The Economics and Governance of Sustainable Aviation Fuel: An Integrated Review and a Stage-Based Policy Framework

Deploying sustainable aviation fuel (SAF) involves more than paying a premium over fossil jet fuel. Fuel pathways differ in production cost, life-cycle emissions, resource needs, and the quantity that can realistically be supplied. Investment also depends on policy stability, contracts, airport infrastructure, airline competition, and rules for environmental claims. This review brings together 81 sources: 66 peer-reviewed studies, two working papers, five foundational theory contributions, and eight institutional documents. Cross-study comparison identifies four recurring decision loci, which we express as practical questions: which fuels can be produced in useful quantities with verified climate benefits; how uncertain projects obtain finance and dependable demand; how contracts and market power divide costs, risks, access, and profits; and how fuel and environmental claims are allocated across airports and jurisdictions. We connect these questions with the private-social adoption gap, defined as the difference between the net value to society and the net value faced by an airline or buyer. The evidence shows that a low selling price does not necessarily mean low-cost emissions reduction when supply is limited or inputs have valuable uses elsewhere. Carbon prices, mandates, subsidies, and certificates also work differently under uncertainty, capacity limits, market power, and traffic response. Flexible accounting can reduce matching and logistics costs. Whether it increases net social value depends on whether it causes extra supply, prevents duplicate claims, preserves competition, and avoids shifting benefits away from smaller regions. We therefore propose a stage-based policy framework: first reduce project risk and build operating capacity; then use competition to reveal cost and allow controlled trading; and finally rely more on verified performance, competition policy, and declining public support.