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Low-Carbon Fuel Mandates: From Rules to Revenue in Asia

14 min read · Apr 17, 2026 · By Alex

Basically low-carbon fuel mandates are rules that require a minimum share of cleaner fuel in aviation or shipping. Therefore they create demand. However they do not create revenue. Still between the rule and the cash flow sit a buyer, a contract, a certified feedstock and a delivery route, and that is where projects in Southeast Asia stall. Accordingly this hub guide maps the rules that matter, the chain that turns them into a financeable project, and the questions I would ask before I lend a dollar to one.

In short

Indeed mandates create regulated demand. Still lenders finance contracts.
Thus the chain from rule to revenue has five links: obliged party, contract, inputs, certification and price.
In fact aviation has the more established rules. Meanwhile shipping has more buyers and more open questions.
Finally each rule below has its own guide, and each guide ends at the same place: the buyer.

A mandate is not a target

In practice the word mandate gets used for two different instruments. A mandate obliges a named party to meet a share or an intensity limit, and it attaches a consequence to failure. Meanwhile a target states an ambition without a named party or a penalty. In practice the distinction matters because a lender can size a contract against the first and cannot size anything against the second.

For example, ReFuelEU Aviation obliges aviation fuel suppliers to ensure that all fuel made available at each Union airport contains the minimum SAF share, and it makes a supplier liable to a fine of not less than twice the difference between the SAF price and the conventional price, multiplied by the quantity that fell short. By contrast the IMO strategy sets a checkpoint of at least 20 % by 2030 and at least 70 % by 2040 against 2008, but the legal instrument that would turn it into an obligation is still not adopted.

Therefore I sort every rule in this guide by one question: who is obliged, and what happens if they fail? Therefore a rule that fails that test is context, not demand.

The low-carbon fuel mandates that matter

Rule	Sector	What it does	Guide
ReFuelEU Aviation	Aviation	Minimum SAF share at EU airports, 2 % in 2025 and 70 % in 2050, with a synthetic sub-target reaching 35 % in 2050	Read
CORSIA	Aviation	Offset scheme for international flights, in a pilot phase from 2021 to 2023, a first phase from 2024 to 2026 and a second phase from 2027	Read
EU ETS aviation	Aviation	Zero rating for eligible SAF, plus 20 million allowances set aside to support SAF uptake	Read
RFNBO rules	Both	Define renewable fuels of non-biological origin and set a 70 % greenhouse gas saving threshold	Read
FuelEU Maritime	Shipping	Greenhouse gas intensity limit for ships above 5,000 gross tonnage, falling 2 % in 2025 and 80 % by 2050	Read
IMO Net-Zero Framework	Shipping	Draft global fuel standard and pricing mechanism, adjourned in October 2025, earliest entry into force 2028 at the earliest (16 months after adoption)	Read

How each low-carbon fuel mandate creates a buyer

In practice each low-carbon fuel mandate reaches a different buyer, and that difference decides the contract. To begin with, ReFuelEU creates a buyer at the airport. To begin with the aviation fuel supplier has to blend the share, so it needs certified SAF, and the airline has a separate refuelling obligation that keeps the fuel inside the EU rather than in the tanks of a cheaper departure point. Therefore the buyer is visible before the plant exists, which is why the SAF market has a queue of announced projects.

In addition CORSIA creates a buyer for the same molecule on international routes, because an operator can use eligible SAF instead of purchasing offsets. In addition the European Parliamentary Research Service notes that CORSIA allows aircraft operators to use SAF that comply with a dedicated sustainability framework instead of buying offsets. However the price signal depends on the offset price, so the CORSIA buyer is weaker than the ReFuelEU buyer.

Moreover the EU ETS creates a buyer by removing a cost. Moreover the Commission states that operators are not required to surrender allowances for eligible SAF, an advantage it valued at around EUR 25 million in 2024, on top of about EUR 100 million of free allowances distributed to 53 operators for SAF used in that year. Consequently the ETS adds a second revenue line to the same contract.

Where the maritime low-carbon fuel mandates create a buyer

By contrast FuelEU Maritime creates a buyer at the ship. The obligation sits on the shipping company, which has to meet an average greenhouse gas intensity across the energy it uses. Moreover the limit uses a reference of 91.16 gCO2eq/MJ, with a path of 2 % in 2025, 6 % in 2030, 14.5 % in 2035, 31 % in 2040, 62 % in 2045 and 80 % in 2050. In addition only ships above 5,000 gross tonnage are in scope, at 100 % of the energy on intra-EU voyages and 50 % on extra-EU voyages. Therefore the buyer is an operator with a fleet, not a fuel pool, and the contract has to fit the route and the vessel. Finally the IMO framework, if adopted, would create a global buyer for the same fuel, but it is not yet a rule.

Moreover the maritime rule attaches a price to failure. FuelEU sets the penalty at 2,400 EUR per tonne of VLSFO equivalent, on 41,000 MJ per tonne, and lifts it by 1 + (n-1)/10 when the deficit repeats, with 1.5 EUR per kWh added for a ship at berth. In addition it gives RFNBOs a multiplier of 2 from 1 January 2025 to 31 December 2033, then a 2 % RFNBO sub-target from 2034 if their share stays below 1 % in 2031. Therefore the cost of non-compliance is a number the buyer can put in a contract.

From rule to revenue: the five-link chain

Obliged party: who has to buy or supply, and are they solvent? A fuel supplier at an EU airport is a different credit from a single shipowner.
Contract: term, volume, price formula. In practice a take-or-pay floor is worth more than a larger optional number.
Inputs: feedstock, power, hydrogen or carbon dioxide, contracted. IRENA puts the capital intensity of a renewable ammonia plant at around USD 4,800 per tonne of annual capacity at 0.5 million tonnes, falling to about USD 3,000 at 10 million tonnes.
Certification: accepted by the buyer. See also SAF Sustainability Criteria.
Lastly, price: indexation and pass-through, with a review trigger when the rule changes.

In effect the chain is only as strong as its weakest link, and the weak link is usually the second one. Therefore I spend more time on the contract than on the technology.

Aviation versus maritime: low-carbon fuel mandates

Point	Aviation	Maritime
Obliged party	Aviation fuel suppliers, plus a refuelling obligation on airlines	Shipping companies responsible for ships above 5,000 gross tonnage
Buyer concentration	Higher, because supply at an airport is a narrow market	Lower, because many operators buy at many ports
Rule maturity	In force to 2050, with a published schedule	FuelEU in force since 2025, the global IMO rule pending
Volume driver	A share of fuel supplied at the airport	An average greenhouse gas intensity across the fleet

In addition see ReFuelEU Bankability, Maritime Fuel Bankability and SAF vs Methanol.

Where the low-carbon fuel mandates stop

In practice every mandate in this guide stops at the same place: the cost of capital. The IEA’s World Energy Investment 2025 reports that the cost of capital in emerging market and developing economies outside China is two to three times the level in developed countries. Moreover it finds that 80 % of utility-scale solar and wind investment in 2024 was met through debt, and that clean energy project finance outside China rose 46 % to USD 37 billion. Therefore a rule that works in Rotterdam can still fail in Jakarta, not because the demand is missing but because the money is dearer.

Moreover the feedstock cost is not small. IRENA estimates e-methanol at USD 800 to 1,600 per tonne when carbon dioxide comes from bioenergy with capture at USD 10 to 50 per tonne, and USD 1,200 to 2,400 per tonne when it comes from direct air capture at USD 300 to 600 per tonne. Against a fossil marine fuel that moves with oil, the gap needs a contract mechanism, not a hope.

Consequently the mandates do the first job, which is to create a reason to pay a premium. They do not do the second job, which is to allocate the cost of that premium across the producer, the buyer and the lender. That allocation is the project.

The low-carbon fuel mandates timeline to 2030

Year	What changes
2024	ReFuelEU applies, with articles 4, 5, 6, 8 and 10 from 2025. The EU ETS covers maritime transport at 40 % of verified emissions.
2025	ReFuelEU requires 2 % SAF. FuelEU Maritime starts at a 2 % intensity cut. The EU ETS reaches 70 % for shipping.
2026	The EU ETS reaches 100 % for shipping and adds methane and nitrous oxide. Singapore’s methanol bunkering licence period begins on 1 January.
2027	CORSIA enters its second phase.
2028	1 March is the earliest possible entry into force for the IMO Net-Zero Framework, if it is adopted.
2030	ReFuelEU reaches 6 % SAF with a 1.2 % average synthetic share. FuelEU reaches a 6 % intensity cut. The IMO checkpoint is at least 20 %, striving for 30 %.

Therefore the calendar is the most useful planning tool a developer has when a low-carbon fuel mandate sets the deadline. It tells you which buyer has a problem in which year, and it tells the lender when the contract has to start.

What Southeast Asia changes in the low-carbon fuel mandates case

In practice the region changes the delivery side faster than the demand side. Singapore opened applications for methanol bunkering licences on 26 March 2025. A licensee must secure methanol supply to Singapore, run quality assurance, provide storage and safe handling, hold emergency response measures and own or operate at least one IMO Type 2 chemical tanker, and the licence runs from 1 January 2026 to 31 December 2030 with a well-to-wake carbon intensity and a chain of custody.

Moreover the first methanol bunkering in the port took place on 27 July 2023, when Hong Lam Marine delivered about 300 tonnes of bio-methanol to a Maersk vessel at the Raffles Reserved Anchorage. Therefore a producer in the region can point to a licensed buyer and a tested route, which is more than most projects can show for the demand link.

By contrast a SAF project in Southeast Asia usually sells into Europe, because the obligation sits at Union airports. Consequently the project carries freight, certification and a longer commercial chain. See Export SAF and Southeast Asia SAF.

What a low-carbon fuel mandate does to the contract

In practice a low-carbon fuel mandate changes four clauses in the offtake. The first is tenor, because the buyer’s obligation runs on a published schedule and the contract can be priced against it. The second is volume, because a share of fuel supplied is easier to forecast than a share of a market that may or may not switch. The third is the price formula, because the compliance saving gives both sides an index they can agree on. The fourth is change in law, because a mandate can be amended and someone has to carry that risk.

Therefore I read the regulation before I read the term sheet. A contract that ignores the schedule will either overprice the early years or underprice the late ones. Moreover a contract that puts all change in law risk on the producer will be more expensive for the buyer, because the producer has to hold a reserve against a risk it cannot measure. See SAF Policy Risk for how that risk behaves in aviation.

Consequently the best low-carbon fuel mandates do not remove risk. They make it visible, which is what a lender needs in order to price it instead of refusing the file.

The mistakes I see with low-carbon fuel mandates

Treating a target as a mandate, and building a base case on the IMO checkpoint rather than on an adopted rule.
Assuming the obliged party is the buyer. In shipping the obliged party is the shipping company, but the fuel may be bought by a charterer or a supplier.
Ignoring the sub-target. A SAF project that meets the headline share but not the synthetic share is not in the same market.
Leaving the delivery layer to the end. A licensed bunker supplier and a tested port are worth more to a lender than an extra megawatt of electrolysis.

In practice these four mistakes share one cause: the project team reads the rule as an engineering requirement rather than a commercial one. Therefore the fix is a commercial review before the feasibility study, not after it. In practice that review takes a week. It saves a year of work on a low-carbon fuel mandate that never had a buyer.

What to do first with low-carbon fuel

So pick the rule that gives your buyer a reason to talk, and check that it has an obliged party and a penalty.
Then find the buyer. Also see ReFuelEU Offtake and Marine Fuel Offtake.
After that check your inputs and certification. In practice certification takes longer than developers expect.
Finally build the file for lenders. See How to Finance a SAF Project.

Therefore the order is rule, buyer, contract, inputs, certification. A project that starts with the plant and works backwards usually ends with a fuel that nobody has agreed to buy.

What an investor should ask

Is the revenue contracted, and what happens if the rule changes? In practice those two questions cover most of the risk in a low-carbon fuel project. For example a mandate can be delayed, as the IMO process was in October 2025, and a contract that has no answer for that delay is not bankable.

In fact capital alone rarely unlocks financing. Instead investors, lenders, offtakers, suppliers and strategic partners unlock it when they align around a project. Thus rules help them align. However they do not do it for them. See also my bankability hub and project finance, offtake and strategic partnership services.

Therefore the answer should be a number, not a commitment. I want the buyer’s own calculation of the compliance cost it avoids per tonne, at each step of the schedule, signed by the person who owns the budget.

Moreover I would ask for the counterparty’s own compliance calculation. If the buyer cannot show the cost it avoids, the premium is a preference rather than a budget line, and preferences disappear in a bad year. Consequently a low-carbon fuel mandate is a starting point, not a business plan.

The rest of the series

In practice this hub is only useful if it leads to the detail. Therefore every article in the series is listed below, grouped by track.

Aviation:

ReFuelEU Aviation, the regulation and its schedule.
CORSIA, the global offset scheme and its phases.
EU ETS aviation, the zero rating and the allowance support.
RFNBO, the definition and the 70 % threshold.
SAF sustainability criteria, what makes a parcel eligible.
Book and claim, the chain of custody model.
SAF mandates, the comparison across jurisdictions.
Southeast Asia SAF, the regional supply case.
ReFuelEU bankability, the chain applied to aviation.
Export SAF, selling into Europe from Asia.
ReFuelEU offtake, what the fuel supplier will sign.
SAF policy risk, what happens if the rule moves.
e-SAF project finance, the synthetic route.

Maritime:

Sustainable maritime fuels, the fuel family and its buyers.
FuelEU Maritime, the intensity limit and its schedule.
IMO Net-Zero Framework, the global rule and its status.
Methanol bunkering in Southeast Asia, the port layer.
Maritime fuel bankability, the chain applied to shipping.
Marine fuel offtake, who signs and what they sign.

Comparison:

SAF vs methanol, the financeability comparison.

Sources

Sources

European Parliamentary Research Service, ReFuelEU Aviation initiative, PE 698.900, November 2023.
Regulation (EU) 2023/2405, ReFuelEU Aviation, Article 4, Article 12 and Annex I.
Commission Delegated Regulation (EU) 2023/1185 on the 70 % greenhouse gas saving threshold for RFNBOs.
European Commission, FuelEU Maritime (Regulation (EU) 2023/1805), consolidated text at eur-lex.europa.eu.
European Commission, FAQ on maritime transport in the EU ETS.
European Commission, EU allocates EUR 100m-worth of ETS allowances to help airlines buy SAF, 17 September 2025.
International Maritime Organization, IMO’s work to cut GHG emissions from ships.
SAFETY4SEA, IMO MEPC ES.2: key outcomes, 20 October 2025.
EASA, ICAO Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) (phases and eligible units).
Maritime and Port Authority of Singapore, media release on the methanol bunkering licence, 26 March 2025, and the first methanol bunkering release of 27 July 2023.
IRENA, Innovation Outlook: Renewable Methanol (2021) and Innovation Outlook: Renewable Ammonia (2022).
IEA, World Energy Investment 2025.

FAQ

What are low-carbon fuel mandates?

In short rules requiring a minimum share of cleaner fuel in a sector, usually with a named obliged party and a penalty. In practice that combination is what separates a mandate from a target.

Do they guarantee revenue?

No. They create demand. Instead a contract creates revenue, and the contract has to survive a delay in the rule.

Which mandate matters most for SAF?

Above all ReFuelEU Aviation is the reference, because it has a schedule to 2050 and a fine. Meanwhile CORSIA and the EU ETS support it with a second and third revenue line.

Which matters most for marine fuels?

Still FuelEU Maritime today, with the IMO framework as a pending global rule. However the October 2025 adjournment means the global case is not yet bankable.