Singapore's green levy on flights is a world first. Will others follow?

The Republic's new sustainable aviation fuel levy raises the question: Can an air hub stay competitive while making flying greener?

- David Broadstock

From October 2026, air travellers from Singapore will be charged a green levy - the first ever directly imposed on passengers and cargo to fund the large-scale purchase of sustainable aviation fuel (SAF), ringfenced for decarbonising aviation. The levy will work as an additional charge on flight tickets, or air cargo shipments departing from Singapore.

It may seem counter-intuitive for a small, open economy that relies heavily on aviation and connectivity to raise flying costs. Wouldn't this make Singapore less competitive as an air hub?

The answer lies in understanding why additional policy intervention is needed - and why waiting for the market to act on its own is no longer viable.

A WICKED PROBLEM

Aviation remains one of the hardest and most complex emissions-intensive sectors to decarbonise. Technological solutions like electrification of flight or alternative fuel technologies are still years to decades away from mass commercial deployment.

This is where SAF becomes relevant. At the risk of oversimplifying, SAF is essentially the same fuel, but produced in vastly different ways, integrating waste and bio feedstocks through circular economy principles to massively reduce life-cycle emissions.

The International Energy Agency and the World Economic Forum highlight SAF as an essential near-term decarbonisation pathway for aviation. The International Air Transport Association (IATA) too identifies SAF as critical to decarbonisation, estimating it could reduce aviation emissions by 65 per cent by 2050.

However, SAF is far more expensive than conventional aviation fuel. IATA has also warned of supply bottlenecks that limit availability and keep SAF prices high. This cost differential explains why operators have been slow to adopt it.