SAF Deployment Is Underway But Is Facing Challenges
Operators flying to the NBAA Business Aviation Convention & Exhibition (NBAA-BACE) will be able to pump sustainable aviation fuel at nearby Florida airports or claim credit for it being pumped elsewhere, but widespread, regular availability of the fuel for business aviation remains years away.
Sustainable aviation fuel (SAF) is considered critical for business aviation to achieve its stated goal of achieving net-zero CO2 emissions by 2050. “Waypoint 2050,” a report issued by an international air transport industry coalition last year, estimated that 53-71% of aviation decarbonization will need to be accomplished by shifting to sustainably sourced jet fuel.
Fixed-base operators (FBO) serving business aviation started offering SAF, initially on a demonstration basis, in late 2020. Earlier this month, Avfuel Corp. shipped two truckloads of Neste MY Sustainable Aviation Fuel to its branded FBO, Sheltair Aviation, for use by Sheltair’s customers at Orlando Executive Airport (KORL) during NBAA-BACE. To help shuttle their aircraft to the conference, Avfuel has also supplied SAF to manufacturer Embraer at Sheltair’s Melbourne Orlando International Airport (KMLB) FBO, and to Textron Aviation at that company’s Wichita headquarters.
Alternatively, operators flying to Orlando for the conference will have the option of claiming emissions reduction credits by paying for SAF through a book-and-claim program offered by Atlantic Aviation and sustainability rating company 4AIR at Atlantic’s KORL and Orlando International Airport (MCO) locations.
Other than directly pumping sustainably sourced jet fuel, book-and-claim is the industry’s go-to mechanism for sparking demand. Through book-and-claim, an operator flying from an airport that does not have SAF on site can purchase—or book—a specific quantity of fuel from an FBO that does supply SAF, pay the premium, and claim an emissions reduction credit. The FBO accounts for that quantity and delivers an equivalent amount of SAF elsewhere in the supply chain. Atlantic Aviation is underwriting the cost of its program during NBAA-BACE and will not charge a premium for the SAF gallons it sells to customers.
The industry may be making progress in familiarizing operators and driving demand for SAF, but the heavier lift is upstream, on the supply side. The SAF distribution infrastructure in the U.S. is anchored in California, and many of the FBOs that supply SAF are clustered there and along the West Coast. Aviation industry sources attribute the concentration of FBO locations to California’s Low Carbon Fuel Standard, an emissions trading scheme that incentivizes the production and use of low-carbon transportation fuels, and physical proximity to the fueling infrastructure.
As of October, 4AIR counted 24 FBOs in the U.S. that supply SAF and 38 overall when including international locations. In addition to locations in California, FBOs also offer SAF in Colorado, Michigan, North Carolina, Oregon, Texas, and Washington. 4AIR President Kennedy Ricci thinks that SAF availability will “plateau” in the near term until other states grant incentives for its production.
“It’s really going to be the advent of book-and-claim that is going to bring availability to locations beyond California,” Ricci says. “It’s more economical, it’s more sustainable to keep [SAF] in the state. I don’t think we’ll see a huge explosion of physical supply outside of California for probably several years, until we get production outside of California.”
Blenders Tax Credit
In August, the U.S. Congress passed the Inflation Reduction Act of 2022, which contained a Blenders Tax Credit that business aviation had long advocated to incentivize SAF production. The tax credit is valued at $1.25-1.75 per gallon of SAF sold, depending on percentage of life-cycle greenhouse gas (GHG) emissions reduced compared to fossil-based jet fuel. The credit is effective until January 2025; after that, a new Clean Fuel Production Credit that expires in December 2027 will allow up to $1.75 per gallon for SAF with a 100% GHG reduction compared to a baseline emissions factor.
“The tax credit for SAF helps level the playing field with more established biofuels and sends the right signal to investors to attract that capital that is needed,” to build out the distribution network, says Megan Eisenstein, managing director of industry and regulatory affairs with the National Air Transportation Association (NATA).
Ricci predicts the Blenders Tax Credit will boost SAF availability indirectly, by making it more affordable for aircraft operators. “It’s really about making it easier for adoption,” he says. “The Blenders Tax Credit is going to reduce the net cost to the end customer; in turn that’s going to allow for more adoption, and that’s going to show there is more demand. The tax incentive helps spur the momentum for SAF through the next few years by showing the demand for it, getting beyond the early adopters to a wider audience.”
A “drop-in” fuel, SAF has a similar chemical composition to fossil fuels and can be pumped, stored and used within the existing fuel infrastructure. Its hydrocarbons come from more sustainable sources than fossil-based fuels, such as used or waste cooking oils, tallow, waste biomass and municipal solid waste. This results in a net reduction of emissions when compared to conventional jet fuel on a total life-cycle basis.
Tracking and documenting the SAF content in jet fuel gallons will be important for operators and FBOs in claiming emissions credits. In July, the NATA and 4AIR released a common SAF Delivery Receipt that itemizes the SAF feedstock, fuel blend and gallons uplifted by an aircraft to calculate the actual emissions reduced. The creators say the form is the first standardized proof-of-purchase documentation for SAF serving business aviation.
Eisenstein recalls: “A lot of folks, especially out in California who are uplifting SAF, were literally going to the front desk at FBOs saying, ‘Hey, I uplifted SAF. I need the documentation. I need to know what type of blend this is.’ This was something we heard from our members. This is something they needed.”
Competition for Feedstocks
The incentives notwithstanding, business aviation inevitably will face competition from airlines for SAF production capacity. In April, for example, biofuel supplier World Energy announced plans to increase SAF production at its Paramount, California, facility by 700% to 340 million gal. annually. The company also said that it is preselling future capacity at Paramount, naming Amazon Air, United Airlines, JetBlue, Rolls-Royce and Boeing as current customers.
Competition also looms from other industries for renewable feedstocks used in making SAF, which are not inexhaustible. Associations representing fuel retailers and trucking interests opposed passage of the Blenders Tax Credit; they contend that incentivizing SAF production will increase competition for renewable feedstocks and undercut production of renewable diesel and biodiesel.
World Energy plans to expand the types of renewable feedstocks it uses to produce SAF with the expectation that increasing demand for waste oils, fats and greases will drive up prices. “When we’re finished with this, we’ll be able to [use] absolutely every feedstock under the Sun,” CEO Gene Gebolys declared at the Paramount ribbon-cutting event in April. “We are continuing to work on new feedstocks, and we’ll source everything we could possibly source.”
Ricci concurs that increasing demand for feedstocks will drive up their price as well as the price of SAF to the end user.
“All of the feedstocks we have today are by-products,” he says. “You can’t get long-term agreements for them, so you see a lot of price volatility. Trucking and aviation compete for the same used cooking oil and tallow, so you’re going to see these types of feedstocks escalate in price. That will drive up the price of SAF.”