FEATURE: US airlines cast a wider net in search for sustainable aviation fuel supply


Global supplies of oils tighten, exacerbated by lower Ukraine output

SAF producers use alternate methods to meet growing demand

As US airlines seek to lock in sustainable aviation fuel supply to reach their 2030 greenhouse gas emissions reduction goals, many are looking beyond suppliers who produce SAF using traditional feedstocks like hydrogenated vegetable oils and tallow.

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With more renewable diesel and SAF projects starting up, renewable feedstock supplies are tightening, increasing costs. The price of key soybean oil feedstock averaged 75.86 cents/lb in March, compared with the year-to-date average of 68.22 cents/lb, according to Platts assessments from S&P Global Commodity Insights.

And some refiners with renewable diesel projects underway are on the fence as to whether to incur increased capital costs to add SAF to the mix, sending airlines to look for alternatives as they seek to meet their net-zero goals.

United Airlines Ventures, the corporate venture capital fund for United Airlines, recently took a stake in Cemvita Factory which uses microbes to turn carbon dioxide into a feedstock for alternative fuels, including SAF. Oxy Low Carbon Ventures, a founding investor in Cemvita Factory, is collaborating.

“At United, we have been consistent in leading the airline industry with bold action when it comes to fighting climate change,” said Michael Leskinen, president of United Airlines Ventures in a March 29 statement.

United is not the only airline expanding its SAF sources.

Finnair on March 30 signed an offtake agreement with California-based Aemetis for 17.5 million SAF gallons over seven years beginning in 2025 — part of a $2 billion contract with Oneworld Alliance members to meet their long term net-zero ambitions.

This agreement supplements a deal Finnair has with Finnish refiner Neste, a leading SAF pioneer, to supply the Helsinki airport.

However, European SAF supplies are expected to tighten on lack of feedstock from Ukraine — the primary exporter of vegetable oils to the EU — following the Russian invasion on Feb. 24, according to S&P Global’s estimates.

Prior to that, S&P Global estimated Ukraine to export 88% of its rapeseed oil, a key feedstock for European renewable diesel and SAF, which is now unlikely.

Aemetis, Gevo and Lanzjet add offtake agreements

Before its foray into renewable diesel and SAF, California-based Aemetis produced low-carbon ethanol and built biogas digesters to capture dairy farm methane to convert into renewable natural gas.

Aemetis recently acquired a former military terminal in Riverbank, California, and plans to produce 90 million gallons of RD, SAF and other fuels by 2025 from the facility, named Carbon Zero 1.

For feedstock, Aemetis will use cellulosic hydrogen, byproducts from its other biofuel plants, as well as wood waste from local orchards. Operations are expected to begin in 2023, ramping up to full rates by 2025.

Aemetis will be using the HEFA-SPK process to make renewables at its Riverbank facility, “the lowest cost and widely accepted process” approved to produce SAF, said Credit-Suisse analyst Manav Gupta.

US SAF Offtake Agreements

​Annual Offtake Volumes

World Energy (AltAir Fuels)

World Energy (AltAir Fuels)

World Energy (AltAir Fuels)

Scandinavian Airlines System

oneworld Alliance is comprised of Alaska Air, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines and Qatar.

Source: Company and regulatory filings compiled by S&P Global Commodity Insights

Gevo, Lanzajet pioneer ATJ technology

Incentivized by $4.3 billion in government funding to increase SAF production to 3 billion gal/year by 2030, Chicago-based LanzaJet plans to make 1 billion gallons of SAF by 2030 using alcohol-to-jet technology.

In January, LanzaJet received $50 million in funding from Microsoft to build the first alcohol-to-jet SAF production plant to be based in Soperton, Georgia, using ethanol waste as feedstock for the plant, named Freedom Pines.

Construction is expected to be completed in 2022, with production of 10 million gallons of renewable fuels beginning in 2023. British Airways has signed an offtake agreement with the understanding LanzaJet will be involved in planning a large scale biorefinery in the UK.

LanzaJet recently signed a Memorandum of Understanding with Marquis Sustainable Aviation Fuel to build a 120 million gal/year plant in Hennepin, Illinois, using its ATJ process.

Colorado-based Gevo plans to break ground in 2022 for its Net-Zero 1 Project, located in Lake Preston, South Dakota, where it will produce about 46 million gal/year of SAF and gasoline products from corn.

However, airlines are “clearly looking for more renewable jet fuel,” according to Credit-Suisse’s Gupta, a possible impetus to include SAF in RD conversion projects.

†[Marathon Petroleum] is evaluating production of SAF at Martinez,” Gupta said, adding the refiner has had discussions with airlines “around this topic” and recently signed an MOU with Southwest Airlines. Marathon is converting its Martinez, California, refinery to a renewable fuels facility.

“Right now, the regulatory subsidy market is more favorable for renewable diesel than SAF. Eventually [Marathon] thinks there is a high possibility regulation could be in place that provide enough support to produce SAF,” he said, adding Marathon said switching to SAF from RD “will require some capital.”

Marathon’s newly minted Martinez joint venture with Neste will heighten its SAF expertise. Neste pioneered SAF, and is the largest global producer with 100,000 mt/year capacity, which is expected to reach 1.5 million mt/year by end-2023, once the expansion of its Singapore facility comes online.

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