This article first appeared in Forum, The Edge Malaysia Weekly on February 17, 2025 - February 23, 2025

As the Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) edges closer to its mandatory phase in 2027, the global aviation sector faces a new wave of uncertainty on its journey towards net zero emissions. Even as 2024 growth forecasts anticipate the commencement of compliance offsetting, the momentum driving airlines towards the use of sustainable aviation fuels (SAF) may be stymied by rising anti-environmental, social and governance (ESG) sentiment in the US.

Although SAF mandates have quietly come into force in the European Union (EU) and UK, the Trump administration could roll back generous incentives that have enabled much of the growth in global SAF supply in recent years. As a result, 2025 is poised to be a pivotal year with developments in the EU and US likely to shape policy directions in the region.

In Asean, not all states are signatories to global aviation net zero pacts. Six have voluntarily joined Corsia and some are further along the SAF track than others. Below is a round-up of key announcements and developments expected this year.

Malaysia unveiled its Aviation Decarbonisation Blueprint in August 2024, strategically timed to align with its 2025 chairmanship of Asean, which carries the theme of “Inclusivity and Sustainability”. Malaysia is keen to join the ranks of global SAF producers with national oil company Petroliam Nasional Bhd in the driving seat. In 2023, it published its National Energy Transition Roadmap, setting up an ambitious target of up to 47% SAF blending mandate by 2050.

However, Malaysia has yet to outline a clear strategy to achieve its multifaceted goals, which include meeting domestic demand, attracting international investment and supplying SAF globally. Unlike China and Indonesia, it has also not announced plans to restrict feedstock exports or identify future feedstock sources and technologies beyond current capabilities. These critical gaps are expected to be addressed in the National SAF Roadmap, slated for release in 2025.

Singapore launched its Sustainable Air Hub Blueprint last year, announcing the introduction of a carbon levy on all outbound flights to fund the use of 1% SAF from 2026, rising to 3%-5% by 2030. The levy is estimated to add S$3 (RM9.90), S$6 and S$16 to the economy fare of a flight from Singapore to Bangkok, Tokyo and London respectively, with higher charges for premium classes.

However, securing supply to meet its mandate and managing the cost impact will be significant challenges. With EU and UK mandates now soaking up SAF supply, airlines in Europe are already reporting SAF prices exceeding four times conventional jet fuel. The carbon levy, coupled with planned increases in Changi airport fees through 2030, will widen the cost disparity between air travel in Singapore and other Asean capitals, potentially eroding its competitiveness. The details of the carbon levy and its implementation will be closely watched by the industry.

Thailand missed out on the inclusion of its Premium Thailand Voluntary Emission Reduction Programme (Premium T-VER) to the list of Corsia Emissions Unit Programmes. This is a notable setback as Premium T-VER included methodologies to qualify carbon projects that are potentially applicable in other Asean countries as well, under an Asean Common Carbon Framework.

To resubmit, Thailand has to reconcile its climate goals under its Nationally Determined Contribution with its willingness to trade emissions units for international mitigation or other purposes, such as Corsia compliance. Additionally, the country has to iron out its processes for issuing national authorisations of emissions units to meet Corsia requirements.

Thailand has also signalled its intentions to introduce an SAF mandate as early as 2026, contingent upon availability of domestic supply. While this might help advance Thailand’s climate targets, it may also impact the recovery of its tourism sector, a critical pillar of the country’s economy.

Indonesia is poised to benefit significantly from the global push for aviation decarbonisation. As a major source of organic SAF feedstock, it has the potential to become a global supplier of both SAF and carbon offsets. In late 2023, Indonesia produced its first batch of SAF, followed by the release of its National SAF Roadmap in 2024, which outlines a 1% SAF mandate from 2027. Indonesia has also imposed export curbs on used cooking oil and palm oil residues, both of which are critical raw materials for meeting its SAF targets up to 2040. In January 2025, the Indonesia Carbon Exchange announced plans to authorise international trades of carbon offsets from five projects.

Despite these advancements, inconsistencies remain in Indonesia’s alignment with Corsia standards. Its first batch of SAF was produced using palm kernel oil, which is not an approved Corsia feedstock. Similarly, its carbon offsets are certified under Indonesia’s national registry system, rendering them ineligible for Corsia compliance. Nevertheless, these developments make Indonesia a top country to watch in 2025, as it navigates the challenge of balancing domestic capabilities with international requirements.

The Philippines has also expressed intentions to produce SAF, with President Ferdinand Marcos Jr securing a commitment from Airbus in March 2024 to support its ambitions. Airbus is currently assisting with an SAF feasibility study to assess the country’s potential, due for completion by the second half of 2025.

Of the above five countries, the Philippines is likely to face the most significant challenges in establishing an SAF facility. Key hurdles include feedstock limitations and a prospective producer that is ready and willing to invest. Unlike Malaysia and Indonesia, which have access to palm oil waste, the Philippines’ main agricultural residue for SAF production is non-standard coconuts, which are limited in quantity. As an archipelagic nation, it also has to contend with logistical challenges in accessing and transporting feedstock. Furthermore, Philippine oil refining company Petron lags regional counterparts in investing in SAF facilities. As a result, the Philippines has indicated that it will introduce an SAF mandate only in 2030, with details expected to be published in its upcoming SAF road map.

Vietnam is the last country meeting the Corsia emissions threshold that is not a signatory to the scheme, apart from the BRIC quartet. However, in 2024, the country announced its decision to join starting Jan 1, 2026, one year ahead of the scheme becoming mandatory. Vietnam has acknowledged that it currently lacks the technology, know-how and financial resources to produce and utilise SAF on a large scale. Additionally, Its primary feedstock options — agricultural residues such as rice husk and rice straw — require more expensive production technologies. In the near term, Vietnam may focus on leveraging its carbon projects to meet decarbonisation goals.

Cambodia is the latest Asean country to join Corsia in 2023. It is home to numerous carbon projects that qualified for the Corsia Pilot Phase. Although eligibility criteria have been tightened, Cambodian projects are expected to be among those approved for Corsia Phase 1 offsetting. Further updates from emissions unit programmes are anticipated in the coming months.

Brunei is not a Corsia Participating State but it began internal consultations in 2024 to consider opting in. The country is considering the use of low-carbon aviation fuels and the co-processing pathway to produce SAF but compared with its Asean neighbours, it lacks the advantage of scale and feedstock availability.

Laos is exempt from Corsia offsetting as a landlocked developing country.

Myanmar is exempt from Corsia offsetting as a least developed country.

Yap Mun Ching is the chief sustainability officer of Capital A. She chairs Malaysia’s Corsia Task Force and is a technical expert of the ICAO Committee for Aviation Environmental Protection Working Group on Corsia. Yap also co-hosts ‘Positive Altitude’, AirAsia’s podcast on aviation sustainability.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.