The first few months of the second Trump administration have seen a shift from sustainability, DEI and climate-related initiatives in terms of federal programming and industry commitments.
Agricultural and aviation groups believe sustainable aviation fuel is exempt from this trend, with airlines expected to maintain their commitment and drive growth. With the administration’s priorities on the farm economy, it could give agriculture a bigger seat at the table in SAF policy.
U.S. biofuel and SAF industries are waiting for final guidance on the 45Z tax credit for clean fuel producers. The Biden administration released preliminary guidance on the Inflation Reduction Act credit in January but its future lies with the Republican Congress and the White House.
Speaking at Commodity Classic earlier this month, Pete Meyer, crops economist at Muddy Boots Ag, explained that farmers should focus less on how much of the credit will end up in farmers’ pockets. Instead, he said a shift to SAF will greatly increase the demand for corn and soybeans.
Biofuel policies and credits like 45Z do have a lot of bipartisan appeal in Congress, and political onlookers are confident it will be preserved through reconciliation talks. Even then, Meyer said he believes airlines will stay interested in SAF regardless of the credit.
Meyer said airlines are largely committed to being net zero by 2050, and SAF is a key part of those efforts. Some of this is consumer-driven, but some is being pushed along by European mandates.
Demand in the U.S. has slowed slightly, but the global market for SAF is “massive” and not easing, said Jarod Creed, owner of JC Ag Financial Services in Iowa. Ultimately, airlines are going to dictate the direction of SAF and the industry shows no sign of slowing, he said.
Jarod Creed (Linkedin photo)“I don’t think there’s any concern that we’re actually seeing a slowdown in the U.S. market. If anything, it’s just going to come back with a vengeance once we get some more of this stuff,” Creed said. “The global market is going to continue to grow and the consumer — right, wrong or indifferent — is going to continue to have this push to sustainability.”
Steve Csonka, executive director of Commercial Aviation Alternative Fuels Initiative, said it’s still too early to tell exactly how the administration is going to work with the aviation industry on SAF. He noted that the administration is still working to get leadership at some agencies in place.
One key issue on which the group awaits clarity is whether the administration will continue with the SAF Grand Challenge or make alterations.
“We can’t do any of those things without acknowledgement from agency leadership, so we’re still waiting for those things to happen,” Csonka said.
There’s still a lot of interest in the airline industry to pursue SAF, Csonka said. So far, airlines have not backed off on carbon reduction commitments, he noted.
Some airlines are really focused on potential producers and pathways for fuel production that could lower price points moving forward. Csonka said CAAFI is continuing to weave together and align the interests of the aviation sector with interests expressed by the Trump administration.
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An airline industry representative said that the Biden and Trump administrations' priorities on biofuels are largely in alignment but come from a different point of origin. While the Biden administration's efforts were focused on climate change and carbon emission reductions, Trump’s efforts have focused on economic development in farm country.
Ahead of the election there was a push to bar foreign feedstocks from eligibility for tax credits. Under a new administration, the move could gain traction. While agricultural groups have always been part of SAF coalitions, they could have a bigger voice moving forward.
Steve Csonka (Linkedin photo)Currently, Csonka also said that airline interest in SAF is partially driven by global policies. The European Union and the U.K. have mandates on the use of SAF, which will likely drive the aviation industry’s move in that direction. However, he noted that the EU mandate limits the type of fuels and feedstocks that will satisfy the criteria.
“I do expect SAF use to continue to proliferate,” Csonka said. “We’re seeing continued policy pushes around the world with things like voluntary or mandatory targets, and some of those locations aren’t necessarily well-blessed with feedstock supply like the U.S.”
The European mandate specifically excludes crop-based feedstocks, including ethanol or soybean oil markets. The airline industry representative said this reduces the choices available in the European market and makes SAF more expensive than it is in voluntary markets in the U.S.
Airlines have advocated for more neutral policies in Europe that allow for corn-based ethanol, but it’s unclear that feedstock requirements will change soon.
There are also state policies in the U.S. that are likely to drive increased SAF use by airlines. They include low carbon fuel standards in Oregon and California. Some states, like Illinois, are pursuing an incentive approach to SAF with tax abatement.
One issue Csonka noted with state carbon standards is that there are no mandates for SAF production. Instead, they rely on an incentive approach due to federal preemption on jet fuel requirements, creating inequities among fuels. For example, he said diesel production in California is more valuable than jet fuel production.
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