Policy Recommendations for Developing Sustainable Aviation Fuel (SAF) into a Competitive Industry in China

John Swire & Sons Limited

Executive Summary

Climate change is a global issue. President Xi Jinping’s solemn goal of achieving carbon neutrality by 2060 demonstrates China’s commitment to this issue. Premier Li Qiang stated in the 2025 government report that China will “accelerate the development of a green and low-carbon economy”, “actively and steadily promote carbon peaking and carbon neutrality”, and “coordinate efforts to reduce carbon emissions, pollution, and increase green growth, accelerating the comprehensive green transformation of economic and social development”.

Swire Group, rooted in China for 159 years, is a highly diversified multinational conglomerate with five business divisions: Property, Beverages & Food Chain, Aviation, Marine Services and Trading & Industrial. Swire Group’s business is concentrated in Hong Kong and Chinese Mainland. As a firm supporter and practitioner of sustainable development, Swire Group has formulated a clear group sustainability strategy, Swire THRIVE, to address important environmental issues such as climate change, carbon reduction, water resource protection, and waste reduction. The group has been committed to contributing to China’s high-quality development. This document draws on Cathay Pacific’s recent exploration experience in sustainable aviation fuel to deeply consider the development path of the sustainable aviation fuel industry and proposes suggestions for the development of China’s sustainable aviation fuel industry based on international practises.

As one of the world’s leading airlines, Cathay Pacific has taken various measures over the past few decades to mitigate its impact on climate change, including continuously improving fuel efficiency, introducing new aircraft, and exploring SAF. Cathay Pacific has now committed to achieving net-zero carbon emissions by the middle of this century. Given that the role of existing technologies in improving fuel efficiency has reached a bottleneck, the low-carbon development goals of the aviation industry largely depend on the large-scale application of SAF.

Although China is temporarily behind Europe and the United States in SAF policy, it has long mastered key technologies in the production field and has production capacity facilities that are already in operation or under construction. In August 2024, the Central Committee of the Communist Party of China and the State Council issued the “Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development”, which clearly requires “strengthening the research and application of sustainable aviation fuel”. In September of the same year, SAF uplift pilots were launched at four airports and on twelve routes nationwide, but there are currently no production targets or long-term commitments to the use of sustainable aviation fuel.

The policy environment has a significant impact on the development and application of sustainable aviation fuel. Due to the high production cost of sustainable aviation fuel, it relies on policy support to narrow the price gap and compete with fossil fuels until production scale can be expanded and costs reduced to price parity.

To promote the development of SAF industry in China, we mainly have two recommended measures:

1. At the central government level, include the development of the SAF industry in the national “15th Five-Year Plan”, position it as a strategic emerging industry for support, and make corresponding arrangements in long-term industrial development planning, industrial policies, import and export trade measures, and R&D.

2. In the national strategy, further upgrade the status of Hong Kong International Aviation Hub to an international leading SAF hub and consider building the Guangdong-Hong Kong-Macao Greater Bay Area into an international leading SAF ecosystem, promoting the formation of a full-chain SAF ecosystem in the Greater Bay Area.
Sustainable aviation fuel (SAF) refers to jet fuel produced from feedstock such as used cooking oil, agricultural and forestry waste, energy crops, and green hydrogen through refining processes. Compared with traditional fossil-based jet fuel, its feedstock are renewable and clean, and it can be blended with traditional jet fuel for use in airports and aircraft equipment. The ultimate effect is to reduce carbon emissions by about 80% over the entire lifecycle compared to traditional jet fuel.

After several years of development, Europe, the United States, and some countries Asian region have made significant progress in SAF. In contrast, China’s sustainable aviation fuel industry is relatively lagging behind. Therefore, it is urgent to strengthen top-level design at the national level, consolidate consistent advantages in the new energy field, accelerate the promotion of the “dual carbon goals”, and cultivate SAF as the next globally leading competitive industry after photovoltaic power generation and electric vehicles.

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