The Next Oil War Will Be Fought in the Sky: Why SAF Moment Has Arrived

A quiet but strategic shift is beginning in global aviation decarbonization market.

For years, sustainable aviation fuel (SAF) was treated as a climate compliance topic. It belonged to airlines, regulators, and ESG reports. That is starting to change.

Under the uncertain geopolitics, it is no longer a niche climate tech play—it's becoming a strategic imperative for the global aviation industry. With aviation accounting for 2-3% of global CO₂ emissions (and its share projected to rise sharply as other sectors decarbonize), SAF stands out as the most viable "drop-in" solution for existing aircraft fleets. Chemically identical to conventional jet fuel, it can slash lifecycle emissions by up to 80% without requiring engine or infrastructure overhauls.

For China—home to the world's second-largest aviation market and committed to carbon neutrality by 2060—SAF development is both an environmental necessity and a massive economic opportunity.

However, the core question is not whether China needs SAF. It does. The more important question is whether China can turn SAF from a demonstration product into a scalable and globally competitive fuel system.

From climate option to strategic fuel infrastructure

Aviation is one of the hardest sectors to decarbonize.

Batteries and hydrogen may eventually reshape short-haul or next-generation aircraft, but for the existing global fleet, SAF is the most practical near- and medium-term pathway because it can be blended with conventional jet fuel and used in current aircraft and airport fuel infrastructure. SAF can reduce lifecycle emissions significantly, with some pathways reaching 70%–100% net CO₂ reduction depending on feedstock and technology route. Globally, the market is still tiny. IATA data show that global SAF production in 2024 was around 1 million tonnes, equal to only about 0.3% of global jet fuel use; even IATA’s 2025 estimate remains below 1% of total jet fuel production.

That gap is the opportunity.

The aviation sector has already accepted the direction of travel. Europe has moved from voluntary ambition to mandatory demand: ReFuelEU Aviation requires fuel suppliers at EU airports to begin with a 2% SAF blend in 2025 and gradually rise toward 70% by 2050. China has also moved from policy language to operational pilots. In September 2024, the National Development and Reform Commission and the Civil Aviation Administration of China launched SAF application trials, with Air China, China Eastern, and China Southern participating on routes from Beijing Daxing, Chengdu Shuangliu, Zhengzhou Xinzheng, and Ningbo Lishe airports.

For investors, this means SAF is entering the conversion layer: from technology to offtake, from pilot to infrastructure, from climate narrative to industrial asset.

HEFA is the start. PtL is the frontier.

HEFA is commercially mature, compatible with existing refining capabilities, and aligned with China’s waste-oil resource base. It is the logical first bridge from pilot volumes to early commercial scale. But HEFA has a ceiling. Used cooking oil is limited, fragmented, and already competes with export markets and other biofuel demand. HEFA pathway dominates current global SAF supply, but feedstock limitations, collection cost, and supply-chain constraints continue to push up cost.

The long-term strategic frontier is PtL, or power-to-liquid SAF. PtL converts renewable electricity, green hydrogen, and captured CO₂ into synthetic aviation fuel. It is more expensive today, but it has a different scale logic. Unlike waste-oil-based SAF, PtL is not fundamentally constrained by biomass availability. It is constrained by green electricity, electrolyzer cost, CO₂ sourcing, conversion efficiency, and project finance.China’s advantage in PtL could become significant if its renewable power, electrolyzer manufacturing, industrial CO₂ sources, and refining know-how are coordinated into integrated projects.

This is where SAF becomes part of China’s broader new energy system.

China’s advantage is not just demand. It is system density.

China has three structural advantages in SAF.

First, it has aviation demand. China is already one of the world’s largest civil aviation markets, and passenger traffic is expected to keep expanding over the long term. A domestic SAF mandate, even at low blending levels, would create immediate volume.

Second, China has feedstock potential. HEFA, the most mature SAF pathway today, relies heavily on used cooking oil and waste oils. China has a large catering economy and significant waste-oil resources. CCTV reported that China’s existing SAF capacity was estimated at around 350,000 tonnes per year, with planned capacity of about 3.53 million tonnes per year, while iGDP cited around 300,000 tonnes of built capacity and more than 4 million tonnes of planned or under-construction projects. These estimates differ, but the direction is clear: supply is moving from symbolic to industrial.

Third, China has the industrial system to reduce cost. SAF is not only a fuel. It is a chain: waste collection, pretreatment, hydrogen supply, refining, certification, blending, storage, airport logistics, airline procurement, and carbon accounting.

China’s strength lies in exactly this type of system-level scaling.

The Market Will Not Be Linear.

China’s SAF development will likely unfold in stages.

In the first stage, HEFA projects scale around waste oil, aviation pilots and early certified production. In the second stage, policy support expands through blending targets, procurement frameworks and carbon accounting. In the third stage, PtL and other synthetic routes begin to matter as China’s renewable power, hydrogen and CO₂ utilization ecosystems mature. In the fourth stage, China becomes not only a domestic SAF consumer, but a global supplier of SAF production systems, project development models and certification-compatible fuel.

This will take time. SAF remains more expensive than conventional jet fuel, and global production is still far below what airlines need. But that is precisely why the market is attractive.

The gap between today’s supply and future aviation decarbonization demand is not a small niche. It is an industrial opening.

The companies that win will not wait for perfect policy clarity. They will help create it.

China has already shown in solar, batteries and EVs that cost curves fall when policy, manufacturing scale, infrastructure and demand move together. SAF may be the next test of that model.

For GX, the opportunity is to help make that coordination investable.

Not just cleaner fuel.

Not just aviation decarbonization.

A new industrial category for the low-carbon economy.