Clearing the Skies

The flight toward SAF.

The aviation industry stands at a pivotal juncture: It’s trying to balance growth in passenger traffic and cargo volumes with pressure to decarbonize. According to U.S. DOE, global aviation accounts for 2 percent of CO2 emissions and 12 percent of all CO2 emissions from transportation. The International Air Transport Association has set a goal of net-zero carbon emissions by 2050.

Sustainable aviation fuel (SAF) is poised to play a critical role. As a drop-in replacement for conventional Jet A fuel made from nonpetroleum-based renewable feedstocks such as used cooking oil (UCO), animal fats and woody biomass, SAF works in existing jet engines and airport-fueling infrastructure and could reduce greenhouse-gas (GHG) emissions by up to 80 percent.

The first SAF test flight occurred in 2008. Since then, over 50 airlines around the world have collectively operated over 500,000 commercial flights with SAF blends.

Production

The U.S. burned approximately 18 billion gallons of jet fuel in 2024, with SAF accounting for roughly 112 million gallons, or less than 0.1 percent. SAF usage in the U.S. has increased from around 5 million gallons in 2021 to 16 million gallons in 2022 and 25 million gallons in 2023.

In early 2024, U.S. SAF production capacity was limited to approximately 30 million gallons per year (mgy), with just two plants capable of producing SAF—World Energy in California and Montana Renewables in Great Falls. By late 2024, two renewable diesel plants capable of producing SAF came online—Phillips 66 in Rodeo, California, and Diamond Green Diesel in Port Arthur, Texas. In 2025, new SAF facilities that have either commenced or are launching include New Rise Renewables in Reno, Nevada; Par Pacific in Oahu, Hawaii; and LanzaJet in Soperton, Georgia.

Global SAF production capacity is approximately 1.4 billion gallons, a fraction of jet-fuel demand. IATA projects SAF will account for 0.7 percent of total jet fuel in 2025, an increase from 0.3 percent in 2024. Neste is the world’s largest SAF producer with 515 mgy of production capacity, which is expected to grow to 750 mgy in 2027.

Technology

There are currently 11 ASTM-approved methods to produce SAF, for use in blends of up to 50 percent with conventional Jet A fuel. These technologies allow feedstock flexibility while making the end product chemically identical to fossil jet fuel.

Hydroprocessed esters and fatty acids (HEFA) is the most commercially developed and widely used pathway, representing approximately 80 percent of global SAF volumes, due largely to its adaptability to existing refineries and pipelines. HEFA producers convert waste feedstocks, including UCO, animal fats and certain vegetable oils into SAF or renewable diesel. The availability of waste feedstocks, however, is inherently limited, necessitating the scale-up and commercialization of other SAF technologies.

Another SAF technology that has attracted investment is the alcohol-to-jet (ATJ) pathway. Ethanol is an abundant feedstock as U.S. production alone exceeds 16 billion gallons per year. It is produced from various sources including corn, sugarcane and cellulosic biomass. Several companies are actively developing and commercializing ATJ, including LanzaJet, which recently announced the world’s first production of SAF using ethanol feedstock at its commercial-scale plant in Georgia. Separately, Gevo is targeting final-investment decision in mid-2026 on its planned ATJ facility in North Dakota, to be co-located alongside its ethanol plant and carbon-capture and sequestration assets acquired in February 2025.

Economics, Policy Support

SAF is pricier than conventional Jet A fuel—often two to five times more—due to its limited availability, capital-intensive technology and higher feedstock costs. This presents a significant challenge for airlines that operate on tight profit margins and seek costs comparable to fossil Jet A. Therefore, steadfast government support and durable economic incentives are needed to accelerate SAF development.

Across major markets, policymakers are deploying a combination of subsidies and mandates. In the U.S., SAF demand is shaped by a combination of federal policies, state programs and tax credits incentivizing its use ranging from the Renewable Fuel Standard, low-carbon fuel standards (LCFS) in states like California, and federal incentives like the section 45Z tax credit, which was extended to 2029 in the “big, beautiful bill” and whose value was reduced from $1.75 to $1 per gallon for SAF to be at parity with other clean transportation fuels.

In Europe, binding blending mandates drive SAF demand. Under new EU and U.K. rules, airlines face escalating mandates to use SAF on flights departing from European airports. The ReFuelEU SAF mandate starts with a 2 percent minimum blend in 2025, rising to 6 percent by 2030 and eventually reaching 70 percent by 2050. The mandated SAF demand in the EU and U.K. is expected to grow from 400 million gallons in 2025 to approximately 1.3 billion gallons in 2030.

Conclusion

Airlines need SAF to make jet travel business sustainable. According to IATA, airlines will require approximately 165 billion gallons of SAF annually by 2050 to achieve net-zero emissions. The SAF industry has entered a critical phase. Commercialization and scale-up require capital investment, policy support and improved supply chains and production capacity. The future of aviation is green, but it will take collective action to get there. 

Author: Eric Ouyang

Managing Director

Ocean Park

310-670-7910

eouyang@oceanpk.com