Kuala Lumpur: Malaysia’s efforts to increase the use of sustainable aviation fuel (SAF) are being slowed by limited policy support and the high cost of production, according to a report by BIMB Securities, reports The Edge Malaysia.
The research house said that while the European Union and the United States have put in place mandatory measures to boost SAF use, Malaysia’s current blending targets remain voluntary and non-binding. This could leave the country in a position where it produces SAF for export without creating enough demand from its own airlines.
BIMB Securities pointed out that Malaysia’s policies lack clear requirements and firm timelines, which could delay adoption by domestic carriers and reduce the fuel’s competitiveness.
SAF, made by blending palm oil or used cooking oil with conventional jet fuel, is regarded by the aviation industry as one of the main ways to reduce carbon emissions from flying.
In the European Union, airlines must ensure that at least 2% of fuel used on departing flights is SAF from 2025, with the share set to rise to 20% by 2035 and 70% by 2050. In the United States, producers are offered tax incentives if they meet certain conditions.
Malaysia has also acknowledged the importance of SAF and has set a target to produce up to one million tonnes by 2027.
However, BIMB Securities said the biggest hurdle remains the high cost of SAF, which is estimated to be around three times more expensive than traditional jet fuel. Without subsidies, tax breaks or mandatory blending rules, airlines have little incentive to adopt it on a voluntary basis.
The research firm added that because airlines operate on thin margins, the price gap between SAF and conventional fuel has limited uptake, making stronger policy support necessary to encourage wider use.
