Quick Answer

Jet Zero Australia closed an A$30 million Series C on 7 September 2026 and won final Queensland approval for Project Ulysses, backed by Qantas, Airbus and new investor POSCO International. In the same week Montana Renewables cut the capex on its 200 million gallon US expansion from US$1.2 billion to US$137 million, and Singapore confirmed a passenger SAF levy on flights from 1 January 2027. After the 2026 Hormuz shock pushed average jet fuel to US$152 a barrel, sustainable aviation fuel is being bought as a hedge against fuel-price spikes and a CORSIA credit market that is four to five times undersupplied, not as a sustainability-deck exhibit.

Key Takeaways

  • Jet Zero Australia’s A$30 million (about US$22 million) round takes total capital above A$80 million and funds front-end engineering ahead of a final investment decision. Production at Project Ulysses, up to 113 million litres a year of SAF and renewable diesel via LanzaJet alcohol-to-jet, is targeted for 2028 to 2029.
  • Qantas needs roughly 600 million litres of unblended SAF a year to hit its 10 per cent 2030 target. One Ulysses plant is about a sixth of the domestic industry pledge if every litre stays in Australia. Helpful, not sufficient.
  • Montana Renewables’ recut expansion is the real tell: brownfield, feedstock-advantaged and self-funded projects get built. Billion-dollar greenfield e-SAF decks do not.
  • Singapore’s levy is small by design, S$1.00 to S$41.60 per ticket, with cargo deferred to 2028. It is a procurement vehicle for a 1 per cent blend, not a price signal that builds a refinery.
  • CORSIA is the larger P&L risk. Phase 1 demand of 170 to 236 million tonnes faces eligible supply of around 40 million tonnes, and airlines have retired about 0.2 per cent of what they will owe by January 2028.

The equity cheque is about optionality, not tonnes

IATA expects 2.4 million tonnes of SAF in 2026, 0.8 per cent of airline fuel use, at an extra cost of US$4.3 billion. Paper capacity is closer to 9 million tonnes; utilisation, not nameplate, is the constraint. Against that backdrop, Ulysses at roughly 0.09 million tonnes and Montana at roughly 0.61 million tonnes are material to this year’s global output and rounding errors against the 500 million tonnes a year the net-zero path requires by 2050.

The investment signal matters more than the litres. Jet Zero chief executive Ed Mason framed the distinction plainly: some organisations will buy low-carbon liquid fuels, others will invest in building the industry. Qantas, which lifts around 70 per cent of conventional jet fuel in Australia and currently sources about 1 per cent of its fuel as SAF, almost all of it imported, has chosen the second path. Its chief sustainability officer Fiona Messent tied the round to fuel security and jobs before decarbonisation. That ordering is the story.

After Hormuz, a domestic litre became a treasury conversation

IATA’s June outlook cut 2026 industry net profit to US$23 billion from US$45 billion in 2025. Jet fuel averaged US$152 a barrel against US$90 last year, and fuel rose to 31.4 per cent of operating cost from 25.4 per cent. The Australian Financial Review explicitly linked the Jet Zero raise to higher oil prices making SAF more economically attractive.

For an import-dependent carrier, equity in a domestic alcohol-to-jet plant, a take-or-pay offtake or a booked environmental attribute is now a hedge against two things at once: another refined-products shock, and a compliance unit market that does not yet exist at scale. The analogue for lessors and private equity is last week’s ORIX and AerFin transaction, where lessors bought engine residual value rather than airframes. Here, airlines and traders are buying the compliance molecule upstream so they are not short eligible emissions units or SAF certificates in 2028.

Montana shows which projects actually get built

On 1 September Calumet’s Montana Renewables recut its Phase 2 plan to reach about 200 million gallons of SAF a year by the end of 2028, from a current run-rate near 60 million. Remaining capex fell to US$137 million from US$1.2 billion by repurposing adjacent asphalt-refinery equipment. The Department of Energy loan guarantee draw shrank from up to US$658 million to US$34 million, with the balance funded from earnings and no third-party equity.

That is capex deflation of roughly 90 per cent on the same headline volume. Willie Walsh has listed cancelled or downsized SAF projects in Sweden, the Netherlands, Germany, Spain, Denmark, the UK and Singapore over the past two years. IATA counts around 0.02 million tonnes of e-SAF operating or under construction against a 0.6 million tonne EU and UK 2030 mandate, with no new final investment decision in the past year. Investors screening the pipeline should look for equipment reuse and contracted ethanol or tallow feedstock, not nameplate.

Singapore’s levy is a procurement tool, not a price signal

The Civil Aviation Authority of Singapore confirmed on 3 September that the passenger SAF levy applies to tickets sold from 1 October 2026 for flights departing from 1 January 2027, banded by distance and cabin. The cargo levy is deferred a year, to services sold from October 2027, because forwarders would otherwise route around Changi. SAFCo will tender levy-funded SAF by the end of 2026 for first uplift in mid-2027, against a 1 per cent target.

A charge of a few dollars per ticket will not close a SAF-to-jet spread that IATA puts at roughly US$3,000 a tonne after the Middle East shock, up from around US$2,000 in February. What Singapore has done is put a central buyer in the market with a published tariff. The question for Singapore Airlines and the Gulf carriers is whether the year-end tender clears at a premium they can absorb, or whether book-and-claim imports fill it.

CORSIA is where the consensus trade could blow up

One hundred and thirty states are in CORSIA as of January 2026. Phase 1 covers 2024 to 2026 and IATA’s central demand estimate is around 213 million tonnes; eligible issued supply is 36 to 41 million tonnes. Sylvera counts about 400,000 tonnes retired so far. Airlines must surrender Phase 1 units by 31 January 2028, and Phase 2 becomes mandatory for larger aviation states in 2027.

The consensus treasury trade is to wait for cheaper units into 2027. MSCI has modelled prices rising from about US$15 a tonne to US$100 by 2035, with a cumulative airline carbon bill of up to US$127 billion; Emirates’ high case is around US$8 billion, Qatar’s US$6 billion, United’s US$5 billion. If ICAO letters of authorisation stay scarce, the waiting trade fails in the second half of 2027 and physical CORSIA-eligible SAF becomes the substitute for missing credits. That option is only worth anything to operators who can claim eligible fuel, not generic green marketing litres.

What this means

Discount the litre, credit the permit. The A$30 million pays for engineering, not steel, and POSCO’s offtake is still subject to agreement. Import plus book-and-claim remains the base case for Qantas in 2030. But the pattern across Australia, Montana and Singapore is consistent: capital-light, brownfield, policy-anchored supply is being financed by the people who will otherwise be short in 2028. For airline CFOs, network planners and lessors, the question is no longer whether SAF is an ESG cost. It is who owns the compliance option when the CORSIA true-up arrives.

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Boston Warwick’s sustainability and fuel advisory practice works on SAF offtake structuring, CORSIA exposure modelling and fuel-security strategy for airlines, lessors and investors. Subscribe to Aviation Insights for the weekly briefing.