Fundamentals and the Future: At the National Biodiesel and Renewable Diesel Summit, Industry Experts Discussed the Complexities of the Current Sustainable Aviation Fuel Industry

by Katie Schroeder (SAF Magazine) The market opportunities around sustainable aviation fuel (SAF) have attracted the attention of the ethanol industry. In June, at the National Biodiesel & Renewable Diesel Summit—colocated with ethanol industry’s largest conference, the Fuel Ethanol Workshop, held in Omaha, Nebraska,—experts from the SAF industry, biofuels industry and government discussed ethanol’s potential as a feedstock for SAF via the alcohol-to-jet pathway. On panel, “Reviewing the Dynamics and Trajectories of Renewable Diesel and Sustainable Aviation Fuel Markets,” presenters discussed SAF market factors and prices, the importance of SAF in helping the aviation industry meet decarbonization goals, and public policy related to SAF technology development. Panelists included Nicolle Castro, managing editor of Americas Biofuels with S&P Global Platts; Steve Csonka, executive director of the Commercial Aviation Alternative Fuels Initiative; and Ben Simon, biotechnology officer with the U.S. Department of Environment and Energy.

Understanding the Market
During her presentation, Castro discussed SAF price dynamics and the market factors connected to SAF costs in the U.S. S&P Global Commodity Insights has been developing price assessments to help producers better understand these markets and the impact of policies such as tax credits on their profitability. The three major determining factors of SAF prices include feedstock prices, environmental credits and tax incentives, Castro explained. S&P Global Commodity Insights also tracks the cost of low-carbon hydrogen, known as blue hydrogen, because of its impact on SAF production prices. As the primary objectives of the SAF Grand Challenge are to expand SAF supply and end use, reduce cost and enhance sustainability, it is important for producers to know where the industry stands regarding these goals. “It’s extremely relevant from a producer’s perspective to understand what is going to be involved in the production cost model, what the main price trends are, and what to expect in terms of public policies and how that impacts the price model," Castro said. "And also from a consumer’s perspective, to identify what is going to be the financial impact of expanding the SAF credit for jet fuel."

Tax credits and public policy are vital to help airlines meet decarbonization goals and support the expansion of the SAF industry without greatly impacting the social economy, she explained.

Csonka explained that the U.N. body, the International Civil Aviation Organization, implemented a program called the Carbon Offsetting and Reduction Scheme (CORSIA), which sets the benchmark of actual emissions in 2019, meaning that the aviation industry cannot surpass this benchmark without offsetting the emissions in some way. “The industry recognized, as well as the federal government did, that we needed to address aviation emissions, and part of the reason for that is the reliance or the impact of the aviation industry on the U.S. economy—second in gross domestic product and balance of trade, only behind agriculture,” he said.

Csonka referred to SAF as the only viable approach to GHG reduction in the aviation industry; however, significant feedstock must be unlocked to make those reductions a reality. In order meet the projected demand of 27 billion gallons of jet fuel across all aviation sectors in the U.S., the SAF industry needs to double its capacity in the U.S. each year, Csonka explained. “The really good news is that some of these entities themselves have committed to aspire to producing a billion gallons themselves as they build the first plant, and then are able to replicate,” he said.

Currently, ethanol is the most widely available feedstock, as hydrogen is not practical for long-range or medium-haul flights, and technology needed for battery-powered flight is not yet viable for large aircraft. The ethanol industry’s goal of reaching net zero is encouraging because it is a great opportunity for the SAF industry, he explained.

The Illinois state legislature passed a tax rebate for airlines using SAF in the state.

Washington state has implemented a similar tax rebate, aimed at SAF production instead of use.

DOE has awarded grants to first-generation ethanol facilities for the purpose of exploring solutions such as regenerative agriculture and carbon capture and sequestration or utilization.

DOE is interested in funding R&D for projects using municipal solid waste (MSW), woody biomass and purpose-grown feedstocks, such as algae and switchgrass. MSW and woody biomass will be of interest in the 2026 to 2030 timeframe, while feedstocks such as ag waste are expected to be an option in the 2030 to 2040 timeframe. Energy crops and algae are further down the road, becoming of interest between 2040 and 2050. CO2 is another feedstock that BETO is interested in researching for utilization.

The three types of development scales DOE is funding include prepilot, pilot and demonstration, and first-generation corn ethanol emissions reduction. READ MORE