CAAS defers sustainable aviation fuel levy for air cargo by one year

29 September 2026

On 3 September 2026, the Civil Aviation Authority of Singapore (“CAAS”) announced that it will defer the implementation of the sustainable aviation fuel (“SAF”) levy for air cargo shipments by one year. The SAF levy will now apply
to services sold from 1 October 2027 for flights departing Singapore from 1 January 2028. 

The implementation of the SAF levy for passengers as well as general and business aviation flights remains unchanged. As announced on 10 November 2025, CAAS will start applying the SAF levy for all origin-destination passengers and general and business aviation flights departing Singapore from 1 January 2027, for tickets or services sold from 1 October 2026. The SAF levy must be reflected as a distinct line item in the fare breakdown, like other taxes and charges.

Compared to airlines’ passenger operations, cargo operations are more diverse and involve varying commercial arrangements and a wider range of stakeholders, such as airlines, air express companies, freight forwarders, and shippers. Taking into account industry feedback, the one-year deferment will allow more time for CAAS to work with industry to develop and implement a robust SAF levy collection mechanism for cargo shipments on departing flights. 

Treatment of SAF environmental attributes 

CAAS also provided further details on how the SAF levies will be used. 

Under the Civil Aviation Authority of Singapore (Amendment) Act 2025, all SAF levies collected will be channelled to a statutory SAF fund and used to purchase SAF and/or related environmental attributes (“EAs”) and to cover associated administrative costs. The Singapore Sustainable Aviation Fuel Company Ltd (“SAFCo”), a non-profit company limited by guarantee wholly owned by CAAS, will be the collection agent for the SAF levy and will also procure, manage, account for, and allocate SAF and SAF EAs. 

SAFCo will aggregate the SAF demand arising from the SAF levies collected and voluntary SAF demand and procure the SAF and associated EAs. The EAs associated with SAF will be managed separately from the physical fuel and allocated to eligible users. We understand from the CAAS that this is intended to be done in a transparent, traceable, and verifiable manner while safeguarding environmental integrity, and in compliance with sustainability requirements, including the International Civil Aviation Organization’s (“ICAO”) Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”) Eligible Fuels certification standards. 

The EAs procured by SAFCo will have two components, covering Scope 1 emissions and Scope 3 emissions. In sustainability reporting, Scope 1 covers direct carbon emissions from sources controlled by the organisation, such as
fuel combustion for airlines. Scope 2 covers indirect emissions from purchased energy, such as electricity. Scope 3 covers indirect emissions other than from the generation of purchased energy, including transport of goods and business travel. 

Scope 1 EAs will be allocated to eligible aircraft operators, according to their relative SAF levy contributions, to support requirements under ICAO’s CORSIA and ICAO’s long-term aspirational goal of net zero carbon emissions for international aviation by 2050. 

Scope 3 EAs, along with Scope 1 EAs that are not allocated to aircraft operators, will be centrally managed by SAFCo and made available to organisations seeking to reduce emissions associated with business travel and air freight activities. Proceeds from the sale of these EAs will be used to purchase more SAF and facilitate greater SAF uptake. 

Procurement for first voluntary SAF trial 

In August 2026, SAFCo completed its first voluntary SAF trial involving nine companies. SAFCo plans to launch a request for proposal for SAF procurement from the SAF levy by end-2026. The procurement will be conducted in a manner that is transparent, competitive, and cost effective, with the first batch of SAF expected to be delivered and uplifted in mid-2027. 

Practical impact 

The implementation of the SAF levy marks a milestone in CAAS’s concerted effort to introduce green initiatives in Singapore. For a more detailed analysis of the effect of the SAF levy and fund on airlines, banks, and lessors, please refer to our article “Singapore’s new sustainable aviation fuel levy and fund, and their implications for airlines, banks, and lessors”. 

Reference materials 

The press release is available on the CAAS website www.caas.gov.sg.