Sustainable aviation fuel's turbulent future under Trump

Published: 2025-03-07 05:02:06 ET CVI

The return of Donald Trump to the U.S. presidency has created uncertainty for the sustainable development of aviation and airports in America. The aviation industry's ambitious target to achieve net zero by 2050, crucially relies on the development of sustainable aviation fuel (SAF) production.

In 2022, then President Joe Biden passed the Inflation Reduction Act. It included a tax credit for SAF production, of $1.25 for each gallon from a qualified mixture[1]. Almost $300 million in investment towards SAF and technologies, and the establishment of the Sustainable Aviation Fuel Grand Challenge which aimed to scale up SAF production to reduce greenhouse gas (GHG) emissions by at least 50%; produce three billion gallons of SAF by 2030; and support 100% of domestic aviation fuel demand by 2050.

Under the Biden Administration (2021-2025) SAF took off. SAF production grew from 2021 of five million gallons to 93 million gallons in the first three-quarters of 2024. More than 750,000 metric tons of CO2 equivalent to domestic GHG emission reductions occurred in 2024, compared to 50,000 in 2021.[2]

It is projected that SAF would continue to grow and become imperative in lowering aviation emissions in America, however, under Trump sweeping changes are already affecting production. On the first day of Trump's second term, he froze Biden's Inflation Reduction Act, and signed the executive order Unleashing American Dominance, a less inclusive order for sustainable initiatives.

As of February 2025, CVR Energy Inc. announced that it has halted SAF production as it waits on government clarification on whether tax credits will continue. Though, on the other hand, the new administration approved a SAF refinery loan in Montana[3].

It seems SAF is entering a turbulent future, with many questions arising from the uncertainty that currently clouds it around achieving net zero.

Will the Trump administration stall SAF, or could it propel it to new heights?

What is SAF and why is it important?

Concisely, SAF is a fuel that can be produced from non-petroleum-based renewable feedstocks, including, but not limited to; the food and yard waste portion of municipal solid waste, woody biomass, fats/greases/oils, and other feedstocks. SAF can be blended at different levels with limits between 10% and 50%, depending on the feedstock and how the fuel is produced.[4]

The freeze on regulatory development is seen as a significant setback for the SAF industry.”

The benefits of SAF reveal how fundamental its production is for achieving net zero. The aviation industry accounts for 2.5% of global Co2 emissions, but it has contributed around 4% to global warming to date[5]. With SAF, however, it has the potential to lower flight emissions by 80%, compared to conventional jet fuel. It is also a drop-in fuel, meaning there is no need for modifying aircraft or constructing new fuelling stations. SAF produces fewer harmful pollutants and contains lower levels of sulphur and aromatic components, allowing aircraft engines to burn more cleanly and generate less pollution compared to conventional fuels.

Critical role of the 45Z Tax Credit

Fayaz Hussain, Editor of SAF Investor, stresses the importance of Biden's 45Z tax credit, stating: "45Z is critical to development of SAF and includes incentives that have the potential to make or break projects as SAF is currently significantly more expensive compared to kerosene. Without the 45Z incentives, developers will have difficulty in selling SAF at high prices." With the tax credit in limbo under the new administration, developers are hesitant to move forward with projects, as seen with CVR Energy.

The freeze on regulatory development is seen as a significant setback for the SAF industry. With SAF producers needing both federal and state-level incentives to bridge the price gap between SAF and traditional jet fuel, the future of the industry now hinges on how these incentives are shaped moving forward.

State-level incentives

Despite the federal uncertainty, state-level incentives have played a key role in keeping the SAF industry afloat. Washington, Illinois, and Minnesota, among other states, have implemented policies designed to encourage SAF production. Hussain highlights the importance of both state and federal incentives in creating an "incentive stack" that is necessary to scale up SAF production. He explains: "Federal and state-level incentives are key to achieving the desired incentive stack to scale SAF. At the moment, SAF producers need both incentives to have the desired stack to plug the massive gaps between kerosene and SAF prices."

As countries like the UK and EU implement clear mandates and aggressive policies for SAF, the U.S. risks falling behind unless it solidifies its commitment to SAF production and development.”

These state-level policies are crucial in sustaining the momentum in SAF production, especially in the face of federal regulatory freezes and uncertainty. However, the real challenge lies in ensuring that the incentives at both the federal and state levels are aligned to achieve the scale needed to meet the aviation sector's future fuel demands.

Can the U.S. still achieve its target of three billion gallons by 2030?

The Biden Administration set an ambitious goal of producing three billion gallons of SAF by 2030, a target that now faces the possibility of being derailed. Despite the recent setbacks, there is still hope that the target can be met, as the U.S. has already announced a SAF production pipeline expected to yield between 2.6 billion and 4.9 billion gallons by 2030. However, as Hussain points out, the uncertainty surrounding incentives could alter this forecast. "Any uncertainty around the incentives has the potential to change this forecast," he says. The recent pause by CVR Energy is just one example of how political instability can disrupt the growth of the industry.

It's clear that without a supportive policy, the U.S. may face challenges in meeting its production targets for SAF. The polarised politics only exacerbates the uncertainty, leaving industry stakeholders with more questions than answers about the long-term outlook for SAF.

Could Trump propel SAF with corn-based Ethanol?

One area that Trump could benefit SAF is the potential for corn-based Ethanol to become a dominant feedstock. Given Trump's focus on rural economic priorities (states/areas that typically vote Republican), there is speculation that corn-based ethanol could play a more significant role in SAF production. However, this pathway faces significant challenges. According to Hussain, "SAF produced from corn-to-Ethanol (alcohol-to-jet) pathway is significantly more expensive than that produced via HEFA [Hydroprocessed Esters and Fatty Acids] pathway. Although it is a viable pathway, the carbon intensity of corn-based Ethanol in the U.S. will have to come down before it can scale to the level needed to deliver volumes."

Could the U.S fall behind the rest of the world?

The global SAF landscape is divided into two main approaches: the "stick" approach, used by the UK and the EU, which mandates SAF production with civil penalties in place for those who don’t comply, and the "carrot" approach employed by the U.S., which focuses on incentives to stimulate growth. Hussain is concerned that the U.S. could lose its competitive edge if it fails to stabilise its policies. "The current U.S. Administration has yet to issue its stance on goals for the SAF industry during its term. This will ultimately determine whether the U.S. will emerge as a leader in SAF production or lose ground to other countries."

As countries like the UK and EU implement clear mandates and aggressive policies for SAF, the U.S. risks falling behind unless it solidifies its commitment to SAF production and development.

Conclusion

The future of SAF production in the U.S. hangs in the balance, caught between political uncertainty, regulatory freezes, and the critical need for incentives. The 45Z tax credit remains a cornerstone, and without it, SAF projects will stall. At the same time, state-level incentives provide some relief, but the need for a co-ordinated federal policy remains critical. As the Trump administration’s freeze on key regulations and incentives continues, and regressive policies for sustainability are implemented, it seems likely that SAF production will experience major setbacks, making it increasingly difficult for the aviation industry to meet its ambitious goals. Without stable and supportive federal policies, the U.S. may fall short of its target of three billion gallons by 2030, stalling progress towards net zero emissions in aviation. The uncertainty surrounding the future of SAF production under the Trump administration could ultimately delay or even derail efforts to significantly reduce aviation emissions, putting the aviation industry’s 2050 net-zero goal at risk.

Refrences

[1] Sustainable aviation fuel credit | Internal Revenue Service

[2] Sustainable Aviation Fuel Grand Challenge: October 2021 – September 2024 Progress Report

[3] https://www.reuters.com/sustainability/trump-administration-approves-sustainable-aviation-fuel-refinery-loan-2025-02-11/

[4] https://afdc.energy.gov/fuels/sustainable-aviation-fuel#:~:text=and%20production%20technologies.-,Production,%2Foils%2C%20and%20other%20feedstocks.

[5] https://ourworldindata.org/global-aviation-emissions