Global Sustainable Aviation Fuel Report

By the end of 2023, SAF production in the US reached 12.1 million gallons, marking a 53% rise year-on-year. Though SAF supply is still a minuscule share of total jet fuel consumption, there is a growing pipeline of upcoming SAF production capacities seeking to capitalize on the market opportunity. The projections from the US Energy Information Administration indicated a 15-fold rise in SAF production by the end of 2024 if the projects under development materialise as planned.

Policy measures help boost the demand for SAF. State-level policy measures in California, Illinois, and Oregon are notable examples. At the Federal level, an ambitious policy initiative is the SAF Grand Challenge, which aims for 100% SAF supply by 2050. The Inflation Reduction Act of 2022 is the other major federal policy that sets incentives for local SAF supply.

Incentives are likely to play an important role in attracting investments in the US SAF market. A key factor is the well-established biofuels industry, which already caters to transportation sector demand and would need attractive returns to divert resources towards SAF supply. Furthermore, the new e-SAF technologies must be supported with initial funding to enable commercial scale in the business.

The US government has launched several government-wide initiatives to assist in the decarbonization of the aviation industry, such as the SAF Grand Challenge. Launched in 2021, the SAF Grand Challenge (SGC) is a collaborative initiative between the US Department of Energy (DoE), the Department of Transportation (DoT), and the EPA to develop a comprehensive strategy for scaling up new SAF technologies.

Through the SGC initiative, a goal has been set to supply sufficient SAF to meet 100% of aviation fuel demand by 2050. Along with that, an ambitious government-wide commitment has been set to scale up the production of SAF to 35 billion gallons per year by 2050. A near-term goal of 3 billion gallons per year is established as a milestone for 2030. The SGC outlines a multi-agency approach to accelerate the research, development, demonstration, and deployment of SAF technologies. Various tax incentives complement the SGC policy’s goals, although it does not entail any binding targets for the industry and instead relies on voluntary SAF purchases (US DoE, 2023) (US DOE, 2022).

The flagship US legislation, the Inflation Reduction Act (IRA), that took effect in August 2022, seeks to incentivize SAF to promote its wider adoption. The IRA instituted a standalone blenders tax credit for SAF known as 40B, named for the section of IRA where it can be found. The 40B credit, made available to domestic SAF producers for the calendar years 2023 and 2024, is based on the carbon intensity of the fuel’s production, including the feedstock that is used to produce it.

In practical terms, IRA’s 40B credit results in a higher credit for any SAF that generates lower GHG emissions in its lifecycle. The credit value is equal to $1.25 per gallon of SAF plus $0.01 for each per cent of lifecycle GHG emissions reduction below 50% compared to petroleum-based aviation fuel. If SAF does not achieve at least a 50% reduction in carbon intensity, the fuel does not qualify for the 40B credit. The maximum credit per gallon is $1.75. On January 1, 2025, the 40B program will expire, and the 45Z Clean Fuel Production Credit will begin. The new tax credit amount is $0.35 per gallon for SAF.

For facilities that satisfy the prevailing wage and apprenticeship requirements, the credit amount is $1.75 per gallon. While the tax credit for 2023 and 2024 was limited to SAF blenders, the one for 2025-2027 covers all producers of low-carbon fuels, including SAF. This latter phase of the tax credit, estimated to be worth $3 billion, is critical for expanding the local SAF production base (WSJ, 2022) (US Govt Treasury, 2023) (American Soybean Association, 2024) (US DOE, n.d.) (Growth Energy, 2023) (NBAA, 2023).

The US DOE’s GHG, Regulated Emissions, and Energy Use in Transportation (GREET) model lays down the IRA methodology to calculate lifecycle GHG emissions related to SAF. An updated version of this model, originally targeted for March 1, 2024, is awaited. The GREET model will determine tax credit eligibility and corresponding disbursement for 2023 and 2024. The country’s biofuel producers and agricultural feedstock suppliers are significantly impacted by the delayed GREET model update (Farmweek Now, 2024).

Other federal policy measures include the renewable fuel standard (RFS) program that mandates the blending of renewable fuels into the nation’s fuel supply. While primarily focused on biofuels for road transportation, recent amendments have started to recognize SAF as part of the renewable fuel categories, providing additional incentives for its production and use. (US EPA, n.d.). Another scheme, the Clean Fuels & Products Shot™, part of the DOE Energy Earthshots™ initiative, supports the feedstocks and conversion technologies and SAF research and development (R&D) through funding opportunities. (US DoE, 2023)

Separately, state-level policies and regulations are driving the SAF market at different speeds and directions. California, for instance, had an early start. It leads the way through its Low Carbon Fuel Standard that incentivises low-carbon fuels including SAF, by setting carbon intensity reduction targets. SAF producers can generate LCFS credits which are tradeable in the market.

Washington state introduced the Clean Fuels Standard (CFS), similar to California’s LCFS, to set carbon intensity reduction targets for transportation fuels. This standard encourages the production and use of SAF by allowing producers to generate credits for compliance. Other states like Illinois and Oregon have similarly introduced SAF-related policies and regulations to support its production and adoption.

Government funding opportunities, voluntary SAF adoption commitments from leading airlines and technological advancements in the production process have led to a growing pipeline of projects in the US. The country’s upcoming SAF production capacity by 2030 could be the highest in North America and globally (GlobalData, 2023).

In July 2022, American Airlines committed to purchasing 500 million gallons of SAF from Gevo, Inc. over a five-year period. The agreement brought the Airline’s total low-carbon fuel commitments to more than 620 million gallons — fulfilling roughly 20% of the airline’s goal to replace 10% of jet fuel usage with SAF by 2030 (American Airlines, 2022). Similar goals have been set by Delta Air Lines and Southwest Airlines — to replace 10% of jet fuel with SAF by 2030 (Reuters, 2023).

Dallas-based Southwest Airlines launched, in February 2024, the Southwest Airlines Renewable Ventures (SARV), a wholly-owned subsidiary dedicated to creating more opportunities for Southwest to obtain scalable SAF. As part of its SARV investment portfolio, Southwest also announced a $30 million investment in LanzaJet Inc., a SAF technology provider and producer with a patented ethanol-to-SAF technology.

As part of its agreement with Southwest, LanzaJet intends to build an ethanol-to-SAF facility to produce SAF primarily for Southwest. That facility includes capabilities to convert SAFFiRE’s cellulosic ethanol into SAF, which can produce greater quantities of SAF from SAFFiRE ethanol over time (Dallas Innovates, 2024).

The US DOT’s Federal Aviation Administration (FAA) introduced the “Fueling Aviation’s Sustainable Transition” (FAST) discretionary grant program, which is aimed at making investments to accelerate the production and use of SAF and the development of low-emission aviation technologies to support the US aviation climate goal.

The FAST Grant Program is made possible by the IRA of 2022. The SAF portion of the program, termed FAST-SAF, will provide $244.5 million in grants to support the build-out of infrastructure projects related to SAF production, transportation, blending, and storage. The low-emission technology portion of the program, termed FAST-Tech, will provide $46.5 million in grants to develop and demonstrate new aviation technologies to improve fuel efficiency and reduce emissions. (FAA, 2023) (Holland & Knight, 2023).

Furthermore, the FAA launched, in July 2024, a $1 billion fiscal year (FY) 2025 funding opportunity that could help US airports develop infrastructure to increase access to SAF (Ethanol Producer Magazine, 2024). Global Sustainable Aviation Fuel Market Review | 101 United States

In January 2023, the US DOE awarded $108 million in funding to 13 SAF projects as part of the SAF Grand Challenge. These projects are a mixture of pre- pilot, pilot, and demonstration projects by private companies and universities. The DOE also awarded $10 million to 4 Gen-1 Corn Ethanol Emission Reduction projects (SAF Investor, 2023).

In September 2023, the US DOE announced $16.7 million in funding via Bioenergy Technologies Office (BETO) for five projects to advance the production of affordable biofuels and biochemicals that will significantly reduce GHG emissions (US DOE, 2023).

Through financial grants, the government is also promoting technological innovation in the SAF production process. In July 2024, the US DOE granted Atlantic Biomass $199,180 for a project titled “Low-Cost Production of SAF from Perennial Feedstocks using Simultaneous Ball Milling and Enzyme Hydrolysis.” The Atlantic Biomass grant was part of the BETO initiative, which selected 13 small businesses across 10 states to advance bioenergy R&D (ChemAnalyst, 2024).

• In December 2022, the Montana Renewables facility in Great Falls, Montana, began production with an initial annual output of ~30 million gallons of neat, unblended SAF. Once completed, an expansion of this facility could boost SAF output to 230 million gallons annually.
• World Energy’s Paramount refinery in California is investing $2 billion to upgrade its plant capacity to 340 million gallons of annual SAF output by 2025. The company also announced plans for the conversion of its biorefinery in Houston into a SAF hub, producing 250 million gallons per year by 2025 (Aviation Week Network, 2022)
• In April 2024, Energy products manufacturer Phillips 66 announced the conversion of its San Francisco oil refinery in Rodeo, California, to process only renewable feedstocks and is now producing approximately 30,000 barrels of renewable diesel per day. The company announced in 2022 its plans to convert the refinery into the Rodeo Renewable Energy Complex, which would no longer process crude oil and will instead use waste oils, fats, greases, and vegetable oils to produce 800 million gallons per year of renewable transportation fuels, including renewable diesel, renewable gasoline, and SAF (ESG Today, 2024).
• In December 2023, Canadian SAF project developer Azure Sustainable Fuels Corp. announced plans to develop a SAF production facility in Cherryvale, Kansas (KS) in the US. Once fully operational in 2027, the Cherryvale facility is estimated to produce ~135 million gallons per year of renewable fuels, primarily SAF (Bioenergy International, 2023).
• In September 2023, Airbus partnered with DG Fuels with an aim to support DG Fuels’ goal of launching the equity process and reaching a final investment decision on building DG Fuels’ first SAF plant in the US. DGF’s plant aims to have an initial production capacity of 120 million US gallons of SAF per year on average (Airbus, 2023).

Companies are undertaking innovation in conversion technologies with an aim to make SAF production more efficient and scalable. For instance:

• LanzaJet’s Freedom Pines facility in Soperton, Georgia, which became operational in January 2024, represents the world’s first ethanol-to-SAF production facility using Next-Gen SAF Technology. At full capacity, it will produce 10 million gallons of SAF or renewable diesel a year (AgroSpectrum Asia, 2024) (AIN Media, 2024).
• In April 2024, DG Fuels selected Fischer Tropsch (FT) CANS™ technology, which is co-developed by Johnson Matthey and energy giant bp, for the production of SAF in its planned $4 billion plant near the Mississippi River in Louisiana. Expected to be in operation by 2028, this project would be the largest announced FT SAF production operation in the world with a planned capacity of around 120- 135 million gallons of SAF annually. DG Fuels has already secured offtake purchase deals with Delta Air Lines and Air France-KLM and has a strategic partnership with Airbus to scale up the use of SAF globally (Greenair, 2024) (IANS, 2024).