Why Sustainable Fuel Is Scarce, Expensive—and Still Aviation’s Best Hope

Pilots at the small Truckee Tahoe Airport in California have a unique proposition when they fuel up their planes. The only option on offer is low-emission sustainable aviation fuel, or SAF. “We’re the only airport in the world to do that,” said Jeff Menasco, the airport’s director of aviation, in a January video.

Offering only SAF is no small feat, even at a tiny general aviation airport such as Truckee Tahoe. The low-emission fuels made from elements like used cooking oil or leftover biomass are widely seen as the most feasible way to quickly decarbonize aviation. It’s just that they are extremely scarce.

Airline industry trade group IATA estimates that last year only 343 million gallons of SAF was produced globally, or just 0.3 percent of jet fuel production. And while output doubled from 2023, it wasn’t as much as IATA expected.

“SAF volumes are increasing but disappointingly slowly,” IATA director general Willie Walsh said in December. That was before President Trump, with his pro-fossil-fuel policies, took office in the U.S. The administration has yet to outline a policy on SAF.

And when there is scarce supply and strong demand, prices are high. At Truckee Tahoe Airport, a gallon of SAF blend—30-percent sustainable fuel mixed with 70-percent Jet A—is at least $7.22 per gallon. The average price of commercial jet fuel in the U.S. stood at approximately $2 a gallon in early March, according to Argus data from trade group Airlines for America.

None of this is good news for global airlines that hope to achieve net-zero carbon emissions by the middle of the century. Other technologies, such as electric planes or hydrogen fuel cells, either do not have the energy density—the amount of energy stored in a given space—or are too far from maturity to meet the industry’s timeline. That leaves SAF, which can be used in planes today, as the best option to significantly cut emissions soon.

Archer Aviation Midnight eVTOL aircraft / Photo: Courtesy of Archer Aviation

Sustainable Fuel Debate

SAF, by definition, produces half the emissions of traditional jet fuel and often far less. Most of the fuels produced in Europe and the U.S. generate at least 80-percent fewer emissions.

They are not a panacea, however. SAF derived from palm oil, for example, can cause deforestation. And there are well placed concerns that increased SAF production could pressure global food supplies.

Cabin of the Archer Aviation Midnight eVTOL / Photo: Courtesy of Archer Aviation

“I can’t take any of this SAF stuff seriously,” said David Neeleman, CEO of Breeze Airways and founder of JetBlue Airways, at the World Aviation Festival in October. An outspoken critic of sustainable fuels, he argued that the dollars being spent on the development of SAF could be better used decarbonizing other segments of transportation. Aviation is widely acknowledged as contributing approximately two percent of global carbon emissions, and transport as a whole around 20 percent.

Currently, the U.S. is one of the few countries that have incentivized SAF production. Tax incentives were included in the Inflation Reduction Act of 2022. The European Union took a different approach and mandated SAF usage beginning at two percent of all fuel in the bloc beginning this year, and rising to 70 percent by 2050.

The EU has not dedicated funding for sustainable fuel production. To the IATA boss, who joined Neeleman on stage at the World Aviation Festival, the criticism was too much. “An airline like yours, if you want to stand up and say, ‘I’m not going to do anything to address my environmental footprint,’ I wish you well,” Walsh said. “As an industry, we have to recognize that there is a global movement to address environmental performance, and we have to play our part in that,” he added.

Photo: Willie Walsh, Director General. Courtesy of IATA

Henry Harteveldt, president of Atmosphere Research Group who moderated the panel at the World Aviation Festival, says both Neeleman and Walsh were correct in some respects. Dramatically cutting personal vehicle emissions, for example, would have a much larger environmental benefit than focusing solely on aviation.

“But we cannot do nothing as an industry,” he says. “This is why we need government support, government partnerships, government funding for research and development of SAF.”

“In the U.S., the markets are in a bit of a chaotic situation with the change in administration,” says Nikita Pavlenko, program director for fuels and aviation at the International Council on Clean Transportation, a think tank that backs cutting transport emissions. The chaos affects both airlines and producers alike, with uncertainty swirling around the future of federal tax incentives as well as loan and grant programs.

Photo: Courtesy of Joby Aviation

“If you’ve got proven technology, we should have access to lower cost of capital,” said Adam Klauber, vice president of sustainability and digital supply chain at SAF producer World Energy, at a Bloomberg event in February. “It’s a really appropriate place for public funding.”

Klauber referred to the U.S. Department of Energy’s Loan Program that provides low-interest construction loans to energy projects. The financing is critical for companies like World Energy for construction expenses until production can begin and revenue start flowing. “We’ll see what happens with the Loan Programs Office,” he added, referring to the uncertainty under Trump.

A Long Way From Net Zero

“We are at ground zero in starting to define and scale this marketplace,” said Lauren Riley, chief sustainability officer at United Airlines, at the Bloomberg event in February. And she’s right. Global SAF usage amounts to a rounding error in aviation fuel use.

There is not a single electric aircraft in commercial service globally. And hydrogen fuel cell technology is decades away from the energy densities needed to power commercial planes such as the Airbus A320 or Boeing 737.

IATA expects SAF production to double this year to approximately 713 million gallons. One driver is the opening of new production facilities in the U.S. that were delayed from late 2024.

Photo: Courtesy of Airbus SAS / Artem Tchaikovski

If production of SAF continues to double annually, production of the fuels would meet or exceed that of jet fuel a few years before the airline industry’s 2050 net-zero target. But it is not expected to double indefinitely—at some point, the world will run out of used cooking oil and disused biomass. Synthetic sources, for example “green” hydrogen, will need to be developed and many are years away from production at scale.

That, however, requires determination, grit and a lot of patience to come to fruition—things that, at least in the U.S., appear in short supply when it comes to green technologies.

Just look at Southwest Airlines’ decision to lay off the majority of its sustainability team in February.

“Sustainability has taken a back seat,” says Shashank Nigam, founder and CEO of aviation advisor SimpliFlying and coauthor of the book Sustainability in the Air. “It’s the companies that are able to adapt to be energy-resilient, energy-dominant that will succeed.”