European SAF Production Costs Reach New Highs
The cost of producing sustainable aviation fuel in Europe climbed to record levels during the first half of 2026 as feedstock and energy markets tightened.
Fastmarkets assessed its SAF base-cost benchmark in the Netherlands at $2,181 per tonne on July 10, the highest level recorded since the assessment was introduced in June 2025.
A related SAF production-cost assessment based on a higher renewable diesel co-product value reached $2,294 per tonne on the same date, also a record for the series.
The increases underline a growing challenge for the European SAF market: mandates are creating demand, but the cost of supplying compliant fuel remains heavily influenced by volatile commodity markets.
Used Cooking Oil Becomes the Main Cost Driver
Waste-based feedstocks were the largest factor behind the increase in production costs.
Used cooking oil is a major raw material for the HEFA pathway, currently the most commercially established route for producing SAF.
Northwest European used cooking oil prices fell to around €1,025 per tonne in early March before reversing sharply during the second quarter.
By July 10, the price had reached €1,198 per tonne, its highest level since February 2025.
Hydrogen costs also contributed to volatility. Prices rose sharply during the first quarter as natural gas markets reacted to geopolitical disruption before easing and then moving higher again in June.
The combination shows why SAF pricing cannot be considered separately from the markets for waste oils, hydrogen and other renewable fuel co-products.
Spot SAF Prices Remain Well Above the Start of the Year
Physical SAF prices followed a more volatile path than production costs.
European spot indications rose sharply in March as conventional jet fuel prices increased and concerns grew over energy supply disruption.
Prices briefly reached around $3,500 per tonne before retreating during the second quarter.
By early July, spot SAF indications had eased to approximately $2,500–$2,700 per tonne, still around 14 percent higher than at the beginning of 2026.
Despite the higher prices, market participants reported that Europe remained sufficiently supplied with HEFA-based SAF for current near-term blending obligations.
The larger concern is shifting toward the years ahead, when European mandates increase and competition for eligible waste oils, fats and other renewable feedstocks is expected to become more intense.
That is increasing interest in alternative pathways including Alcohol-to-Jet, Methanol-to-Jet and synthetic SAF, which could reduce the industry’s dependence on a limited pool of lipid feedstocks.
For the market, the next phase of SAF growth will therefore depend not only on mandated demand but on whether producers can secure enough feedstock and deliver fuel at commercially sustainable prices.
Sources
Fastmarkets — European SAF Market Reshaped by Record Production Costs, Volatile Spot Prices in H1, July 17, 2026
EASA — Sustainable Aviation Fuels Market and ReFuelEU Aviation