project, reflecting a shift in focus [22].

What could bend the cost curve

Several factors could significantly alter the SAF cost curve. Technological innovations, like those implemented by Velocys to reduce microFTL™ technology investment costs by over 30 percent, can drive down capital expenditures [27]. Increased government support, such as the $1.46 billion loan guarantee for Gevo's Net-Zero 1 project from the U.S. Department of Energy in October 2024, can de-risk large-scale investments [5][6]. The FAA awarded $291 million in grants for 22 SAF-related projects in August 2024, further supporting infrastructure development [18]. Continued policy incentives, like the U.S. Clean Fuel Production Credit offering up to $1.75 per gallon, will make SAF more competitive [14]. Scaling up production, as seen with Neste's 1 million tons per year SAF capacity in Singapore [1][2][3][4], can also lead to economies of scale and lower per-unit costs.

Who gains and who is squeezed

Producers with established technology and significant government backing are likely to gain. Neste, with its €1.6 billion ($1.7 billion) Singapore expansion and increasing sales margins, is well-positioned [1][2][3][4][23]. Gevo benefits from a $1.46 billion U.S. Department of Energy loan guarantee for its Net-Zero 1 project [5][6]. Companies developing innovative production methods, like LanzaTech with its $587 million facility in Belgium [8], stand to gain from early market entry. Smaller players or those relying on less efficient technologies may be squeezed by rising capital costs and the need for substantial investment. The increasing cost estimates for projects like Neste's Rotterdam refinery, up to €2.5 billion, suggest that capital-intensive projects face financial pressures [7]. Policy incentives, while beneficial for producers, also create competitive advantages for those able to leverage them effectively.

What it means for buyers and suppliers

For buyers, the availability of SAF is increasing, driven by significant investments from companies like Neste, which dedicated 1 million tons per year of its Singapore capacity to SAF [1][2][3][4]. Government incentives, such as the U.S. tax credits of up to $1.75 per gallon, aim to make SAF more economically viable for airlines [12][13][14]. However, initial costs remain high, as evidenced by the substantial capital expenditures for new facilities. For suppliers of SAF technology and feedstock, the market presents significant opportunities. Companies like Velocys, reducing their microFTL™ technology investment costs by over 30 percent, are positioned to support new projects [27]. The overall market growth, from $2.5 Bn in 2025 to a forecast of $23.3 Bn by 2035, indicates a robust and expanding demand for SAF and its related supply chain.

About the data

Facts in this cost analysis come from the dated public sources listed below - company announcements and filings, regulators and business and trade news - cited by number in the text. Market size figures are Market-Reports.com estimates (US dollars, base year 2025, forecast to 2035). Statements about what developments mean are our assessment, not reported fact.

Sources

1. [1] ainonline.com
2. [2] kellerasean.com
3. [3] neste.com
4. [4] neste.com
5. [5] gevo.com
6. [6] biomassmagazine.com
7. [7] neste.com
8. [8] gasworld.com
9. [9] esgtoday.com
10. [10] macquarie.com
11. [11] skynrg.com
12. [12] projectfinance.law
13. [13] irs.gov
14. [14] cfp.energy
15. [15] gevo.com
16. [18] iratracker.org
17. [22] gevo.com
18. [23] biomassmagazine.com
19. [27] advancedbiofuelsusa.info