Within the broader transportation sector which represents about 25% of carbon emissions, aviation fuels are responsible for approximately 2-3% of global carbon dioxide emissions, according to the IATA. SAF presents an opportunity to mitigate these emissions and foster a more sustainable aviation industry. Despite its potential, SAF currently makes up only around 0.1% of the aviation fuel currently in use. Unlike fossil-based aviation fuels, SAF can be produced from a variety of sources, including agricultural renewables, municipal waste, and even carbon capture technologies, making it a versatile and environmentally compatible fuel alternative.
While the potential of SAF is evident, the challenge lies in scaling up its production to meet the growing demands of the aviation industry. At this time there is a focus on establishing standalone refineries to meet SAF demand. While a piece of the solution, these standalone facilities take time to permit and construct, and involve a lengthy and capital-intensive process. On the other hand, co-processing which involves blending SAF with traditional jet fuel during the refining process, allows for a more seamless integration of sustainable practices into existing and fully operational infrastructures which will enhance supply to meet established global SAF targets and growing aviation fuel demand. Co-processing also represents a bridge between the existing refining infrastructure and the future of sustainable aviation. By utilizing existing refineries, co-processing significantly reduces the investment costs and time that are required to establish new standalone facilities dedicated solely to SAF production, thus ensuring optimal utilization of existing infrastructure and resources, while maximizing efficiency and reducing the overall environmental impact.
Tax incentives continue to play a pivotal role in encouraging businesses to invest in sustainable practices. Currently, incentives tend to focus on supporting standalone SAF refineries, while failing to recognize not only the potential of co-processing but as noted, it’s importance in meeting SAF demand forecasts and targets. To achieve meaningful progress in meeting global SAF targets, policymakers must seriously consider extending tax incentives to refineries adopting co-processing methods. Inclusive tax incentives will expedite the widespread adoption of SAF, and along with standalone refinery expansion, propel the aviation industry toward carbon reduction goals at a quicker pace.
As the aviation industry charts its flight plans toward a more sustainable future, co-processing emerges as the critical factor in the widespread adoption of SAF. The White House’s SAF Grand Challenge goals to produce 3 billion gallons of SAF by 2030 is likely unachievable unless co-processing is part of the SAF production plan. Longer term goals to advance SAF production will also be challenged without a co-processing component.
To ensure the success of this transition, it is imperative that lawmakers and administration officials understand the need to craft tax incentives to support not only standalone SAF refineries but also those utilizing co-processing methods. By fostering an inclusive approach, policymakers can best ensure the transformation of the aviation sector and usher in an era where flying is not only efficient but also environmentally responsible. The co-processing of SAF thus becomes the key to achieving domestic and global SAF targets and along with advancements in aircraft-related technology, will ensure that the aviation industry is on the glide path to achieve its net-zero climate goals.
Mike Roman is a Senior Fellow at the American Council for Capital Formation.
