Future of SAF sector in USA uncertain under Trump

Despite a recent rapid growth in domestic SAF production, driven in part by incentives introduced by the previous Biden administration, sources in the industry were concerned about the sector’s future following Trump’s 20 January inauguration, the 16 February report said.

According to Adam Schubert, senior associate for the transportation fuels consulting firm Stillwater Associates, early moves by the Trump administration indicated it was less likely the USA would produce 3bn gallons (11.3bn litres)/year of SAF by 2030, to account for 10% of US aviation fuel consumption – a Biden administration target.

Airlines also had set SAF targets, with the International Air Transport Association (IATA) estimating that SAF would be responsible for 65% of emissions reductions required for the industry to achieve its goal of net-zero emissions by 2050, a goal also adopted by the United Nations aviation arm.

According to Environmental Protection Agency (EPA) figures, US facilities produced 38.7M gallons (146M litres) of SAF in 2024, compared to 14M gallons (52.9M litres) the previous year and 7.9M gallons (29.9M litres) in 2022.

SAF production capacity in the USA will total almost 800M gallons (3bn litres) this year due to recent and upcoming launches by Phillips 66 and Valero and increased output by specialised renewable energy producers, according to an estimate jointly produced by the US Department of Agriculture (USDA) and the University of Illinois.

One of the major drivers of recent production increases was a programme introduced as part of the Inflation Reduction Act (IRA) which provided tax credits of between US$1.25-US$1.75/gallon – depending on the emissions reductions offered by the specific fuel – to SAF purchasers, Travel Weekly wrote.

The credits were key to promoting demand for SAF, which costs around US$2/gallon more than conventional jet fuel, according to Schubert, citing figures from the energy industry data provider OPIS.

However, the tax credit programme expired at the end of 2024 and was set to be replaced by a new scheme providing sliding tax credits directly to producers from 1¢ to US$1.75/gallon until 2027.

Although the Biden administration published guidance for its implementation on 10 January, the Trump administration would have the responsibility of finalising the regulations and initiating the tax credits, the report said.

At the time of the report, the process was on hold in accord with a 60-day freeze on all regulatory development put in place by the president via an Inauguration Day executive order.

Although such freezes have become routine during recent transitions to give the new administration time to get up to speed, Trump’s hostility to climate initiatives was raising concerns about how long the administration will take to complete the regulatory rulemaking, or even whether it will implement the tax credit programme, according to the report.

“It’s going to be completely unpredictable,” Fayaz Hussain, editor of the trade publication SAF Investor, was quoted as saying.

The uncertainty has the potential to slow SAF production, according to Hussain and Schubert, as the tax credits are key to spurring purchase demand from airlines.

Despite industry concerns, some sources in the sector have said the Trump administration’s priorities would be beneficial to the industry.

According to Alison Graab, executive director of the SAF Coalition, whose members include producers, airlines and others in the SAF value chain, SAF can help the Trump administration’s plans for “American energy dominance”.

“Helping rural communities create jobs, creating new agricultural markets … ties into the new administration’s goals,” she was quoted as saying.

Scott Lewis, a division president for World Energy, which this year expects to produce 30M gallons (113M litres) of SAF at its Paramount refinery in California, said he was confident the new tax credit programme would go forward.

“What we want to see first and foremost is continuity,” he added.