The war in Iran has sent shockwaves through global energy markets, forcing airlines to compete aggressively for jet fuel while exposing a long-standing weakness in the aviation industry’s transition toward cleaner alternatives.

Sustainable aviation fuel (SAF), long promoted as the industry’s best hope for decarbonizing air travel, remains far too scarce to offer meaningful relief. Despite years of pledges, SAF accounted for just 0.6% of global aviation fuel use last year, according to the International Air Transport Association.

Production has also lagged expectations dramatically. The United Nations’ aviation body had forecast roughly five million tons of SAF production by 2026, but current output stands at just over two million tons—while global jet fuel demand is close to 300 million tons. Industry leaders acknowledge that existing SAF supply cannot even cover one week of airline consumption.

“Currently available SAF supply does not meet global airline demand for even one week,” Delta Air Lines told investors, despite calling it “the most promising lever” for reducing aviation emissions. Even with an 80% year-on-year increase, the airline secured just 23.4 million gallons of SAF last year—still a small fraction of its overall fuel needs.

The core problem remains cost and scale. SAF is primarily made from waste oils, animal fats, and agricultural feedstocks, which are expensive and limited in supply. Before the war, SAF cost about $1,500 more per ton than conventional jet fuel, according to Argus Media, making widespread adoption economically difficult.

Unlike solar or wind power, SAF has not experienced a steep cost decline curve. Production is dominated by startups and a small number of pilot-scale projects, while major oil companies have largely prioritized traditional refining operations over large-scale SAF conversion.

Industry data shows that although around 260 SAF projects are planned globally, only 42 have reached construction-ready stages, and just a handful are operational—highlighting the gap between ambition and deployment.

Some major energy firms have even stepped back. Shell recently halted its Rotterdam biofuels project, citing weak competitiveness in delivering affordable low-carbon fuel at scale. Analysts say oil majors see greater short-term returns in conventional fuel markets than in building new SAF infrastructure.

However, regulatory pressure is beginning to shift the landscape. The European Union and United Kingdom have introduced SAF blending mandates starting at 2%, with targets rising steadily toward 70% by 2050. These rules are expected to gradually force greater production and investment across the industry.

Airlines and logistics firms are now signing long-term SAF supply deals, but volumes remain limited. Companies such as United Airlines, DHL Express, and FedEx are investing in pilot projects and partnerships with emerging fuel producers, though most supply agreements will not materially scale for several years.

Despite growing urgency triggered by geopolitical tensions and oil price volatility, industry experts warn SAF is not yet capable of acting as a true buffer against energy shocks. Production would need to expand more than twelvefold to meet near-term policy targets, underscoring the scale of the challenge ahead.

For now, airlines remain exposed to traditional fuel markets—paying higher costs in volatile conditions while waiting for the long-promised SAF revolution to catch up with demand.