Clean jet fuel could take off with new climate law

Executive Editor

The U.S. government is for the first time in history singling out and subsidizing cleaner aviation fuel.

Such a move is poised to help clean up one of the most high-profile ways our society contributes to climate change—and one of the most difficult given the sheer dynamics required to keep planes in the sky.

With nearly $370 billion flowing from the federal spigots, the Inflation Reduction Act signed into law last month supercharges existing tax credits and gives first-ever subsidies to a range of technologies considered essential in helping the U.S. reach net-zero emissions by 2050.

Included in that first-ever bucket is sustainable aviation fuel (SAF). SAF embodies not one thing but a range of liquid fuels produced from various raw materials through different technologies.The fuel is capable of directly replacing or mixing with traditional fossil-fuel-based jet fuel.

Aviation accounts for about 2.5% of global carbon emissions, but its impact could be more than 1.5 times that figure given the warming effect of contrails (those innocuous-looking white cloud lines that form at the end of planes), according to 2021 scientific research.

The tax credit applies for about half as long as earlier proposals, but it’s nonetheless notable because SAF didn’t get any support from the infrastructure law passed last year, which poured more than $100 billion into a range of other climate technologies.

“The biggest stumbling block is economics,” said Graham Noyes, executive director of the Low Carbon Fuels Coalition, a group representing a broad cross-section of companies that are somehow involved in the pursuit of low-carbon fuels, including SAF.

“Even though it’s not the 10 years we would have liked to have seen, having five years of the credit will be an enormous boost,” Noyes told Cipher. “It will allow the industry to begin to scale up and deploy new feedstocks and technologies at scale.”

Indeed, like many clean energy technologies, the core challenge for SAF is that it’s simply too expensive compared to its dirtier, fossil fuel counterpart.

The new subsidy may reduce costs for SAF to a point where it would be roughly equal to fossil fuel jet prices, though a wide range exists depending on costs of technology, production and other variables, according to the Rhodium Group, a research firm. (See chart below).

Source: Rhodium Group • SAF cost estimates reflect two types of SAF using particular processes and feedstocks, including used cooking and vegetable oil and ethanol. Prices are wholesale.

The new subsidy marks a high point in a tumultuous period for the aviation industry as the COVID-19 pandemic swung it from one extreme (no passengers) to another (lots of passengers and not enough workers).

Before the pandemic, the conventional wisdom for how airlines would reduce their emissions was largely through carbon offsets—nebulous financial transactions that ostensibly help cancel out carbon emissions by preventing emissions elsewhere in the world, like planting trees or supporting renewable energy.

Since then, offsets have faced growing scrutiny for their authenticity and effectiveness. Meanwhile, airlines have increasingly embraced more technologically minded solutions, led by SAF but also including battery-electric and hydrogen power.

The first test flight with biofuels mixed with traditional fossil jet fuel was in 2008. United became the first airline in 2016 to introduce SAF into its normal business operations, according to the International Air Transport Association (IATA), which represents nearly 300 airlines in 120 countries. Since then, most major airlines have made commitments to SAF.

Battery-electric and hydrogen-based fuel promise more aggressive emissions reductions but face big technical hurdles. Thus, they are unlikely to satisfy fuel demand for long-haul flights, at least not any time in the next few decades.

Precisely because SAF can be dropped into existing engines and mixed with fossil-based jet fuel, airlines are focusing on it as a central solution.

Airlines estimate they will likely depend on SAF for 65% of their emissions reductions toward a net-zero goal in 2050, according to a climate strategy IATA released in October 2021. That’s compared to 13% with new electric and hydrogen technologies. Carbon offsets, which are estimated to make up a whopping 97% of the industry’s emissions reductions through at least 2025, are set to decline to just 8% by 2050.

Source: International Air Transport Association • Carbon capture category includes direct air capture technology. It also encompasses capturing carbon to make into SAF and as an offset mechanism.

The required scale is massive. Despite numerous airlines committing to use SAF, it’s currently supplying just a drop in the bucket: less than 0.1% of global jet fuel consumption, according to the International Energy Agency.

Equally important is the fact that SAF’s climate potential can be hard to pin down.

“SAF is not one thing,” said Julio Friedmann, chief scientist at Carbon Direct, a carbon management firm. “SAF is a half-dozen pathways that produce sustainable fuels of different quality and carbon intensity.”

The overall emissions profile of different types of SAF can vary significantly—but the current average may be as high as 70% reduction over jet fuel, according to IATA.

Biofuels produce SAF from a range of biological materials, including used cooking oil (like the kind used to cook fries), corn ethanol (the type caught up in a yearslong debate about its environmental footprint) and even municipal solid waste.

The problem with most biofuels—especially those with the cleanest feedstocks available today, like used cooking oils—is that they’re limited, and demand for aviation fuel is massive, creating limitations to bringing down the costs, Friedmann says.

That’s where the promise of other technologies come in. Early efforts are underway to produce SAF from materials other than biofuels, including carbon capture, direct air capture and hydrogen produced from renewable electricity.

The costs for these types of SAF are higher than SAF from biofuels, but the potential is greater for their costs to come down because they’re not limited by potentially constrained feedstocks.

This is especially the case considering generous federal support the Inflation Reduction Act (along with the infrastructure law) gives to these types of tech through multiple tax credits.

Andrew Chen, an expert on sustainable aviation at the nonprofit RMI, says the focus in the short term must be on scaling up biofuels-based SAF and shifting at least some biofuels currently going to road transport to aviation.

In the longer run, though, given the limitations with sustainable feedstocks for biofuels, the final destination needs to be other types of SAF and technology.

“We need to start supporting and getting the advanced fuel products in the pipeline as well,” Chen told Cipher. “You run out of new sources of biomaterial eventually.”