The levy will be paid to the Civil Aviation Authority of Singapore, which will procure and manage sustainable aviation fuel, according to senior minister of state for transport Sun Xueling at a parliamentary debate.

Singapore has set a goal to raise the use of sustainable aviation fuel to more than 1% by 2026, with plans to increase it further to between 3% and 5% by 2030 – a move it says won’t significantly raise airfares.

The cost will be shared across all air transport users, with earlier estimates suggesting an SAF levy of S$3 (US$2.30) to S$16 for passengers on an economy class direct flight, depending on distance.

The International Air Transport Association estimates that SAF can contribute around 65% of the reduction in emissions needed by the industry to reach net zero carbon emissions by 2050.

Still, global adoption of the green fuel remains minuscule, with SAF poised to make up 0.7% of aviation fuel this year, while air travel is expected to climb 6%, driving emissions higher.

The city-state will aggregate SAF demand across airlines and procure the fuel centrally, allowing for better commercial terms with fuel suppliers, Sun said.