As Hong Kong strives to maintain its status as a global aviation hub, industry leaders and sustainability experts stress the urgent need for sustainable aviation fuel (SAF) policies and investments. With 98% of the aviation sector’s greenhouse gas (GHG) emissions coming from jet fuel use, SAF is seen as critical to decarbonizing the industry. However, the current lack of government incentives in Hong Kong and southern China is hindering progress. To ensure a sustainable future for aviation, policy interventions are required to stimulate SAF demand and ramp up supply
At VURDHAAN, we are actively engaged in supporting the aviation sector’s transition to SAF, providing strategic guidance on emissions reduction, regulatory compliance, and fuel innovation.
The Importance of Government Intervention in SAF Adoption
One of the primary challenges in adopting SAF is the “chicken-and-egg” scenario of low demand and low supply. Without strong government policies to incentivize SAF production and use, the industry cannot achieve the scale necessary to make SAF a viable alternative to conventional jet fuel. Experts, such as Mark Harper, Group Head of Sustainability at John Swire & Sons (HK), believe that clear government policies are essential to maintaining Hong Kong’s competitiveness as an aviation hub.
Currently, 80% of the global SAF supply comes from North America and Europe due to tax incentives and government support. To keep pace with global aviation leaders, Hong Kong needs similar policies to drive investment in SAF infrastructure and production. Chief Executive John Lee’s upcoming policy address is expected to outline steps to promote SAF, with initiatives like simplifying the approval process for transport and storage.
At VURDHAAN, we help aviation companies navigate the evolving landscape of SAF regulations and assist them in implementing sustainable fuel strategies that align with international standards such as CORSIA and ReFuelEU.
Public-Private Collaboration: The Key to Scaling SAF
To accelerate the adoption of SAF, collaboration between the public and private sectors is essential. Tracy Wong Harris, Head of Sustainable Finance for Asia at Standard Chartered Bank, emphasized the need for joint efforts to share costs and risks. This includes investments in refueling and blending infrastructure, which are necessary for SAF to be implemented at scale.
In January, a coalition of 13 stakeholders, including Standard Chartered, Cathay Pacific, and SAF producer Ecoceres, was formed to push for policy support in Hong Kong. The coalition is expected to release its policy recommendations ahead of the Chief Executive’s address, advocating for SAF adoption targets and financial incentives.
Public-private partnerships, like this coalition, are critical for ensuring that the aviation industry can meet its emissions reduction targets. At VURDHAAN, we provide expert advice on building effective collaborations, enabling companies to leverage partnerships that drive innovation and sustainability in aviation.
Global SAF Targets: Setting the Bar for Hong Kong
Other regions have already established clear SAF targets as part of their climate action plans. Beijing aims to use 50,000 tonnes of SAF between 2021 and 2025, while Singapore plans to mandate 1% SAF-blended fuel on all flights by 2026, rising to 5% by 2030. The US government has set ambitious goals to reach 3 billion gallons of SAF annually by 2030, and the European Union has mandated airports to supply at least 2% SAF from 2024, increasing to 70% by 2050.
These targets are crucial benchmarks for Hong Kong to consider as it looks to maintain its role as a global aviation leader. SAF is three to five times more expensive than conventional jet fuel, which highlights the need for financial support and policy frameworks to incentivize both supply and demand.
VURDHAAN works closely with aviation clients to help them align with global best practices in SAF adoption, offering tailored sustainability strategies that meet both local and international standards.
Local SAF Production: Opportunities for Hong Kong
One of the closest SAF production facilities to Hong Kong is located in Jiangsu province, built by Ecoceres, a Hong Kong-based company. The plant’s output grew from 40,000 tonnes in 2022 to 100,000 tonnes in 2023, giving it a 20% share of global production. However, the full potential of SAF production in the region can only be realized with stronger policy support.
By incentivizing local production and streamlining the logistics of SAF distribution, Hong Kong can position itself as a key player in the regional SAF market. This would not only reduce the aviation sector’s carbon footprint but also create economic opportunities in green fuel production.
At VURDHAAN, we help aviation companies explore opportunities to source and implement SAF locally and globally, ensuring they are prepared for future regulations and market shifts.
Conclusion: Policies for a Sustainable Aviation Future
The aviation industry in Hong Kong faces a critical juncture. To remain competitive as a global aviation hub, the city must adopt clear policies that mandate the use of SAF and incentivize its production. Government intervention, public-private collaboration, and investment in infrastructure are all necessary to solve the supply-demand issue and accelerate decarbonization in aviation.
At VURDHAAN, we are dedicated to helping the aviation industry transition to sustainable practices by providing guidance on SAF adoption, compliance with global standards, and strategies to reduce emissions. Together, we can pave the way for a cleaner, greener future for aviation.