When British Prime Minister Boris Johnson attended the COP26 climate summit in Glasgow last week, he was a man of contradictions. He condemned delegates by saying current targets for the use of sustainable aviation fuel (SAF)—a catchall term for green, renewable jet fuels used in airplanes—were “pathetic.” He called on world leaders to do more to move the aviation industry away from fossil fuels and aggressively adopt SAFs.
And yet he opted to fly to and from the meeting, even though he could have taken the train, a greener transportation option.
Inadvertently, Johnson’s actions were characteristic of the SAF market, which is full of its own contradictions. Although the technology and wherewithal to produce SAF exists today, a lack of government incentives has led producers to hold back on production because of lean profit margins, hindering what could be an easy solution for airlines to reduce their greenhouse gas emissions.
The world certainly wants SAFs to grow. On Wednesday, more than 23 countries attending the UN’s COP26 climate conference signed a declaration calling for the aviation sector to be carbon-neutral by 2050—including through the use of renewable fuels. U.S. Transportation Secretary Pete Buttigieg announced the U.S. would pledge $200 million “to advance aviation technologies that will reduce fuel use, emissions and noise… Our view is that just like vehicles on the ground, the future of aviation is a sustainable one.”
The airline industry is responsible for 12 percent of all carbon dioxide emissions produced by transportation. SAFs have similar properties to traditional jet fuels, but are made from a myriad of renewable feedstock, including garbage, waste oils produced from cooking and other activities, and plants. Airlines love them because they are “drop-in” ready, meaning they can be blended with regular jet fuel or used as is, without any plane modifications. Depending on how they’re produced, SAFs can result can cut aviation carbon emissions by 60 to 80 percent.
Unsurprisingly, the biggest hurdle preventing SAFs from taking over the aviation industry is money. Right now, SAFs cost about four to five times more to produce than conventional jet fuel. Without a high demand from airlines until recently, supply has stayed low, further bolstering high costs.
“Airlines are very cost-conscious,” said Pratik Chandhoke, the technical manager for renewable aviation at Neste Oyj, a Finnish oil refiner that is now a major SAF producer. “Prices go up on a commodity by 50 cents and they get nervous.”
In addition, many SAF producers also make renewable biodiesel for trucks, a market that has plenty of tax incentives, so producers have chosen to focus on the more profitable commodity at the detriment of the airline industry’s efforts to go green.
Chandhoke told The Daily Beast airline fuel producers are waiting for the quick passage of policy measures around the world that will “even the playing field” and create price parity between SAFs and other fuels. In the U.S., the passage of the Sustainable Skies Act would create something akin to the tax credits available to truck biodiesel producers. Chandhoke said such a policy could spur mass production of SAFs on the same scale as renewable biodiesel—a market that’s now worth over $140 billion.
Airports are only now trying to figure out needed infrastructure upgrades. San Francisco International Airport, currently thought to be the most progressive airport facility in the U.S. that’s tackling climate change, estimates it needs about $1 billion more to properly tackle SAF-related infrastructure needs. President Biden’s $1.2 trillion infrastructure bill earmarks $20 billion for airports to repair their aging facilities, but experts have calculated there’s already a $115 billion backlog for other necessary improvements.
Availability of feedstock is another obstacle to expanding the SAF market, according to Theo Zisis, an oil demand analyst at consulting firm Wood Mackenzie. Making SAFs using vegetable oil derived from soybeans, sunflowers, or rapeseed creates direct competition with the food supply chain and is often subject to regulatory limits, he said. There’s also competition for such feedstock to make biofuels for trucks. This is part of the reason why Zisis predicts the SAF market in the U.S. will remain tiny, growing only by 0.5 percent by 2025 and 2 percent by 2030.
Luckily, there are quite a few options for SAF feedstock. Recently, researchers from the University of Georgia found that Ethiopian mustard plants could theoretically be planted as a winter crop in farms all across the southeast; the SAF produced from this plant could be sold at the same price as traditional jet fuel.
Some airlines are setting their own emissions-cutting goals and purchasing SAFs even without government incentives. Delta Airlines signed a $1 billion purchase deal with Aemetis, a renewable fuels and chemicals company, for 250 million gallons of SAF over the next decade. JetBlue also has its own $1 billion agreement bioenergy developer with SG Preston, while United Airlines will buy 1.5 billion gallons of SAF over 20 years from Alder Fuels.
Last month, United Airlines also became the first commercial airline to fly a commercial plane using fuel that was 100 percent SAF. The company had two pilots test fly a 737 aircraft for 90 minutes over George Bush International Airport in Houston. Lauren Riley, managing director of global environmental affairs and sustainability at United, told The Daily Beast the pilot felt the flight performed exactly as it would have had it flown on conventional jet fuel.
“We are really at the point where even a 50 percent SAF blend should be outdated,” Riley added.
United currently offers corporate travelers the opportunity to pay a bit extra for flights partially fueled by SAFs, under its Eco-Skies Alliance program. So far, 13 companies have signed up, which helped the airline buy 3.3 million gallons of SAF this year. Riley pointed to this as evidence there’s a demand for SAFs and a desire from bigger companies to reduce their own carbon footprint, she said.
Granted, that’s a drop in the bucket: In pre-COVID times in 2019, the airline industry burned 95 billion gallons of fuel. The economics of SAFs still need some massive incentives to push them forward.
“The technological process, the routes, the engine capacity, it’s all there,” said Riley. Everyone is simply waiting for government policies to catch up, to make SAF production as profitable as renewable diesel.
“It’s the right thing to do and our customers are demanding it,” she said.