SAF Scale-up Faces Financing, Execution Hurdles : Biomass Conference Panel

by Sofia Cabrera (S&P Global) SAF scale-up stalls amid financing gaps; Policy fragmentation complicates global growth; Rail demand rises for biofuel logistics

Financing constraints, infrastructure limitations, and evolving policy frameworks continue to challenge the scale-up of sustainable aviation fuel, even as global demand signals strengthen, said speakers at the Biomass Conference & Expo held March 31-April 2 in Nashville, Tennessee.

At "The Real-World Challenges of Scaling Sustainable Aviation Fuel," panel participants said a large gap remains between announced SAF capacity and projects that have reached final investment decisions, with financing and execution among the main bottlenecks.

Scott Vanderau, partner at ETA Energy Transaction Advisors, said project developers continue to face challenges securing capital, particularly for newer conversion pathways that lack a commercial track record.

"Lenders are very risk-averse," Vanderau said, adding that projects typically require long-term feedstock agreements and creditworthy offtake contracts to move forward.

Many SAF pathways — including alcohol-to-jet, gasification, and pyrolysis — show technical promise, Vanderau said, but face hurdles in scaling due to integration complexity and limited operational history at commercial scale.

"A lot of these pathways do not have multiple commercial plants installed," he said.

While global demand for SAF is expected to grow rapidly, current production remains limited. Vanderau noted that, even with recent capacity additions, SAF represents a small share of total aviation fuel demand.

Policy support is expanding globally, with mandates and incentives across the US, Europe, and Asia, but differences in implementation are creating additional complexity.

He said, however, that many projects remain stuck in early development stages, with financing and execution challenges slowing progress.

John Pierce, partner at Kilpatrick Townsend & Stockton, highlighted the European Union's Carbon Border Adjustment Mechanism as a potential long-term factor shaping SAF markets and trade flows. "CBAM ... is intended to mitigate carbon leakage by pricing carbon into imported goods," he said.

While SAF is not currently included in the mechanism, Pierce said it could be indirectly affected through life cycle emissions and supply-chain impacts, particularly as European sustainability requirements tighten.

Pierce added that global regulatory frameworks remain fragmented, with differences in life cycle accounting, traceability, and certification requirements across regions.

On the logistics side, Tom Jackson, vice president of marketing and general manager at Greenbrier, said growing renewable fuel volumes are beginning to reshape North American freight markets. "We're coming up ... what we believe is the trough," he said, referring to current rail market conditions.

Jackson said the rail sector is expected to build about 25,000 railcars this year, with demand increasingly driven by chemicals, renewable fuels, and agricultural products rather than crude-by-rail. "Chemicals, biofuels, renewable diesel — non-traditional customers are coming to us," he said.

Tank cars and covered hoppers are seeing the strongest demand, reflecting rising movements of fuels and feedstocks. Supply constraints remain, however, with lead times of about six months for tank cars and up to eight months for covered hoppers.

Jackson said biofuels are also reshaping freight flows, with rail linking Midwest feedstock production and crushing facilities to refining hubs and export markets.

"There's a lot of rail moves involved here to create these biofuels," he said, adding that policy certainty remains a key factor driving investment in logistics infrastructure and equipment.

"Getting that certainty around regulations is kind of the key thing," Jackson said.

Despite strong demand signals and increasing policy support, speakers said scaling SAF will require alignment across financing, feedstock supply, infrastructure, and regulatory frameworks.

Overall, the panel highlighted that while momentum is building across the SAF value chain, execution risks — particularly around financing, technology, and logistics — remain the primary constraint to large-scale deployment. READ MORE