M’sia’s SAF ambitions face a reality check

SEPANG: The country’s push to develop a sustainable aviation fuel (SAF) industry will hinge on a careful balance between decarbonisation targets, commercial viability and the competitiveness of its aviation sector.

These challenges were among the key issues discussed at Aviation Sustainability Day 2026, jointly hosted by Malaysia Aviation Group (MAG) and Malaysia Airports Holdings Bhd (MAHB) at Sama-Sama Hotel at Kuala Lumpur International Airport yesterday.

The event underscored the need for closer coordination between airlines and airports, particularly in aligning infrastructure planning, investment priorities and efforts to support Malaysia’s transition towards net-zero carbon emissions by 2050.

MAHB managing director Datuk Mohd Izani Ghani said the transition would require airports and airlines to align their priorities, infrastructure planning and long-term investments.

MAG president and group chief executive officer Captain Nasaruddin A Bakar said progress depended on coordinated efforts across the aviation ecosystem.

“The progress of aviation sustainability reflects the spirit of Malaysia Inc, where government, regulators, airports, airlines and industry partners work together towards shared national objectives,” he said.

MAG targets a 30% to 35% reduction in emissions intensity by 2030, rising to 40% to 45% by 2035.

It also aims to reduce building energy intensity by 20% and achieve a 55% waste diversion rate by 2030.

MAG recently became the first airline group in Asean to obtain certification under the Sustainable Procurement module of the International Air Transport Association’s Integrated Sustainability Programme.

It also became the first airline group in Malaysia to retire 80,100 Carbon Offsetting and Reduction Scheme for International Aviation-eligible emissions units towards meeting its initial compliance obligations.

However, scaling up SAF production remains a challenge, with industry players calling for clearer policies, reliable feedstock supplies and greater demand certainty to establish a commercially viable domestic ecosystem.

Speaking on behalf of the deputy transport minister, Civil Aviation Authority of Malaysia deputy chief executive officer (regulatory) Captain Mohd Radzi Mohamad Alias said Malaysia’s energy sector, manufacturing capabilities, logistics network and strategic location offers advantages in developing the industry.

Resources such as used cooking oil, agricultural residues and other sustainable biomass feedstocks could support domestic SAF production, although its viability would depend on feedstock sustainability, supply reliability, processing costs and airlines’ ability to absorb higher prices.

During a panel discussion yesterday, MAG group chief sustainability officer Philip See Yew Jin cautioned that domestic feedstock availability would likely be constrained.

“Even under best-case scenarios, our feedstock may not be sufficient to meet potential SAF mandates post-2035,” he stressed.

While Malaysia could accelerate adoption, See said the industry needs to model the implications carefully and address immediate challenges over the next 10 to 15 years to avoid becoming structurally uncompetitive.

Meanwhile, PETRONAS Dagangan Bhd head of commercial business Hardeep Singh Kirpal Singh said affordability and economies of scale would determine the pace of production.

“Until we achieve economies of scale, we cannot simply produce more without considering the commercial viability of the investment.

“The question is not whether we can produce SAF, but at what scale and pace we should do so,” he said.

He added that demand certainty is crucial for producers to determine when and how to scale up, requiring alignment among airlines, airports, producers and regulators.

Separately, See stressed that SAF adoption should be gradual to prevent sudden cost increases from being passed on to consumers.

“We cannot avoid the fact that SAF will carry a premium over conventional fuel,” he said.

He noted that Malaysia’s price-sensitive market could not absorb an aggressive mandate without consequences.

However, delaying clear policy direction for too long could lead to sharper cost increases that would be harder for consumers to absorb, See added.