Production of domestic sustainable aviation fuel (SAF) has grown rapidly in recent years, driven in part by Biden administration incentives. But early moves by the Trump administration are fueling uncertainty about what will come next.
Adam Schubert
"Carrots are being taken away, and we still don't have any sticks," said Adam Schubert, senior associate for the transportation fuels consulting firm Stillwater Associates, adding that it now seems less likely the U.S. will produce 3 billion annual gallons of SAF by 2030, enough to account for 10% of U.S. aviation fuel consumption, a Biden administration target.
Airlines also have ambitious SAF commitments. IATA estimates that SAF will be responsible for 65% of the emissions reductions that will be required for the industry to achieve its goal of net-zero emissions by 2050, also adopted by the United Nations aviation arm.
Last year, U.S. facilities produced 38.7 million gallons of SAF, according to Environment Protection Agency figures, compared to 14 million gallons in 2023 and 7.9 million gallons in 2022.
Fueled by recent and upcoming launches of SAF production by Phillips 66 and Valero and capacity increases by specialized renewable energy producers, SAF production capacity in the U.S. will reach nearly 800 million gallons this year, according to an estimate generated jointly by the Department of Agriculture and the University of Illinois.
A major driver of recent production surges was an Inflation Reduction Act program that provided tax credits of between $1.25 and $1.75 per gallon to purchasers of SAF, depending on the emissions reductions offered by the particular fuel product. The credits were key to spurring demand for SAF, which costs about $2 more per gallon than conventional jet fuel, said Stillwater's Schubert, citing figures from the energy industry data provider OPIS.
But that tax credit program expired at the end of 2024 and is slated to be replaced by a new program that would provide sliding tax credits from 1 cent to $1.75 per gallon directly to producers through 2027. The Biden administration belatedly released guidance for its implementation on Jan. 10, but it will be up to the Trump administration to finalize the regulations and initiate the tax credits.
For now, that process is on hold in accord with a 60-day freeze on all regulatory development put in place by the president via an Inauguration Day executive order. Such stays have become routine during recent transitions to give the new administration time to get up to speed. But Trump's hostility to climate initiatives is sowing doubts about how long the administration will take to complete the regulatory rulemaking, or even whether it will implement the tax credit program at all.
"It's going to be completely unpredictable," said Fayaz Hussain, editor of the trade publication SAF Investor. "You can never tell how Trump will perceive something. Everything is going under the microscope."
Such uncertainty has the potential to slow SAF production, said Hussain and Schubert, since the tax credits are key to spurring purchase demand from airlines that can't afford to pay the full SAF premium and because energy companies will want to calibrate production accordingly.
Adding to the uncertainty are other steps the new administration has taken. On Jan. 28, the Department of Energy delayed delivery of $782 million in loan proceeds to Montana Renewables, the first half of a $1.44 billion loan deal the department under Biden closed on Jan. 10. Montana Renewables will use the loan to increase its annual SAF production capacity from 60 million to 300 million gallons.
In a statement, the company described the delay as a tactical one by the Energy Department to make sure the loan aligns with White House priorities.
The Trump administration has also removed some federal webpages related to SAF initiatives, including sites detailing the $244.5 million in grant funding the FAA allocated last year to SAF projects.
Those developments aside, SAF stakeholders say their industry aligns with other Trump priorities. Corn-based ethanol, for example, is expected to be a major source of SAF.
Alison Graab, executive director of the SAF Coalition, whose members include producers, airlines and others in the SAF value chain, said SAF can help the Trump administration's plans for "American energy dominance."
"Helping rural communities create jobs, creating new agricultural markets -- all of that ties into the new administration's goals," she said.
Scott Lewis
Scott Lewis, a division president for World Energy, which this year expects to produce 30 million gallons of SAF at its Paramount, Calif., refinery, offered a similar take. "Each administration has its own agenda of what it is trying to achieve. It is industry's role in this to tell them how we can help achieve it," he said.
Lewis added he has little doubt the new tax credit program will go forward, but "what we want to see first and foremost is continuity," he said. "Tell us the rules and let's go."
Schubert said that dynamics in Congress could also be helpful to the SAF industry. Farm state Republicans are likely to push for SAF initiatives even if many in their party view the issue through the lens of climate policy.
But at least in the short term, the only policy continuity that SAF producers can be confident of will come from the small group of states that have developed their own packages of SAF incentives, including Washington, Illinois and Minnesota.
"The only silver lining I see is state support," Hussain said. "States are probably going to remain committed to this."