High feedstock costs slow the development of Europe’s sustainable aviation fuel market

Europe’s sustainable aviation fuel (SAF) market faced a sharp increase in production costs during the first half of 2026. The main drivers were rising feedstock prices, particularly used cooking oil (UCO), volatile energy markets and growing concerns over Europe’s ability to secure enough production capacity to meet future blending targets.

According to Fastmarkets, the base cost of SAF production in the Netherlands increased from $2,036/t at the beginning of the year to $2,181/t on July 10, the highest level since the assessment was launched. The production cost of hydrotreated vegetable oil (HVO) followed the same trend, reaching $2,294/t. The strongest upward pressure came from higher UCO prices, the key feedstock used in the HEFA production pathway.

Despite rising production costs, physical SAF prices were much more volatile. After surging to around $3,500/t in March following the escalation of tensions in the Middle East, the market gradually retreated. By early July, spot prices had eased to $2,500-2,700/t due to weaker demand, limited trading activity and lower conventional jet fuel prices.

Market participants are increasingly focusing not on current SAF blending mandates but on the industry’s ability to secure sufficient feedstock supplies later this decade. As a result, interest is growing in alternative production pathways, including alcohol-to-jet (AtJ), methanol-to-jet (MtJ) and synthetic aviation fuel (eSAF), which could complement HEFA-based production.

Industry experts say the market is shifting from ambitious policy targets toward the practical realities of scaling up commercial production. Ensuring adequate feedstock availability, maintaining cost-competitive fuel production and attracting investment are becoming the key challenges that will determine whether Europe can achieve its sustainable aviation fuel goals by 2030.

Tags: EU, biofuel