The green flight reckoning: Financing and governing aviation's climate transition
Glamorised as the engine of civilisation, aviation has long occupied a unique position in climate discourse by escaping the strict gaze of decarbonisation. However, the urgency of alternate fuel has drawn attention to aviation’s overall climatic footprint including its broader atmospheric effects.
- Jun 4, 2026,
- Updated Jun 4, 2026 1:25 PM IST
This World Environment Day, the question before us is not limited to the timeline of global transition but whether the law, markets, industry, and economies can evolve and adapt fast enough to decarbonise the world’s hardest-to-abate sectors.
Glamorised as the engine of civilisation, aviation has long occupied a unique position in climate discourse by escaping the strict gaze of decarbonisation. However, the urgency of alternate fuel has drawn attention to aviation’s overall climatic footprint including its broader atmospheric effects. Thus, SAF has evolved from a mere technological experiment into the pillar of contemporary aviation revolution solving the emissions dilemma without grounding aircraft.
At present, aircraft cannot rely solely on battery-powered systems for long-haul commercial operations. Hence, the only choice available with the aviation industry to curb emissions is to change the fuel and transition to SAF which is derived from alternative feedstocks such as used cooking oil, agricultural residues, municipal waste, algae, and biomass. Trial flights have already been successfully conducted across the globe using blended SAF. Furthermore, several nations are rapidly developing regulatory frameworks in an effort to mandate blending and usage obligations.
The most consequential and least honestly discussed question in SAF policy is who absorbs the cost premium and whether the industry will reflexively shift that burden onto the consumers.
Across the globe, governments are now constructing detailed regulatory ecosystems around SAF. While the European Union, through the ReFuelEU Aviation framework, has imposed mandatory SAF blending targets, the United States has focused heavily on financial incentives and tax credits as its primary transition tool. Meanwhile, this transition is also being shaped by Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Thus, sustainable aviation is no longer optional diplomacy. It is becoming a regulatory reality.
India’s aviation story is most remarkable. India is now the world’s third-largest domestic aviation market and is led by highly price-sensitive consumers and one of the world’s largest low-cost carrier ecosystems. Yet this growth carries an inherent vulnerability. With aviation turbine fuel already constituting nearly 35 - 40 percent of airline operating costs in India, the introduction of SAF, which remains significantly more expensive than conventional jet fuel globally, risks increasing fares in a market where even marginal price increases can materially impact demand. India possesses a myriad of structural advantages for instance, an abundance of biomass feedstock, a politically embedded biofuel ecosystem, and a rapidly expanding domestic production base.
India’s regulatory response has been calibrated and gradual. In April 2026, the Ministry of Civil Aviation introduced a framework permitting SAF-blended ATF under the existing regulatory regime and outlined a phased blending roadmap initially limited to international routes and aligned with CORSIA obligations. The absence of domestic blending mandates at present may reflect a deliberate sequencing strategy to prioritise production capacity and regulatory readiness before extending obligations to India’s significantly more price-sensitive domestic aviation market.
The case for regulatory intervention rests on several market failures that voluntary adoption alone cannot address. These include the coordination challenge associated with the development of production and blending infrastructure, the absence of transparency in the SAF-related cost pass-through mechanism, and the risk of concentration of supply in the emerging market with limited producers. These dynamics merit regulation, for if left unchecked, they shall inflate compliance costs, ensure inefficient pricing, and create scarcity-driven market distortions, particularly where demand obligations can outpace competitive supply creation.
These questions become even more complicated when examined through the lens of competition law and market regulation. The SAF market is still in an early stage, which means there is a real possibility that a small number of producers, refiners, or airport fuel suppliers could acquire disproportionate control over supply chains. If SAF mandates become compulsory while production remains concentrated in a few hands, market distortions may emerge quickly.
Critics have cautioned that excessive regulation may inflate costs, suppress competition, favour politically preferred technologies, and even evolve into forms of green protectionism as seen in the case of US corn based ethanol and CBAM.
The preservation of competitive neutrality is critical to the success of SAF. While SAF production infrastructure, airport refuelling networks, and financial incentives must remain open and non-discriminatory, the regulatory framework must endeavour to foster technological plurality and encourage multiple market participants rather than inadvertently facilitating concentration of market power.
SAF lies at the convergence of climate governance, industrial policy, energy security, aviation expansion, and competition law representing something far more than a mere technological response to climate concerns. The central question is no longer whether aviation must become more sustainable. It is whether the law can move fast enough, and fairly enough, to make that transition work for everyone.
This World Environment Day, the question before us is not limited to the timeline of global transition but whether the law, markets, industry, and economies can evolve and adapt fast enough to decarbonise the world’s hardest-to-abate sectors.
Glamorised as the engine of civilisation, aviation has long occupied a unique position in climate discourse by escaping the strict gaze of decarbonisation. However, the urgency of alternate fuel has drawn attention to aviation’s overall climatic footprint including its broader atmospheric effects. Thus, SAF has evolved from a mere technological experiment into the pillar of contemporary aviation revolution solving the emissions dilemma without grounding aircraft.
At present, aircraft cannot rely solely on battery-powered systems for long-haul commercial operations. Hence, the only choice available with the aviation industry to curb emissions is to change the fuel and transition to SAF which is derived from alternative feedstocks such as used cooking oil, agricultural residues, municipal waste, algae, and biomass. Trial flights have already been successfully conducted across the globe using blended SAF. Furthermore, several nations are rapidly developing regulatory frameworks in an effort to mandate blending and usage obligations.
The most consequential and least honestly discussed question in SAF policy is who absorbs the cost premium and whether the industry will reflexively shift that burden onto the consumers.
Across the globe, governments are now constructing detailed regulatory ecosystems around SAF. While the European Union, through the ReFuelEU Aviation framework, has imposed mandatory SAF blending targets, the United States has focused heavily on financial incentives and tax credits as its primary transition tool. Meanwhile, this transition is also being shaped by Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Thus, sustainable aviation is no longer optional diplomacy. It is becoming a regulatory reality.
India’s aviation story is most remarkable. India is now the world’s third-largest domestic aviation market and is led by highly price-sensitive consumers and one of the world’s largest low-cost carrier ecosystems. Yet this growth carries an inherent vulnerability. With aviation turbine fuel already constituting nearly 35 - 40 percent of airline operating costs in India, the introduction of SAF, which remains significantly more expensive than conventional jet fuel globally, risks increasing fares in a market where even marginal price increases can materially impact demand. India possesses a myriad of structural advantages for instance, an abundance of biomass feedstock, a politically embedded biofuel ecosystem, and a rapidly expanding domestic production base.
India’s regulatory response has been calibrated and gradual. In April 2026, the Ministry of Civil Aviation introduced a framework permitting SAF-blended ATF under the existing regulatory regime and outlined a phased blending roadmap initially limited to international routes and aligned with CORSIA obligations. The absence of domestic blending mandates at present may reflect a deliberate sequencing strategy to prioritise production capacity and regulatory readiness before extending obligations to India’s significantly more price-sensitive domestic aviation market.
The case for regulatory intervention rests on several market failures that voluntary adoption alone cannot address. These include the coordination challenge associated with the development of production and blending infrastructure, the absence of transparency in the SAF-related cost pass-through mechanism, and the risk of concentration of supply in the emerging market with limited producers. These dynamics merit regulation, for if left unchecked, they shall inflate compliance costs, ensure inefficient pricing, and create scarcity-driven market distortions, particularly where demand obligations can outpace competitive supply creation.
These questions become even more complicated when examined through the lens of competition law and market regulation. The SAF market is still in an early stage, which means there is a real possibility that a small number of producers, refiners, or airport fuel suppliers could acquire disproportionate control over supply chains. If SAF mandates become compulsory while production remains concentrated in a few hands, market distortions may emerge quickly.
Critics have cautioned that excessive regulation may inflate costs, suppress competition, favour politically preferred technologies, and even evolve into forms of green protectionism as seen in the case of US corn based ethanol and CBAM.
The preservation of competitive neutrality is critical to the success of SAF. While SAF production infrastructure, airport refuelling networks, and financial incentives must remain open and non-discriminatory, the regulatory framework must endeavour to foster technological plurality and encourage multiple market participants rather than inadvertently facilitating concentration of market power.
SAF lies at the convergence of climate governance, industrial policy, energy security, aviation expansion, and competition law representing something far more than a mere technological response to climate concerns. The central question is no longer whether aviation must become more sustainable. It is whether the law can move fast enough, and fairly enough, to make that transition work for everyone.