Carbon Policy

Biden's SAF Policy Targets Net Zero

Copyright © 2021 Energy Intelligence Group

The Biden administration’s “whole-government” support for sustainable aviation fuels (SAF) puts the US airline industry on a clear pathway toward meeting its pledge for net-zero carbon emissions by 2050. It sets an interim goal to boost production of SAF to 3 billion gallons to reduce aviation emissions by 20% by 2030 under the Sustainable Aviation Fuel Grand Challenge. Stakeholders say that target is achievable with the fiscal and policy incentives outlined last Thursday in the Biden plan for aviation.

The aviation sector and government have been collaborating for many years through the Commercial Aviation Alternative Fuels Initiative founded in 2006. That framework set the template for putting SAF development at the forefront of a far-reaching government strategy for reducing the environmental impact of aviation.

Current SAF output in the US totals about 4.5 million gallons per year, a tiny sliver of the 21.5 billion gallons of jet fuel used by commercial airlines in 2019 before the pandemic decimated air travel and jet fuel demand. To accelerate progress toward commercialization, the White House is coordinating policy and $4.3 billion in funding across seven federal departments. They run the gamut from energy, transportation, agriculture, defense, to NASA, the General Services Administration and the Environmental Protection Agency (EPA).

Level Playing Field

That concerted effort across high levels of government is coupled with a proposed SAF tax credit in Biden’s $3.5 trillion spending plan, which is working its way through Congress. A blender’s tax credit of at least $1.50 per gallon that is linked to environmental performance is seen as crucial to put SAF on a level playing field with renewable diesel. That incentive could encourage existing producers such as Valero, and plants owned by Phillips 66 and Marathon in California that are undergoing conversion, to shift yields toward SAF. Major oil firms could also enter the fray, following the path forged by Finland’s Neste 20 years ago to convert petroleum refineries into renewable fuels plants.

Airlines for America (A4A) threw their support behind the 3 billion gallon interim goal, which exceeds their earlier target for 2 billion gallons when they announced their net-zero pledge in late March. "We are proud of our record on climate change, but we know the climate change challenge has only continued to intensify. Accordingly, A4A member carriers have embraced the need to take even bolder, more significant steps to address the climate crisis,” Airlines for America President and CEO Nicholas E. Calio said at a White House roundtable on sustainable aviation last Thursday.

United Airlines announced a deal last week that could jumpstart the scaling up process. Its venture capital fund United Airlines Ventures has teamed up with Honeywell in a multimillion-dollar investment in start-up firm Alder Fuels that entails a purchase agreement for 1.5 billion gallons over 20 years. The carrier says that is 1.5 times the SAF supplies under known purchase commitments for the entire global airline industry.

Alder is bypassing feedstock constraints with a new technology to produce low-carbon replacement crude oil from biomass such as forestry residues and crop waste. Honeywell’s proprietary technology would produce what they say is a carbon-negative SAF that meets current specifications. To speed up commercialization, Alder’s replacement crude could potentially be used in conventional refineries as co-processing feedstock.

Plans announced so far by SAF producers to scale up output are about halfway to the 2030 goal. LanzaJet aims to produce 1 billion gallons by then from ethanol derived from waste sources using its alcohol-to-jet (ATJ) process; World Energy is on track for 150 million gallons by 2024 from fats, oils and greases via hydroprocessing; Gevo is projecting 45 million gallons by 2025 from crop residue to ethanol via ATJ technology; Fulcrum is planning for 33 million gallons by 2022 from municipal solid waste using the Fischer-Tropsch (FT) process, while Velocys is projecting 300 million gallons of blended SAF using waste woody biomass and FT processing.

The SAF challenge covers all aspects of the development process. It involves Department of Agriculture support for farmers to grow appropriate biomass feedstock. The EPA and Federal Aviation Administration will collaborate to accelerate the approval process for new fuels that can generate renewable identification numbers under the Renewable Fuels Standard. The Department of Energy (DOE) will provide up to $3 billion in loan guarantees. Alongside SAF development, DOE and NASA will step up research and development efforts to achieve fuel efficiency improvements of at least 30% for aircraft engines.

As one aviation specialist tells Energy Intelligence, “The Biden plan includes all the necessary incentives to scale up SAF output and potentially bring traditional oil companies into that space. That would be the real game changer.”

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