Sustainable Aviation Fuel Capacity Domestically to Rise Fourteen-Fold in 2024, US EIA Says

by Seher Dareen (Reuters) Production capacity of sustainable aviation fuel in the United States could jump by 1400% in 2024 if all announced capacity additions come on line, the U.S. Energy Information Administration said on Wednesday (July 18, 2024).

The EIA anticipates domestic production of biofuels will increase by about 50% in 2024, led by rising SAF production.

The White House aims to meet all of the U.S.'s aviation fuel demand with SAF by 2050 and to supply at least 3 billion gallons of SAF annually by 2030.

The EIA projects that SAF output will rise from 2,000 bpd to nearly 30,000 bpd in 2024.

Phillips 66's Rodeo facility in California reached its renewable fuel production target of 50,000 bpd in June, of which 10,000 bpd is SAF.

Valero's (VLO.N), Diamond Green project, in partnership with Darling Ingredients (DAR.N), at its Port Arthur, Texas refinery is expected to come online in the fourth quarter of this year and produce 15,000 bpd of SAF by the end of 2024. READ MORE

Excerpt from Reuters: Despite the first ever biofuel-powered flight taking place more than a decade-and-a-half ago (with a Virgin Atlantic flight from London to Amsterdam in 2008), there is still no viable replacement to conventional jet fuel at the scale required.

Last year, total global production of SAF rounded out at about 158 million gallons (600 million litres); yet United alone requires 4.25 billion gallons of fuel to keep its planes in the air. Read more, opens new tab

As Riley notes, airlines looking to purchase SAF in bulk have one of only two commercial providers to choose from: Finland’s Neste and California’s World Energy, companies that do not have infrastructure such as pipelines in place to deliver aviation fuel at scale.

But that looks to be changing, she added: “We are starting to see that oil and gas incumbents come online with alternative fuels. They've been in the renewable diesel market for some time now. They're starting to look at the sustainable aviation fuel market.

"And so while they have not necessarily been in the production mode in the recent years, they're starting to this year, which is really exciting. … We want all of this to kind of blend in with how we operate as an airline. And the more that we can support that transition using the infrastructure we have, the faster it's likely to be adopted.”

Riley was speaking before Shell announced in early July that it was suspending construction of one of Europe’s largest biofuel plants, which had originally been planned to come online next year, because of weak market conditions, while BP said it was pausing two biofuel projects in Germany and the U.S.

Asked to comment on the Shell development, she said: "I don’t think we can comment on a project that United has no connection with."

However, with SAF costing two to three times as much to produce as conventional jet fuel, price is a major barrier. Much as consumers are keen to fly green, few are willing to pay a premium to do so. Hence the need for innovation.

Riley admits that decarbonisation of the aviation sector is “way bigger” than United’s in-house research and development capacity, so it invests in early-stage eco-innovators through its own United Airlines Ventures department. Since its inception five years ago, the division, which has a total investment pool in excess of $200m, has seen United take a stake in at least 17 startups.

But the bulk of Ventures’ early bets are in SAF. One is Houston-based Dimensional Energy, which manufactures catalysts that convert carbon dioxide into low-carbon synthetic paraffins.

“Our commercial agreement with each is different and bespoke (but) we're incubating those solutions that we believe have the prospect to scale and commercialise over time,” Riley states.

The United Airlines Ventures Sustainable Flight Fund’s pool of 22 backers spans the sector; from aircraft-makers Boeing and GE Aerospace, to Google and Boston Consulting Group, and fellow airlines Air Canada, Air New Zealand and JetBlue.

“What's interesting about the fund to me is that the investors are all value-chain investors … and they're all partnering with us to say, ‘What technologies do we think can decarbonise aviation and bring scale across our operations?’ So, this is really sort of a statement and a leadership position on behalf of the industry,” Riley reflects.

Another example of United’s collaborative approach is the Eco-Skies Alliance initiative, Created in 2021, the scheme is based on a “book and claim” system that enables United to procure (“book”) physical SAF, which its corporate customers can purchase through a surcharge and count towards their own carbon goals (“claim”). To date, the alliance has attracted nearly 40 customers, including big brand partners such as Nike, Meta, Microsoft and Visa.