Civil Aviation Authority of Singapore (Amendment) Bill

Order for Second Reading read.

Mr Deputy Speaker: Senior Minister of State Sun Xueling.

4.35 pm

The Senior Minister of State for Transport (Ms Sun Xueling) (for the Acting Minister for Transport): Mr Deputy Speaker, on behalf of the Acting Minister for Transport, I move, “That the Bill be now read a Second time”.

Aviation is a critical sector for Singapore. It connects us to the world and anchors our status as a global hub. Prime Minister Lawrence Wong just broke ground on Terminal 5, which will increase Changi’s capacity by about 50 million passengers a year.

As we continue to grow, we want to do so sustainably, so that future generations of Singaporeans can also experience the joy of air travel and Singapore can continue to serve as a premier air hub for the region and the world. The International Civil Aviation Organization (ICAO) has set a long-term aspirational goal of net zero carbon emissions for international aviation by 2050. As a member of the international civil aviation community and an ICAO Council Member, we are committed to working towards that goal. We will do so in a practical manner, advancing both sustainability and competitiveness, not one at the expense of the other.

The Singapore Sustainable Air Hub Blueprint was launched last year and sets out Singapore’s approach. Within this, the implementation of sustainable aviation fuels (SAF) is a critical pathway for us to realise our aviation decarbonisation goals. This Bill provides the legislative framework to enable its adoption in Singapore.

SAF is the most practical way to decarbonise aviation today. It is a drop-in fuel that can be blended with jet fuel, for use with existing aircraft and refuelling infrastructure, without the need for costly modifications. SAF is expected to contribute around 65% of the carbon emission reduction needed by aviation to achieve net zero by 2050. Recognising the importance of SAF to aviation decarbonisation, ICAO and its member states have agreed to a collective global aspirational vision to reduce international aviation emissions by five percent by 2030 through the use of SAF and other cleaner energies.

However, there are challenges in the adoption of SAF. Firstly, global supply remains limited, with production capacity only gradually scaling up. Number two, on the demand side, uptake is uneven and often concentrated in regions with strong mandates or subsidies. Number three, the sector is still nascent, and the costs remain high and volatile. Currently, SAF costs about three to four times more than conventional jet fuel.

Countries around the world have taken different approaches. Some jurisdictions adopt mandates. They require fuel suppliers to blend SAF into conventional jet fuel. The European Union's (EU’s) ReFuelEU Aviation Regulation, for instance, requires a two percent SAF blend by 2025, rising progressively to 70% by 2050. The United Kingdom's (UK’s) SAF mandate targets a 10% blend by 2030. They are exploring a revenue certainty mechanism to encourage investment in SAF production. This includes a guaranteed minimum level of revenue for SAF producers, even when market prices fluctuate.

Other jurisdictions use incentives. In the United States (US), federal incentives as well as state-level programmes help to lower the cost of SAF and encourage domestic production.

We have studied these approaches for Singapore carefully. Both have their merits, but they also come with trade-offs. Due to price volatility, mandates create significant cost uncertainty for airlines and passengers. In adopting SAF, we want to provide cost certainty to airlines and passengers and ensure that the cost is manageable. Subsidies, on the other hand, require large and recurring fiscal commitments, which are not fiscally sustainable for Singapore. Singapore has therefore chosen a pragmatic and balanced approach, calibrated to our circumstances. We do this in three ways: through a SAF target, fixed cost envelope model and centralised procurement approach.

To anchor supply resilience, Singapore has set a 1% SAF uplift target by 2026, with the goal to raise this to 3% to 5% by 2030, subject to global developments and the wider availability of SAF. We have consulted the industry and assessed that starting with a 1% target is manageable. It will not increase air ticket prices significantly.

On the other hand, the 1% target will send a firm demand signal to the market to spur production and industry development in Singapore. It allows us to do our part to support aviation decarbonisation, while laying the groundwork for broader adoption in the future.

At the same time, cost certainty is critical. SAF is still a nascent product that is subject to high price volatility. Unlike fossil jet fuel, airlines cannot hedge the price of SAF. Simply mandating the use of SAF would impose unpredictable and unsustainable costs on airlines and passengers as SAF prices may vary significantly.

This is why Singapore will adopt a fixed cost envelope model, funded through a SAF levy. Under this model, the total amount spent on SAF each year will be pre-determined based on our SAF target and the projected SAF premium. The amount needed will be collected upfront via the SAF levy. Importantly, the levy quantum for that year will not change even if the actual SAF premium differs from our projection. Instead, SAF uplift volumes will be adjusted accordingly. This ensures cost certainty for airlines, passengers and shippers. Airlines can plan with confidence, and passengers and shippers can expect predictable and stable charges, instead of facing sharp and unpredictable fluctuations.

We will also aggregate SAF demand across airlines and centrally procure SAF using the SAF levy collected. This allows us to secure better commercial terms with fuel suppliers and ensures that the levy proceeds are used in an accountable and effective manner.

Our approach balances ambition with pragmatism. It helps to encourage SAF production through clear demand signals, while ensuring that costs remain contained, predictable and fairly shared. These in turn allow us to meet our environmental responsibilities while safeguarding the competitiveness of our air hub.

Mr Deputy Speaker, I will now go into the key features of the Bill, which proposes to make amendments to the Civil Aviation Authority of Singapore Act 2009. Clause 9 of the Bill provides for the SAF levy to be payable in respect of passengers, cargoes and flights departing from an airport in Singapore to land in a place outside Singapore. The airports in Singapore that require the payment of SAF levy will be as specified in an Order made by the Minister for Transport.

Clause 9 also provides that the SAF levy is payable to the Civil Aviation Authority of Singapore (CAAS). The amount or rate will be prescribed in the Order and must be paid into the SAF Fund. The Order may also provide for other details, such as different amounts or rates that may be imposed in respect of different classes of passengers, cargoes, airports or aircraft.

Clause 3 of the Bill amends section 7(1) to create a new function for CAAS. CAAS may procure, manage, account for and allocate SAF and SAF environmental attributes, or establish and appoint a company to carry out these functions. SAF environmental attributes (SAF EAs) represent the difference in carbon dioxide emissions between the same quantities of SAF and conventional aviation fuel throughout their respective life cycles. Under the Bill, the SAF and SAF EAs may be allocated to persons who pay SAF levies or any other person as prescribed in an Order.

Clause 5 of the Bill inserts new sections 25C and 25D. The new section 25C establishes the SAF Fund, which comprises, among other moneys, all the SAF levies collected, and all interests and penalties imposed in relation to the SAF levies. The new section 25D sets out an exhaustive list of the purposes of the SAF Fund, which includes procuring SAF and SAF EAs and paying for the costs of procuring, managing and allocating SAF and SAF EAs.

Clauses 6, 7 and 8 make miscellaneous amendments to sections 86, 87 and 87A to align the provisions on the aviation levy and airport development levy with the new section 87B for consistency.

This Bill is an important enabler of Singapore's aviation decarbonisation journey. It reflects Singapore’s commitment to international decarbonisation goals and our determination to pursue a pragmatic and balanced approach that supports the competitiveness of our Singapore air hub. We will continue to work closely with the aviation industry and stakeholders to ensure the smooth implementation of this Bill. Sir, I seek to move.

Question proposed.

Mr Deputy Speaker: Mr Edward Chia.

4.46 pm

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Deputy Speaker, I would first like to declare that I am the owner and operator of a food waste valorisation enterprise, which produces a side stream product that can be used as a feedstock for biofuels.

The intent behind these amendments to decarbonise aviation and align Singapore with the global net-zero targets is a step in the right direction.

The global aviation sector is at a crossroads. While SAF offers a promising pathway to decarbonisation, it is still in its infancy in terms of supply, cost and scalability. The question before us is how we get there, and at what pace and price.

To this end, I would like to raise a few points for clarification.

First, on the viability of SAF, both economically and technologically. Second, on upstream capacity and whether global supply can meet our ambitions. Third, on feedstock availability and type, given regional constraints. Fourth, the impact of the levy on investors and airlines. And finally, on regional opportunities – how this transition could create green jobs and help Singapore leapfrog as a regional hub for sustainable aviation.

SAF is the aviation industry's best near-term pathway to decarbonisation. Yet, SAF today remains three to five times more expensive than conventional jet fuel. According to the International Air Transport Association (IATA), global production accounted for only 0.2% of jet fuel consumption in 2023.

This raises the question of just how economically and technologically viable SAF is. Without sufficient scale, a SAF levy risks becoming a cost burden on airlines and passengers rather than a market signal strong enough to catalyse real change.

In Norway and the EU, SAF blending mandates have been introduced. In Norway, 0.5% blending requirement, implemented in 2020, did increase SAF uptake, but at significant cost to carriers, which in turn led to ticket price increases and logistical complexities in supply.

Similarly, the EU's RefuelEU Aviation regulation, passed this year, mandated a progressive SAF blend rising to 70% by 2050. However, the European Commission itself acknowledges that high production costs remain the biggest constraint.

The energy transition toward carbon neutrality demands a transformation across the entire aviation supply chain, from producers to off-takers, from regulators to the flying public. This is not a change that one sector can shoulder alone. It requires a shared understanding of how costs and upstream investments are borne, how responsibilities are shared and how each phase of implementation unfolds.

For a SAF levy to truly succeed, it must inspire confidence, de-risk investment and drive down costs over time.

Globally, even major energy players, such as Shell and BP, have slowed or paused SAF investment. Just this year, Shell suspended plans for its 820,000-tonne-per-year SAF facility in Rotterdam, citing rising costs and uncertain margins. To put things in perspective, the world's total SAF production capacity today stands at around 600 million litres a year, less than what airlines consume in a single day. To meet the ICAO target of 5% SAF by 2030, the global production output would need to increase 50-fold in just five years.

Sir, even the largest integrated energy companies remain cautious. Without strong market guarantees or co-investment frameworks, smaller producers will not invest in new refineries or feedstock supply chains.

Singapore's SAF levy could be made more effective by pairing it with targeted incentives, such as joint ventures or green finance instruments like transition bonds, to support feedstock aggregation and upstream infrastructure.

Japan's "ACT FOR SKY" consortium offers a useful model, where the government united airlines, fuel suppliers and trading houses to co-invest in early-stage SAF projects, aligning public and private risk to achieve scale.

I would like to ask if the Ministry will consider allocating part of the SAF levy revenue towards developing upstream production capacity.

The success of SAF depends very much on the feedstock, which is the raw material used to produce it. Today, most SAF comes from things like used cooking oil, animal fats, or farm waste. But these materials are limited in supply. A McKinsey study found that by 2030, such waste-based sources can meet only about 30% of global demand. The rest will have to come from more advanced fuels made using captured carbon and green hydrogen – technologies that are still expensive and developing.

To build Singapore's position as a sustainable aviation hub, we must look closely at what kinds of feedstock are available in our region. Broadly, there are two types: first-generation feedstock is made from food crops such as corn, sugarcane, or palm oil. Second-generation feedstock is made from waste materials such as used cooking oil or animal fat.

The difference between them is significant. For example, when you take into account the clearing of land to grow palm oil, the total carbon pollution from palm oil-based fuel can actually be higher than regular jet fuel, more than 100 grammes of CO₂ per unit of energy, compared to about 89 grammes for conventional jet fuel.

In contrast, fuels made from used cooking oil or animal fat can reduce emissions by 60% to 70%, because they use recycle existing waste rather than grow new crops. The problem is that these waste materials are limited and already in demand by other industries.

That is why international bodies like ICAO, through its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) framework, now define which feedstocks truly count as sustainable. Some, like palm oil residues, are still hotly debated because of concerns about deforestation and how carbon is measured. Choosing the wrong mix of feedstocks could hurt both our environmental goals and economic opportunities in the carbon market.

Sir, Singapore should build feedstock differentiation and traceability into its SAF framework from the very start, ensuring accountability to ICAO's sustainability standards.

Alternatively, a more practical approach could be to set uniform emissions targets, adjusted according to each feedstock's carbon intensity, so that producers are rewarded for using cleaner inputs and held accountable for those with higher carbon intensities.

May I ask the Ministry which approach Singapore plans to adopt in aligning our SAF framework with international standards and what are the plans to develop upstream feedstock capacity?

Sir, the SAF levy has been introduced as a flat charge to provide price predictability for end consumers and airlines. The levy takings will be used to purchase SAF at market prices, meaning that the volume of off-take will fluctuate in response to price movements.

This design ensures cost stability for airlines and travellers but not volume stability for producers. For investors developing refineries, feedstock logistics, or synthetic fuel technologies, such uncertainty poses a challenge. Manufacturing operations require a minimum scale to be viable.

The SAF levy rightly internalises environmental costs and encourages greener choices. But does it drive more upstream investments?

Experience abroad offers valuable lessons. In the US, the Inflation Reduction Act introduced SAF tax credits of up to US$1.75 per gallon, narrowing a price gap with conventional jet fuel. That single policy unlocked billions in private investment across 14 states, demonstrating how clear price and volume signals coupled with investment incentives can provide the certainty needed to scale production.

I would like to emphasise my earlier point. Singapore could consider a similar approach, such as a performance-linked rebate or co-investment scheme, where part of the levy revenues is directed into SAF research and development (R&D), production infrastructure, or feedstock aggregation. This would create a more circular levy and crucially, send a strong signal of long-term policy confidence to investors.

Another avenue is to enable voluntary contributions, especially from corporate travellers, to fund SAF adoption. This would expand financing options and engage the public in Changi's sustainability journey.

Ultimately, producers need predictability, in terms of off-take volumes to justify investments. The current levy provides price certainty, but it risks volume volatility. A minimum offtake commitment could help bridge that gap.

May I ask how the Government what are the plans to ensure minimum off-take guarantees for producers, while still maintaining price stability for airlines and travellers?

Despite these challenges, Sir, there are promising opportunities. With strategic design, the SAF levy could put us in the lead as a regional hub for SAF, attracting new green investments, encouraging co-location of upstream production facilities, creating high-value jobs across the feedstock, refining and carbon management value chains.

Given our established petrochemical expertise and proximity to Southeast Asia's agricultural base, Singapore is uniquely positioned to coordinate feedstock-to-fuel supply chains. A collaborative framework with Association for Southeast Asian Nations (ASEAN) partners could enable joint certification, financing and trade of SAF across borders, much like how Singapore pioneered regional liquefied natural gas (LNG) trading.

Beyond serving as a trading and refining hub, Singapore can also derive direct benefits from co-locating SAF production and carbon management activities. This would generate quality employment in advanced manufacturing, logistics and sustainability services, and anchor Singapore in the upstream value chain, from feedstock aggregation and processing to downstream carbon credit generation through verified emission reductions.

May I ask the Minister how the Ministry plans to grow the broader SAF ecosystem and what new high-value jobs and opportunities for local enterprises it expects to create through this transition?

Sir, to summarise, the success of the SAF levy will depend on how well it drives real investment and innovation across the value chain.

I have raised clarifications on five areas: one, the viability of SAF; two, upstream production capacity; three, feedstock standards; four, investment certainty; and five, regional opportunities. In particular, how the Ministry plans to support upstream development, ensure off-take stability for producers and grow high-value jobs and local enterprise opportunities through this transition.

With clear policies and strong partnerships, Singapore can turn this levy into a catalyst for green aviation leadership. Sir, notwithstanding my clarifications, I support the Bill.

Mr Deputy Speaker: Mr Dennis Tan.

4.58 pm

Mr Dennis Tan Lip Fong (Hougang): Mr Deputy Speaker, the Civil Aviation Authority of Singapore (Amendment) Bill whilst seemingly technical, is a critical piece of legislation that puts into policy and operationalises Singapore's commitment to tackling carbon emissions from the aviation sector through the increased adoption of SAF.

The adoption of SAF is broadly recognised by the scientific community and the industry as a necessary step in our pathway towards achieving net-zero emissions by 2050 and crucially, in striving to meet the Paris Agreement goals of limiting global warming to below two degrees Celsius.

The production of SAF is still nascent and breakthroughs may come in sparse so Singapore must stay agile to capitalise on them. With our worldclass logistics trade links and existing refinery presence, we are well-placed to lead in the regional SAF industry. We can build flexibility into our SAF regimes so that when new pathways mature, we can scale up quickly.

As a party that supports ambitious climate action in line with scientific consensus, the Workers' Party (WP) supports the intent and broad purpose of this Bill. We believe it is important to tackle carbon emissions from international aviation even if they are not covered under Singapore's national carbon budget.

This is because it is the right thing to do. It is an area where we have a measure of control and it is a move that will benefit our economy and society in the long run by future-proofing our status as an international aviation hub.

Generally, the new provisions in the Bill allow for a more straightforward and policy stable approach to SAF adoption. This is commendable. Nevertheless, I have some clarifications to seek from the Minister of State regarding the mechanics and implications of this legislation. My queries fall broadly into the following categories: one, the rationale and transparency of the proposed SAF fund mechanism; two, issues of process regarding the implementation of the fund; three, the impact of the new levy on travellers and the broader strategy of fair decarbonisation of Singapore's aviation sector and; four, ensuring that we remain ready to scale and capture market share as the technology develops.

One, why the fund mechanism. Mr Deputy Speaker, according to clause 9 of this Bill, airlines are expected to potentially pass down the cost of SAF adoption to travellers. If the costs are ultimately borne by the consumer, may I ask why has the Government chosen the method of establishing a fund for the collection of SAF levies to procure SAF over other methods? I note this is different from the funding mechanism in say, the EU or the UK. Why not allow the cost to be passed through directly and transparently by the airlines? Is the fund primarily intended as a risk-pooling mechanism, or does it serve another strategic purpose?

Secondly, on the issue of transparency, I would like, will the collections, purchases and timing of SAF procurement through the fund be made public and transparent? It is stated that the fund will not form part of the CAAS revenue and will also be used for administrative cost. Given that the fund appears designed to have some slack after SAF purchases, which is prudent, will the public have access to information on how much surplus or slack there is in the fund annually? Furthermore, does the Government have any projections yet on the annual total collections via the levy? This information is vital for public accountability and for assessing the efficiency and scale of this new policy tool.

Two, issues of process for the implementation of the SAF procurement mechanism. I turn to the issues of process regarding the implementation of the procurement mechanism, it is not entirely clear from the Bill who or what will be the procuring entity mentioned in clause 5, which outlines the purposes of the SAF fund.

Currently, there is only one major SAF operator in Singapore. Given that we have ambitions to scale up the sector, how can new players be assured that the procurement process is fair and open to all? I would also like to ask the Minister, what is the timeline for the formal establishment and operationalisation of this procuring entity? In the interim before the entity is formally set up, is the CAAS the designated procuring entity? How is the procuring entity going to be appointed and governed? Will its structure be similar to existing models such as the Singapore Gas Co Ptd Ltd under the Energy Market Authority? Will private sector firms be involved in this procuring entity? Regardless of whether it is a wholly owned, public or mixed entity, will the procuring entity be subject to the standard public agency procurement rules to ensure fair and competitive processing of SAF?

Mr Deputy Speaker, as a small nation, Singapore does not produce enough convertible feedstock to be self-sufficient in SAFs, especially given our status as a regional air hub. However, our neighbours in Malaysia, Indonesia and Australia, produce or are capable of producing large volumes of feedstock. We have healthy trade relationships with many economies in the region and we should consider establishing a cooperative framework that can ensure a steady supply of feedstock into our facilities. Having a clear and fair framework for regional cooperation will also strengthen Singapore's status as a leader in the carbonisation efforts in the region.

Furthermore, not all feedstock are made equal. Some have significant significantly higher greenhouse gas (GHG) emissions due to inefficient conversion, higher carbon cost at production or polluting by-products. We must ensure that we do not inadvertently become a tool for green washing in our quest to be a leader in the nascent SAF industry. We can perhaps strengthened safeguards by defining categories of feedstock acceptable under this Bill.

Next, the impact on travellers and fair decarbonisation. Mr Deputy Speaker, I am conscious of the potential financial impact this levy will have on travellers, especially those who rely on air travel to visit family or pursue work opportunities. This is set against the context that Singapore already charges fairly high airport fees, for example, due to the Terminal 5 development levy, otherwise known as the Airport Development Levy.

On the issue of financial impact on travellers, I have the following questions.

First on the expected cost. Based on the current market rates for SAF and the projected adoption mandate, can the Government provide any illustration on the additional expected cost for a typical passenger flying of Changi Airport. A clear illustration is helpful to manage public expectations.

Second, I note that the Bill allows for the possibility of prescribing different rates of SAF levy for different classes of passengers or cargoes, airports or aircraft, places of landing or any other differential basis. This seems rather broad. So, I would like to ask as a matter of equity and fairness, will the SAF levy be stratified or differentiated to charge those who pollute more such as private jets, special chartered flights or passengers on different classes of travel on commercial airlines and if so, how it will be done. Is the Bill designed to simply allow airlines the discretion to decide how these new costs are passed down to different classes or passengers at least in terms of cost? A flat rate imposition could disproportionately affect those travelling in economy class. Can the Minister also provide some information on the way SAF levy charges will apply for outbound air cargo?

Next, fair decarbonisation and supply side. Sir, this Bill represents the Government's first ever airport levy specifically intended for decarbonisation purposes, which is a noteworthy step. I would like the Minister to elaborate on the expected impact of this levy and fund on the development of Singapore's domestic SAF industry and its overall supply. I would also like to ask whether the industry is currently constrained primarily by a lack of guaranteed demand from airlines, or is this levy needed more because it will provide the financial support necessary for the industry to overcome the technological and cost challenges of producing SAF?

I note that IATA recently released a study suggesting the main bottleneck is more with technology rather than the availability of feedstocks. We have used cooking oil, being the main commercially available process. In the Government's view, how far is the industry from commercially scaling up other crucial processes such as power to liquid SAF? I asked this because if our ability to make aviation feel more sustainable is still constrained by technological or supply side limitation, we must also think more broadly about reducing emissions through other viable means. This includes reducing per passenger emissions by encouraging airlines to adopt higher passenger density on the aircraft, albeit carefully drawing appropriate balance between basic acceptable comfort and numbers, especially for the economy class.

Expert groups, such as the Global Solidarity Levies Task Force has suggested that this could be achieved by raising fees on classes with lower passenger density, such as business or first class, as well as on private jet passengers. Such a policy structure would align the cost of travel more closely with the environmental impact and promote a fairer distribution of the decarbonisation burden.

Finally, Mr Deputy Speaker, an SAF levy is intended to find the use of more expensive SAF. But this increases operating costs for airlines, which are then typically passed on to passengers as higher ticket price. This situation creates a risk of carbon leakage, which is commonly understood as the increase in emissions outside a region imposing a climate policy due to businesses or consumers shifting their activities to areas with less stringent regulations.

In aviation this leakage may happen when airlines or passengers avoid the levy by hard switching. That is to say, they opt for connecting flights to international airports that do not impose the SAF charge, thereby displacing the carbon intensive activity rather than truly reducing global emissions and putting the regulated hub at the competitive disadvantage. Given the goal of net-zero future, how does the Government intend to prevent or significantly reduce such carbon leakage after the introduction of our levy?

Next, scalability and market capture. Singapore is spearheading the development of SAFs in the region with Neste's Tuas facility, the first of its kind globally, marking a significant step forward. The Government has made clear its intent to continue advancing SAF as a key pillar of Singapore's sustainable aviation strategy. However in a nascent and rapidly evolving industry, technological breakthroughs are unpredictable and can often occur in bursts rather than along a steady trajectory.

The CAAS (Amendment) Bill does not prescribe a fixed schedule for increasing the SAF levy on blending ratio. It empowers CAAS to review these from time to time. This raises an important policy question. What should trigger future changes to the levy or SAF target? Should adjustment depend on global supply milestones, declining price differentials or broader regional capacity developments? I know the Senior Minister of State has explained on this.

Nevertheless, let me suggest, to ensure flexibility and market alignment, Singapore could adopt a trigger base framework where each revision is activated only when specific verifiable conditions are met. For example, a new blending target could be triggered when global certified SAF supply reaches a certain threshold or once SAF price premiums fall below a defined multiple of Jet A-1 fuel. Alternatively, escalation could be tied to regional production capacity or carbon intensity benchmarks verified under ICAO's CORSIA framework. Such an approach ensures that taxpayers and airlines can be confident that adjustments are implemented only when the market is ready, keeping Singapore nimble and responsive to dynamic global conditions rather than bound to an arbitrary timeline.

Mr Deputy Speaker, in closing, I will reiterate that the market-based solution of an SAF levy as legislated by this Bill is a good step forward. I am heartened that Singapore is taking tangible first steps in line with the global aviation industry's goals. Of course, this must only be the beginning and we should and must explore further avenues for fair and effective decarbonisation after this. I look forward to the Minister of State's clarifications on the questions I have raised. Mr Deputy Speaker, notwithstanding the questions and concerns I have raised, I support this amendment Bill.

Mr Deputy Speaker: Ms Poh Li San.

5.12 pm

Ms Poh Li San (Sembawang West): My Deputy Speaker, I declare my interest as an employee in the aviation sector.

Every passenger departing Singapore through Changi Airport will pay $16.90 for levies, that is $6.10 for Aviation levy and $10.80 for Airport Development Levy to CAAS, on top of the air ticket. With the SAF levy, the total levy per trip will increase to between $19.90 and $32.90, or an increase of between 18% and 95%, depending on the distance of the destination. This is a price which every departing passenger has to pay and while it may be a small amount, it is one in which consumers have no choice in, have no control over, in terms of adapting their behaviours to the change in price and actually, from which they enjoy no benefit, except indirectly.

In my speech, I will request for clarifications on three points: one, why is the cost burden levied solely on passengers; two, will SAF levy rate increase in the future and; three, is the central procurement model necessarily the most cost-effective.

The global aviation sector is responsible for about 3% of global carbon emissions. In 2024, Changi Airport reported 1.207 million tonnes of CO₂ emissions, which is about 2% of Singapore’s carbon emission and only 0.13% share of CO₂ emissions from global aviation, or only 0.0039% of global CO₂ emissions. As Singapore has only one international airport, estimated at 0.0039%, our effective contribution to global carbon emissions is actually very small.

Nevertheless, as a key leader in global aviation and Singapore Changi Airport being a leading regional and international air hub, we must do our part to support global efforts in sustainable aviation and meet ICAO's Net Zero goal by 2050.

In the recent ICAO Assembly, a collective global aspirational vision to reduce CO₂ emissions in international aviation by 5% by 2030 was adopted. In fact, several airports and jurisdictions have already implemented mandatory SAF policies. For instance, the European Aviation Security Agency (EASA) has mandated, since January this year, a minimum 2% blend on Aviation Fuel Suppliers in European Union (EU) airports. Their long-term target is to increase to 70% blend by 2050.

At the same time, airlines, such as KLM and Delta Airlines, have pledged a 10% SAF blend by 2030, while industry bodies, such as IATA's Fly Net Zero roadmap, lean on SAF for 65% of all emission cuts by 2050.

Mr Deputy Speaker, it is clear from this that the specific behaviours we should target are at the airlines and not the consumer. At the same time, it is the airlines which will benefit from the carbon credits that accrue from the use of these clean fuels.

It is, therefore, the airlines, and not the consumer, who should be the object of taxes. In many countries and jurisdictions, the cost of SAF is indeed directly borne by airlines or by aviation fuel suppliers. In fact, Singapore is the only country to have a SAF levy imposed solely on passengers.

Hence, the first question is, why do passengers and not the airlines pay? Second, why does the Government even need to mandate a SAF levy on passengers, when some airlines have already voluntarily committed to decarbonisation through SAF for their corporate decarbonisation targets?

Some airlines have also signed up on the CORSIA framework under ICAO, to reduce their carbon footprint. If I may draw an analogy, it is akin to restaurants using styrofoam packaging, and the Government wanting them to switch to green packaging. And rather than levying taxes on those restaurants using styrofoams, the Government has decided to tax the diners instead.

Further, this tax is not only on diners at restaurants with styrofoam packaging, but on all diners, even those dining at establishments that are already using green packaging. This is, to say the least, a very odd state of affairs. I hope the Minister can clarify why is Singapore's approach different from all other countries in the world. Was there public engagement with passengers on the imposition of the SAF levy? Also, can the Minister clarify if there is a plan to roll back on the SAF levy if more airlines are voluntarily committing to decarbonisation?

The Singapore Sustainable Air Hub Blueprint has recommended a 1% SAF by 2026, rising to 3% to 5% by 2030. This is a small step in the right direction. In 2024, Changi Airport contributed only 0.13% to global aviation's carbon emissions. With a 3% to 5% SAF blend, what is the effectiveness in reducing the global aviation's carbon emissions?

In order for Singapore to contribute more meaningfully to ICAO's Net Zero by 2050 goal, do we expect a steady increase in the SAF blend requirement above 5% after 2030? If so, will the SAF levy, correspondingly, increase in the future?

Currently, SAF is two to five times more expensive than Jet A-1 fuel. As demand for SAF increases, the cost may also increase, if supply of feedstock continues to be limited. If the revenue from levy collected is insufficient to cope with the SAF price increase, will the SAF levy be expected to increase in the future?

Following the successful expansion of a renewable diesel refinery in Tuas, up to one million tonnes of SAF can now be produced per annum at the Singapore facility. This makes Singapore the largest producer of the renewable jet fuel in the world. The expanded facility is owned and operated by Finnish energy company, Neste.

With Neste being the only SAF producer in Singapore, how does SAFCo then ensure that SAF procured is most cost effective? How will SAFCo bring more producers in to increase competition?

Currently, airlines have their own teams that will procure Jet A-1 fuel. Many airlines hedge forward fuel prices and some, which predict the trend wrongly, may turn airlines into huge losses. How can SAFCo ensure they have the talents who have the expertise, experience and the market network of oil traders, who can trade on behalf of the airlines and seek best value for the SAF levy collected from passengers, which is likely to be in the tune of a few hundred million dollars per annum.

SAF is just one of the many ways to decarbonise the industry. At present, it is the most mature and easy to use as it is a drop-in fuel. However, its scalability is limited by the high price, which is, in turn, caused by limited feedstock. There are ongoing studies and trials on other pathways to reduce carbon emissions by airlines, such as hydrogen powered aircraft, battery operated aircraft for short-haul flights and contrail avoidance flight routes, and so on.

While we get started on SAF operations, we should also keep an open mind on other viable options along the way. Mr Deputy Speaker, I would ask for serious consideration on my first question, on whether passengers ought to be paying the levies. Notwithstanding, I support the Bill's amendment.

Mr Deputy Speaker: Ms Lee Hui Ying.

5.22 pm

Ms Lee Hui Ying (Nee Soon): Mr Deputy Speaker, I stand in support of the CAAS Amendment Bill.

In February 2016, ICAO announced the first global CO₂ Standards for 13 new aircrafts launched after 2020. More countries than ever, including our neighbours, such as Indonesia, have pledged to incorporate SAFs into their aviation industries. Malaysia has also opened a biofuel processing plant, facilitating potential regional trade in SAFs in the upcoming years.

I am glad that Singapore is joining in on this global movement to achieve net-zero emissions domestically and internationally in aviation emissions by 2050.The aviation industry is responsible for 2.5% of global emissions and SAFs can contribute around 65% reduction in emissions. The Civil Aviation Authority of Singapore (Amendment) Bill, therefore, aims to aid Singapore towards this endeavour.

On this Bill, I have two questions: first, the risks of the SAF market; and second, the levy impact on consumers while we maintain our competitiveness as an aviation hub.

My first question really touches on the risk of investing in the SAF market, which is a novel market, subject to high uncertainty. The new sections 25C and 25D proposed in the Bill state that the Authority may use the SAF fund to carry out investments. The net income of the fund is calculated by an addition or reduction from the income derived from investments. The Bill also accounts for instances where such investments could lead to losses. A big concern in the SAF industry is in its novelty stage, especially in second generation SAF processes, which are not yet proven to be commercially viable.

Many global players, like the US, UK and the EU, have enacted specific legislations that invests in the development of second generation SAFs as the available biofuels currently made from the hydroprocessed esters and fatty acids (HEFA) process, are in limited supply. The success of these projects is uncertain, whereby the costs of failed ventures are largely incurred by investors and in this case, the SAF fund. Therefore, the SAF fund is inherently risky as the SAF industry is still in an early stage and profits may be vulnerable to sudden changes in technological advancements, viability of second generation SAFs and policies of other countries.

I would like to ask the Minister of State what steps will be taken by the Government to ensure the resilience of the SAF fund, while managing the risks and fluctuations in the SAF industry due to technological developments and/or global political uncertainty? In particular, will the SAF fund invest in the second generation SAF industry?

Second, on levy impact on consumers and maintaining competitiveness as an aviation hub. I would like to touch on the costs that would be incurred by consumers as a result of this act. Research has shown that biojet fuel can be two to eight times more expensive than conventional kerosene jet fuel. Singapore is fortunate enough that we can afford to expend more to protect the environment and the levies and funds set out in clause 9 of the Bill today would certainly assist us in affording this transition towards SAFs.

However, air travel in Singapore is already considerably expensive for regular consumers. I would like to ask the Minister of State if the Government has calculated how much of the levy costs are predicted to be shifted onto consumers versus industry stakeholders? What is the expected impact of the levy on passenger fares and also air freight costs? And how does the Government plan to maintain Singapore's competitiveness and perhaps, also harmonise standards as an aviation hub, given that other regional airports may not impose a similar levy?

Mr Deputy Speaker, these questions aside, I support the Bill and hope such sustainable spirit would expand in future to other aviation-adjacent industries.

Mr Deputy Speaker: Mr Yip Hon Weng.

5.27 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Deputy Speaker, Sir, I declare that I work in a global investment firm that have investments in aviation companies and sustainable solutions. This is a forward-looking and pragmatic piece of legislation. The Bill does more than establish the SAF fund and levy. It gives us a clear, stable framework to turn our Sustainable Air Hub Blueprint from aspiration into action.

But this Bill is not just about planes or policies. It is about people. It is about families planning their next holiday. It is about the thousands of Singaporeans whose livelihoods depend on our position as a trusted global air hub. So, the question before us is this: how do we fly toward a greener future without losing our altitude as a competitive, connected economy? To that end, I wish to seek clarifications on five key areas: transparency, fairness, competitiveness, accountability and international alignment.

First, Mr Deputy Speaker, Sir, predictability builds trust. Singaporeans can accept modest green contributions when they understand what they are paying for. But a green cost must be a seen cost, not one hidden in the fine print.

Section 87B of the Bill rightly requires that if a levy is passed on, the amount must be stated. That is a strong start. But we can go further. Will the implementing order require the SAF levy to appear as a clear, separate line item on all passenger tickets and cargo contracts? It should never be buried inside a "taxes and fees" bundle. To strengthen cost certainty, will the Government confirm that the indicative levy range shared publicly for the initial 1% target, around $3, $6 and $16 for short-, medium- and long-haul flights respectively, while noting that final amounts are likely to be even lower?

And will the Ministry consider codifying a cap in subsidiary legislation, so that families can plan with confidence? How will short-, medium- and long-haul be defined – by distance or flight time? And will rates vary across cabin classes?

For SMEs, predictability matters even more. Can the Minister of State ensure that cargo levies are transparently itemised in freight contracts, instead of being rolled into "all-in" rates? This transparency gives our small exporters the clarity to price their goods competitively and hold logistics partners accountable.

Second, Mr Deputy Speaker, Sir, for this levy to be legitimate, it must also be fair. Those who contribute more to carbon emissions should bear a proportionate share of the cost. The Bill's powers for differentiation and remission under section 87B are, therefore, crucial. Can the Ministry commit to a progressive levy structure, where non-commercial, private and business jets contribute more than regular families flying economy?

Globally, there is a growing call for fairness in climate policy. Studies show that a small fraction of frequent flyers and premium travellers account for a disproportionately large share of aviation emissions. Many countries are exploring progressive levies to address that imbalance. Singapore should not shy away from this conversation.

On the other hand, essential flights, such as humanitarian missions, medical evacuations or pilot training, should rightly be exempted. Will the Ministry publish clear exemption criteria, so operators are not left guessing in an emergency? Will it also disclose, annually, how many exemptions were granted and why, so the public can see fairness in action? For SMEs facing urgent cargo needs, will there be a defined remission process, especially when cost pressures or timing make the levy burdensome? Fairness is not only about who pays. It is about ensuring no one is penalised for trying to do the right thing.

Third, Mr Deputy Speaker, Sir, our air hub is the heartbeat of our economy. Tens of thousands of Singaporeans, pilots, engineers, caterers, cleaners, depend on it every day. Section 87B specifies that the levy applies to flights taking off from Singapore. Can the Minister of State confirm that the levy will not apply to transit or transfer passengers? They are the lifeblood of Changi's success and essential to its competitiveness.

We must also guard against what some have called "green fatigue". Around the world, passengers and politicians are showing signs of giving up on greener air travel, weary of rising costs, divided politics and confusing regulations. Singapore cannot afford to be part of that retreat. We must show that ambition and accountability can co-exist.

That is why the timing and design of this levy matter. Changi Airport raised passenger and airline fees in November 2024 to fund its $3 billion infrastructure plan. If we now add a new SAF levy, will that risk pricing Singapore out of the regional race, pushing airlines toward Bangkok or Kuala Lumpur International Airport (KLIA)? Likewise, with sustainable fuel procurement mandated, will budget carriers with thinner margins struggle to operate here? Could that affect connectivity and affordability for travellers?

Predictability is key. Will the Ministry consider publishing a multi-year levy schedule, setting out indicative rates for the next three to five years? A transparent roadmap will give both households and businesses the confidence to plan ahead. For cargo operators, can the Minister of State ensure that levies are structured with stable, geography-based rates and weight bands? That clarity will help our small and medium enterprises (SMEs) maintain Singapore's reputation as a reliable logistics hub.

Next, Mr Deputy Speaker, Sir, every green dollar must now show its work. Singaporeans will support this levy only if they know each cent is used responsibly and effectively to make our skies cleaner.

The creation of a ring-fenced SAF fund under section 25C is the right step forward. But good governance demands more than structure. It demands clarity, scrutiny and stewardship. Will CAAS be required to publish a detailed annual report showing how much was collected, how much SAF was purchased, where it was sourced, who supplied it and how the SAF EAs were allocated? What key performance indicators (KPIs) will the SAF Procuring Entity be measured against, competitive pricing, source diversification and maximising physical uplift at Changi? Will the fund and its registry undergo independent audits, with findings made public? And will the Ministry consider a statutory review clause, perhaps every three years, to assess whether the levy and fund remain effective and fit for purpose?

We must also be realistic. SAF currently accounts for less than 1% of global jet fuel consumption. Production remains costly and feedstocks are limited. That is why Singapore's approach must be pragmatic, scaling gradually, aggregating demand and building credibility step by step. Furthermore, when sourcing SAF, can we ensure that Singapore's investment strengthens domestic and regional capabilities, building our own production base, where feasible, and positioning local firms within the green aviation value chain?

Lastly, Mr Deputy Speaker, Sir, this Bill must also work hand-in-hand with international frameworks, especially CORSIA. Singaore already mandates monitoring and reporting through the Air Navigation Regulations. But we have not yet legislated the offsetting duties or penalties for non-compliance. Why stop halfway? Without enforcement, compliant airlines pay their fair share while others may get a free ride. More importantly, passengers risk being double-charged, once under the SAF levy and again under separate CORSIA-related offsets.

This concern has been echoed internationally. If countries fail to coordinate their climate measures, consumers lose trust and the green agenda falters. Can the Minister of State clarify when and how the CORSIA offsetting and penalty framework will be implemented, ideally through subsidiary legislation under the Air Navigation Act? Will the Ministry ensure that any CORSIA-related costs passed to consumers are clearly displayed as a separate line item, distinct from the SAF levy, to prevent confusion or duplication? And finally, will the framework apply only to flights between states that are CORSIA-participants, so our carriers remain aligned with global norms and remain competitive?

In conclusion, Mr Deputy Speaker, Sir, this Bill represents more than a change in law. It represents a change in mindset. It asks us to see sustainability not as a cost, but as an investment, in our future, in our children and in our planet. It asks our families to do their part, our businesses to innovate and our Government to lead with integrity and foresight.

We have spoken about transparency, so Singaporeans can see where every dollar goes. We have spoken about fairness, so the burden is shared justly. We have spoken about competitiveness, so our air hub remains strong in a turbulent world. We have spoken about accountability, so trust in our system remains unshakable. And we have spoken about alignment, so Singapore continues to lead by example on the global stage. But beyond all that, this Bill challenges us to look skyward and ask: how do we build a future where progress does not come at the planet's expense?

Around the world, some are giving up on greener air travel. They say the politics are too hard, the costs too high and the people too weary. But Singapore must not be among them. We must show that realism and resolve can walk hand-in-hand, that we can fly further because we choose to fly cleaner. If we get this right, Singapore will not just be a world-class air hub. We will be a trusted one, known for doing the right thing, even when it is not the easy thing.

Let us move forward with clear eyes, steady hands and open skies. Let us keep Singapore flying high, not just in the air, but in our ideals. I support the Bill.

Mr Deputy Speaker: Mr Cai Yinzhou.

5.38 pm

Mr Cai Yinzhou (Bishan-Toa Payoh): Sir, this Bill aims to establish the SAF Fund and to provide for the imposition of a SAF levy and supports the laudable goal of CAAS and MOT to kickstart the adoption of SAF in Singapore.

Sir, I seek to raise two key areas for the Minister's clarification.

The first is on the financial structure of the levy. It is accepted the high costs of SAF currently necessitates a measure and mechanism like this levy to support its initial adoption. However, I remain concerned that this policy decision appears to place the financial burden entirely upon passengers.

I respectfully ask the Minister of State to justify the approach and explain the considerations behind the choice, not to implement a model of financial risk sharing with airlines or fuel suppliers, or direct volume metric mandate on these commercial entities, an approach which has been adopted in other jurisdictions, such as EU and UK. As this levy is passed on to consumers, we need clear assurance that their contribution is both effective and monitored.

Flights from Singapore were previously estimated to increase by $3 to Bangkok; $6 to Tokyo and $16 to London. I would be grateful if the Minister of State could inform the House of the specific mechanisms and reporting protocols. CAAS was established to actively monitor these estimates and ensure that actual financial impact of the levy on ticket prices remains predictable and consistently aligns with the Ministry's initial projections.

A crucial point for public confidence is technical basis for the cost difference. The Ministry has previously stated, including in its discussion in 2023 that SAF is currently more than three times the cost of conventional jet fuel, thereby being unsuitable for use by the Republic of Singapore Air Force and its aircrafts, like the F-16. Could the Minister of State provide more detailed elaboration on the methodology, including the specific fossil fuel benchmark used to assess how the cost of the banded fuel of jet fuel was calculated and substantiated to be more than three times that of Jet Propellant 8 (JP-8) fuel?

Finally, we must leverage on our national strengths. Singapore is a major refining hub, home to significant self-production capacity, such as Neste's expanded facility. The Minister's assurance is sought on the strategy for how the presence of these advanced facilities will be utilised to bring the cost of SAF lower over time, rather than merely acting as a platform for centralised procurement and persistently high global market rates.

Secondly, on the need for public accounting in its management. This SAF levy is a public contribution towards a critical national goal and the accompanying trust must be transparently maintained. While the blueprint indicates the fund will purchase SAF at its actual market price, the Bill is not explicit on public reporting obligations. I urge to consider establishing a clear formal reporting obligation for CAAS regarding the SAF Fund. Will the Ministry commit to publish a regular and comprehensive report for the public? Such a report should document the total levy collected and expended, the volume and cost of SAF purchase, the actual SAF uplift proportion achieved by airlines and, most importantly, the measurable environmental impact and carbon emissions reduction delivered by the fund.

I commend the Ministry for this decisive step towards the long-term decarbonisation for our aviation industry. Notwithstanding these clarifications, Deputy Speaker, Sir, I stand in support of the Bill.

Mr Deputy Speaker: Ms Gho Sze Kee.

5.45 pm

Ms Gho Sze Kee (Mountbatten): Mr Deputy Speaker, this Bill introduces the SAF levy, a key part of the Sustainable Air Hub Blueprint and a step towards Singapore's net-zero carbon emissions. From next year, Singapore will be among the first countries and the first in Asia to mandate SAF use. The levy will also help airlines in Changi Airport meet CORSIA requirements, the global carbon reduction scheme for international aviation which will become mandatory in 2027.

Sir, let me begin by making my position unequivocal. I support the Bill.

Climate change is a major threat, especially for us, a tiny, low-lying island at the equator. We must do our part, not only for ourselves but also for our future generations. However, notwithstanding my support, I must voice a few caveats and seek some clarifications or, rather, reassurances, from the Minister.

Allow me to share some quick numbers with the House.

Currently, departing passengers from Changi Airport are charged a total of $65.20, comprising of the passenger service and security fee, the aviation levy and the airport development levy. This total sum is significantly higher than those of competing air hubs in the region. Let me offer some comparisons, based on current exchange rates in Singapore dollars. For KLIA, $23; Suvarnabhumi Airport in Bangkok, $30; Dubai International, $45; Incheon, $24. Changi Airport's passenger charges are also projected to rise annually till 2030, reaching $79.20 before any SAF levy is added.

Mr Deputy Speaker, I understand that Changi Airport offers unique value propositions over its competitors. We have strong values in connectivity, efficiency and quality of service. Changi is, simply put, a spectacular airport. Of course, I do not believe that we can successfully compete on cost and perhaps, nor should we. However, our current passenger fees are already higher than all of our regional competitors. If costs rise too much, surely, we risk undermining Changi's position as a global air hub.

Our competitors are also not standing still. Other airports are working hard to beat us at our own game. They are learning from us, improving on both hardware and software. Some are already nipping at our heels. Notably, none of our peer competitors, such as Incheon and Dubai airports, are as expensive. If we are not careful, if we take our eyes off the ball, someone else will be stealing our lunch.

Next, I note that the proposed amendments enable a levy on both passenger and cargo flights. Indeed, CORSIA obligations cover both categories. I shall not pre-empt the detailed announcement of the levy structure. We do have some sense of how the centralised levy will work for passengers and a ballpark figure for the initial rate. However, there is still little detail on how the levy mechanism will apply to cargo flights.

Sir, I must highlight this – Changi Airport is more than just a passenger hub. It is also a key cargo hub in the Asia Pacific. Beyond pure cargo flights, many services are hybrids, carrying both passengers and freight. Cargo customers tend to be more cost-sensitive. For them, intangibles, such as the Changi experience or the sights of Jewel have absolutely no bearing. What matters are efficiency, connectivity and cost.

In that regard, cargo operators will even be more sensitive to increases in levies and costs. The impact could also be more significant to them in absolute dollar terms, since freight consignments can be much larger than individual tickets. That is how equitable the levy system is. The size of the levy quantum will be of great concern to cargo operators. It will directly impact Singapore's standing as a leading cargo hub.

Sir, our status as a thriving air hub is crucial to our economy. It is a major driver of trade. It connects Singapore to the rest of the world. It also supports a large number of jobs, both directly and indirectly. The success of our air hub is crucial importance to our country. We must ensure that it remains strong and competitive. I am glad to know that the CAAS Sustainable Air Hub Blueprint, was recognised that environmental sustainability must be balanced with competitiveness.

The previous Minister for Transport had also repeatedly emphasised the same point in this House. There is no benefit in moving too far ahead of others in SAF adoption. I could not agree more. Sustainability and competitiveness must go hand in hand. Only when we maintain our competitiveness, only when we thrive, can we meaningfully pursue sustainability goals. Without economic strength, sustainability becomes a heavy burden and a constraint.

Mr Deputy Speaker, this Bill demonstrates Singapore's commitment to our environmental responsibilities. But I hope the Minister can assure us that cost structures are being closely monitored and that our air hub will remain competitive even as we pursue sustainability goals. We must always remind ourselves that sustainability and economic competitiveness must be pursued together.

Mr Deputy Speaker: Mr Sharael Taha.

5.49 pm

Mr Sharael Taha (Pasir Ris-Changi): Mr Deputy Speaker, I would like to declare my interest as an authority member of the Civil Aviation Authority of Singapore and as one of more than 50,000 proud workers in our aviation and aerospace industry.

Mr Deputy Speaker, aviation has always been and remains one of the key pillars of Singapore's economic success and competitiveness. Globally, air passenger traffic is projected by IATA to double by 2040, driven by a growing middle class and rising regional connectivity. Asia Pacific will lead this expansion and as a major global air hub, Singapore is well placed to capture a significant share of this growth.

With Terminal 5 coming online in 2030s, Changi Airport's capacity will increase by 50 million passengers annually, bringing total throughput to nearly 140 million passengers per year. This will reinforce Singapore's position as a leading global air hub for the future. This growth will not only strengthen air connectivity, but also catalyse growth across tourism, logistics, hospitality, retail, e-commerce and urban development. It will power our aerospace sector, a key pillar of our manufacturing base.

Today, Singapore accounts for over 10% of global maintenance, repair and overhaul (MRO) output, and for engine MRO, it accounts for close to 20% of global market share; a position earned through decades of trust and capability.

Singapore's aviation ecosystem, encompassing our airlines, airports, air navigation service providers and logistics partners, contributes about 5% of our gross domestic product and supports more than 190,000 jobs. When we include its wider economic impact through supply chains and tourism, aviation sustains about 529,000 jobs across our economy.

Mr Deputy Speaker, these are not just numbers. They reflect how deeply aviation is woven into our economic fabric. A strong aviation sector anchors growth, attracts investment, drives innovation and creates good jobs. Supporting it is not only an economic policy, it is a strategic necessity for Singapore's continued prosperity.

Mr Deputy Speaker, it is estimated that the aviation sector contributes about 2% to 2.5% of global CO₂ emissions. The industry recognises this challenge and is taking major steps to reduce its environmental impact. New-generation aircraft, such as, the Airbus A350 powered by Trent XWB engines, achieve up to 25% lower fuel burn and CO₂ emissions through better aerodynamics, advanced materials and efficient propulsion. And the fleet renewal is supporting this transition.

Another key lever is SAF. Under the ECLIF3 programme, Airbus, Rolls Royce and the German Aerospace Centre successfully tested 100% SAF on both engines of an A350, demonstrating its compatibility and emissions benefits. Here in Singapore, CAAS' Sustainable Air Hub Blueprint sets out our roadmap towards net-zero aviation emissions by 2050, focusing on SAF adoption, electrification of ground operations and renewable energy deployment.

These efforts show that aviation growth and sustainability are not mutually exclusive. As a leading global hub, Singapore can prove that responsible aviation growth and climate stewardship can go hand in hand.

Mr Deputy Speaker, I support the Bill, which strengthens Singapore's leadership in sustainable aviation and continues our commitment to global decarbonisation efforts. However, as we advance this important goal, we must take a balanced approach, recognising both its strategic advantages and practical implications.

I wish to raise three clarifications: firstly, how Singapore will ensure SAF supplies stability and manage price volatility while investing sufficiently in future production; secondly, how we will safeguard Singapore's competitiveness as an air hub amid regional expansion; and thirdly, how we will ensure fairness and equity in how the cost of transition is shared across passengers and industry stakeholders.

Mr Deputy Speaker, it has been noted in this debate that SAF currently costs three to five times more than conventional jet fuel, while global supply makes up less than 1% of total aviation fuel consumption. Decarbonising aviation is essential, but the transition must also be economically and operationally sustainable for airlines, passengers and industry players. Singapore has taken an important first step. Neste's expanded refinery in Tuas now produces more than one million tonnes of SAF annually, making it one of the largest facilities in the world and positioning Singapore as a key node in the regional SAF value chain.

However, other countries are rapidly increasing capacity too. In our region, EcoCeres Renewable Fuels and Petronas are developing similar facilities targeting about one million tonnes per year. With rising global demand and new mandates, such as, in France, Sweden and Japan requiring 10% SAF blending by 2030, we can expect increased competition for feedstock and price volatility.

Hence, my first clarification: how will Singapore manage this volatility? What measures will ensure stability in ticket pricing and airline operations, especially when market fluctuates?

Clause 5 of the Bill introduces section 25D, creating the SAF Fund, financed by a levy estimated at $3 for short-haul, $6 for medium-haul and $16 for long-haul flights. This is in addition to the levy that has already been imposed. Based on 2024 Changi Airport passenger volumes of 67.7 million passengers, this could generate at least a minimum $210 million annually; a meaningful start. But will the fund be sufficient to not only procure SAF, but to also develop local production capacity, support R&D and also diversify feedstocks?

How will this fund be aligned across agencies, like CAAS, the Economic Development Board and Enterprise Singapore, to build an end-to-end resilient SAF supply-chain that creates new green industries, good jobs and regional leadership for Singapore? This transition is not merely about SAF. It is also an economic opportunity to secure Singapore's place as a leader in sustainable aviation innovation.

Mr Deputy Speaker, on my second point. The global aviation race is intensifying. KLIA's Aeropolis Master Plan aims to handle over 100 million passengers a year. Bangkok's Airport is expanding through a US$4 billion project. Incheon Airport and Hong Kong International Airport's Three-Runway System will each soon handle up to 120 million passengers annually.

Against this backdrop, Singapore must remain vigilant. The proposed SAF levy, in addition to the levy that was already introduced, though small in absolute terms, could affect our price competitiveness, especially for transit traffic and air freight if neighbouring hubs delay similar moves.

Has the Ministry assessed the potential impact of this levy on Singapore's attractiveness as a transit and cargo hub? And what mitigation strategies are being considered to preserve our competitiveness, while sustaining our leadership in sustainable aviation? We must ensure that environmental responsibility does not inadvertently erode our competitiveness as an international hub. Instead, it should become a source of differentiation and trust.

Finally, Mr Deputy Speaker, as we move toward increased sustainability, we must also ensure fairness in implementation. The proposed levy applies different rates by flight distance – $3, $6 and $16 depending on short-, medium- or long-haul flights. But, within each flight, passengers pay vastly different fares across the different classes of flights. Will the levy be applied proportionately across the different passenger classes, so that it does not disproportionately burden economy class travellers?

Likewise, how will the cargo sector be factored into this framework, given its integral role in Singapore's hub competitiveness? And what about private flights? How will it fit into this framework? Ensuring fairness and transparency will be critical to maintaining public trust and broad-based support for this important transition.

Mr Deputy Speaker, in summary, my clarifications concern: firstly, ensuring price stability and meaningful investments in building local SAF capability and capacity; secondly, safeguarding Singapore's air hub competitiveness; and thirdly, upholding fairness and transparency in sharing this burden of cost. We must monitor these developments carefully to ensure that the policy intent to encourage SAF adoption remains aligned with Singapore's long-term strategic goal of being a leading global and sustainable aviation hub.

I also note that no timeline has been specified for future price adjustments. It is therefore important that we are clear about the levers and conditions that must be met before any price revisions are made, to ensure transparency, predictability and fairness. Ultimately, this is not a choice between economic growth and environmental stewardship, it is about advancing both, together, sustainably.

Notwithstanding these clarifications, I express my support for the Bill, which marks an important step in positioning Singapore as a global leader in sustainable and responsible aviation while creating good jobs, fostering innovation and ensuring that our skies and our future remain bright and green.

Mr Deputy Speaker: Mr Foo Cexiang.

6.00 pm

Mr Foo Cexiang (Tanjong Pagar): Thank you, Mr Deputy Speaker. "The greatest con job ever perpetrated on the world." This was how President Donald Trump described climate change just last month when he addressed the United Nations General Assembly. And he went on, "All of these predictions made by the United Nations and many others, often for bad reasons, were wrong. They were made by stupid people. But of course, their countries' fortunes, and given those same countries, no chance for success. If you do not get away from this green scam, your country is going to fail."

Given President Trump’s remarks and in the current context where cost-of-living continues to be of high concern, it may be attractive for countries worldwide to abandon our climate change strategies. After all, if even the second largest emitter of carbon dioxide has decided to rubbish the endeavour, none of us alone will be able to move the needle – certainly not Singapore.

The SAF levy which this Bill provides for is one of Singapore’s policies that will contribute towards the global climate change mitigation effort. It will mean that from 2026, travellers flying out of Singapore will pay slightly higher airfares. Previous preliminary estimates from CAAS suggest that economy-class passengers may incur an additional $3 levy for flights to Bangkok, $6 for flights to Tokyo, $16 for flights to London. The levy will be used to purchase SAF in bulk to achieve our target of 1% of all jet fuel used at Changi Airport and Seletar Airport in 2026. Should we abandon this policy?

On the other hand, there are some who say that our target is not ambitious enough. They may quote regions like the EU, which I understand has agreed to rules mandating 6% in 2030, rising to 70% in 2050 and countries like Japan, which aims to have SAF account for 10% of its aviation fuel supply by 2030. I note that the hon Member Mr Dennis Tan too, had asked last year if the Government will study plans by other countries with higher SAF targets such as Britain, Japan and the EU to raise our projected targets even further. But today I heard he also said that he was conscious of the financial impact to travellers. So, perhaps we would invite him to clarify whether he is of the view where we should have higher targets and therefore higher levy on travellers or has he changed his mind with the concern of the financial impact on travellers today?

Sir, I speak as someone who has benefited from and believes in the potential of air travel. It connected me to people and cultures worldwide, to develop friendships which I know will last a lifetime. It opened my mind to new sights, sounds and perspectives. It further anchored my sense of multi-culturalism. I hope that many more in our current generation and future generations in Singapore and beyond Singapore will also be able to benefit from air travel.

Aviation is responsible for about 2.5% of global carbon emissions. However, estimates are that 80% of the global population, about 5 to 6 billion people worldwide, have never taken an air flight – and there will be some in Singapore as well. Imagine if everyone took just one flight. The aviation related emissions will skyrocket. The impact on the environment will be immense, and this may then severely constrain the options for future generations. This is why I believe we need to reduce emissions from air travel. And based on current science, SAF is the most viable pathway to do so in the short and medium term.

Members have highlighted that Singapore's approach to introducing SAF is novel. We are the first country to introduce a levy rather than a mandate. CAAS’ intent is to fix the cost of using greener jet fuel so that travellers have certainty. CAAS will also manage costs by procuring sustainable fuel centrally on behalf of carriers, reaping economies of scale. Some Members asked: would it be better to charge the airlines instead? But I am of the view that having a transparent charge to the travellers avoids the risk of airlines using this as a reason to inject further upward pressure on prices because of a lack of transparency.

So, Sir, this approach protects both the environment and the competitiveness of Singapore’s air hub, a major economic sector for us. It has at its heart the interests of both the current generation and future generations. It may not have as ambitious a target as some other countries, but it is a target backed up by a robust plan as the Bill shows, implementable, deliverable, not just for show. And may I add, while it is important that we understand, consider and assess the strategies taken by other countries, there must be occasions where our convictions give us the strength to take our own path. And this is something that this Government has never shied away from.

In conclusion, Singapore’s SAF levy may not move the global needle on climate change. But it is a commitment by all Singaporeans and all travellers who come through our airports to give hope to our future generations. In the words of Dr Jane Goodall: "And even today, when the planet is dark, there is still hope. Don’t lose hope. If you lose hope, you become apathetic and do nothing." Mr Deputy Speaker, I support the Bill.

Mr Deputy Speaker: Senior Minister of State Sun Xueling.

6.08 pm

Ms Sun Xueling: Mr Deputy Speaker, I thank Members for their support of the Bill, as well as their comments and suggestions.

Ms Lee Hui Ying, Ms Gho Sze Kee, Mr Sharael Taha and Mr Yip Hon Weng asked about the impact of the SAF levy on Singapore’s hub competitiveness.

Singapore has chosen a pragmatic and balanced approach. We are a council member of ICAO and are committed to working towards the ICAO's long-term aspirational goal of net zero carbon emissions for international aviation by 2050. Airlines and passengers fly through Changi Airport for various reasons, including safety, network and connectivity.

[Mr Speaker in the Chair]

We will continue to keep a close watch on our charges and costs to ensure our air hub's competitiveness. With regard to SAF's adoption, we have calibrated our approach to our circumstances, with safeguards to maintain our air hub’s competitiveness.

As international aviation moves towards decarbonisation, our modest 1% SAF target sends a firm demand signal to spur production and ecosystem development in Singapore. As a leading air hub, this lays the groundwork for Singapore’s broader SAF adoption in the future. At the same time, with a fixed cost envelope approach, we can decide how much costs we want to bear and provide cost certainty for airlines and passengers. This ensures that our competitiveness is not adversely impacted. We have also adopted a differentiated approach for transit and transfer passengers where they will not incur the levy. I will elaborate on this later.

Mr Dennis Tan and Ms Poh Li San asked about adjustments and triggers to the SAF target and levy in the future if airlines were to voluntarily decarbonise or if SAF prices remain volatile. We will review Singapore's national SAF target and the SAF levy periodically, taking into account global developments in SAF supply, prices and the policies of other countries. To echo Mr Foo, Ms Gho and Ms Poh, we will ensure Singapore remains aligned with international progress while safeguarding our hub's competitiveness.

Ms Lee, Ms Gho, Mr Taha, Mr Tan and Mr Yip have asked about further details on the design of the SAF levy. Should this Bill pass, CAAS will share more details on the SAF levy and the implementation date by the end of this year. The SAF levy is designed to allocate the cost of meeting Singapore’s SAF target across different user groups, including passenger, cargo and general or business aviation flights based on their relative fuel consumption. This approach ensures that the costs of SAF adoption are shared across all air transport users.

For passenger flights, we have earlier estimated the SAF levy amounts for passengers on an economy class direct flight to be about $3, $6 and $16 for short-, medium- and long-haul flights respectively. I would like to assure the House that the levy to be announced later this year is within what we have communicated earlier and is determined based on factors such as distance flown and cabin class. Stakeholders will be given sufficient lead time to prepare ahead of the implementation date.

As Mr Yip has highlighted, transit and transfer passengers are a critical part of air traffic through Changi Airport. Although they do not start or end their journeys in Singapore, transit and transfer passengers enhance Singapore’s connectivity by supporting a broader network of destinations and higher flight frequencies. This strengthens Singapore’s position as a global aviation hub, which in turn benefits origin-destination passengers, particularly Singapore residents, by making flights more convenient and affordable. As passengers may choose to transit or transfer through different hubs, we need to ensure that Changi remains competitive so that they will continue to choose to transit or transfer through Changi. As such, there are currently no plans for passengers transiting or transferring through Changi Airport to incur the SAF levy.

Mr Tan had also asked about potential carbon leakage arising from the levy and if airline operators may choose to operate elsewhere. Airlines choose where to operate based on a variety of factors including safety, network, connectivity and experience at various airports. In addition, other jurisdictions in the region are exploring and developing SAF policies and targets. Our differentiated approach towards transit and transfer passengers will avoid situations where such passengers choose to fly via other air hubs or airlines where there are no SAF policies in place.

Mr Sharael Taha and Mr Yip asked about how Singapore will manage the volatility of SAF prices to minimise disruption to airlines and consumers. Mr Cai Yinzhou also asked about the methodology used to calculate the SAF premium. SAF levy rates will be calculated based on the current 1% SAF target. However, within a fixed period, should the actual SAF premium fluctuate, the SAF levy rates will remain fixed. This provides certainty to passengers and airlines. What then changes is the actual SAF uplift. As the SAF market remains nascent, we will closely monitor SAF premiums and global developments, and review if adjustments to the SAF levy are required in the longer run. We will continue to prioritise providing cost certainty to passengers and businesses.

Ms Poh and Mr Cai asked about the decision to impose the levy on passengers instead of airlines. To clarify, the SAF levy is payable by persons that will be specified in the Order, such as aircraft operators. The levy payable is calculated based on, among other things, the ultimate user of the air transport service, such as the passengers or shippers. Aircraft operators will be allowed to pass on the levy to the end users such as passengers and shippers. To assure Mr Yip, if the levy is passed on to end users, the amount of the SAF levy that each end user is paying must be reflected transparently.

Mr Yip asked about the exemption criteria for the SAF levy. The SAF levy will apply to all flights departing from Singapore. We nonetheless recognise that there are flights where the levy should not be payable, such as aircraft used for flight training and flights for charitable and humanitarian purposes. The types of flights that are excluded from the payment of SAF levy will be specified in the Order, similar to the approach taken for the aviation levy and airport development levy.

Ms Poh asked for details on the public consultations done. CAAS has been engaging airlines and other industry partners closely on the SAF levy framework since last year. Feedback has been constructive. CAAS will continue to do so as it firms up details for implementation.

Mr Cai, Mr Chia, Ms Lee, Ms Poh, Mr Sharael Taha, Mr Tan and Mr Yip asked for more details on the procurement of SAF and our plans to strengthen production capabilities. To support long-term supply resilience, Singapore's 1% SAF uplift target is designed to send a clear and credible demand signal to the market. This will give producers the certainty to invest in production capacity and supply chains in Singapore and the region. As a member of the international civil aviation community, Singapore is committed to ensure that the SAF procured complies with the requirements under ICAO's CORSIA.

In line with Singapore's Sustainable Jurong Island vision to manufacture sustainable products to help sectors decarbonise, the Economic Development Board has been in discussions with existing energy majors on retrofitting existing refinery units, and new entrants for greenfield SAF production. The Agency for Science, Technology and Research (A*STAR) and research institutes are also pre-investing in technologies that could be of use to advance biofuels production. These are part of our efforts to build a sustainable and reliable SAF ecosystem, which will also result in more good jobs for Singaporeans. Should this Bill pass, CAAS will share more details on the central procurement of SAF and SAF environmental attributes subsequently.

To Mr Cai, Mr Tan and Mr Yip's questions on governance and reporting requirements, the SAF Fund will be administered and managed by CAAS, with robust governance mechanisms in place to ensure transparency and accountability in the use of the Fund. These include regular reporting, independent audits and outcome tracking against the national SAF target. CAAS will provide updates on the SAF Fund and SAF target in its annual financial statements and sustainability reports.

Mr Chia and Mr Yip asked about how the Bill would work in tandem with international frameworks, such as CORSIA. CORSIA is the world's only global market-based measure for international aviation. The international aviation community reaffirmed its commitment to CORSIA at the recent ICAO Assembly last month.

Singapore is already complying with the monitoring, reporting and verification requirements under CORSIA. When implemented, the SAF framework will further enable aircraft operators to comply with the requirements under CORSIA, such as by procuring SAF that is CORSIA-eligible. Legislation, such as this Bill, alongside others, such as the Air Navigation (Carbon Emissions and Reporting) Regulations, will continue to support our sustainability plans.

Mr Speaker, Sir, this Bill enables Singapore to take a meaningful step towards decarbonising aviation. It balances our environmental responsibility with pragmatism, providing the foundation for Singapore to grow as a sustainable air hub. I thank Members for supporting this Bill and I look forward to working closely with all stakeholders to implement this Bill effectively. Mr Speaker, Sir, I beg to move.

Mr Speaker: Clarifications. Mr Dennis Tan.

6.19 pm

Mr Dennis Tan Lip Fong: Mr Speaker, I thank the Senior Minister of State for her concluding remarks. I just want to reply to the clarification which Member Mr Foo Cexiang sought. Mr Foo is right, I had made certain clarifications on this issue with the previous Minister. I heard the Minister with his explanation and I am prepared to let this Fund and the plans take off and see how we progress in the initial years and then we can take it from there.

Mr Speaker: Any other clarifications for Senior Minister of State Sun? No?

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Ms Sun Xueling].

Bill considered in Committee; reported without amendment; read a Third time and passed.