DECATUR, ILLINOIS, US — Production of aviation fuels from biological feedstocks is set to soar, a prospect that could benefit the agriculture industry as a push toward electrification is softening demand for ground transportation biofuels, according to a new report by Rabobank.

Sustainable aviation fuel (SAF) production capacity could potentially increase from 25 million gallons now to nearly 2.2 billion gallons by 2026, said Owen Wagner, Rabobank senior analyst, grains and oilseeds, who spoke with World Grain about his new report, “The Future for Sustainable Aviation Fuels,” during the Farm Progress Show in Decatur, Illinois, US.

That’s good news for the agriculture industry, which has benefited tremendously from the biofuels industry. Upwards of 40% of the value of corn comes from ethanol. With the twilight of the internal combustion engine possibly on the horizon, SAFs could provide another outlet for biofuels and their feedstocks, Wagner said.

“SAFs will prolong for decades, and hopefully beyond that, the benefits — which are immense — that have already been conferred by the biofuels programs,” he said. “Can you imagine how different the agriculture economy would look without those programs in place? We envision SAFs as extending the runway for biofuels and their feedstocks, until we find the next thing.”

One of the biggest challenges facing SAFs is policy uncertainty, Wagner said, along with future competition from non-biobased SAF feedstocks.

“For the time being, biofuels are the only viable solution or feedstock for SAFs, and SAFs offer tremendous potential for the industry for the next 20 years,” Wagner said.

SAFs are renewable fuels with similar properties to conventional jet fuel but with a smaller carbon footprint. So far, all SAFs approved for commercial use have been derived from biological feedstocks. They are approved for blending with conventional jet fuel at rates up to 50%.

Airlines are eager to use SAFs to reduce their greenhouse gas emissions (GHG), Wagner said. Emission reductions range from 50% to 80% compared to petroleum, depending on the feedstock and production platform.  

Seven different methods of SAF production have been approved by ASTM, using oil-based feedstocks, municipal solid waste, sugars and ethanol.

For years, World Energy mostly had the SAF market to itself with its refinery in Paramount, California, US. But with the support of the airlines and compelling economics, an additional 16 facilities are either under construction or planned for the future, Wagner said.

Total US production is estimated at 2.2 billion gallons by 2026, growing to 25 billion to 34 billion gallons by 2050, Wagner said. Global production by 2026 is estimated at 4 billion gallons.

Of the US production coming online in the next three years, 73% will use the HEFA production platform. This method uses the same underlying technology and equipment as renewable diesel production, with oil-based feedstocks.

About 20% will use the ATJ platform, which uses ethanol as a feedstock. The process has yet to be fully commercialized and requires larger capital investment. The remainder of the new facilities will use a thermochemical conversion of biomass to SAF via gasification and Fischer Tropsch.

Whatever the pathway, SAFs have the potential to somewhat lessen the blow from waning demand for biofuels.

Wagner noted that in California, ethanol consumption peaked in 2018 and biomass-based diesel consumption is projected to peak in 2025.

“That’s really worrying,” he said. “California is not the rest of the country but historically they’ve been five to 10 years ahead of what America will look like.”

Research has shown that every 1 billion gallons of ethanol produced supports 3% of the price of corn. Multiply 15 billion gallons of ethanol by 3% and about 45% of the price of corn is supported by ethanol production.  

“We envision the future of ethanol in ground transport being more problematic than biomass-based diesel,” Wagner said. “SAF can be made from alcohol, so that’s super encouraging.”

Feedstock availability, at the right price, could be challenging for SAF expansion, Wagner said. If the planned SAF capacity comes online and operates at full capacity, it will require 7.5 million tonnes of vegetable oil and 10 million tonnes of corn by 2026.

There has been a surge in new soybean crush facilities the last three years, coinciding with growing demand for renewable diesel, Wagner said. Collectively, the announced projects are equal to a one-third increase in US capacity.

One company has canceled plans for a facility in Missouri and more could follow suit due to policy uncertainty and higher costs along with availability problems for specialty equipment, Wagner said.  

“I would anticipate there would be more cancellations in crush capacity,” he said. “A lot of it does depend on how quickly this SAF product mix can take off. The potential there is tremendous. It’s importance for agriculture is hard to overstate.”

Currently about 45% of soy oil is used in fuels, and that volume could increase some, Wagner said. Canola also could be used as a feedstock.

“Necessity becomes the mother of invention, and if soy oil and fats are too expensive, they’re going to be looking at other platforms,” Wagner said. “Right now, the bulk of the intended investments announced are in that oil platform, but there seems to be a lot of promise in the alcohol to jet platform because I think there is going to be more and more of that alcohol looking for a home.”

Policy uncertainty is the biggest challenge facing SAFs, Wagner said.

“We are sort of at an inflection point with the RFS,” he said. “It’s EPA that’s setting volumes now, so that’s a bit challenging from the renewables standpoint. When so much of your profitability and ability to competes rests on that policy stack, investors do want to see a bit more certainty.”

In the future, SAF production platforms based on synthetic feedstock could emerge as viable alternatives. For example, technology exists to sequester green hydrogen from water via hydrolysis and combine that with CO2 as a syngas for conversion to aviation fuel. While currently prohibitively expensive, it has the potential to produce nearly limitless quantities of jet fuel with a low carbon intensity, Wagner said.

“There’s going to be competition long term,” he said. “That’s not there today but it’s something to be mindful of.”