US production of sustainable aviation fuel (SAF) is behind the 11.35bn litres (3bn gallons)/year by 2030 target set by US President Joe Biden, according to analysts quoted in a report by Reuters.
The target set by Biden in 2021 in 2021 is a steep jump from the current 59.8M litres (15.9M gallons)/year reported by US government data and US SAF production would only total 7.9bn litres (2.1bn gallons)/year by 2030, according to estimates by S&P Global Commodity Insights, based on upcoming projects.
“A lot of additional investment [is] needed to hit that [11.35bn litres/year] target,” Wood Mackenzie analyst Gordon McManus was quoted as saying in the 1 November report.
A lot of the focus is on SAF as battery technologies and hydrogen are not expected to contribute substantially to reducing aviation emissions until after 2050, according to the US Energy Department.
The goals were for domestic production and not consumption, S&P Global Commodity Insights’ Corey Lavinsky said.
“As things stand now, an airline may choose not to use SAF because it believes it’s too expensive compared to traditional jet fuel. Mandating the use of SAF would eliminate that option,” Lavinsky added.
According to data from commodities and energy pricing agency Argus Media, US jet fuel prices were around US$2.85/gallon at the time of the report while SAF prices were around US$6.69/gallon.
Although leading airlines, including Delta Air Lines and Southwest Airlines, had said they would like to replace 10% of jet fuel with SAF by 2030, SAF currently made up only 0.1% of the total US jet fuel pool, Reuters wrote.
Rising costs and supply issues were among the biggest challenges and the industry needed more support to reach the goal of net zero emissions by 2050, according to a survey commissioned by GE Aerospace ahead of the Paris Airshow in June.
SAF producers in the USA are currently eligible for a tax credit of up to US$1.75/gallon under the Inflation Reduction Act (IRA), but this might not be enough to offset poor margins, according to analysts.
“At the moment, it’s maybe a hard decision for producers to put additional capital in to produce SAF rather than renewable diesel,” Wood Mackenzie’s McManus said.
Project costs for SAF also remained high as additional processing was required to produce it and supply of feedstocks such as used cooking oil was tight, Reuters wrote.
