As the sustainable aviation fuel industry in the U.S. takes shape, it’s becoming clear that an all-of-the-above approach to feedstock and technology will present the best chances of meeting aggressive domestic production goals. But existing supply constraints in lipid markets are raising concerns that ramping up the SAF industry will cannibalize feedstocks for other renewable fuels.
Ethanol’s current 17.7-billion-gallon industry has an enormous opportunity to occupy a share of the SAF feedstock pie and potentially help relieve pressure on global oilseed markets. Through the Inflation Reduction Act’s 40B and forthcoming 45Z structures, pathways that result in a 50% greenhouse gas (GHG) reduction over conventional jet fuel receive a $1.25 per gallon tax credit, with higher GHG cuts reaping as much as $1.75 per gallon. The U.S.’s SAF Grand Challenge outlines incremental goals, starting with 3 billion gallons in 2030 and increasing to 35 billion by 2050.
“The issue is that we’ve set these really lofty goals,” says Susan Stroud, analyst at No Bull Ag. “It’s not just the U.S.—it’s all of these increasing targets around the world. We’re ramping up and we’re going green in a big way, and that puts more pressure on all feedstocks.”
Renewable diesel, in particular, is experiencing dramatic growth, which is expected to continue through 2030.
“As we’ve seen production ramp up in an unprecedented way for RD, one of the big results is, as we see demand for those fat, lipid feedstocks grow, soybean oil wins as default because it [has been] the most widely available and the most relatively inexpensive,” Stroud says. “But the abundance of soybean oil that we’ve had is the reason we saw it take the largest piece of the pie for so long.”
She adds, “That’s going to be squeezed out eventually when SAF comes online.”
Total soybean crush capacity in the U.S. is expected to grow 23% in the next three years. But U.S. soybean oil demand is expected to grow from an estimated 27.45 billion pounds in the 2023/24 marketing year to a projected record of 28.8 billion pounds in 2024/25, Stroud says. One bushel of soybeans yields just 11 pounds of oil.
“Yes, I think you’ll see some of that renewable diesel capacity pivot to SAF,” says Jimmy Samartzis, chief executive officer and board director of LanzaJet, which operates an alcohol-to-jet fuel production facility in Georgia. “It will be a shift from one product to another product ... For ethanol, it’s a phenomenal opportunity to provide support for the aviation sector through technologies like ours.”
“The target of opportunity (for ethanol) absolutely is significant, not just from corn starch, but also corn stover and lignocellulosics,” says Steve Csonka, executive director of the Commercial Aviation Alternative Fuels Initiative.
“We have always been working an all-of-the-above approach, with respect to multiple feedstocks, multiple conversion approaches for those feedstocks, even competing conversion processes for the same type of feedstock, etc.,” Csonka adds. “Feedstocks are not ubiquitous around the world, and we definitely have a worldwide transportation system [with] needs we’re trying to satisfy.”
Imports and Acreage
The increased pressure on feedstock supply from ramped-up renewable fuels means larger imports to sustain production, Stroud says. “One of the biggest things we've seen as this evolves is record amounts of imports.”
The U.S. imported a record 742 million pounds of canola oil in March, and 672 million pounds in April. Soybean oil, too, recently hit a billion-pound month for imports, and tallow—preferred for renewable diesel for its status as a waste—has more than doubled its percentage share of all feedstocks from 2022 to March 2024 (8% to 20%).
“We’ve always imported a huge amount of canola for food and feed, and now that that oil is approved as a feedstock—we’ve seen a tremendous uptick in canola imports going into biofuel applications,” Stroud says. “We’re using record amounts in biomass-based diesel.”
If the U.S. puts restrictions on used cooking oil from China as analysts have speculated, Stroud says, that particular renewable diesel feedstock would be even more constrained, and it is no small volume.
“Chinese used cooking oil imports have absolutely exploded,” she says. “We imported essentially nothing from China in 2022 and then in 2023, 51% of our (used cooking oil) imports, out of a total of 3.1 billion pounds, came from China.”
In the first four months of 2024 alone, the U.S. imported 1.55 billion pounds of used cooking oil globally, compared with 717 million in the same period of 2023. “We’ve more than doubled,” Stroud emphasizes.
“At the end of the day, that total pool of available molecules is going to be limited because of the amount of fats, oils and greases that are available, especially on the waste side, because it’s inelastic with respect to demand,” Csonka says, adding that prices of fats, oils and greases also will likely rise as a result of the increased interest.
Stroud and Csonka agree that policies guide which markets the feedstocks will supply. Research shows, for instance, larger incentives for SAF would redirect soybean oil there from renewable diesel production, Stroud says.
But Csonka also points to supply constraint relief likely coming through efforts to expand acreage of oilseed crops such as camelina, pennycress and carinata, many on the verge of commercialization. “There is the opportunity to bring several billion gallons of purpose-grown oilseed crops into the picture,” he says.
Ethanol’s Exceptions
Even with expanded production, limitations exist on hydrotreated esters and fatty acids (HEFA) technologies, Samartzis says, citing Illinois and the UK. In addition, the U.S. has the existing capacity to produce roughly 17.7 billion gallons of ethanol, plus the chance for more to come online as a result of SAF demand and lower carbon intensities.
According to research by Worley Consulting, ethanol could add 6.6 billion gallons of SAF to the supply by 2050, if 85% of a very conservatively estimated 15 billion-gallon-per-year capacity was diverted from gasoline to SAF. As a result of supply constraints and lower yield per acre, among other factors, that’s 2.6 times more than the potential contribution of soybean oil in that timeframe, according to the analysis.
But ethanol’s opportunity in SAF is not limited to the U.S., Samartzis says. “The opportunity is a global one for U.S. ethanol. (Ethanol can) support SAF through ATJ (alcohol-to-jet fuel) in other countries as well.” Particularly, he adds, countries that don’t have the 50% threshold for emissions reduction.
Carbon Intensity Requirements
In fact, the 50% threshold is a hindrance to ethanol’s immediate promise as an SAF fuel, Csonka says.
“To see the ethanol-to-jet fuel space moving forward, we really have to be talking about getting corn ethanol down to the 20-units-of-carbon level, and that’s going to require some significant effort,” Csonka says. “My organization is going to be looking at how we can foster the thinking around producing low carbon-intensity (CI) ethanol in order to help facilitate our own journey.”
Measures to reduce ethanol’s CI include conversion to renewable heat and power, carbon capture and sequestration, and regenerative ag practices such as reduced tillage, cover crops and green fertilizers. Carbon capture and sequestration (CCS) alone can have a large impact on an ethanol plant’s CI score, to the tune of a 40% reduction, according to an analysis by Worley Consulting.
Stroud, Samartzis and many others are optimistic that the ethanol industry will meet the challenge, especially if CCS pipelines under development come online. Csonka says he is encouraged by the work Marquis is doing for CCS onsite in Illinois, as well as the well-publicized Summit Carbon Solutions pipeline with plans for CCS from 57 plants throughout Iowa, Minnesota, North Dakota, South Dakota and Nebraska. In addition, Tallgrass Energy has approval from the Federal Energy Regulatory Commission to convert an existing natural gas pipeline to instead transport carbon dioxide.
Samartzis also points to a LanzaTech technology under development that can convert the pure carbon dioxide from fermentation at ethanol plants into more ethanol. “So instead of sequestering it or shipping it out, you can actually make a really low carbon-intensity ethanol reusing that CO2 that gets created through the ethanol production process.”
With CI reduction, Stroud, Csonka and Samartzis all agree that ethanol can play a key role in SAF markets. Plenty of research even suggests the SAF Grand Challenge cannot be met without the help of ethanol. But demand will be crucial, too, and some states with airline hubs are setting up SAF incentives to encourage development and the economic benefit it would bring.
For now, the only commercial alcohol-to-jet facility in the U.S. is LanzaJet’s. With a technology that can use several different kinds of ethanol (cellulosic, sugar cane, corn, etc.), the company is poised to take advantage of any feedstock availability benefits ATJ offers in the future.
“I think there’s a significant opportunity for ethanol production to find a new market and be incrementally additive to what ethanol producers do today,” Samartzis says.
Author: Lisa Gibson, Freelance Journalist
Contact: writer@bbiinternational.com
