North American production of Sustainable Aviation Fuel (SAF) is below the target set by US President Joe Biden of 11.35 billion liters per year by 2030, as pointed out by analysts cited in a Reuters report.
The target set by Biden in 2021 represents a significant increase compared to the current 59.8 million liters (15.9 million gallons) per year, according to US government data. However, the estimate for total U.S. SAF production through 2030 is just 7.9 billion liters (2.1 billion gallons), according to S&P Global Commodity Insights, based on future projects.
Wood Mackenzie analyst Gordon McManus said in the Nov. 1 report that “substantial additional investment is needed to achieve this target of 11.35 billion liters per year.”
The main focus is on SAF, as battery and hydrogen technologies are not expected to contribute significantly to aviation emissions reductions until after 2050, as indicated by the US Department of Energy.
It is essential to emphasize that the goals are related to domestic production, not consumption. Corey Lavinsky of S&P Global Commodity Insights clarified that in the current situation, airlines may choose not to use SAF. This is due to the cost compared to conventional jet fuel. Mandatory use of SAF would eliminate this option.
The current SAF scenario in the US and aviation's environmental goals
According to commodity and energy pricing agency Argus Media, U.S. jet fuel prices were approximately US$2.85 per gallon in the reporting period. SAF prices reached around US$ 6.69 per gallon.
Major airlines such as Delta Air Lines and Southwest Airlines pledge to replace 10% of jet fuel with SAF by 2030. However, SAF only accounts for 0.1% of total jet fuel in the US, according to Reuters.
Challenges in the sector include rising costs and supply issues. According to research from GE Aerospace, more support is crucial to achieving net-zero emissions targets by 2050. The research was commissioned ahead of the Paris Airshow in June.
US SAF producers receive up to US$1.75/gallon tax credit under the Inflation Reduction Act. However, analysts indicate that this may not cover reduced margins. According to Wood Mackenzie's McManus, deciding to invest in SAF instead of renewable diesel is challenging due to current conditions.
Project costs for SAF remain high. This is due to the additional processing required for production. Additionally, they face challenges in sourcing raw materials such as used cooking oil, as reported by Reuters.
Source: Oils & Fats International
