Industry leaders call for unified approach to SAF development

During the North American SAF Conference and Expo in Minneapolis, held from Sept. 22 to 24, industry leaders underscored the critical need for coherent policies to support the sustainable aviation fuel sector amid evolving market dynamics.

Bruce Fleming, CEO of Montana Renewables, emphasized that "the government can take risks that the private sector isn't ready to yet," highlighting the need for stable regulatory frameworks to foster growth in SAF production.

The expiration of the Blender Tax Credit in 2024, which was initially set at $1.25/gallon for SAF with 50% GHG emission reduction and included an additional incentive for further emission reduction over 50% up to a maximum of $1.75/gallon, marked a significant shift in the industry.

The transition to the Clean Fuel Producer Tax Credit in 2025 resulted in a reduction of the maximum incentive from $1.75 per gallon under the BTC to just $1 per gallon under the new credit.

The CFPC also removed indirect land use change from carbon accounting, which incentivizes the use of agricultural feedstocks. In contrast, the amendments to the Low Carbon Fuel Standard impose a cap on the use of soybean and canola oil, limiting their contribution to 20% of a company's diesel pool starting in 2025, thus creating conflicting signals for the industry.

This reduction in the maximum incentive and the conflicting policies have created tension within the industry. Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, pointed out, "We need to come back and make double sure we have a unified voice." He stressed that perceptions in Washington, D.C. can significantly influence the industry's future, urging for alignment of interests to ensure progress. "If we can correct some of these perceptions and get our house in order, I'm still a glass-half-full optimistic," Shaw added.

Jim Hileman, VP & Chief Engineer of Sustainability & Future Mobility at Boeing, discussed the broader implications of these policy changes on market dynamics. He noted the importance of the Renewable Fuel Standard and the producer tax credit for the economic viability of SAF production, stating, "There are mandates going up in place around the world... a lot of these are just simply based on the fuel being sustainable."

As the industry navigates these challenges, the new Renewable Volume Obligation proposal, which sets high biomass-based diesel requirements for 2026 and 2027, is expected to drive stronger demand for BBD. Jet fuel is not currently included in the Renewable Volume Obligation.

Analysis from S&P Global Energy indicates that domestic feedstock supplies will be insufficient to meet the proposed mandate. Once domestic feedstocks are depleted, the US may need to import twice as many products to satisfy the D4 and overall biofuels mandate.

Platts, part of S&P Global Energy, assessed USWC SAF (H-S) CA (credits det) on Sept. 24 at 442.77 cents/gal, down 4.85 cents/gal day over day.