The decision by South African energy and chemicals company Sasol and Danish clean energy technology firm Topsoe to dissolve their sustainable aviation fuel (SAF) joint venture, Zaffra, marks another significant development in the global energy transition, highlighting the commercial challenges that continue to slow the scale-up of low-carbon aviation fuels despite growing policy support and climate commitments.
The companies confirmed on June 26 that Zaffra would cease operations just two years after it was established, ending a partnership that had sought to accelerate industrial-scale production of sustainable aviation fuel by combining Sasol’s Fischer-Tropsch technology with Topsoe’s advanced fuel processing technologies. Despite the ambitions surrounding the venture, the partnership concluded without producing any commercial volumes of SAF, underlining the widening gap between technological capability and commercial viability in one of the world’s most closely watched decarbonisation sectors.
Neither company disclosed the specific reasons for winding up the venture. In a joint statement, Sasol Chief Executive Officer Simon Baloyi described the decision as a carefully considered organisational transition while confirming that both companies would continue collaborating under an existing technology licensing agreement. Since 2019, the two firms have signed six technology licensing agreements, suggesting that while the joint venture structure has come to an end, the underlying technological collaboration remains strategically important. The closure comes at a time when sustainable aviation fuel is increasingly viewed as one of the aviation industry’s primary pathways towards reducing greenhouse gas emissions. Unlike conventional jet fuel, SAF is produced from renewable biomass, waste materials or synthetic processes using captured carbon dioxide and green hydrogen. Depending on the production pathway, lifecycle carbon emissions can be reduced by up to 80% compared with fossil-based aviation fuel.
However, producing SAF at commercial scale has proven considerably more difficult than anticipated. According to industry analysts, the sector continues to face high capital expenditure requirements, uncertain long-term demand, constrained feedstock availability and elevated financing costs. At the same time, green hydrogen an essential input for many synthetic fuel pathways remains significantly more expensive than conventional alternatives, limiting the competitiveness of emerging projects. These challenges have increasingly affected investment decisions across the clean fuels industry. According to research published in Nature Energy in 2025, only around 7% of global green hydrogen projects announced in 2023 had progressed to implementation, reflecting persistent barriers related to project economics, infrastructure availability and market certainty.
The dissolution of Zaffra therefore reflects broader market conditions rather than an isolated corporate decision. Across Europe, North America and parts of Asia, several hydrogen, e-fuel and SAF projects have experienced delays, redesigns or cancellations as developers reassess project economics against rising construction costs, higher interest rates and slower-than-expected demand growth.
For Africa, these developments carry important implications. The continent has emerged as a potential future supplier of green hydrogen and sustainable aviation fuels due to its abundant renewable energy resources, particularly solar and wind potential across countries including South Africa, Namibia, Egypt, Morocco, Mauritania and Kenya. Governments have increasingly incorporated hydrogen production into national industrialisation strategies, viewing the sector as an opportunity to attract investment, expand exports and create higher-value manufacturing industries. Yet the experience of Zaffra illustrates that abundant renewable resources alone are insufficient to guarantee commercially successful projects. Investors continue to require predictable policy frameworks, long-term purchase agreements, competitive electricity costs, efficient logistics and supportive financing mechanisms before committing billions of dollars to new industrial facilities.
South Africa offers perhaps the clearest illustration of these commercial realities. While the country has positioned itself as one of Africa’s leading green hydrogen investment destinations through its Hydrogen Society Roadmap and the Just Energy Transition Investment Plan, commercial deployment has progressed more slowly than initially anticipated. Earlier this year, Sasol reportedly cancelled its pilot green hydrogen project at Boegoebaai after determining that the project was not commercially viable despite substantial investment.
The latest decision also raises questions surrounding another major sustainable aviation fuel project involving Sasol and German renewable energy developer Enertrag. The proposed €500 million (approximately US$571 million) facility in Germany had secured more than US$400 million in public funding and was intended to become one of Europe’s flagship synthetic aviation fuel projects. Neither Sasol nor Topsoe has indicated how Zaffra’s closure may affect the project’s future development or governance arrangements.
Meanwhile, Topsoe has also scaled back parts of its hydrogen business. Earlier in June, the company suspended operations at its hydrogen production facility in Denmark, citing insufficient market demand. The move reflects an increasingly cautious approach among technology developers as commercial markets for green hydrogen mature more slowly than expected. Despite these setbacks, policy momentum behind sustainable aviation fuel continues to strengthen globally. The International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), together with the European Union’s ReFuelEU Aviation regulation and national blending mandates in several jurisdictions, are expected to increase demand for lower-carbon aviation fuels over the coming decade. The challenge increasingly lies not in policy ambition but in bridging the commercial gap between demonstration projects and competitive industrial-scale production.
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For African policymakers and investors, the closure of Zaffra offers an important reminder that the energy transition is as much an economic challenge as it is a technological one. While the continent possesses many of the natural resources required to participate in emerging green fuel value chains, long-term competitiveness will depend on creating investment environments capable of supporting commercially viable projects rather than relying solely on resource potential or policy aspirations.
As governments continue pursuing industrial decarbonisation and climate objectives, the lessons emerging from projects such as Zaffra are likely to shape future investment strategies. The experience reinforces the importance of balancing innovation with commercial discipline, ensuring that the transition to low-carbon fuels is supported by robust market fundamentals, scalable financing models and sustained industrial demand. For Africa’s growing green economy, these considerations will remain central as the continent seeks to position itself within the evolving global clean energy landscape.
