Policy Built the First SAF Markets. Production Advantage May Build the Next.
We looked to the United States for tax credits and to Europe for mandates, and that was a reasonable place to start. Yet some of the strongest SAF production economics may lie in emerging markets where feedstock, industrial capability and export access already exist. The open question is whether capital can be structured to capture that advantage.
My previous article examined what Europe's 2027 ReFuelEU review can build around the demand signal it has already created: firmer revenue certainty, better cost visibility, broader participation and a more financeable supply base. That leads to the next question: Once policy has created dependable demand, where should the additional fuel be produced? The global SAF industry has largely followed the geography of policy. Developers went to North America for production credits and to Europe for mandates. Capital, technology and airlines gathered there because the signals were visible and customers were already buying. That was rational, however, policy geography and production geography are not necessarily the same thing. The clearest demand signals do not always coincide with the strongest production fundamentals. If you set out to produce the lowest-cost renewable fuels and earn the strongest risk-adjusted return on the capital behind it, where would you build?
The answer may include parts of South America, Southeast Asia, Africa, the Caribbean and the Middle East, for different reasons in each. Two numbers ultimately determine whether the opportunity is worth pursuing: the production cost of the fuel and the risk-adjusted return available to the capital financing it and the current project map may understate how attractive that combination can be in selected emerging markets.
Policy created real demand, but not durable certainty
Subsidies and mandates did the early work, creating demand where the renewable fuels could not yet compete on cost, leaving a meaningful share of project value exposed to policy. On the Argus Biofuels Analytics series presented in its 2026 outlook, indicative US renewable-diesel margins fell from roughly $860 per tonne in 2022 to about $220 per tonne in 2025, a decline of nearly three quarters. Individual plants differ by feedstock, location, integration and credit exposure, but the direction is instructive. The conversion technology did not suddenly become incapable. The revenue stack changed, and it can change far faster than the asset built around it. The clearest recent illustration is Section 45Z in the United States. Legislation enacted in July 2025 eliminated the separate SAF premium on which some business cases had relied, cutting the maximum credit from $1.75 to $1.00 per gallon. It also restricted eligible feedstocks to materials grown or produced in the United States, Mexico or Canada.
Whatever one thinks of those changes, the investment lesson is plain. A fuel plant must recover capital over decades and may carry debt for ten or fifteen years, while incentives are created, revised or extended over much shorter political cycles. Contracts and financial structuring can reduce that exposure, but they cannot eliminate legislative risk. Nor is 45Z an isolated example. Even where biofuels enjoy unusual bipartisan support, policy mechanics can change repeatedly through feedstock-origin restrictions, credit revisions, lifecycle-model updates and new treatment of land-use effects. No single change is decisive, but the pattern very much is. An asset carrying capital for decades cannot comfortably underwrite a rulebook revised every few years. A producer ultimately just wants to make fuel.
The demand created by policy remains real and is growing. Europe, the United Kingdom and an increasing number of markets across Asia-Pacific and South America are establishing larger SAF requirements toward 2030. A future Chinese mandate remains one of the most consequential open questions. Yet capacity does not translate to output. In some markets, commissioned and announced renewable-fuel capacity exceeds the SAF volumes that buyers are currently required or willing to purchase. Flexible plants can swing toward renewable diesel or HVO when those products offer stronger returns. Actual SAF output therefore follows the interaction of mandates, buyer commitments, feedstock economics and relative product margins, rather than nameplate capacity alone. Europe may have enough capacity under construction to meet its aggregate 2030 target if projects ramp as planned. The United Kingdom appears more likely to require additional domestic capacity or imports, while advanced and synthetic-fuel obligations create further supply pressure in both markets. The pace of decarbonisation depends on the availability of production capacity, but also on how dependable and affordable the demand becomes.
The durable path pairs credible policy with less dependence on any single instrument. A return grounded in feedstock, industrial integration, conversion efficiency, logistics and proximity to demand can withstand policy change more readily than one built primarily around a temporary credit. The lower the underlying cost of the fuel product, the less value the project must recover through subsidies or unusually high customer premiums, and that shifts the commercial question. Policy selected many of the first SAF markets and the next production platforms may be selected by where the complete cost system is strongest.
The feedstock is here, and the system to use it can be built
You cannot out-engineer the absence of carbon and hydrogen. Across the three principal pathway families, the resource map frequently tilts toward the emerging-market belt. On the lipid routes that feed HEFA, carinata is already grown commercially in Argentina between primary crop seasons. ICAO assigns its jet fuel a relatively low default core lifecycle value, although the certified result still depends on land use, cultivation, processing and transport. On the alcohol-to-jet route, the same belt grows cassava, sugarcane and maize at enormous scale, with Nigeria alone producing about one-fifth of the world's cassava. On gasification routes, agricultural and wood residues are abundant across many of these markets. Africa's land figures are often reduced to sweeping statistics, but the commercially relevant point is narrower. Several countries hold combinations of suitable climate, crop diversity, agricultural residues and expansion options that are less available in the built-out economies consuming most of the world's aviation fuel.
Abundance does not equate to refinery-ready supply, and that distinction is a reason to build the commercial system rather than dismiss the resource. These economies already aggregate enormous volumes of crops, oils and residues. The relevant question is whether those systems can deliver certified feedstock at a cost and scale that preserve the underlying advantage. The food-versus-fuel concern is also more nuanced for a crop such as Nigerian cassava. Nigeria already supplies cassava into food, starch, flour, feed and ethanol markets, while significant volumes are lost after harvest. Published estimates place those losses at roughly 13% to more than 30%, depending on the location, the stage of the value chain and how loss is defined. The strongest fuel opportunity lies in reducing those losses, raising yields and recovering processing residues while protecting established food supply. The resource base is no longer simply an inference from crop statistics. Under ICAO's ACT-SAF programme, country-level feasibility studies in Uganda, Kenya, Côte d'Ivoire, Rwanda, Zimbabwe and other markets have begun moving beyond gross crop totals. They apply recoverability assumptions, consider competing uses and identify the collection, processing and certification work still required.
The uneven results are valuable. In ICAO's own words, the opportunity is unique to each State. Uganda's recently completed study identifies substantial technical potential, largely from agricultural residues and municipal waste, while Rwanda found domestic feedstock availability to be a binding constraint. The defensible claim is therefore narrower and stronger than "Africa has feedstock." Several specific markets may hold far more usable feedstock than the current project map reflects. The work is determining which markets, through which pathways and at what commercially recoverable volume.
Availability also has a subtler dimension. The first US commercial alcohol-to-jet plant initially used Brazilian sugarcane ethanol under an approved pathway, demonstrating that local proximity alone does not determine feedstock value. Carbon intensity, competing demand and policy eligibility can matter as much as the plant-gate price. Availability, rather than abundance alone, is the question that matters. The concern that emerging-market feedstock cannot be aggregated is also answered by how renewable-fuel markets already operate. In 2024, only about 7% of the renewable fuel verified under the UK's road-transport fuel obligation came from UK-origin feedstock. Imported used cooking oil, including large volumes originating in China, remained central to the market. That is a road-fuel supply chain rather than an aviation one, and SAF eligibility must be designed separately. The underlying principle still holds. Collection, traceability and certification are capabilities that can be built. They are not characteristics reserved for wealthy markets. The same standards can be applied to used cooking oil collected in Lagos or agricultural residues aggregated in Colombia.
Nigeria shows what the whole proposition can look like
Nigeria provides one worked example. It is not the answer for every market, but it offers a useful test of the argument. The country has an unusually broad set of candidate feedstocks across all three SAF pathway families. Cassava, maize, sorghum and molasses could support alcohol pathways. Palm-derived streams, used cooking oil, cottonseed oil and animal fats could supply lipid routes. Crop residues, forestry residues and municipal waste could support gasification and other advanced pathways.
That resource base sits alongside a large domestic market, established edible-oil and starch processing, world-scale refining, major ports and direct Atlantic access. Dangote has demonstrated the downstream capability by placing specification-grade jet fuel into international markets. That creates access to hard-currency demand and can reduce currency mismatch in a project's capital structure. The feedstock streams sit at different stages of readiness. Cassava, grains and palm products already move through large commercial supply chains, although their SAF-ready fractions still need to be isolated, characterised, traced and contracted. Tallow and cottonseed oil require more formal collection or processing. Distillers corn oil would depend on first developing a larger domestic dry-mill ethanol industry.
The central question is therefore no longer whether Nigeria merits consideration. It is which feedstock systems can be aggregated, certified and delivered at a cost that supports a competitive first project. Answering that requires a stream-by-stream assessment of recoverable volume, delivered cost, technology fit, certification and potential SAF output. That is the point at which a country screen becomes a feedstock and pathway diagnostic, and resource potential becomes an investment strategy.
Production advantage is not always one location
One assumption that appears frequently in SAF discussions is that the entire value chain should be located in one place and that may not always produce the most competitive outcome. The optimal location for producing an intermediate feedstock or energy carrier may be different from the optimal location for converting it into SAF. Likewise, the optimal location for producing SAF may differ from the market where its environmental attributes create the greatest value. In other words, production advantage can be designed across multiple geographies rather than concentrated in one. ETFuels provides an interesting example of this architecture. Rather than locating every step of production in one country, the company plans to produce e-methanol in Texas, where renewable power is abundant and comparatively low cost, before converting that intermediate into e-SAF in the UK, closer to refining infrastructure, policy support and customer demand. The same logic already exists elsewhere in sustainable fuels:
Used cooking oil may be collected in Southeast Asia before conversion into HEFA in Europe.
Ethanol may be produced in Brazil before being upgraded into SAF elsewhere.
Future synthetic-fuel platforms may increasingly separate renewable-energy production, intermediate fuel synthesis and final fuel upgrading across different regions.
Production advantage is therefore not only about choosing the best location but about deciding which location is best for each step of the fuel production value chain.
Where the advantage sits, and how to screen for it
An emerging-market project can gain in three places, although none is automatic.
The first is the feedstock source. Agricultural or waste inputs may cost less, particularly in HEFA, where feedstock is commonly the largest production-cost component.
The second is the industrial system. Existing ethanol plants, refineries, ports, utilities or processing assets may reduce capital requirements and logistics costs.
The third is the market boundary. Export access, hard-currency offtake, domestic obligations or book-and-claim can improve realised value and expand the pool of potential buyers.
Low yields, weak logistics, export-parity pricing or limited customer ability to absorb a premium can erode any of these advantages. The opportunity appears where enough of them coexist to survive aggregation, certification, conversion and financing. That makes the investment test concrete: a market merits deeper diligence when four conditions begin to align:
A feedstock system that can be contracted at a competitive delivered cost, rather than merely counted in national production statistics.
Industrial infrastructure that lowers conversion, utility, storage and logistics requirements.
Access to creditworthy demand through physical export, international offtake, domestic obligations or book-and-claim.
A financing structure that reduces country and project risks without consuming the underlying production advantage.
Few places will satisfy all four, and those that do deserve more attention than the current project map gives them. A serious investor or developer will still test delivered feedstock cost, pretreatment, realistic plant scale, operating capability, certification, offtake and the cost of capital. These are the same questions asked of every renewable fuel project.
The difference is that unfamiliar markets are often judged through assumptions before the data is collected. A more even standard prices the infrastructure and execution gaps, identifies the binding financing risk and compares the complete system with the developed-market alternative. Some markets will fail that test but others may reveal that the cost of closing the gaps is materially smaller than the production advantage available at origin. Those are the opportunities the current map is most likely to miss.
The variable that often decides it: the cost of capital
Feedstock may establish the underlying production advantage, but capital often determines whether anyone can capture it. Selected emerging markets may offer advantages in feedstock, land, labour or existing processing assets. Their recurring disadvantage is the higher price and shorter tenor of capital. Studies consistently find clean-energy financing costs several percentage points higher in many emerging economies than in advanced markets, with particularly large premiums in parts of Africa. Because fuel plants are capital-intensive, that gap can erase a genuine feedstock advantage. Part of the penalty reflects the country and financial market rather than the engineering. A first-of-a-kind SAF plant also carries project-specific risks involving technology, completion, feedstock and offtake. The central discipline is to separate the two because they call for different mitigants.
African institutions are increasingly capable of anchoring transactions at significant scale. In 2026, after the Dangote refinery entered operation, Afreximbank underwrote $2.5 billion of a $4 billion five-year syndicated loan to consolidate existing financing and optimise the refinery's capital structure. The transaction demonstrates both local institutional capacity and the importance of multilateral anchors in some of the region's largest financings. The biological resource is geographically anchored in a way finance is not. Land, climate, crops and residues cannot be created through structuring, although their commercial availability must still be proved. The capital penalty, by contrast, reflects distinct risks: sovereign exposure, currency mismatch, limited tenor, counterparty credit, policy duration and first-of-a-kind execution. Different institutions and instruments are suited to different layers.
Political-risk cover from institutions such as MIGA or the US DFC can address defined sovereign exposures. Afreximbank, the AfDB, the IFC and other development institutions can anchor debt, provide guarantees or extend tenor. Facilities such as TCX can reduce currency mismatch. Creditworthy offtake can address counterparty and revenue risk, while policy exposure can be allocated through price formulas, floors, guarantees and other contractual terms. The discipline is to identify the one risk pricing a given project out rather than pulling every lever at once. Because the binding constraint varies by country and project, each market must be evaluated on its own rather than assigned a blanket premium. The financing syndicate should enter early, alongside feedstock suppliers, technology providers and buyers.
A hybrid structure can be particularly effective: export offtake supplies hard-currency, base-load demand while domestic and regional consumption develops over time. In 2026, Green Sky Capital secured a financing package for a waste-oil and lipid-based biorefinery in Egypt. The project combines development-linked financing, a commercially established hydroprocessing route and a long-term take-or-pay agreement with Shell covering the facility's output. It does not prove that every Sub-Saharan project will close on comparable terms. However, it demonstrates that sophisticated risk allocation in the region is already being put into practice.
Two assumptions that deserve a more even test
The first is whether these markets can refine at scale and Nigeria has answered that question in part through Dangote. Refining capability does not eliminate SAF-specific execution risk, but it provides a strong foundation: process engineering, hydroprocessing, hydrogen systems, utilities, storage and fuel-quality control. The overlap is closest for HEFA, which resembles conventional refining chemistry. Alcohol-to-jet and Fischer-Tropsch require different front-end technologies, feedstock systems and operating capabilities, but they can still draw on much of the same industrial base.
The second is whether palm oil from tropical markets should be treated as inherently linked to deforestation. The lifecycle result depends on the certified supply chain, including land history, yield, fertiliser use, mill energy and methane management. Palm cultivated on drained peat or recently cleared forest can sit at or above the fossil-jet baseline of approximately 89 gCO₂e/MJ and should be disqualified. Palm produced on eligible land, with strong yields, efficient processing and mill-methane control, can perform far better. Land-use change can be the largest determinant of the result, and Nigeria may begin from a different starting point. Much of its palm oil has historically come from dispersed smallholders and long-established groves rather than a system dominated by large industrial estates established on drained peat. That does not provide an automatic sustainability claim. Any new plantation that clears forest carries the same penalty in Nigeria as it would elsewhere. It does mean that lifecycle assumptions shaped by peat drainage and recent forest conversion should not be transferred wholesale to Nigerian supply.
Whether Nigeria's actual palm streams provide a qualifying and commercially valuable carbon intensity must be established through a country- and supply-chain-specific lifecycle assessment. Palm deserves neither a blanket pass nor a blanket condemnation. The same evidence-based standard should apply to palm, soy, rapeseed and every other crop-based pathway, wherever it is grown.
What it comes down to
Global SAF production is expected to reach only about 0.8% of jet-fuel use in 2026 and the industry needs bankable supply at a price airline customers can absorb. The groundwork is already visible across Egypt, Malaysia, Brazil, Argentina, India, Indonesia, Thailand and the Gulf, including a binding SAF-related aviation emissions-reduction framework in Brazil from 2027. The question is increasingly how investors, buyers, developers and governments choose among these opportunities.
For investors, the question is whether perceived risk exceeds the risk that remains after mitigation. Local knowledge, careful structuring and access to guarantees may allow specialist capital to underwrite a project more accurately than investors applying a blanket country premium. Egypt demonstrates that development-linked capital and commercial counterparties can be assembled around a credible project structure.
For the market, the question is whether these projects can produce cost-competitive fuel. Cost is one of the principal limits on how much SAF the market can absorb. As the molecule moves down the cost curve, the buyer base widens, mandates become more affordable and the same pool of capital can support more production.
A SAF molecule produced economically at origin can enter the local or regional fuel system while its verified environmental attributes are sold through book-and-claim to a buyer elsewhere. The model separates physical delivery from the environmental claim, with registry controls preserving traceability and preventing double counting. Production can therefore follow the lowest-cost, most logistically sensible location rather than requiring every buyer to receive the physical fuel at its own airport. This does not argue against building in the United States or Europe. Rather, it argues for building wherever the complete cost system, from feedstock through finance, is strongest.
For developers, the sequence is practical: bring the financing syndicate in early, secure credible offtake, design certification into the feedstock system and place each risk with the party best equipped to hold it.
Governments have their own reason to participate. Depending on the project structure, domestic production can support import substitution, export earnings, foreign-exchange resilience, retained processing margin, rural income and fuel security. These national benefits may justify public participation that reduces the cost of capital.
The resource opportunity is real in selected markets. Production advantages can survive careful diligence, capital penalties can be reduced and existing industrial capability can provide a meaningful foundation. The carbon result depends on the actual supply chain rather than the latitude. A lower feedstock price does not automatically produce the strongest project. A brownfield refinery with existing hydrogen, utilities, logistics and embedded policy value may still come out ahead and the comparison has to allow that result. What remains is to compare these markets honestly, with no romanticism about abundance and no presumption that capability belongs only to the countries that built the first projects.
When we measure the complete cost system rather than the familiarity of the location, where should the next generation of SAF plants actually be built?
Elvis Ebikade, Ph.D. writes on sustainable aviation fuel commercialisation, feedstock economics and equitable energy transition.
