When global airlines gather at industry summits, one subject dominates the agenda: how to cut emissions from long-haul flights, an area where electrification and hydrogen remain distant prospects. The consensus is that sustainable aviation fuel, or SAF, is the only viable route to reducing the sector’s carbon footprint in the near term. Yet in much of Asia, investment in SAF remains tentative. One Thai company, however, has decided to move early.
Bangchak Corporation, best known as a mid-sized oil refiner and the operator of thousands of service stations, has built a plant at its Phra Khanong refinery capable of producing up to one million litres of SAF per day. This makes it one of the largest dedicated SAF facilities in Southeast Asia, a region where aviation is expected to rebound strongly after the pandemic and demand for low-carbon fuels could rise rapidly in the next decade.
The plant, which is still undergoing trial runs, is technically ready but commercially constrained. Thailand’s government has not yet mandated the use of SAF, and without such a requirement airlines remain reluctant to sign long-term contracts. SAF is typically two to five times more expensive than conventional jet kerosene, a price gap that even sustainability-minded carriers struggle to absorb in a competitive market.
Executives at Bangchak describe the venture as both a risk and an opportunity. The company has a history of moving early: in the 2000s, it was among the first in Thailand to introduce ethanol and biodiesel blends, anticipating government policy. The gamble is that history will repeat itself, with regulators eventually mandating SAF usage and Bangchak positioned as the dominant domestic supplier.
The political context, however, is messy. While Thailand has pledged to reach net-zero emissions by 2050 and has highlighted aviation as a sector requiring urgent action, different ministries have failed to agree on who should lead SAF policy. The transport ministry argues that fuel standards fall under its remit; the energy ministry insists blending quotas should be its responsibility; the environment ministry wants to frame SAF as part of climate legislation. This bureaucratic deadlock has delayed a mandate that industry insiders say is inevitable but unpredictable in timing.
The uncertainty leaves Bangchak exposed. If policy support arrives within the next two years, the company could lock in lucrative supply contracts with national carriers such as Thai Airways and with regional low-cost airlines eager to demonstrate climate responsibility. If not, the refinery could be left producing a premium product without a market, eroding returns on an investment that was intended to anchor Bangchak’s transition strategy.
Feedstock is another challenge. SAF production is heavily reliant on waste oils, animal fats and residues, all of which are finite and increasingly contested by producers in Europe, North America and China. Bangchak has launched its “Fry to Fly” initiative, which collects used cooking oil from households and restaurants across Thailand. The programme doubles as an ESG showcase, highlighting community engagement and circular economy credentials. Yet volumes collected are still far below industrial needs, meaning the company must secure larger-scale feedstock imports or develop partnerships with agricultural suppliers — raising questions about supply-chain emissions and sustainability certification.
Regionally, Bangchak is not alone. Malaysia’s Petronas has announced pilot SAF projects, and Indonesia’s Pertamina has signalled interest in co-processing technologies that adapt existing refineries to SAF production. Globally, majors such as Shell, Neste and TotalEnergies are scaling SAF capacity, supported by regulatory mandates in the EU and US. Compared with these players, Bangchak is small, but by being first in Thailand it hopes to capture an early-mover advantage.
Industry analysts say the gamble could pay off. Thailand is one of Asia’s busiest aviation hubs, with Bangkok a key transit point for international flights. Once mandates or incentives are in place, domestic production will be critical to avoid dependence on costly imports. “If Thailand is serious about its climate goals, SAF will have to be part of the mix, and Bangchak will be the only local producer ready at scale,” says an aviation consultant in Singapore.
Bangchak also views the SAF unit as a tool to strengthen its standing with investors. The company has pledged net zero by 2050 under its BCP 316 NET strategy and has tied executive incentives to ESG milestones. Demonstrating leadership in SAF supports its claim to be a credible transition story, which is increasingly important as it seeks access to green finance, sustainability-linked loans and international capital markets. Awards such as the Climate Action Leader Excellence Award have already burnished its credentials.
Yet the risks remain significant. SAF economics are fragile, hinging on subsidies, mandates and international demand growth. Airlines are lobbying governments to provide incentives or tax breaks to level the playing field, while environmental groups warn that without strict sustainability standards, SAF could replicate the controversies that plagued first-generation biofuels.
For Bangchak, the new unit is more than an industrial facility; it is a symbol of its attempt to reinvent itself. By building capacity ahead of policy, the group is signalling that it intends to play a role in shaping Thailand’s energy transition, not just following it. Whether that strategy proves visionary or premature will depend less on engineering than on the pace of regulatory change and the willingness of airlines and passengers to pay for greener skies.