U.S. Takes Big Step with Eco-Friendly Airplane Fuel

[The Guru=Reporter Oh So-young] Major airlines in the United States are expanding the introduction of Sustainable Aviation Fuel (SAF) in response to carbon neutrality. The local government has offered substantial tax benefits to support the production and use of SAF. The U.S. SAF market is expected to grow rapidly.

According to KOTRA Dallas Trade Center on the 21st, Delta Airlines planned to replace 10% of its total fuel consumption with SAF by the end of 2030 and increase the percentage to 50% by 2035, and 95% by 2050. Southwest and Virgin Atlantic also announced they would replace 10% of their total aviation fuel with SAF by 2030.

American Airlines planned to introduce 620 million gallons between 2025 and 2030, while JetBlue will introduce 670 million gallons between 2023 and 2033. United Airlines will procure 219 million gallons between 2026 and 2041. To facilitate this, a $100 million startup support investment fund was facilitated last February with Air Canada, Boeing, GE Aerospace, JP Morgan Chase, and Honeywell.

Global airlines prefer SAF for its environmental friendliness. SAF refers to aviation fuel produced from eco-friendly raw materials such as waste cooking oil, waste fat, waste wood, and agricultural waste. Compared to traditional fossil fuel-based aviation fuel, it can reduce lifecycle greenhouse gas emissions by a minimum of 50% to a maximum of 80%. However, the price is 2-3 times higher than regular aviation fuel, making commercialization difficult.

In order to support the commercialization of SAF, the United States announced the SAF Grand Challenge in September 2021. The substance is to secure an annual production volume of 3 billion gallons by 2030 and 35 billion gallons by 2050, satisfying the entire U.S. aviation fuel demand with SAF in the end.

The U.S. has also created a provision for alternative fuel and carbon reduction aviation technology subsidies in the Inflation Reduction Act (IRA), allocating $297 million for SAF production, transportation, blending, and storage projects. Since last year, a tax deduction benefit of $1.25 per gallon is given if the lifecycle carbon emissions are reduced by 50% compared to fossil fuel aviation fuel. An additional deduction benefit of $0.01 per gallon is given for each additional 1% reduction beyond 50%.

With the active support of the U.S. government, local companies are strengthening their investment in SAF. Twelve began construction of a commercial-scale SAF production facility in Moses Lake, Washington, in July last year. It’s expected to initiate in the middle of this year and produce an initial 40,000 gallons. It will increase production by up to 1 million gallons per year.

USA Bioenergy announced the construction of a biorefinery for SAF production in Bon Wier, Texas, in 2022. Its goal is to produce 34 million gallons of SAF per year from wood waste. World Energy opened an SAF production facility on a refinery site in Paramount, California, in 2016. It produces 250 million gallons annually and will convert its Houston, Texas, facility into an SAF factory, adding another 250 million gallons by next year.

Big tech companies are also stepping in. Google has joined Aveliya, a blockchain-based platform that allows airlines to sell carbon offset credits to corporate customers based on SAF use. Microsoft has signed a contract to purchase 14,700 tons of SAF from the International Airlines Group (IAG), which owns major European airlines.

As companies invest in SAF, the market is expected to grow rapidly. According to market research firm Market and Markets, the global SAF market is expected to grow at an annual average of 47.7% to reach $16.9 billion by 2030.

By. So Young Oh