Fueling net-zero aviation: why SAFs need better policy support to take off

At a glance

Alternative Fuels for Reducing the Contribution of Aviation to Climate Change, by Nafisa Lohawala, Michael Toman, and Emily Joiner. Resources for the Future (RFF), Nov. 19, 2024.

This report from U.S.-based nonprofit Resources for the Future highlights that sustainable aviation fuels (SAFs) are crucial for decarbonizing aviation, but face considerable adoption and production challenges that threaten net-zero targets. Aviation currently contributes approximately four per cent of anthropogenic global warming, and emissions will rise without a change in fuels. The authors suggest that government support for improving SAF production technologies and policies that directly incentivize SAF adoption are vital. They argue that the clearest path to net-zero aviation emissions combines SAF adoption with measures like fleet renewal and operational improvements.

SAFs have a much lower life-cycle CO2 footprint than conventional jet fuels. They can blend up to 50 per cent with fossil-based fuels and are compatible with existing aircraft without engine modifications. A recent transatlantic flight by a Gulfstream G600 business jet using 100 per cent SAF demonstrates their feasibility. There are different types of SAFs with varying emissions reduction potential. Some SAFs reduce life-cycle emissions by up to 94 per cent. Others can also mitigate contrail formation and particulate matter emissions, although these secondary benefits are less studied.

The biggest issue is that SAF production represents less than one per cent of global jet fuel demand, largely due to high cost and limited feedstock availability. For example, the limited availability of waste feedstocks inherently restricts the production of SAFs from waste. The authors argue that policymakers can resolve this with legislation. They propose a National Low-Carbon Aviation Fuel Standard (LCAFS) to drive technical innovation and expand SAF use in the U.S. The authors raise important questions about international collaboration and efficient resource allocation, such as green hydrogen, to maximize emissions reductions across sectors. The report also briefly touches on the need for changes in behaviour, such as reduced flying, to lower carbon footprints.

Key findings

• Aviation contributes approximately four per cent of global warming: It requires urgent decarbonization to reduce both CO2 and non-CO2 emissions, such as contrails and nitrogen oxides.
• Lower life-cycle emissions: Compared to conventional jet fuels, SAFs can be almost twice as clean. They can reduce life-cycle greenhouse gas emissions by up to 94 per cent. Some types also decrease contrail formation by up to 70 per cent.
• Production limitations: Despite enormous potential, SAFs represent less than one per cent of total jet fuel consumption. Global SAF production hit 600 million litres in 2023. The administration of U.S. President Joe Biden set a goal to produce 35 billion gallons (132 billion litres) annually by 2050 but Donald Trump’s incoming administration could change that.
• High production costs for SAFs hinder scalability: This is driven by expensive feedstocks and infrastructure needs. Emerging technologies like power-to-liquid SAFs offer promising low-carbon alternatives but are held back by the need for specialized equipment and the current cost of renewable electricity.
• Current policies unintentionally favour renewable diesel over SAFs: The U.S.’s Renewable Fuel Standard (RFS) makes renewable diesel a more attractive option for fuel producers. This limits SAF growth due to competition for feedstocks.
• Some national SAF blending mandates are increasing: The EU, the U.K. and Japan have set SAF mandates. The former targets two per cent by 2025 and 70 per cent by 2050 but challenges around competition for feedstocks and inconsistent regulatory standards remain.

Take a look

Bigger picture

Aviation is one of the hardest sectors to decarbonize and jet fuel consumption is forecast to increase by two to three per cent annually through 2050. The International Civil Aviation Organization (ICAO) has set a goal of reducing carbon dioxide emissions from international aviation by five per cent by 2030 and net-zero carbon emissions by 2050. Increasing the adoption and production of SAFs is fundamental as they could contribute 24 to 70 per cent of the carbon dioxide emissions reductions needed to meet 2050 aviation targets. SAFs are drop-in fuels — functionally equivalent substitutes to fossil fuels that don’t require modifications to existing aircraft. Combined with measures like engine technology improvements, fuel-efficient flying, and reduced air travel, SAFs could immediately cut aviation emissions by up to 94 per cent. This makes them a more practical solution than alternative propulsion technologies like hydrogen and battery power, which face significant range, cost, and infrastructure challenges.

Nevertheless, the report highlights that SAF production remains far below the levels needed to meet the targeted demand for net-zero international aviation carbon emissions by 2050. Although global output doubled between 2022 and 2023, U.S. production in 2022 was just 15.8 million gallons (59.8 million litres) – well short of targets to use one billion gallons (3.8 billion litres) of SAFs annually by 2018. Achieving the Biden administration’s ambitious goals of producing three billion gallons (11.4 billion litres) annually by 2030 and 35 billion gallons (132 billion litres) by 2050 will require a massive scale-up and robust policy support. Some progress is apparent: last month the U.S. Department of Energy agreed to lend US$1.46 billion to construct a first-of-its-kind factory that could more than double domestic SAF production. Whether this headway will continue under Donald Trump is uncertain. Trump’s proposed import tariffs could make imported feedstocks more expensive and credits granted under the Inflation Reduction Act could be repealed. Moreover, it appears the Biden administration will not finalize guidelines on new clean fuel production tax credits for aviation before the end of his term in January, leaving them vulnerable to repeal.

The report highlights inconsistent policies are a significant barrier. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which aims to cap international flight emissions at 85 per cent of 2019 levels across 126 countries, relies on questionable credits and requires only a 10 per cent reduction in emissions from qualifying fuels. The authors commend the EU’s Emissions Trading System (EU ETS), which sets a cap on the total volume of emissions allowed by industries, including aviation, and permits companies to receive or buy tradable allowances equivalent to the right to emit one tonne of carbon dioxide. By lowering the cap over time, the policy reduces total emissions, incentivizing the adoption of SAFs. However, the EU ETS would require global coverage to prevent airlines from simply deploying more emissions-intensive aircraft or routes outside of the legislation’s jurisdiction. The necessity for transparency over costs in this legislation — and the impact on ticket prices for consumers — could also make it politically unfeasible.

Nevertheless, the report argues that carefully designed policies could address the principal barriers to decarbonizing aviation. Supportive policies can help make SAFs cost-competitive with traditional fuels, enabling manufacturing scale-up and reducing production costs. They can also advance renewable energy and green hydrogen production, vital for scaling very low-carbon power-to-liquid SAFs. This illustrates the interconnectedness of climate solutions. Green hydrogen, essential for aviation, also offers decarbonization opportunities for hard-to-abate sectors like shipping, demonstrating how advancements in one industry can drive broader progress toward global net zero.

Challenges and opportunities

Key barriers to energy transition progress:

• High costs of SAFs: SAF production costs remain significantly higher than conventional jet fuels. Expensive feedstocks and nascent production approaches hinder widespread adoption.
• Competition for feedstocks: Limited availability of essential feedstocks, such as waste oils and agricultural residues, creates competition between SAF production and other biofuel sectors like renewable diesel.
• Weak policies: Divergent national and regional policies on SAF sustainability criteria create regulatory uncertainty for producers and airlines. Current policies lack sufficient incentives to adopt SAFs and reduce production costs.
• Infrastructure challenges: A lack of sufficient blending facilities, storage tanks, and dedicated SAF refineries restricts large-scale distribution and production.
• Technological gaps: Emerging technologies like power-to-liquid SAFs require high capital investments and face challenges related to undeveloped supply chains for renewable hydrogen and captured CO2.
• Slow policy implementation: Uneven participation and weak emissions reduction requirements hinder global initiatives such as CORSIA and SAF blending mandates, essential for the intrinsically transnational aviation sector.

To address these challenges, the report recommends:

• Scaling up SAF production: Governments can implement targeted tax credits and subsidies for SAF production. The U.S. Inflation Reduction Act is an example of how to lower costs and incentivize investment in infrastructure.
• Promoting technology-neutral standards: Policymakers should establish national low-carbon aviation fuel standards (LCAFS), modeled on existing Californian legislation. They should encourage innovation across various SAF technologies without favouring specific pathways or feedstocks.
• Advancing infrastructure development: Public-private partnerships can expedite the construction of SAF blending and distribution facilities, including co-processing at existing refineries to reduce costs and time-to-market.
• Global policy harmonization: The ICAO and other global bodies should lead efforts. The aim should be to align SAF sustainability criteria and enhance participation in schemes like CORSIA for consistent global progress.
• Encouraging innovation in SAF production approaches: Support for research into promising SAF manufacturing like power-to-liquid can alleviate competition for limited biofuel feedstocks. Likewise, advances in direct air capture would facilitate SAF production via the Fischer-Tropsch synthesis. 
• Expanding book-and-claim systems: This system enables airlines to purchase credits for the environmental benefits of SAFs injected into the general fuel supply, decoupling physical delivery from usage and promoting a larger SAF market. A standardized global system for SAF credits could enable airlines to invest in SAFs regardless of physical availability. This would foster a larger market and enable faster adoption.
• Facilitate cross-sector collaboration: Stakeholders in aviation, energy, and biofuel industries should collaborate on best practices for feedstock allocation and innovations that optimize emissions reductions across sectors.

In their own words

…the prospects for SAFs depend on overcoming technological limitations and high costs that hold back production and use. Conversely, policies that directly or indirectly induce or require using SAFs will call forth additional production, thereby also providing opportunities for SAF technologies to further evolve.

Alternative Fuels for Reducing the Contribution of Aviation to Climate Change, by Nafisa Lohawala, Michael Toman, and Emily Joiner, Resources for the Future (RFF), Nov. 19, 2024.

Final thoughts

The report provides a compelling argument for the vital role of SAFs in achieving global climate goals. It presents them as the most practical available solution. Policies that create incentives to increase SAF production and uptake are vital for meeting production levels equal to the demand net-zero targets require. 

However, the report lacks discussion on the life-cycle emissions and overall environmental impact of crop-based biofuels, factoring in land-use change, pesticides and fertilizers. This is significant because agriculture contributes around 34 per cent of global emissions while producing pesticides and fertilizers relies on fossil fuels and causes considerable environmental harm. The authors could also explore how policy can incentivize the use of less carbon-intensive methods of transport than flying. For example, in 2023, France banned domestic flights where a rail alternative under 2.5 hours exists. Critics call for an outright ban on short-haul domestic flights. Taxing private jets more heavily or fining airlines for flying routes with no passengers to keep airport slots could also provide funds for investing in SAF production, improving aircraft design or expanding and electrifying public transit. Airports must also play an important role in this transition. Best practice examples should be imitated, such as London Heathrow’s 2022 SAF incentive scheme which subsidizes 50 per cent of the price premium on SAF through rebates of £460 per tonne, helping to make SAF more viable for airlines.

Download the full report originally published by Resources for the Future on Nov. 19, 2024.