3 Things that Need to Happen for Sustainable Aviation Fuel to Take Off

By Lloyd Ritter, Esq., Director, Green Capitol LLC

Special to The Digest

A timely new report came out recently on sustainable aviation fuel (SAF), “Ready for Takeoff: Aviation Biofuels Past, Present, and Future,” written by the Atlantic Council (herein AC).  The key takeaways are three-fold.

First, aviation emissions are one of the most recognizable sources of pollution.  All of us have seen contrails at one time or another and we recognize that something is going on.  We frequently don’t stop and think about the greenhouse gases being spewed out, or the particualtes, NOx and SOx that come with it.    Intuitively we all know that battery powered passenger aircraft likely won’t happen anytime in the foreseeable future.   While airline travel has been knocked down due to the corona virus pandemic, it will increase over time and recover.  With the recovery come greenhouse gases and other pollution.  It is not going away, and in fact is expected to grow.

Second, sustainable aviation fuels are going to be essential to address de-carbonizing the economy.  They have reduced particulates, nitrogen, sulfer and critical greenhouse gases. Since electrification is decades away for commercial aircraft, and although energy efficiency is possible, it cannot make the required impact alone.  Sustainable biofuels for this sector are a must. The International Civil Aviation Organization (ICAO) forecasts that we need at least 170 new SAF production facilities per year from 2020 to 2050; some other estimates go substantially higher than that.  SAF delivers real environmental and public health benefits.  That should be worth something.  SAF solves problems that a lot of consumers care about.

Third, public policy in the U.S. (and numerous other places around the world)  to help the transition to SAF is simply not where it needs to be.  We need aggressive actions to turn things around.  The menu of policy options is long, and they aren’t mutually exclusive.  Gevo, one of many budding SAF producers, based in Colorado with a footprint in Minnesota and Texas, put out a policy ideas list shortly before the AC report on SAF policy options that largely mirror the Atlantic Council’s.

Bottom line, numerous policies could be improved upon and/or enacted to attract the capital needed to bolster SAF production, create demand, and so on.  Here are just 3 that Gevo and/or the AC report recommends for strong consideration:

1. Expand existing programs/authorities at the Departments of Energy and Agriculture to quickly incent capital investment in SAF facilities and production through cash grants. This is something that is needed, ASAP, and both agencies have tremendous expertise in cost-sharing financing programs.  Thus, a SAF producer grant program ought to be in place, with real dollars, as a rural economic, jobs, and sustainable markets initiative via a future stimulus and/or infrastructure package.  The program should be up and running very quickly, within months, and make awards in a record or near-record time.  Airlines, once out of the red, are expected to enter into SAF off-take agreements, as several have done already. This would be a win for all:

• • • Producers could get steel in the ground much quicker;
    • Airlines could receive much needed SAF sooner;
    • Communities could see new or returned jobs (for example, idled biofuels plants could be beneficiaries by retrofitting their plants for SAF);
    • The public benefits from GHG emissions reductions, cleaner air and sustainable mobility;
    • The U.S. could lead the world in SAF production as well, utilizing diversified feedstocks and technologies.

2. Improve tax policy. There are numerous ways this could be done.  For example, the existing biojet tax credit could expand and be extended for a period of years.  The current credit is considered too low to make up for the cost differential between fossil-based jet and SAF.  The credit also is subject, as are many other credits, to a “boom and bust” cycle due to lapses, and/or short-term extensions. This must be fixed as well.  There could also be a one-time Federal Investment Tax Credit (ITC) or performance credit for new SAF facilities.
3. Have the Federal government lead the way for SAF demand. There are numerous Federal sustainability and “eco-friendly” purchasing preferences or requirements already on the books making a difference (examples include those for energy efficiency, recycling, alternative fuels, industrial bio-based products…). There should be one specifically for the U.S. government – the nation’s largest consumer – to buy SAF for its air fleet – military and civilian.

These are the kinds of common sense and cost-effective policies that should be put in place.  Certainly, SAF producer grants would be easy enough to include in forthcoming bi-partisan legislation this year, with additional measures in tandem or soon after.  The grants could even be temporary, so too could the tax credits, as long as they are robust enough in terms of Federal investment and time.

The real question is not whether this makes lots of sense but whether Congress will act and when.

Lloyd Ritter, Esq., runs Green Capitol LLC, a boutique “green” policy consultancy in Washington DC.