North America's Sustainable Aviation Fuel Efforts: Challenges and Growth

Staff Writer

The aviation sector is witnessing a substantial shift towards sustainability, with sustainable aviation fuel (SAF) taking center stage as a solution to reduce carbon emissions. In North America, the U.S. is advancing its production capabilities, while Canada is laying down a supportive policy framework. Despite these efforts, challenges such as policy intricacies, investment shortfalls, and trade tensions lie ahead.

U.S.: Scaling Up Production with Strategic Investments

Infrastructure Developments

SAF infrastructure in the U.S. has undergone significant growth. As reported by the U.S. Energy Information Administration, SAF production has surged from 2,000 barrels per day in 2020 to 19,000 barrels per day in 2023, with expectations to hit 51,000 barrels per day by 2025. This increase is largely due to the integration with renewable diesel facilities, where the U.S. holds a leading position globally.

Key investments in SAF projects by the U.S. Department of Energy include:

• Calumet’s Montana Facility: Receiving a conditional $1.44 billion loan guarantee, this plant is set to produce 315 million gallons of biofuels yearly, with a major share being SAF.
• Gevo’s Net-Zero 1 Project in South Dakota: Supported by a $1.46 billion loan guarantee, this facility will be the first to convert corn starch to SAF at a commercial scale, targeting 55 million gallons yearly.

Facilities such as World Energy’s Paramount in California and Marathon’s Dickinson in North Dakota also contribute to SAF output alongside renewable diesel.

The U.S. SAF market is poised for significant growth, projected to escalate from $0.86 billion in 2024 to $6.97 billion by 2030, as per a MarketsandMarkets analysis. This momentum is fueled by environmental concerns, government policies, and successful SAF trials, such as United Airlines' 100% SAF commercial flight.

Policy and the SAF Grand Challenge

With the SAF Grand Challenge, the U.S. aims to produce 3 billion gallons of SAF by 2030 and 35 billion gallons by 2050 to meet the projected aviation fuel demand. Current production levels fall short, with less than 100 million gallons produced annually, representing less than 0.1% of the country's jet fuel consumption.

The Inflation Reduction Act (IRA) introduced the 45Z Clean Fuel Production Credit, offering a $1.25-$1.75 per gallon benefit to SAF producers. However, concerns about long-term subsidy stability, especially amid political shifts, pose risks to investment.

Companies like United Airlines, JetBlue, and Delta have inked major SAF supply contracts, while Airbus and Boeing are channeling investments into technologies such as alcohol-to-jet and Fischer-Tropsch.

Canada: Building a Base for Future Expansion

Production and Import Initiatives

Canada currently lacks commercial SAF production but is making moves toward change. Air Canada has engaged with Neste to acquire 77.6 million liters (20.5 million gallons) of SAF, marking Canada's first SAF import. Deliveries have commenced at the Port of Vancouver, with access to Vancouver International Airport.

The Canadian government has pledged over CAD 11 million for clean fuel projects, fostering early-stage facilities to transform forest biomass, waste oils, and municipal waste into low-carbon fuels.

While Canadian specifics are not elaborated in the MarketsandMarkets forecast, North America is positioned for rapid expansion, with the global SAF market anticipated to climb from $1.1 billion in 2023 to $16.8 billion by 2030, heavily driven by U.S. strides.

Policy Challenges and Market Dynamics

Canada’s Clean Fuel Regulations (CFR) demand lower carbon fuel intensity, establishing a compliance market that could entice SAF producers. However, SAF production costs are significantly higher than renewable diesel. To counter this, the Canadian Council for Sustainable Aviation Fuels (C-SAF) advocates for:

• Extending the Clean Technology Investment Tax Credit to SAF facilities
• Price assurance via Contracts for Difference (CfD)
• Joint public-private investments targeting regional SAF hubs

These strategies mirror the successful models for hydrogen and renewable electricity in Canada.

Growth Obstacles

Despite policy efforts, Canadian SAF development faces significant challenges:

• Higher Costs: Without U.S.-like subsidies, Canadian SAF costs remain significantly higher than Jet A fuel prices.
• Reluctance from Investors: Funds are diverted to U.S. projects with better incentives.
• Logistical Gaps: Lack of established systems for feedstock collection and SAF blending.

Impact of U.S.-Canada Trade Issues on Biofuels

In March 2025, the U.S. imposed a 10% tariff on Canadian biofuels, including ethanol and biodiesel. While SAF wasn't explicitly mentioned, these tariffs affect feedstock markets and investor confidence.

Trade tensions could hinder emerging SAF supply chains in North America. Many Canadian SAF projects depend on U.S. Midwest feedstock imports. These trade barriers add risk, potentially stalling biorefinery investments.

Industry leaders from both nations emphasize the need for cross-border cooperation to maintain cohesive climate-oriented energy markets. Without aligned incentives and trade facilitation, Canada's production may lag, while the U.S. confronts policy unpredictability.

Assessing the SAF Landscape in North America

SAF is vital for achieving aviation sector decarbonization in both the U.S. and Canada. Nonetheless, production is still in early stages, hampered by infrastructural, cost, and policy uncertainties. The U.S. has advanced through government incentives and commercial collaborations yet hasn't met its ambitious SAF Grand Challenge targets. Meanwhile, Canada is setting the groundwork with policies and imports but requires substantial investments to transition from consumption to production.

For North America to lead globally in SAF, a cohesive regional strategy is crucial, involving technology deployment, feedstock coordination, stable incentives, and trade policy alignment. The forthcoming five years will determine if SAF evolves from a limited alternative to a sustainable aviation cornerstone across the continent.