Aviation Insights - Cost differentiation between SAF and Carbon Offsetting
A successful solution to reaching carbon neutrality by 2050 requires the combined results of both carbon offsetting and the use of SAF. The carbon market is seen as a transitional solution, while SAF is regarded as the long term path.
While SAF and carbon offsetting are being discussed at an absolute level for the whole industry, their costs are not easy to compare as they are applied differently. SAF is priced in USD per gallon; a carbon credit is priced per tonne CO2.
This study explores the contrast in magnitude between the cost of SAF versus carbon offsets at an asset level. The current cost of SAF exceeds that of carbon pricing by a 4x factor. These results confirm the view that carbon offsetting is a bridging solution until the SAF production scales up and SAF becomes available in large quantities and at a price comparable to that of fossil fuel.
