SAF Industry at a Glance
August 22, 2025
The key SAF market developments in August 2025 include:
Crude oil pricing remains uncertain but relatively stable due to potential weakening of sanctions on Russian exports. However, longer term forecasts are pessimistic on prices due to an expected oversupply from OPEC+.
Airline passenger demand continues to improve globally, which also contributed to an increase in average jet fuel prices for the calendar month of July.
US SAF prices are still responding to the passing of HR 1 Bill (OBBB) into law July 4, 2025 after numerous adjustments. Included were the finalized regulations on the Clean Fuel Production Credit 45Z which has now replaced the Blenders Tax Credit. The key changes included the re-introduction of restrictions on allowable feedstocks for US renewable fuels which preclude the use of imported feedstocks except from Canada and Mexico, and the reduction of the maximum SAF credit from $1.75 per gallon to $1.00 per gallon. These changes deal a significant blow to the prospects for the US SAF industry.
US SAF feedstock imports slowed in June across the board and continues to be volatile due to changes in low-carbon fuels production incentives. We expect material previously destined for the US to be increasingly diverted towards Europe. We believe that this will increase feedstock prices for US SAF producers, which, coupled with a benign jet fuel forecast, will put more pressure on SAF margins.
Major RD/SAF producers Neste, Marathon, Phillips 66, and Valero all reported Q2 2025 results this month, highlighting challenging renewable fuels markets in the US overall. Uncertainty surrounding the proposed RINs limitations provide upside potential of a significant increase in RIN value for those who qualify, with the downside being absorbed by importers.
Gevo reported a second quarter of positive results and is well positioned to benefit from the proposed 45Z changes, but ongoing issues with the Summit CO2 pipeline are putting their planned $1.46 billion DOE LPO loan in further doubt.
Southwest divested SAFFiRE Renewables, shifting away from internal decarbonization efforts.
United Airlines confirmed the end of their SAF purchase agreement with World Energy, as the facility has been idled since April.
Avfuel continues to expand SAF logistics, extending its footprint to Denver, Colorado. This comes after their announcement last month to begin supplying non-commercial SAF to the Northeast US through Albany International Airport.
Our proprietary analysis of costs of production for generic US HEFA and EtJ units shows a further deterioration of margins for HEFA, even with an increase in SAF pricing, solely due to an increase in jet prices, but a slight increase in margins for EtJ due to level ethanol prices.