World’s First Green Fuel Levy to Add Almost $32 to Air Fares
(Bloomberg) -- Air passengers departing Singapore will pay a green fuel levy of as much as S$41.60 ($31.95) from next year as the city-state locks in a key step in its effort to cut the aviation industry’s emissions.
Travelers flying in economy and premium economy, as well as those on short-haul routes, will be charged far less.
Those customers will pay an additional S$1 for trips to Southeast Asia, and S$10.40 for flights to the Americas, the Civil Aviation Authority of Singapore said Monday. Business and first class travelers will pay four times more, it said.
The sustainable aviation fuel levy will be applied on tickets sold from April 1 for flights departing Singapore from Oct. 1. Passengers transiting through the city-state won’t need to pay the fee. Cargo flights will also incur a duty, which will be charged on a per-kilogram basis.
Singapore is the first country in the world to tax passengers, and the levy is especially significant given its role as a global aviation hub. Its Changi Airport is poised for a record year, with this year’s passenger numbers on track to exceed the previous all-time high of 68.3 million hit in 2019.
The funds collected from passengers will go to the centralized purchase of sustainable aviation fuel — typically made from waste oils or agricultural feedstock — as Singapore looks to achieve a SAF adoption rate of 3% to 5% by 2030.
The global aviation sector makes up a relatively small portion of global greenhouse gas emissions — just 1.2% last year, according to the European Commission.
But surging demand for travel, coupled with the higher cost of sustainable fuels and their limited availability, are among key hurdles for the industry’s efforts to decarbonize. While SAF production doubled last year, it accounted for only 0.3% of global jet fuel volumes, according to the International Air Transport Association.
Singapore’s announcement coincides with the COP30 meeting in Brazil, where negotiators from nearly 200 countries are set to thrash out technical details on the world’s efforts to mitigate climate change.
While the duties may be a surprise to some travelers, they’re cheaper than initially feared. The government had previously estimated them at between S$3 and S$16, but a decline in SAF costs has prompted a smaller levy.
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