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Malaysia targets production of 1 million tonnes of Sustainable Aviation Fuel (SAF) annually by 2027, aligning with its National Energy Transition Roadmap (NETR) and aviation decarbonization goals. A report by BIMB Securities highlights SAF as a viable short to medium-term solution for reducing aviation sector carbon emissions, which currently contribute 2-2.5% of global CO2 emissions.

Without effective mitigation, international aviation emissions could triple by 2050. SAF can reduce greenhouse gas emissions by up to 80% throughout its lifecycle, depending on feedstock and production methods.

Malaysia has a competitive advantage in SAF feedstock, particularly from palm oil waste. EcoCeres and PETRONAS are leading SAF production with planned capacities of 350,000 and 650,000 tonnes per year, respectively, contributing to Malaysia's potential as a regional SAF hub. Challenges include the lack of domestic SAF usage mandates, which could hinder local decarbonization efforts.