Pathways to Sustainable Aviation Fuel (North America Edition)

The Sustainable Aviation Futures North America Congress, taking place October 2-4, 2024 in Houston, is the premier event focused on Sustainable Aviation Fuel (SAF) and aviation decarbonization in North America. This three-day conference brings together over 700 senior leaders and experts from across the entire aviation and energy value chain to discuss the latest developments in scaling up SAF production and use.

With the USA positioned as a global leader for announced SAF projects and ambitious targets like the SAF Grand Challenge, this event provides a crucial forum to examine the opportunities and challenges in meeting growing demand. The agenda covers key topics including regulatory frameworks, financing and investment strategies, feedstock development, infrastructure needs, and emerging technologies like e-fuels and hydrogen.

Featuring over 180 expert speakers across multiple content tracks, attendees will gain insights on state and federal policies, lifecycle analysis methodologies, corporate sustainability initiatives, and pathways to net-zero aviation. The event also offers extensive networking opportunities, including a dedicated exhibition area, 1-to-1 meetings, and evening receptions.

Whether you're an airline, fuel producer, investor, policymaker or technology provider, the Sustainable Aviation Futures North America Congress provides the knowledge, connections and strategic insights needed to navigate the rapidly evolving sustainable aviation landscape. Join industry leaders in Houston this October to help shape the future of clean flight.

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The North American Sustainable Aviation Fuel (SAF) market is showing significant growth

• North America, particularly the US, is leading in SAF production.

• 80% of global SAF supply originated from California in 2021, and the U.S. is still projected to produce nearly as much SAF as the rest of the world combined by 2030.

• The SAF market in the US is projected to grow nearly 25x in 8 years: from $180.75 million in 2023 to $4,351.73 million by 2032.

• SAF is critical for aviation's net-zero goals and is expected to mitigate 65% of the industry's projected emissions by 2050.

• Supportive policies are driving SAF growth in North America.

• US initiatives: The Sustainable Skies Act and the Inflation Reduction Act offer significant incentives.

• Canada: British Columbia has introduced the first SAF mandate in North America.

EXECUTIVE SUMMARY EXECUTIVE

Broadly, SAF can be divided into three generations

• First Generation: Primarily HEFA (Hydroprocessed Esters and Fatty Acids).

• Second Generation: Includes municipal solid waste (MSW), agricultural residues, and alcohol-to-jet pathways.

• Third Generation: e-fuels or power-to-liquid fuels.

SAF adoption still faces a number of challenges

• High production costs compared to conventional jet fuel.

• Limited production scale and capacity.

• Feedstock constraints and sustainability concerns.

• Infrastructure and technology development needs.

• Regulatory uncertainties, especially with changing political landscapes.

Strategies to overcome these challenges include

• Policy support and incentives.

• Long-term offtake agreements.

• Feedstock diversification.

• Advanced production technologies.

• Innovative financing mechanisms.

• Book and claim systems.

E-fuels are promising but face significant challenges

• High production costs.

• Intensive energy requirements.

• Need for green hydrogen and carbon dioxide sourcing.

• Scalability and infrastructure concerns.

Future outlook

• There is a need for a balanced approach between near-term action and long-term vision.

• Collaboration across the entire aviation value chain is crucial for success.

• Continued investment in research and development is essential.

• A robust regulatory framework and policy support is critical for market development.

SUMMARY

INTRODUCTION

North America's leadership in the Sustainable Aviation Fuel race

As the aviation industry looks towards its 2050 net-zero target, North America, particularly the United States, has emerged as the undisputed leader in Sustainable Aviation Fuel (SAF) production.

As recently as 2021, a staggering 80% of the global SAF supply originated from a single U.S. state: California. While other regions are gaining ground, projections for 2030 indicate that the USA will maintain its dominance, producing nearly as much SAF as the rest of the world combined.

Upcoming (planned and announced) SAF production capacity by key countries, 2030 (million gallons per annum)

Credit: GlobalData

Already in 2024, the US Energy Information Administration (EIA) estimates that the production capacity of SAF in the United States could increase from around 2,000 barrels per day (b/d) to nearly 30,000 b/d if all announced capacity additions come online.

This rise of the North American SAF industry has several causes, which we will examine in this report, but one of the main reasons has been a supportive regulatory environment.

The 2021 U.S. Sustainable Skies Act and the 2022 Inflation Reduction Act offer SAF producers credits of $1.25 per gallon for achieving at least a 50% reduction in greenhouse gas emissions. State-level initiatives, such as Washington's Senate Bill 5447, provide additional incentives of up to $2 per gallon. In California, the combination of state and federal programs can result in benefits reaching $3.60 per gallon for local producers.

Source: SAF Congress North America

These factors have catapulted the U.S. SAF market to impressive valuations. Valued at $180.75 million in 2023, it's projected to increase to $4,351.73 million by 2032, boasting a remarkable compound annual growth rate (CAGR) of 42.40%. The U.S. government's ambitious "SAF Grand Challenge" aims for an annual production of 3 billion gallons by 2030, while Canada is implementing mandatory SAF blending requirements through its Clean Fuel Regulations.

Major airlines like United, Delta, and Air Canada are fully on board, making significant investments and commitments. This has helped spur substantial investments in new alternative fuel companies, which could lead to a proliferation of new production facilities across the continent.

As a result, though SAF currently represents less than 1% of total fuel growth consumption, the industry is poised for exponential growth. This report, coinciding with the Sustainable Aviation Futures Congress in Houston this October, outlines critical opportunities and challenges in this transformative journey.

WHY SAF NEEDS TO DO THE HEAVY-

LIFTING IN ORDER FOR AVIATION TO REACH NET-ZERO

SAF, derived from non-fossil fuel sources, is poised to play a pivotal role in aviation's journey to net zero.

According to IATA estimates, by 2050, SAF will mitigate 65% of the industry's projected emissions, while new technologies like electric and hydrogen-powered aircraft will only account for 13%.

1

Three key factors underpin this crucial role for SAF: The need for a drop-in fuel compatible with today's technology

The commercial aircraft fleet in 2050 will largely resemble today's. In 2022, approximately 23,000 active commercial aircraft were in service worldwide, with over 7,000 in North America alone. Since commercial airliners have a 20-30-year lifespan, many aircraft delivered today will still be flying in 2050.

The industry is growing post-COVID, with airlines placing significant orders.

For instance, in July 2024, American Airlines ordered 260 new aircraft, including options for an additional 193.

Other carriers, like United Airlines and Southwest Airlines, have also placed substantial orders, ensuring these aircraft will remain in service, potentially with multiple carriers, well into 2050.

As a result, both Boeing and Airbus are focusing on SAF compatibility. Boeing's strategy, dubbed "SAF&" prioritizes sustainable fuel, while Airbus, despite researching hydrogen, has confirmed that its planned A320 family replacement will run on either kerosene or SAF.

Source: American Airlines Newsroom

Battery and hydrogen as longterm, not medium-term solutions

While electric and hydrogen aircraft show promise, they face significant challenges in the medium term. For instance, battery energy density limitations constrain electric flight.

Some promising developments exist, but even the 500 Wh/KG battery the Chinese manufacturer CATL has developed would only fly an eight-tonne aircraft over significant distances. That’s equivalent to the ten-seat Beechcraft King Air or a business jet like the Embraer Phenom 100 – nowhere near a plane like a Boeing 737 MAX 8 with a maximum take-off weight of over 80 tonnes.

Meanwhile, hydrogen entails challenges regarding storage, infrastructure, and modifying aircraft fuel tanks.

The majority of hydrogen production is directed towards e-fuels

Even aviation hydrogen production itself is geared towards SAF. The International Air Transport Association (IATA) predicts that by 2050, the aviation industry will require 120 million tonnes of clean hydrogen annually. Of this, 100 million tonnes (83%) will be used for SAF production, with only 20 million tonnes for direct use in hydrogen-powered aircraft.

This report will further explore e-fuels and the critical role of green hydrogen production in the SAF landscape.

Source: Airbus

TYPES OF SAF AND THEIR PRODUCTION PATHWAYS

Generally, the different feedstocks (raw materials) and pathways (ways of making the fuel) can be grouped into three SAF ‘generations.’

First-generation SAF

First-generation fuels primarily utilize Hydroprocessed Esters and Fatty Acids (HEFA) to make biofuels.

HEFA converts oils from plants or animals into jet fuel and is currently the most commercially viable SAF option. Waste oils, such as used cooking oils and waste fats, offer the dual benefit of waste reduction and sustainable fuel production.

The vast majority of SAF comes from this pathway. Approximately 85% of SAF facilities coming online over the next five years are expected to be HEFA-based.

Though HEFA is a tried-and-tested SAF production method, there are general concerns about feedstock sourcing and availability. This comes as an increasing amount of Used Cooking Oil (UCO) for biofuels is imported from China. According to the U.S. International Trade Commission, U.S. imports of used cooking oil more than tripled in 2023 from a year earlier, with more than half coming from China.

In fact, a recently released report by the US Department of Energy says that the U.S. currently utilizes its entire 23 million tons of annual domestic HEFA feedstock production across multiple industries. Soybean oil (57%), fats/oils/greases (28%), and corn oil (9%) are the main feedstock sources.

In its analysis, the US Department of Energy recognize that the HEFA SAF industry may need to rely on imported feedstocks in the near-term.

Even with those imports, there’s a ceiling on how much SAF can be produced this way. Estimates show that by 2050, at most 10% of jet fuel can be HEFA-based.

Second-generation SAF

Source: Avionics International

Second-generation SAF expands the feedstock options to include municipal solid waste (MSW), agricultural residues, and alcohol-to-jet (ATJ) pathways.

AtJ involves feedstocks like miscanthus, switchgrass, jatropha (all fuel crops), or materials like wheat straw, rice husks, and forestry residues.

Like fermentation used in beer or wine production, these renewable sources are converted into ethanol, a clean-burning alcohol. This ethanol then undergoes further processing to create a fuel with properties very similar to conventional jet fuel.

LanzaJet’s Freedom Pines Fuels plant in Soperton, Georgia is the world's first commercial alcohol-to-jet facility.

There are generally two concerns around ATJ:

• More feedstocks are required to produce SAF, but ATJ feedstocks are cheaper and have better availability.

• There is also the food vs. fuel debate: would large-scale production of fuel crops for ATJ lead to increased competition for land currently used for food production? We will return to this topic later in this report.

The other second-generation SAF that has shown promise involves turning municipal waste into fuel.

Waste is taken to a facility and sorted into organic waste, which can be used as a feedstock. It is then turned into fuel using one of two processes or pathways.

• Fischer Tropsch (FT) is a 100-year-old method of creating synthetic fuels in which organic waste is converted into a synthetic gas (syngas). This syngas then passes through a Fischer-Tropsch reactor, turning it into a liquid fuel resembling jet fuel.

• Pyrolysis: The organic waste is heated in a controlled environment with limited oxygen. This process breaks it down into three components: bio-oil, char, and syngas. The bio-oil or syngas then undergoes further refining to create SAF.

Though the idea of taking waste that would otherwise end up in landfills and turning it into fuel sounds attractive, several municipal waste-to-fuel companies have encountered problems.

Most notably, Fulcrum Bioenergy, which operated a waste-to-fuel plant in Reno, Nevada, with the support of (among others) United Airlines, went under in June 2024.

Questions were raised about how market-ready the technology was to operate at scale and the capital required to build and maintain the plants and produce the fuel.

However, some companies continue to pursue MSW as a promising pathway to fuel. For example, a Canadian company called Enerkem is building a waste-to-fuel facility in Quebec that can produce 125 million liters of biofuel annually.

Finally, in addition to municipal waste to fuel and alcohol to jet, other second-generation SAF pathways are under development, including those using algae or woody biomass as feedstock.

Source: Fulcrum Bioenergy

Third-generation SAF

Third-generation fuels represent the cutting edge of SAF technology and focus on Powerto-Liquid (PtL) pathways.

This process harnesses renewable electricity to produce hydrogen, combined with captured CO2 to create synthetic fuel.

Most e-fuel is produced via the Fischer-Tropsch method, where syngas is put through a reactor. Some startups are also looking at e-methanol, which combines carbon dioxide with hydrogen from renewable sources (electrolysis) through methanol synthesis.

The key appeal of e-fuels lies in their potential to be almost carbon-neutral, with some e-fuel makers claiming a 95% lifecyle reduction in CO2. Like first and second generation SAF, they also remain compatible with existing jet engines and fuel infrastructure as a ‘drop in fuel.’

The production process is as follows:

• Green hydrogen production: Renewable electricity is used to split water into hydrogen and oxygen through electrolysis.

• CO2 capture: CO2 is captured either from industrial processes or directly from the air using Direct Air Capture (DAC) technology or CO2 point source capture at industrial plants.

• Synthesis: The green hydrogen and captured CO2 are combined using processes such as Fischer-Tropsch synthesis (most common) or methanol synthesis followed by fuel upgrading.

• Refining: The resulting synthetic crude is refined into e-kerosene that meets aviation fuel specifications.

E-fuels offer two significant advantages over other alternative fuel sources: they don't compete with food resources, and they have the potential to create an almost circular carbon cycle.

Unlike earlier-generation biofuels, which often use food crops as feedstock, e-fuels are synthesized from non-biological sources.

This means their production doesn't require agricultural land that could otherwise be used for food production. As the global population grows and climate change threatens agricultural yields, this feature of e-fuels becomes increasingly important for maintaining food security.

Furthermore, e-fuels present a unique opportunity for creating a near-circular carbon cycle. The CO2 used to produce e-fuels can be captured directly from the atmosphere or from industrial point sources.

Therefore, when the e-fuel is combusted in an aircraft engine, it releases this CO2 back into the atmosphere. If the CO2 for e-fuel production is sourced entirely from Direct Air Capture, the process becomes almost completely circular.

This circularity has the potential to significantly reduce the net carbon emissions of aviation. While not a perfect closed loop due to energy inputs and inefficiencies in the process, it represents a much more sustainable approach than the linear carbon pathway of fossil fuels.

Source: Carbon Engineering

THE REGULATORY LANDSCAPE IN NORTH AMERICA

The United States and Canada are implementing comprehensive frameworks of incentives and mandates to accelerate the adoption of SAF at both federal and state/provincial levels.

These initiatives aim to reduce SAF production costs, support infrastructure development, and help the aviation industry achieve its goal of net-zero emissions by 2050.

Unlike in Europe, North America focuses on incentives rather than mandates. However, British Columbia has become the first region in North America to have its own SAF mandate.

The United States

At the federal level, the Inflation Reduction Act (IRA) has introduced the SAF Blender's Tax Credit (BTC) and Clean Fuel Production Credit (CFPC).

The BTC offers $1.25 to $1.75 per gallon of SAF blended with conventional jet fuel, depending on the lifecycle GHG emissions reduction. The CFPC provides $0.35 to $1.75 per gallon for SAF production, based on reducing lifecycle GHG emissions. These technology-neutral credits apply to all SAF pathways meeting emissions requirements. Additionally, the Fueling Aviation's Sustainable Transition (FAST) Program has allocated $244 million in grants to support SAF production, transportation, blending, and storage.

This program involves various participants, including state and local governments, air carriers, airport sponsors, higher education institutions, research organizations, SAF developers, and nonprofits.

At the state level, several initiatives have been implemented.

California's Low Carbon Fuel Standard (LCFS) provides tradable credits to SAF producers based on fuel carbon intensity. Oregon has a similar Clean Fuels Program, while Washington implemented its Clean Fuel Standard in 2023 to create a marketbased program incentivizing cleaner transportation fuels.

Illinois recently enacted the Sustainable Aviation Fuel Act, establishing a comprehensive framework for promoting SAF production and use in the state. Minnesota has introduced a Sustainable Aviation Fuels Tax Credit, focusing on feedstocks derived from agricultural and forestry residues.

Several US states are looking to follow suit and introduce their own Sustainable Aviation Fuel (SAF) incentive programs.

Massachusetts, known for its strong environmental policies, is considering a mix of tax credits and mandates that require airlines to blend SAF with conventional fuel. Michigan, with its significant aerospace industry, sees SAF as a way to stimulate economic growth while reducing emissions from air travel.

Source: Vermont.gov

Canada

Meanwhile, New York, a major aviation hub, has considered various SAF incentive programs.

Finally, Vermont, with its focus on sustainability, has also explored SAF incentives as part of a broader effort to reduce transportation emissions.

The Canadian government has introduced the Clean Fuels Fund, which aims to invest $1.5 billion (US $1.1 billion) in growing clean fuel production in Canada.

As part of that, in March 2024, the Canadian government announced an investment in six clean fuels projects nationwide. Key projects include:

• $4.6 million to StormFisher Hydrogen for a front-end engineering study on a renewable natural gas facility in Thorold, Ontario.

• CHAR Technologies will receive over $5 million to support studies for replicating their woody-biomass-to-renewable-energy facility in multiple locations across Canada.

• Azure Sustainable Fuels Corp. will receive $5 million to study a sustainable aviation fuels production facility in Port Colborne, Ontario.

Source: Azure

However, the industry is calling for the Canadian Government to go further and take measures that explicitly foster the development of non-fossil fuel-based aviation fuel.

This comes as the Canadian Council for Sustainable Aviation Fuels (C-SAF) has launched a roadmap detailing the policies and next steps necessary to produce one billion liters of domestic sustainable aviation fuel annually by 2030.

The roadmap states that sustainable aviation fuels (SAF) should achieve a minimum 50% reduction in life-cycle greenhouse gas emissions compared to conventional jet fuel. This represents a reduction of about 1.6 million tonnes of greenhouse gas emissions.

Based on this, the aviation industry has proposed a 50% refundable investment tax credit for SAF production facilities, revenue-certainty mechanisms to support SAF production and boost offtake, and a book-and-claim system for SAF use in Canada.

British Columbia’s SAF mandate

When it comes to Government intervention in the SAF market, one of the most significant developments on the continent was the announcement that British Columbia would be the first jurisdiction in North America to implement a sustainable aviation fuel mandate.

The new regulation will be implemented in two phases:

• From 2026, fuel suppliers must decrease the carbon intensity of their products by 2%, rising to 10% by 2030. This can be achieved by incorporating SAF or creating carbon offsets.

• There is a physical volumetric requirement from 2028: 1% SAF by 2028, 2% by 2029, and 3% by 2030. This translates to 22 million liters of SAF in 2028, increasing to 66 million liters by 2030.

The mandate is modest and achievable. By 2030, it is expected to add only 1.5% to the cost of a typical three-hour flight from Vancouver. As it stands right now, due to limited Canadian supplies, initially SAF will likely be imported. This limits potential feedstocks, as European markets already receive a lot of the available Used Cooking Oil (UCO) from the Far East for HEFA based fuels.

Vancouver International Airport

A comparison with SAF policies in other areas

The European Union and the United Kingdom have adopted a more stringent and prescriptive approach to SAF than North America. They have established binding mandates requiring airlines to use a certain percentage of SAF in their fuel mix rather than relying solely on incentives.

European Union

The European Union's ReFuelEU Aviation initiative aims to significantly increase the use of SAF in the aviation sector.

It proposes binding targets for SAF blending, starting at 2% by 2025, gradually increasing to 6% by 2030, 20% by 2035, and 70% by 2050. This approach is based on the belief that mandates create a stable demand signal for SAF producers, thereby encouraging investment and scaling up production.

Of these amounts, 1.2% in 2030, and 5% in 2035 must be power to liquid (PtL) or e-fuels, increasing to 35% by 2050.

In addition to mandates, the EU has also implemented several incentive mechanisms.

The EU Emissions Trading System (ETS) applies to aviation, requiring airlines to purchase allowances for their carbon emissions. This creates a financial incentive for airlines to reduce emissions by using SAF. Furthermore, the EU has allocated funding for research and development of SAF technologies and infrastructure.

Source: Rolls-Royce

United Kingdom

Starting in 2025, the UK is also introducing a SAF mandate. Like the EU, there will be a requirement of a 2% blend in 2025, though the percentages are less steep, stopping at 22% in 2040. UK Government representatives have said that new targets will then be prescribed.

Like the EU, the UK also has an e-fuels submandate. This is less ambitious than the EU requirements, accounting for 0.5% of the total jet fuel supplied in the UK in 2030, increasing to 3.5% in 2040.

The UK Government has also proposed a revenue certainty mechanism, which aims to provide financial stability for SAF producers by guaranteeing a minimum price for their product. This mechanism is expected to mitigate the risks associated with investing in new SAF production

facilities, foster a thriving domestic SAF industry, and support the UK's transition to a greener aviation sector.

Finally, to incentivize domestic production, the UK has launched the Advanced Fuels Fund, which provides funding for projects that develop low-carbon fuels, including SAF.

The EU and UK's focus on mandates creates a more predictable and stable market for SAF, providing investors with greater confidence. However, this approach can also be seen as more interventionist and potentially less flexible than the incentivebased approach favored in North America.

North America's focus on incentives, such as tax credits and grants, can stimulate innovation and competition among SAF producers. However, it may not provide the same level of certainty for long-term investments as a mandate.

IMPACT ON AIRLINES

Consider this: Air France-KLM is the leading airline using SAF right now, accounting for 16% of the world's SAF production. Other airline groups like IAG and the Lufthansa Group have also made significant SAF purchases, alluding to the fact that from 2025, SAF use in Europe will be mandatory as both the EU and UK mandates kick in.

United Airlines accounts for 14.3 billion liters of total SAF offtake volume

Main purchases of sustainable aviation fuels (SAF) by total offtake volume, as of February 2024 (Billion liters).

Source: ICAO

However, when we look at future SAF use, United Airlines leads the way in future offtakes, with 14.3 billion liters committed in the future, more than four times that of Air-France KLM.

As a result, the European mandates are spurring airlines to source and use SAF right now, while the US emphasis on incentives is encouraging a more long-term approach with airlines placing future bets on SAF, where it will almost certainly be more price competitive with Jet A as volumes increase and the relevant technologies develop further.

Singapore is taking a slightly different approach to fostering SAF use.

As part of its Sustainable Air Hub Blueprint, beginning in 2026, all flights departing from Singapore must use a minimum amount of SAF, starting at 1% and potentially increasing to 3-5% by 2030.

What’s noteworthy about the Singapore approach is that the Government is implementing a passenger SAF levy, which will be incorporated into ticket prices.

The levy will vary based on flight distance and travel class. For example, a passenger flying Economy class from Singapore to London could expect to pay around SG$16 (US$11.91) in additional taxes in 2026. This approach aims to provide cost certainty to airlines and travelers while incentivizing fuel producers to invest in new SAF production facilities.

The amount is also arguably set at a rate that will be digestible for most travelers, given that Singapore – London return fares are, on average, around US $1,000+.

Civil Aviation Authority of Singapore

THE NEED FOR URGENCY – INSIGHTS FROM RECENT ICCT RESEARCH

While the evolving regulatory landscape in North America provides a supportive framework for SAF development, recent research highlights the enormous challenges that lie ahead in achieving aviation's net-zero ambitions. A study by the International Council on Clean Transportation (ICCT) offers crucial insights into the scale and urgency of these challenges.

• Carbon budget: The ICCT establishes a "net-zero" aviation carbon budget of 18.4 billion tonnes (Gt) for 2022-2050, derived from an average of four previously published ICCT decarbonization pathways.

• Current fleet emissions: The existing global fleet (as of 2023) is projected to emit approximately 9 Gt of CO2 before retirement. In other words, the aircraft in our skies right now will consume nearly half of aviation's entire net-zero carbon budget.

• Future projections: Even with optimistic forecasts for sustainable

fuel (SAF) adoption and efficiency improvements, the remaining budget could be exhausted as early as 2037.

• Zero-emission aircraft demand: By 2042, at least 10,000 new aircraft will need to utilize alternative energy sources such as hydrogen, electricity, or 100% SAF.

• Emissions reduction potential: In the most optimistic scenario (Optimistic SAF + Fuel Efficiency), cumulative CO2 from new conventional aircraft delivered between 2024 and 2042 could be reduced by more than 50% – from 29 Gt to 14 Gt.

Unfortunately, even meeting the 2030 SAF production targets presents a formidable challenge.

At the Sustainable Aviation Futures Congress in Amsterdam, Mission Possible Partnership’s Dick Benschop, emphasized the necessity of a tenfold increase in SAF plants. Benschop stated that the industry needs to expand from the current 30-odd active facilities to approximately 300 to meet 2030 targets.

While over 130 SAF plants are currently in the planning stages, few have actually broken ground. Clara Bowman of e-fuels company HIF Global aptly summarized the urgency in a May interview with Sustainability in the Air: "In infrastructure terms, 2030 is actually yesterday."

Recent analysis by the National Renewable Energy Laboratory (NREL) additionally highlighted the magnitude of the challenge facing the SAF industry. To achieve the 2030 target of 3 billion gallons per year (BGPY), production must scale up by about 130 times from 2023 levels in just 6 years. After 2030, the scale-up factor decreases to 12 times over 20 years to reach the 2050 goal of 35 BGPY.

Source: Wikidata - CC0 - Ubahnverleih

The critical role of carbon dioxide removal (CDR)

Given these challenges, the industry may need to rely heavily on CDR technologies to achieve its net-zero goals. The ICCT has identified several significant issues in this area:

• In the Baseline Scenario, approximately 22 Gt of CO2 must be removed through direct air capture (DAC) for aircraft delivered through 2042.

• Even in the Optimistic SAF + Fuel Efficiency Scenario, about 5 Gt of CO2 removal would still be required.

• These volumes are roughly 2,500 times the global capacity of DAC facilities currently under construction or in advanced stages of development for use across all industries in 2030.

• The International Energy Agency projects that global CO2 capture by DAC will reach only about 2.5 million tonnes in 2030, highlighting the massive scale-up required.

DAC technologies face considerable challenges, particularly in terms of cost and energy consumption. The current cost is approximately 500 EUR per carbon tonne, and the energy requirements for DAC are incredibly high.

Source: Climeworks

Source: Carbon Engineering Ltd

FIVE KEY CHALLENGES FACING THE SAF INDUSTRY

The ICCT's findings paint a stark picture of the monumental task facing the aviation industry in its quest for decarbonization. They underscore the critical role that SAF must play in this transition but also highlight its limitations.

In light of the ICCT's findings and the broader context of aviation's decarbonization journey, we'll explore five significant challenges that the SAF industry must overcome. While none of these challenges are insurmountable on their own, each requires attention and innovative solutions.

• The reputational challenge: Although more prevalent in Europe, there's skepticism – and even legal challenges – surrounding the 'S' in SAF. Is SAF truly sustainable?

• The food versus fuel dilemma: Biofuel producers face criticism for allegedly using productive farmland for fuel crops instead of food production.

• The political uncertainty: With the upcoming US Presidential election in November, there's uncertainty about the future of SAF incentives and tax breaks. A change in administration could potentially roll back supportive policies, affecting the industry's growth trajectory.

• The cost and production scale: Currently, SAF prices are at least twice that of conventional Jet A fuel and sometimes seven times more, depending on the pathway. The industry must find ways to reduce production costs while simultaneously scaling up production to meet growing demand. These interlinked challenges are crucial for SAF's widespread adoption.

• The renewable resources challenge: E-fuel producers require substantial amounts of renewable electricity and captured CO2. The industry must identify and secure abundant, costeffective sources of these inputs to ensure sustainable and economically viable production.

Source: Finnair

I Managing the reputational challenge

In July 2024, Client Earth, an environmental legal advocacy group, sent a legal notice to 71 airlines. Though the common denominator was that they were all operating out of Amsterdam Schiphol Airport, the list included several North American carriers, such as Delta and American Airlines.

What was Client Earth’s ask? Among other things, to stop using the words ‘Sustainable Aviation Fuels’, with the key objection being the word sustainable.

The context was the ‘greenwashing’ court case filed by Dutch climate groups against KLM for a 2019-2020 advertising campaign, which the airline lost.

As a result, Client Earth warned airlines about the following:

“Airlines should not describe alternative fuels with the misleading label “sustainable aviation fuel”. It follows that the abbreviation SAF should no longer be used in consumer-oriented communication and that airlines should not use the vague and unclear term 'more sustainable aviation fuel'.

“If airlines choose to advertise about their minor use of alternative fuels, they should use factual and accurate terms for alternative fuels: used cooking oil biofuel, rapeseed crop biofuel, synthetic fuel, etc.”

We've been tracking this groundswell of trying to remove the ‘S’ from SAF and have the industry use other terms like ‘alternative fuels’ over the past year. This comes as many environmental groups have raised several concerns about SAF's sustainability claims.

Key objections

As a result, North American stakeholders need to be aware of the following issues:

• Carbon accounting discrepancies: Critics argue that the lifecycle analysis (LCA) used to calculate SAF emissions reductions can be misleading. The Aviation Environment Federation (AEF) points out that SAF emits the same amount of CO2 as kerosene when burned in an aircraft. The claimed reductions come from the fuel production stage, which some view as a form of offsetting rather than true emissions reduction.

• Non-CO2 impacts: While SAF may reduce CO2 emissions, critics question whether it addresses other aviation climate impacts, such as contrails and nitrogen oxides (NOx). These non-CO2 effects are estimated to account for up to two-thirds of aviation's climate impact.

Source: Client Earth

• Feedstock sustainability: There are concerns about the true sustainability of SAF feedstocks. For instance:

• Used cooking oil: Questions arise about verifying sources and the emissions associated with collection and transportation.

• Agricultural residues: There are worries about soil health impacts if too much residue is removed from fields.

• Purpose-grown crops: These can compete with food production or lead to landuse changes. We will address the fuel vs. food debate in more detail later in this section of the report.

• Scale and additionality: Environmental groups question whether SAF production can scale sufficiently without causing other environmental problems. They also raise concerns about whether SAF use represents additional emissions reductions or simply diverts resources from other sectors.

• Delaying zero-emission solutions: There's a growing concern that heavy investment in SAF might slow the development of true zero-emission technologies like electric and hydrogen-powered aircraft.

Implications for North American airlines

While the regulatory environment in North America is currently more focused on incentives than mandates, airlines should anticipate increased scrutiny of their sustainability claims.

As a result, key considerations for producers and end users in North America include:

• Transparent communication: Be clear about the actual emissions reductions achieved through SAF use, avoiding oversimplified claims. Explain the limitations and benefits of SAF honestly.

• Diverse sustainability strategy: Demonstrate a commitment to a range of solutions, including operational efficiencies and support for zero-emission aircraft development. Show how SAF fits into a broader sustainability plan.

• Rigorous supply chain verification: Ensure that SAF feedstocks are truly sustainable and can withstand public scrutiny. Invest in robust traceability systems.

• Proactive stakeholder engagement: Engage with environmental groups and regulators to address concerns before they escalate into public relations issues. Consider partnerships with respected environmental organizations to enhance credibility.

• Investment in research: Support independent studies on the full lifecycle impacts of SAF, including non-CO2 effects and long-term sustainability of feedstocks.

II Solving the food versus fuel dilemma

Jean Ziegler, the former UN special rapporteur on the "Right to Food," spoke strongly about using farmland for fuel crops. He even went so far as to call the practice a "crime against humanity”.

This issue elicited an emotive response from a UN representative because the push for renewable energy sources has intensified the longstanding debate between food production and biofuel development, particularly in North America.

As governments and industries strive to reduce carbon emissions and enhance energy security, expanding biofuels and SAF has sparked controversy over land use, resource allocation, and potential impacts on food security.

The crux of the controversy

The food versus fuel debate centers on the competition for agricultural resources— primarily land and crops—between food production and biofuel feedstocks.

Critics argue that diverting farmland and food crops to produce biofuels could lead to reduced food availability, increased food prices, and potential food insecurity, especially for vulnerable populations.

Proponents, however, contend that biofuels offer a path to energy independence, rural economic development, and reduced greenhouse gas emissions.

Globally, OECD figures show that almost 22% of sugarcane production and 16% of Maize production is used for ethanol production. However, other feed grains such as sorghum and sugar beets account for a relatively small share of total production (less than 2%).

Turning specifically to the United States and Canada, the debate has significant implications for agricultural policy, energy strategy, and climate change mitigation efforts.

Source: Wikimedia Commons - Steven Vaugh

Percent of global production used for biofuel production (2019-2021)

Chart: Joseph Glauber · Source: OECD/FAO Agricultural Outlook 2022

The U.S. Renewable Fuel Standard (RFS) program and similar initiatives have driven substantial growth in biofuel production, particularly corn-based ethanol. According to the U.S. Department of Agriculture, about 40% of the U.S. corn crop is now used for ethanol production. Though most of this goes to road transport instead of SAF, it still raises concerns about the impact on food markets and prices.

The aviation industry's growing interest in SAF has added a new dimension to this debate. The production of SAF from crops like corn and soybeans or dedicated energy crops like camelina or switchgrass could further intensify competition for agricultural resources.

Crop-specific findings

Recent research has shed light on the potential of various crops for SAF production, particularly focusing on their land use implications and greenhouse gas emissions. A 2024 study published in the journal "Science of the Total Environment" provides valuable insights into the use of different feedstocks for SAF production, with a particular focus on miscanthus and other crops.

This study, led by the International Institute for Applied Systems Analysis (IIASA), offers the first detailed estimates of land use change emissions for six sustainable aviation fuel production pathways. It uses trusted global data sources to provide fine-scale emissions data.

Source: Wikimedia Commons - Krzysztof Ziarnek

The study evaluated six different types of crops proposed by CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) for the production of sustainable aviation biofuels.

The study evaluated six different types of crops proposed by CORSIA (Carbon Offsetting

A key finding of the study is that the location where crops are grown is just as important as the type of crop in determining the environmental impact of SAF production.

The researchers found significant spatial variability in Direct Land Use Change (DLUC) emissions for all crops studied. Some areas have better conditions for producing lowcarbon fuels, with soil and climate that support high crop yields and low carbon loss. For instance, while jatropha and miscanthus showed the lowest average DLUC emissions, their performance varied depending on where they were grown. This spatial variability underscores the need for careful planning and site selection in SAF feedstock production.

The study calls for more detailed guidelines and measures to ensure that aviation biofuels deliver the promised greenhouse gas reductions. The authors also suggest improvements to CORSIA to reflect diverse crop production possibilities better and help biofuel producers identify raw materials and agricultural practices that meet sustainability requirements.

These findings underscore the complexity of the food vs. fuel debate. While crops like miscanthus and jatropha offer hope for more sustainable SAF production, realizing this potential without compromising food security will require careful planning, ongoing research, and adaptive policymaking.

The spatial variability in crop performance emphasizes the need for location-specific strategies in SAF feedstock production, balancing environmental benefits with land use and food security considerations.

Key challenges

Even with careful planning, the large-scale production of biofuels, whether for SAF or other purposes, presents several significant challenges that must be addressed. The IIASA report highlights several different challenges:

• Land use competition: The expansion of biofuel production has led to concerns about indirect land use change (ILUC), where increased demand for biofuel crops may lead to the conversion of natural habitats to farmland, potentially offsetting the environmental benefits of biofuels. The recent study on miscanthus and other crops highlights this issue, showing that even crops with lower emissions could require significant land use changes to meet SAF production goals.

• Food price volatility: Critics argue that biofuel mandates can contribute to food price spikes, as seen during the global food crisis of 2007-2008. While the exact impact of biofuels on food prices is debated, the potential for market distortions remains a concern. The high production potential of crops like miscanthus could exacerbate this issue if not carefully managed.

• Water resources: Biofuel crop cultivation can be water-intensive, potentially straining water resources in regions already facing scarcity. The study's findings on irrigated versus rainfed miscanthus production (19.1% vs 9.4% of 2019 jet fuel demand) highlight the significant role of water availability in SAF production potential.

Source: Advance Biofuel

• Environmental trade-offs: While biofuels aim to reduce greenhouse gas emissions, the environmental benefits can be offset by emissions from land use changes and intensive agricultural practices. The study revealed that the varying DLUC factors among different crops emphasize the need for careful crop selection and land use planning.

• Policy Conflicts: Balancing policies promoting food security and renewable energy development has proven challenging, often leading to competing incentives and regulatory frameworks.

The role of GREET in biofuel assessment and policy

The Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model, developed by the Argonne National Laboratory, plays a crucial role in evaluating the environmental impact of biofuels and SAF.

GREET is a comprehensive lifecycle analysis tool that assesses the full environmental footprint of various fuels, from production to end-use. The results of GREET analyses inform a range of policy decisions, including the setting of biofuel mandates, the evaluation of different policy options, and the identification of areas for further research and development.

In April 2024, the Biden administration released an updated GREET model specifically tailored for SAF tax credits under the Inflation Reduction Act. This new model, called 40B SAF-GREET 2024, provides a framework for ethanol producers to qualify for these credits by adopting specific climate-smart agricultural practices.

Key aspects of the updated GREET model include:

• Climate-smart agriculture requirements: For corn-based ethanol to be eligible for SAF tax credits, producers must adopt a "bundle" of three climate-oriented agricultural practices: no-tilling, cover cropping, and enhanced efficiency fertilizers.

• Emissions reduction standard: The model sets a benchmark of at least 50% life cycle greenhouse gas emissions reduction compared to petroleum-based jet fuel for SAF to qualify for tax credits.

• Land use change considerations: The model incorporates penalties for land use changes, reflecting the potential negative impacts of converting land from food production or natural habitats to biofuel crop cultivation.

• Pathway to qualification: By adopting the required climate-smart practices, both corn and soybean-based biofuels can potentially reach the 50% emissions reduction standard under the new model.

• Potential limitations: The all-or-nothing approach to climate-smart practice adoption may limit participation from farmers who are unable or unwilling to implement all three practices simultaneously. Some stakeholders argue that recognizing incremental progress towards the 50% reduction goal could encourage wider adoption of sustainable farming practices.

Source: The Scoop

Potential solutions

To address these challenges, stakeholders are exploring various solutions:

• Advanced biofuels and waste-based feedstocks: Developing biofuels from non-food sources, such as agricultural residues, forestry waste, algae, waste oils, or municipal solid waste, could reduce competition with food production. The GREET model can be used to assess the life-cycle impacts of these alternative feedstocks. The recent study's findings on miscanthus and other dedicated energy crops provide additional options for consideration.

• Sustainable agricultural practices: Implementing climate-smart agricultural techniques can improve yields and reduce the environmental impact of both food and fuel crop production. The updated GREET model's requirements for SAF tax credits are driving adoption of these practices. For crops like miscanthus, which showed potential for carbon sequestration, these practices could further enhance their environmental benefits.

Source: Enerkem

• Integrated food-energy systems: Developing systems that co-produce food and energy crops can optimize land use and reduce competition for resources. GREET analyses can help quantify the benefits of such integrated systems. The study's findings on using both cropland and grassland for miscanthus production suggest potential for such integrated approaches.

• Policy harmonization: Aligning agricultural, energy, and environmental policies to create a balanced approach that supports both food security and sustainable biofuel production. The GREET model serves as a valuable tool for policymakers in this process. The new insights on crop-specific emissions and production potentials can inform more nuanced policy development.

• Investment in research and innovation: Continued research into more efficient biofuel production methods and novel feedstocks could help mitigate the food vs. fuel conflict. Ongoing updates to the GREET model ensure that it reflects the latest technological advancements. Further studies on crops like jatropha and switchgrass, which showed promising results, could lead to more sustainable SAF production methods.

• Market-based approaches: Implementing flexible mandates or market mechanisms that adjust biofuel requirements based on food market conditions could help balance competing demands. The significant variability in production potential and emissions among different crops underscores the need for adaptable policies.

The role of fuel producers and airlines

The aviation and SAF industries themselves have a crucial role to play in navigating the food vs. fuel debate:

• Investing in technologies: Agribusiness firms are investing in technologies to increase crop yields and develop more sustainable farming practices, potentially alleviating resource competition. These firms can use GREET analyses to demonstrate the environmental benefits of their innovations.

• Diversifying portfolios: Energy companies are diversifying their portfolios to include advanced biofuels and exploring innovative feedstock sources that don't compete with food production. GREET assessments help these companies evaluate the environmental performance of different fuel options.

Source: Successful Farming

• Partnerships: Airlines are partnering with biofuel producers and researchers to develop SAF from sustainable sources, recognizing the need to balance environmental goals with broader societal impacts. The new SAF-specific GREET model provides a framework for these partnerships to qualify for tax incentives.

• Data analytics: Technology companies are leveraging data analytics and precision agriculture techniques to optimize resource use in both food and fuel crop production. These technologies can help farmers meet the climate-smart agriculture requirements outlined in the updated GREET model.

Source: Bizvibe Blog

Looking ahead

The food versus fuel debate in North America will likely intensify as climate change concerns drive further expansion of biofuel and SAF production. Recent policy developments, such as the Biden administration's updated SAF tax credit model based on GREET, demonstrate attempts to balance these competing interests.

Source: The Record

However, the path forward is not without obstacles. The complex interplay of land use, food prices, water resources, and environmental trade-offs necessitates a multifaceted approach. Emerging research, like the IIASA study on miscanthus and other crops, offers valuable insights into the potential of different feedstocks and the importance of location-specific strategies.

As the industry evolves, continued innovation, policy harmonization, and investment in research will be crucial. The GREET model will remain a vital tool for assessing environmental impacts, but it must adapt to incorporate the latest findings on crop-specific emissions and production potentials.

Ultimately, resolving the food vs. fuel dilemma will require collaboration among all stakeholders, including governments, industry, researchers, and consumers.

III Dealing with political uncertainties

The 2024 US Presidential Election, slated for a month after the Sustainable Aviation Futures North America Congress in Houston, could result in significant policy shifts regarding sustainable aviation and existing ‘green’ incentives.

SAF producers and airlines must be prepared for either Donald Trump or Kamala Harris to win the election. As a result, this section compares the likely approaches of each to SAF and provides suggested guidelines for navigating this evolving landscape.

Policy contrasts: Trump vs Harris

The stark differences between Trump and Harris in their approach to climate change and energy policy will likely lead to divergent paths for the SAF industry under their respective administrations.

Under Trump's presidency, the industry could expect a significant reduction in federal support for SAF development.

This comes as Trump's skepticism towards climate change measures and preference for fossil fuels suggests he might roll back or eliminate subsidies and tax incentives provided by the IRA. The prospects of a federal SAF mandate for US airlines would likely diminish, potentially slowing the adoption of cleaner fuels.

Trump's approach to emissions regulations would probably involve relaxing aviation industry standards. His previous withdrawal from the Paris Agreement indicates he might once again withdraw from international climate commitments, focusing instead on boosting domestic fossil fuel production rather than reducing emissions.

In contrast, a Harris administration would likely maintain or even expand federal investment in SAF research and development. Harris's strong climate advocacy suggests she may continue and possibly enhance tax credits for SAF production and use. Under her leadership, there's also a higher likelihood of introducing a federal SAF mandate with specific blending requirements.

Harris could also push for stricter emissions standards for airlines, maintaining the US commitment to the Paris Agreement and global climate goals. Moreover, she has, in the past, supported the idea of a “climate pollution fee”, which she says would "make polluters pay for emitting greenhouse gases into our atmosphere.” As a result, there would be the possibility of an EU-ETS-style system being introduced into the US.

Nonetheless, regardless of which administration takes charge for the next four years, the medium- and long-term sustainability trajectories in the US appear secure. Overall, the current momentum should see the realization of significant decarbonisation efforts over the next decade.

The subsidy and investment climate

The investment climate for SAF would differ markedly under each administration. A Trump presidency might create increased uncertainty for green investments. An analysis by Wood Mackenzie has suggested that $1 trillion could be at risk.

Trump’s focus on traditional energy sectors could disadvantage SAF projects in favor of conventional fuel sources.

Harris, on the other hand, would likely foster continued strong support for green investments, including SAF. Her

Bloomberg administration could be expected to encourage increased public and private investment in clean energy technologies, creating a more favorable environment for SAF development and adoption.

Regarding research and innovation, a Trump administration might reduce federal funding for SAF-related research, emphasizing market-driven solutions without government intervention. Conversely, Harris would likely increase funding for SAF-related R&D through federal agencies and potentially support public-private partnerships to drive innovation in the sector.

The approaches to international cooperation would also diverge significantly. Trump's "America First" policy might lead to reduced engagement in international climate initiatives, with a potential focus on bilateral energy deals rather than global climate efforts. Harris, however, would likely push for increased international cooperation on SAF standards and technology sharing, potentially advocating for harmonized global SAF production and use standards.

Source:

Guidelines for SAF producers and airlines

Despite the uncertainty surrounding the election outcome, SAF producers and airlines can take several steps to position themselves for success in this evolving policy landscape.

• Geographical diversification is crucial: While federal policy may shift, many clean energy initiatives are rooted in traditionally conservative states like Texas and Louisiana, and even in the event of a Trump presidency, lawmakers in those states will not want to see those jobs go. Meanwhile, other states like California and Oregon are steadily strengthening their bundle of green incentives and initiatives, which can provide a buffer against federal policy changes.

• Focusing on long-term investments: As there is no mandate in North America outside of British Columbia, airlines and investors can place long-term bets on pathways and technologies that will come to fruition in the latter part of the decade or the early 2030s. One of those is e-fuels, which we will discuss later in this report.

• Enhancing operational efficiency should be a priority for airlines. Implementing fuel-saving measures and operational improvements can reduce costs and emissions, while investing in fleet modernization improves fuel efficiency regardless of SAF availability. These steps not only prepare companies for a range of policy scenarios but also demonstrate commitment to sustainability.

• Leveraging private sector commitments can provide a stable foundation for SAF development. Engaging with corporations committed to reducing their aviationrelated emissions and exploring long-term offtake agreements

Source: Future Travel Experience with environmentally conscious companies can create demand stability independent of government policy.

• Exploring innovative financing mechanisms such as green bonds and public-private partnerships, can help mitigate investment risks and attract capital even in uncertain policy environments.

• Communicating the value of SAF beyond emissions reduction is crucial. Emphasizing benefits such as energy security, rural economic development, and technological leadership can develop messaging that resonates with diverse political perspectives.

Conclusion

Significant policy shifts on SAF may occur following the 2024 US presidential election. For example, while a Trump administration might reduce federal support for SAF, a Harris presidency would most likely accelerate its development.

However, regardless of the election result, the long-term trajectory towards cleaner aviation fuels remains clear, driven by global climate commitments, corporate sustainability goals, and technological advancements.

By focusing on market-driven solutions, geographic diversification, and adaptable strategies, SAF producers and airlines can position themselves for success in an evolving policy landscape. The key lies in building resilient business models that can thrive under various regulatory scenarios while contributing to the essential goal of aviation decarbonization.

IV Tackling high prices and limited production

Two key factors currently affect the use of SAF:

• Cost: it is more expensive than Jet A fuel.

• Production: there simply isn’t enough of it.

In this section, we’ll delve into these challenges, the strategies being employed to overcome them, and the unique regional dynamics shaping the SAF market landscape in North America.

Source: Canadian Biomass Magazine

Source: Neste

The price premium challenge

One of the most significant barriers to SAF adoption is its cost. Currently, unsubsidized (e,g, without any government or state incentives) SAF trades at a substantial premium compared to conventional jet fuel, typically costing 2-5 times more.

This price disparity presents a major obstacle for an industry that operates on notoriously thin profit margins.

Several factors contribute to the higher cost of SAF:

• Limited production scale: With SAF accounting for less than 0.2% of global jet fuel consumption in 2023, production volumes remain low. This lack of scale prevents producers from achieving the cost efficiencies needed to compete with conventional fuel.

• Feedstock costs: Many current SAF pathways rely on waste oils and fats as feedstocks. As demand grows, these inputs are becoming increasingly scarce and expensive.

• Complex production processes: Converting biomass or captured CO2 into jet fuel requires sophisticated and energy-intensive processes, driving up production costs.

• Infrastructure investments: New or retrofitted facilities are needed to produce SAF at scale, requiring significant capital expenditures.

Source: CNBC

According to the International Air Transport Association (IATA), SAF prices need to fall below US $2.50 per gallon to be competitive with fossil jet fuel in the absence of policy support. Reaching this target presents a chicken-and-egg problem – prices are high due to low production volumes, but production can't scale up without increased demand, which is constrained by high prices.

The production scale-up challenge

In addition to price hurdles, the SAF industry faces major challenges in scaling up production to meet projected demand:

• Feedstock constraints: First-generation SAF relies heavily on waste oils and fats, but these feedstocks face supply limitations. Scaling up will require developing new pathways using abundant feedstocks like agricultural residues, forestry waste, and municipal solid waste - and eventually e-fuels made from CO2 and renewable energy.

• Production facility development: Bringing new SAF plants online is lengthy and capital-intensive. The figures mentioned at the SAF Congress in Amsterdam was that at a minimum $300-500 million is needed for each plant, and that it takes 3-5 years for it to be built and approved - not leaving much time between now and 2030. A recent NREL report also identifies project permitting processes as a substantial barrier to SAF facility deployment. Industry stakeholders reported projects being delayed, canceled, or relocated due to lengthy, high-risk, and time-consuming permitting processes. Simplifying these processes could significantly speed up the deployment of new SAF facilities.

Source: Sustainable Aviation Futures Europe

• Lack of supply chain: SAF production needs to expand globally to serve all major aviation markets, but many regions lack the necessary infrastructure and supply chains. In the USA there is also a mismatch of state level incentives, meaning that SAF production is currently largely concentrated in the west of the country. The NREL has additionally highlighted significant logistical challenges for SAF production. For example, a modest-sized SAF production facility producing 60 million gallons per year (just 2% of the 3 BGPY goal) using woody biomass or agricultural waste could require almost 200 trucks per day to transport raw feedstock. This level of traffic could significantly impact rural communities and contribute to increased emissions if fossil diesel is used for transport.

• Technology maturation: Advanced SAF pathways like power-to-liquid fuels or e-fuels show promise for large-scale production but remain in the early stages of development and commercialization.

Strategies to overcome SAF hurdles

• Policy support and incentives: Government policies like blending mandates, tax credits, and carbon pricing can incentivize SAF production and create market certainty. Earlier in this report, we talked about how the IRA, offering up to $1.75 per gallon in tax credits for SAF, exemplifies how policy can catalyze investment.

• Long-term offtake agreements: Airlines can provide demand signals and reduce investment risk for producers by committing to long-term SAF purchase agreements. United Airlines' Eco-Skies Alliance program, which involves corporate customers in SAF offtakes, demonstrates an innovative approach to demand aggregation.

• Bankable offtake agreements: Large corporates can be brought in to underwrite offtakes and use them towards offsetting their scope 3 emissions. Examples include three way partnerships between Alaska Airlines, Microsoft and Twelve. And also between Infinium, American Airlines and Citi. (The latter unlocked a further funding round from Breakthrough Energy.)

• Feedstock diversification: Expanding feedstock options is crucial for scaling SAF production. Investments in agricultural practices to grow dedicated energy crops and technologies to convert waste streams into SAF can help secure sustainable, long-term feedstock supplies.

• Advanced production technologies: Continued investment in research and development is needed to improve SAF production efficiency and reduce costs. Power-to-liquid fuels, which combine green hydrogen with captured CO2, show particular promise for overcoming feedstock limitations and achieving near-zero lifecycle emissions.

• Innovative financing mechanisms: New financing tools, such as green bonds and sustainability-linked loans, can help mobilize the significant capital needed for SAF projects.

The current SAF market landscape: a regional snapshot

Average Price for 100LL, JetA & SAF Fuel

As of August 2024, price of jet fuel, including both traditional Jet A and SAF, varied significantly across the United States. Understanding these regional differences is key to tailoring effective strategies for SAF adoption. These represent SAF prices, inclusive of subsidies.

• Alaska: Faces the highest fuel prices due to challenges in transportation and distribution.

Source: GlobalAir

• West coast: Sees developing SAF markets with prices around $9 per gallon, a premium of around 36% over Jet A. This factors in state and federal incentives and first generation (largely HEFA) SAF.

• Central and southern regions: Enjoy lower fuel prices, potentially making the transition to SAF more manageable.

The Book and Claim system

Finally, Book and Claim has the potential to be a powerful tool in overcoming the price and production challenges. It is designed to overcome logistical and geographical barriers in the SAF market.

• SAF producers "book" their sustainable fuel production by entering it into a central registry.

• Airlines or other entities can then "claim" the environmental benefits of this SAF, even if they don't physically use the exact SAF molecules in their aircraft.

• The environmental attributes of SAF are separated from the physical fuel and converted into tradable certificates.

• These certificates can be bought, sold, and redeemed through the central registry.

• When an airline redeems a certificate, it can claim the environmental benefits as if it had used the physical SAF.

This system allows for greater flexibility in SAF distribution and use. It enables airlines to support SAF production and claim its benefits even when physical SAF isn't available at their location.

Most importantly, this approach offers several advantages in overcoming SAF's current limitations:

• Decoupling physical supply from environmental benefits: Airlines can purchase and claim the benefits of SAF even if it's not physically available at their location, effectively expanding the market for SAF producers.

• Improving cost-effectiveness: By enabling SAF to be produced and used where it's most economically viable, book and claim can help reduce overall costs. It eliminates the need for expensive transportation of SAF to specific airports, allowing for more efficient distribution.

• Stimulating demand and investment: The increased flexibility offered by book and claim can stimulate greater demand for SAF, as more airlines can participate regardless of their geographic location. This increased demand can, in turn, attract more investment in SAF production facilities.

Source: Ellen M. Bnner / The Seattle Times

• Enhancing transparency and accountability: A well-designed book and claim system includes robust tracking and verification mechanisms, ensuring that environmental benefits are accurately accounted for and prevent double-counting.

• Enabling smaller airlines to participate: Smaller airlines that might not have the resources to directly incorporate SAF into their operations can still contribute to and benefit from the SAF market.

Balancing near-term action and long-term vision

In conclusion, while these SAF supply and price challenges are significant, they are not insurmountable. The industry must pursue a dual strategy:

• Near-Term: Scale up production and adoption of available SAF pathways while expanding into more abundant feedstocks.

• Long-Term: Invest in next-generation technologies like power-to-liquid fuels for truly sustainable SAF production at scale.

Success hinges on collaboration across the entire aviation value chain. Airlines need to send strong demand signals, fuel producers must invest in new capacity and technology, governments should provide supportive policies, and consumers must factor sustainability into their travel decisions.

Source: IAG Cargo Magazine

Source: Neste

V Making e-fuels commercially viable

E-fuels are seen by many policy makers as the future of SAF. In fact, as outlined earlier, both the European Union and UK have an e-fuels sub-mandate where a certain proportion of SAF must be made up of this sub-set of fuels.

However, e-fuels carry with them significant challenges in terms of production issues, the resources needed and cost.

Estimated e-kerosene production cost in the United States and the EU, compared to hydroprocessed esters and fatty acids (HEFA) and fossil Jet A fuel

High production costs

The most immediate barrier to e-fuel adoption is the significantly higher production cost compared to conventional jet fuel. Current estimates suggest that e-fuels can cost anywhere from 3 to 6 times more than fossil-based kerosene. This price differential poses a substantial challenge in an industry known for thin profit margins. Several factors contribute to these high costs:

• Energy-intensive production process

• High cost of green hydrogen production

• Expensive carbon capture technologies, especially DAC

• Limited economies of scale due to earlystage development

For context, while conventional aviation fuels cost around $0.50-$0.60 per liter, e-fuels can cost between US$1.50-$3.00 per liter or even more.

Source: ECOticias

Source: ICCT

Energy consumption

The production of e-fuels is extremely energy-intensive. The overall energy efficiency of the e-fuel production process can be as low as 20%, meaning that a large amount of renewable electricity is required to produce a relatively small amount of fuel.

In a European context, Lufthansa boss Carsten Spohr has claimed that to power his airline’s fleet with e-fuels would use the equivalent of half of Germany’s total electricity capacity.

Source: Plug Power

CO2 sourcing

Green hydrogen production

E-fuels rely heavily on green hydrogen as a key input, but green hydrogen production is still in its infancy. Current global production of green hydrogen is minimal, and scaling up to meet potential e-fuel demand will require massive investments in renewable energy and electrolysis capacity.

Challenges in green hydrogen production include:

• High costs of electrolyzers

• Need for abundant, cheap renewable electricity

• Water requirements, especially in waterstressed regions

• Lack of transportation and storage infrastructure

The cost of green hydrogen production needs to decrease significantly to make e-fuels economically viable. Current costs range from €3.20/kg to €7/kg for green hydrogen, compared to under €1/kg for grey hydrogen produced from fossil fuels.

While capturing CO2 from industrial processes is currently the most cost-effective option, long-term sustainability goals require CO2 to be captured directly from the air. However, DAC technology is still in its early stages and is extremely energy-intensive and expensive.

Current DAC costs range from $500 to $1,000 per tonne of CO2 captured, far exceeding the EU Emissions Trading System's carbon price of $50-$100. The energy requirements for DAC are also substantial, with current systems using between 1,500 to 2,650 kilowatthours (kWh) of energy to capture one tonne of CO2.

To illustrate the scale of the challenge, offsetting the emissions of a single long-haul flight using DAC would require energy equivalent to the annual consumption of hundreds of average households.

Regulatory framework

The lack of a comprehensive and consistent regulatory framework across different countries and regions creates uncertainty for potential investors and producers. Clear, long-term policies are needed to drive investment and innovation in e-fuel technologies.

While some regions, like the European Union, have begun to implement supportive policies (such as the ReFuelEU Aviation initiative), global coordination is still lacking. This regulatory uncertainty can hinder investment and slow down the development of the e-fuel market.

Technological readiness

Source: Darryl Dyck / The Canadian Press

Many of the technologies required for large-scale e-fuel production are still at relatively low Technology Readiness Levels (TRLs). For instance, while some components like Fischer-Tropsch synthesis are well-established, others like high-temperature electrolysis and large-scale Direct Air Capture are still in development or early demonstration phases. This technological immaturity adds risk to investments and can slow down the scaling process.

Source: PtX Hub

Six potential solutions for scaling up e-fuels in aviation

Despite these challenges, several promising solutions are emerging, offering a multifaceted approach to accelerating their use.

• Technological advancements: Continued research and development are crucial for improving efficiency across the e-fuel production process. Advancements in electrolyser efficiency can reduce energy consumption. Innovative catalysts developed at institutions like the Technical University of Denmark are enhancing the conversion of CO2 to hydrocarbons. Meanwhile carbon capture companies like are looking at innovative and cheaper ways to operate DAC facilities, while others are developing ocean based carbon capture and hydrogen production solutions.

• Economies of scale: While initial production costs are high, they are expected to decrease significantly as the industry scales. Pilot projects are demonstrating the feasibility of large-scale e-fuel production. Facilities are already opening in the USA, with views to develop larger scale commercial plants.

• Strategic locations: Placing e-fuel production facilities in regions abundant in renewable energy sources, such as Texas, can lower production costs.

• Disruptive pathways: Unlike most e-fuels companies, some are experimenting with replacing the two step Fischer-Tropsch process where Co2 and H2 is combined into a syngas and then put through an FT reactor, into a more economical one step process. Others are looking at the Methanol pathway as a more efficient e-fuel production process.

• Carbon pricing: Implementing carbon pricing mechanisms, such as the EU Emissions Trading System (ETS) and CORSIA, makes e-fuels more competitive by internalizing the environmental cost of conventional jet fuel.

• Research and development funding: Increased public and private funding for e-fuel research, such as that offered by EU Horizon Europe and the US Department of Energy, is vital for accelerating technological advancements and overcoming the remaining barriers to e-fuel production. Ultimately, the journey towards sustainable aviation necessitates a holistic approach that encompasses technological innovation, economic viability, environmental sustainability, and public engagement.

Source: HIF Global

DIRECTORY OF SAF PRODUCERS OPERATING IN NORTH AMERICA

Accurate as of July 2024. Please note we seek to be as accurate as possible with this list, but acknowledge that the industry is constantly changing. If you believe an organization is missing or an amendment is required, please contact us directly.

Adkins Energy

Founded: 1996

Country: USA adkinsenergy.com

Aeon Blue

Founded: 2018

Country: Canada aeonblue.ca

Company

Country: USA

Country: USA

Founded: 2016

No. of offtakes: 3

No. of offtakes: 1

Azure

Founded: 2021

Country: Canada

Aether Fuels

Founded: 2022

Country: USA aetherfuels.com

Renewables

Country: USA

No. of offtakes: 1

Carbon Engineering

Founded: 2009

Country: Canada azuresf.com carbonengineering.com

Arcadia eFuels

Founded: 2021

Country: USA arcadiaefuels.com

No. of offtakes: 1 aemetis.com aircompany.com amyris.com

Byogy Renewables

Founded: 2005

Country: USA byogy.com

alderrenewables.com cemvita.com

DIRECTORY OF SAF

Cemvita

Chevron Lummus

Founded: 200 Country: USA chevronlummus.com

CleanJoule

Founded: 2009 Total offtake volume*: 340.69 No. of offtakes: 1 cleanjoule.com Country: USA

Chevron Renewable Energy Group Founded: 1995 Country: USA regi.com

Darling Ingredients

Founded: 1882 Country: USA darlingii.com

Diamond Green Diesel

Founded: 2012

Country: USA diamondgreendiesel.com

Founded: 2016 HQ: USA weflywright.com

Expander Energy

Founded: 2004 Country: Canada expanderenergy.com

Enerkem

Founded: 2000 Country: Canada enerkem.com

Fidelis New Energy

Founded: 2019 Country: USA

Total offtake volume*: 348.26 No. of offtakes: 1 fidelisinfra.com

Founded: 2005 Country: USA

offtake volume*: 9,550.03 No. of offtakes: 14 gevo.com

Highbury Energy

Founded: 2008

Country: Canada highburyenergy.com

Global Clean Energy

Founded: 2007

Country: USA gceholdings.com

Honeywell

Founded: 1906

Country: USA uop.honeywell.com

SAF PRODUCERS

Infinium

Country: USA

Founded: 2020

Total offtake volume*: 0 No. of offtakes: 1 infiniumco.com

LanzaTech

Founded: 2005

Country: USA lanzatech.com

Montana Renewables

Founded: 2021 Country: USA montanarenewables.com

LanzaJet

Country: USA

Founded: 2020

Total offtake volume*: 46.94 No. of offtakes: 2 lanzajet.com

Mercurius Biorefining

Founded: 2009

Country: USA mercuriusbiorefining.com

Northwest Advanced Biofuels

Founded: 2017 Country: USA nwabiofuels.com

Phillips 66

Total offtake volume*: 9 No. of offtakes: 3 phillips66aviation.com Country: USA

Proton Power

Founded: 2005 Country: USA protonpower.com

Founded: 1927

Rocky Mountain Clean Fuels

Founded: 2017

Country: Canada rmcfi.com * In million liters

Nacero

Founded: 2015 Country: USA nacero.co

NXTClean Fuels

Founded: 2016

Country: USA nxtclean.com

Prometheus Fuels

Country: USA

Founded: 2018

Total offtake volume*: 37.85 No. of offtakes: 1 prometheusfuels.com

Raven SR

Country: USA

Founded: 2018

Total offtake volume*: 1,561.64

ravensr.com

SAF+ Consortium

Country: Canada

Total offtake volume*: 408.82 No. of offtakes: 1

No. of offtakes: 1

Founded: 2019

safplusconsortium.com

DIRECTORY OF SAF

* In million liters. Source ICAO.

SAFFiRE Renewables

Founded: 2022

Country: USA saffirerenewables.com

Sustainable Oils

Founded: 2005

Country: USA susoils.com

SGP BioEnergy

Country: USA

Founded: 2013

Total offtake volume*: 526.17

No. of offtakes: 2

Valero Energy Corporation

Founded: 1980

Country: USA valero.com

Virent

Founded: 2002

Country: USA virent.com

Wastefuel

Country: USA

Founded: 2018

Total offtake volume*: 378.54

No. of offtakes: 1 wastefuel.com

USA BioEnergy

Country: USA

Founded: 2018

Total offtake volume*: 3,255.45

Twelve

Country: USA

Founded: 2015

Total offtake volume*: 981.25

No. of offtakes: 1

sgpbioenergy.com twelve.co

Vertimass

Founded: 2013

Country: USA vertimass.com

Viridos

Founded: 2005 Country: USA viridos.com

World Energy

Country: USA

Founded: 1989

Total offtake volume*: 877.12

No. of offtakes: 12

No. of offtakes: 1 worldenergy.net usabioenergy.com

SAF PRODUCERS

CONCLUSION

As North America leads the charge in SAF adoption, the region faces unique opportunities and challenges in its pursuit of aviation sustainability. The United States and Canada stand at the forefront of SAF production and policy innovation, positioning the continent to play a pivotal role in the global transition to cleaner air travel.

In the near term, North America must focus on rapidly scaling up SAF production to meet ambitious targets. This involves expanding existing facilities, particularly in SAF hubs like California, while also developing new production centers across the continent.

The region's diverse feedstock options, from agricultural residues to municipal solid waste, offer a strong foundation for growth. However, balancing this immediate expansion with long-term sustainability goals is crucial, especially as the industry moves towards advanced technologies like e-fuels.

Success in North America hinges on collaboration across its robust aviation ecosystem. From major airlines and fuel producers to innovative startups and research institutions, the region's stakeholders must work in concert to overcome technical, economic, and logistical hurdles. The unique partnership between public and private sectors in North America, exemplified by initiatives like the U.S. Sustainable Skies Act and Canada's Clean Fuel Regulations, provides a model for effective industry-government cooperation.

Continued investment in research and development is where North America can truly shine. The region's world-class

universities and national laboratories, coupled with a culture of innovation and entrepreneurship, position it to drive breakthroughs in SAF technology. Focusing this innovative capacity on reducing production costs, improving fuel efficiency, and developing novel SAF pathways will be critical for long-term success.

The regulatory landscape in North America presents a mixed bag. While supportive policies like the U.S. Inflation Reduction Act provide crucial incentives, the potential for political shifts adds an element of uncertainty. Developing stable, long-term regulatory frameworks that transcend political cycles will be essential to provide the certainty needed for sustained investment in SAF.

Source: Infinium

As North America charts its course towards sustainable aviation, it has the potential to not only transform its own aviation sector but also to set global standards for SAF production and use.

By leveraging its technological prowess, abundant resources, and innovative spirit, while addressing challenges head-on, North America can lead the world in making sustainable aviation a reality.

GLOSSARY OF TERMS

This glossary covers the main terms and abbreviations used throughout the document.

• ATJ: Alcohol to Jet - A process that converts alcohols (like ethanol) into jet fuel.

• Book and Claim: A system that allows the environmental attributes of SAF to be separated from the physical fuel and traded as certificates.

• Carbon Intensity: The amount of carbon (by weight) emitted per unit of energy consumed.

• CORSIA: Carbon Offsetting and Reduction Scheme for International Aviation - A global market-based measure adopted by ICAO to address CO2 emissions from international aviation.

• DAC: Direct Air Capture - A technology that captures CO2 directly from the atmosphere.

• DLUC: Direct Land Use ChangeChanges in land use directly caused by biofuel production.

• E-fuels: Also known as synthetic fuels or power-to-liquid (PtL) fuels - Advanced biofuels produced by combining green hydrogen with captured carbon dioxide.

• ETS: Emissions Trading System - A market-based approach to controlling pollution by providing economic incentives for reducing emissions.

• Feedstock: The raw material used to produce biofuels or other products.

• FT or Fischer-Tropsch: A process that converts a mixture of carbon monoxide and hydrogen into liquid hydrocarbons.

• GHG: Greenhouse Gas - Gases that trap heat in the Earth's atmosphere, contributing to global warming.

• Green Hydrogen: Hydrogen produced by splitting water by electrolysis using renewable electricity.

• GREET: Greenhouse gases, Regulated Emissions, and Energy use in Technologies - A model developed by Argonne National Laboratory to assess the environmental impact of fuels.

• HEFA: Hydroprocessed Esters and Fatty Acids - A process used to convert oils and fats into biofuels.

• IATA: International Air Transport Association - The trade association for the world's airlines.

• ICAO: International Civil Aviation Organization - A UN specialised agency that works with member states and industry groups to reach consensus on international civil aviation standards and practices.

• ILUC: Indirect Land Use ChangeUnintended consequences of releasing more carbon emissions due to land-use changes induced by the expansion of croplands for biofuel production.

• IRA: Inflation Reduction Act - A U.S. law that includes significant provisions for clean energy and climate change mitigation.

• LCFS: Low Carbon Fuel Standard - A policy to reduce the carbon intensity of transportation fuels.

• Offtake Agreement: A contract between a producer and a buyer to purchase/sell a certain amount of the future production.

• Pyrolysis: A thermochemical decomposition of organic material at elevated temperatures in the absence of oxygen.

• RFS: Renewable Fuel Standard - A U.S. federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels.

• SAF: Sustainable Aviation Fuel - A type of fuel derived from sustainable sources that can be used as an alternative to conventional jet fuel.

• Syngas: Synthesis gas, a fuel gas mixture consisting primarily of hydrogen, carbon monoxide, and often some carbon dioxide.

• TRL: Technology Readiness Level - A method for estimating the maturity of technologies during the acquisition phase of a program.

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