Every Latin American country faces the same aviation decarbonization challenge, but not every country needs to produce every litre of sustainable aviation fuel (SAF) it consumes.
Research from the MIT Center for Sustainability Science and Strategy suggests that the region’s future SAF economy could be shaped by significant differences in feedstock availability, production costs, industrial capacity and domestic demand. Some countries may be able to produce more fuel than they require, while others could find imports more economical than building a complete national supply chain.
That raises a strategic question for governments, airlines and investors: could a regional market reduce the cost of decarbonization while helping to protect air connectivity?
National self-sufficiency may be the wrong objective
SAF policies are often designed within national borders. Governments assess domestic resources, set local production ambitions and consider mandates or incentives for their own aviation markets.
But a purely national approach may not always deliver the most efficient outcome.
MIT estimates that approximately US$204 billion in cumulative capital investment could be required to develop new SAF production capacity across Brazil, Chile, Colombia, Ecuador, Mexico and Peru between 2025 and 2050. With capital requirements of that scale, where facilities are built matters.
Requiring each country to develop a complete domestic production system could fragment investment across smaller plants, duplicate infrastructure and direct capital towards pathways that are less competitive locally.
National energy security will remain important, but it does not necessarily require every market to produce all the SAF it consumes. A coordinated system could instead combine domestic resilience with regional specialization.
A regional division of roles is emerging
The MIT scenarios indicate that the six countries are unlikely to play identical roles.
Brazil, Colombia, Ecuador and Peru emerge as potential net suppliers under regional trading scenarios. Chile and Mexico, meanwhile, could import part of their future requirements.
This does not mean that importing countries would have no domestic SAF industry. Chile, for example, could develop synthetic power-to-liquid fuels based on its renewable energy resources. Mexico also possesses agricultural and industrial potential.
The distinction is economic rather than absolute. A country can produce SAF domestically while still importing additional volumes when regional supply is more competitive.
Such a model would create a more diversified regional system. Large producers could supply neighbouring markets, smaller countries could specialize in particular feedstocks or technologies, and major aviation markets could combine local production with imported fuel.
A regional SAF economy would therefore not require every country to perform the same function.
Trade could lower the cost of decarbonization
Production costs provide one indication of why regional trade may matter.
In the pathways assessed by MIT, minimum estimated production costs range from around US$1.11 per litre in Brazil to approximately US$1.68 per litre in Chile. These figures depend on the technology, feedstock and modelling assumptions, but they illustrate the economic differences between markets.
Concentrating more production in locations with favourable resources and established value chains could allow developers to construct larger facilities, improve capacity utilization and benefit from economies of scale.
Regional trade could also reduce the need to reproduce the same industrial infrastructure in every country. Rather than financing multiple small and potentially underused plants, capital could be directed towards the facilities most likely to operate competitively over the long term.
The benefits would not be automatic. Transport costs, port access, storage capacity, customs procedures and taxation could erode part of the price advantage. Agricultural commodity prices could also alter the competitiveness of individual pathways.
Even so, a regional system would give producers and buyers more flexibility than isolated national markets.
The cost of SAF is also a connectivity issue
SAF is not only an energy or industrial policy issue. Its cost will eventually reach airline balance sheets.
Airlines may absorb part of the premium, pass it to passengers, negotiate long-term supply agreements or adjust their networks. The effect will vary by carrier and route, but services with thin margins are likely to be more sensitive to rising fuel costs.
This is particularly relevant in Latin America and the Caribbean, where air transport often performs an essential economic and territorial function. Many destinations depend on aviation for tourism, trade, business travel and access to regional hubs. Island and peripheral markets may have few practical alternatives.
A fragmented and unnecessarily expensive SAF transition could therefore place additional pressure on fares, frequencies and route viability.
A regional market would not eliminate the premium associated with lower-carbon fuel. It could, however, help reduce avoidable costs by directing production towards the most competitive locations.
Lowering the cost of SAF is consequently not only an industrial objective. It may also support the affordability and resilience of regional air connectivity.
Physical fuel does not have to reach every airport
Regional trade will not necessarily mean transporting SAF to every airport where an airline wants to claim lower emissions.
Book-and-claim systems offer another possible approach. Under this model, SAF is physically delivered and used where production, storage and blending infrastructure are available. The associated environmental attributes can then be purchased by an airline or corporate customer operating elsewhere.
This could be particularly relevant in a geographically dispersed region with many small airports and uneven fuel infrastructure. Delivering limited SAF volumes physically to every airport may be costly and operationally inefficient.
A credible book-and-claim system could allow more airlines to support SAF consumption before direct physical supply becomes widely available.
However, such systems require strong safeguards. Environmental attributes must be traceable, independently verified and protected against double counting. Governments and industry participants must also agree on how emission reductions are calculated and recognized.
Book-and-claim should therefore be understood as a complementary market mechanism, not a substitute for physical production or robust sustainability standards.
A regional market will require common rules
The main barriers to regional SAF trade may ultimately be institutional rather than technological.
Countries could adopt different definitions of eligible fuel, different sustainability thresholds and different methodologies for calculating lifecycle emissions. A SAF pathway recognized in one jurisdiction may not automatically qualify in another.
A functioning regional market would require greater compatibility in several areas:
- sustainability and feedstock criteria;
- carbon accounting methodologies;
- certification and traceability systems;
- customs and tax treatment;
- infrastructure standards;
- long-term demand signals;
- contractual and financing frameworks.
Coordination would also need to extend beyond national governments. Producers, airlines, airports, fuel suppliers, financial institutions and port operators would all influence how the market develops.
Without a shared framework, regional production potential could remain trapped behind regulatory fragmentation.
Regional trade also creates strategic risks
Regional integration would bring its own vulnerabilities.
Heavy dependence on a small number of producers could expose airlines to supply disruptions, agricultural shocks or policy changes. Feedstock expansion could also create land-use, biodiversity and food-security concerns if sustainability rules are weak.
Concentrated supply chains may face port congestion, transport bottlenecks and price volatility. Political disagreements or inconsistent incentives could further complicate long-term investment.
For that reason, a regional model should not be confused with complete import dependence. Countries may still need diversified suppliers, strategic reserves, selected domestic capacity and a mix of production pathways.
The objective would be resilience through cooperation, rather than efficiency at any cost.
From national industries to a regional system
Latin America may not need six isolated SAF industries built behind national borders.
It may need a coordinated system that produces fuel where feedstocks, technology and economics align most effectively, while allowing airlines and markets across the region to access that supply.
Such a system would require physical trade, compatible certification, credible environmental accounting and long-term cooperation between public and private actors.
The region’s aviation transition may therefore depend not only on how much SAF it can produce, but on whether it can design a market capable of moving fuel, investment and environmental value efficiently across borders.
