Sustainable Aviation Fuel Future Foggy

OMAHA (DTN) -- The race to produce sustainable aviation fuel may be the next gold rush in biofuels.

Airlines from across the world have been lining up to sign offtake agreements with companies planning to build plants to produce SAF -- and at a blistering pace -- even before many companies have yet to produce a drop.

The airline industry as a whole has pledged to reach net-zero emissions by 2050.

The list of airlines and SAF production companies matching up is exhaustive.

Alaska Airlines, American Airlines, Atlas Air, Delta, FedEx, Hawaiian Airlines, JetBlue, Southwest, United, UPS and Air Canada have all pledged to cut emissions.

United, for example, created a $100 million SAF investment fund and has offtake agreements with World Energy, Fulcrum, Blue Blade Energy, Neste and Alder Fuels.

Though the investments in SAF production and commitments by airlines may be impressive, SAF production as a whole will need to at least double year over year for the next 27 years to achieve net zero in the airline industry.

ETHANOL'S SAF ROLE

So, it's no wonder the airlines are turning to the corn-ethanol industry for help.

Corn is seen as a viable feedstock to produce SAF, meaning ethanol producers across the country could play a significant role in expanding overall SAF production.

The Commercial Aviation Alternative Fuels Initiative forecasts SAF production through 2028, based on technology used and public reports.

By the end of fiscal year 2023, 55 million gallons of SAF are expected to be produced. That number grows exponentially to 400 million gallons in 2024, 995 million gallons in 2025, 1.415 billion gallons in 2026, 1.629 billion in 2027 and 1.789 billion in 2028.

The U.S. government's SAF grand challenge calls for 35 billion gallons of production by 2050 in the U.S. alone.

According to the SAF Grand Challenge roadmap, https://www.energy.gov/…, the U.S. corn-ethanol industry could produce about 9.4 billion gallons of SAF from existing plants using the same amount of corn the industry uses today.

As SAF production expands, the U.S. has been relying on feedstock imports to grow that production.

According to S&P Global, total imports of canola oil, palm oil, yellow grease and tallow have grown from around 800 million pounds in January 2022 to about 1.3 billion pounds in March 2023.

AIRLINES' PATH UNCLEAR

Steve Csonka, executive director of the initiative, said during a recent panel discussion at the Fuel Ethanol Workshop in Omaha that it is unclear how or if SAF production can continue to grow to eventually replace all fossil-based fuel by 2050.

Csonka said the airline industry feels confident it can achieve 3 billion gallons of SAF production and use by 2030.

Beyond that, he said, it gets more difficult to see a way forward.

"The good news is that for these facilities identified, they will be responsible for producing 1.8 billion, so not a bad start -- got a couple of years -- three years basically after this to add another 1.1 billion more," Csonka said.

Perhaps overall SAF production will explode as new production companies continue to emerge, he said.

"Some of these entities have been working in the background for five years, and they're actually ready to start their commercialization activity," Csonka said.

"So, I remain extremely encouraged with respect to the 3-billion goal and 2030. After that, it gets really hard. It gets hard because in these first years, that 1.8 billion gallons, about 70-plus percent of that comes from fats, oils and greases. The rest is coming from alcohol conversions, municipal solid waste, probably some pyrolysis stuff comes into play, but we need to unlock significant regions of feedstock viability as well as technology in order to achieve that 2050 goal."

When the Renewable Fuels Association committed in 2021 to achieving net-zero emissions in the industry by 2050, Csonka said it opened the door for the airline industry to pursue ethanol producers as a viable option for SAF production.

"This was critical that RFA came out and said, 'Hey, we as an industry are going to try to drive ethanol production to net-zero carbon also,'" he said.

"What that means for us is that it opens the door for using ethanol as a feedstock with this kind of sustainability associated with it and allows us to achieve carbon indexes from final fuel production that qualify for policy support that's available here in the U.S."

PRICE DISPARITIES

Csonka said airlines will continue to deal with a price disparity between SAF and regular aviation fuel. Keeping the costs reasonable for airlines while expanding production is one challenge the industry faces, he said.

Even after credits through the low-carbon fuel standard in California, a federal blender's tax credit and income from D4 renewable identification numbers in the Renewable Fuel Standard, S&P said the average daily price of SAF is about $4.25 a gallon.

Kerosene-based aviation fuel, by contrast, has been priced between $2.15 and $2.30 per gallon in recent months.

Renewable energy enthusiasts point to other technologies eventually helping airline companies achieve their emissions goals.

Csonka said electrification of modestly sized airplanes is underway, including civil-aviation vehicles and commuter planes.

"Nice progress has been made there no question," he said. "But, look, the amount of carbon that segment produces is less than 1% today. So, the bottom line is the technology needed for larger aircraft electrification, or the use of hydrogen is not viable for decades without major paradigm changes.

"But across the industry, this is the approach that we're all looking at -- SAP hydrogen-powered aircraft might come into play at some point in the future. That does not appear to be anytime in the near future. Electrification may also, but guess what, they're not going to touch the most significant contributor of greenhouse gases which is that large aircraft segment until the 2050 timeframe.

"This is why the industry is all in on SAF because we don't have any other viable approaches to reduce our greenhouse-gas footprint."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

(c) Copyright 2023 DTN, LLC. All rights reserved.