SAF Industry at a Glance
January 17, 2025
The key SAF market developments in January 2025 include:
The Biden administration is going out with a bang. Sanctions against Russian oil, guidance on the CFPC 45Z tax credit designed to protect US farmers in an apparent attempt to ensure its survival, and the finalization of a record number of loans from the DOE LPO, all have major implications for markets. However, as with all the best laid plans, there may be unintended consequences to these developments, which we examine in more detail in this report.
One key highlight from the new 45Z tax credit guidance is the preclusion of all imported feedstocks for qualifying SAF and RD, except for tallow from all countries and rapeseed oil from Canada. If ratified by the new administration, this will have a major impact on Used Cooking Oil (UCO) imports and Soybean Oil imports. UCO imports in particular have become extremely important as a feedstock for the US RD/SAF industry.
Another key highlight of the guidance is the restriction on qualifying feedstocks for the FT / Gasification SAF pathway to US-sourced corn stover. There is no mention of the acceptability of domestic US woody biomass which will raise concerns among developers involved in projects which intend to rely on this feedstock.
In the US, December SAF market prices experienced some further weakening in the face of significant new SAF capacity starting up in the US in Q1 2025, which has resulted in some SAF margin erosion in current markets.
In December we have seen CI-related SAF pricing becoming more widespread. The reduction in CO2 emissions for a unit of SAF versus a unit of conventional aviation fuel is increasingly being used to price SAF molecules despite the fact that most US SAF markets still operate primarily on the basis of prices for a 70/30 JET/SAF blend.
There have been various announcements this month of new SAF capacity around the world, but nevertheless our analysis still shows that by 2030 over 85% of global SAF capacity will be HEFA-based. For this reason, HEFA feedstock availability is critically important, and HEFA costs of production will play an outsized role in influencing SAF market prices until the end of the decade.
On this basis Green Star BCS have developed a proprietary long term price forecast for SAF comprising a price floor based on alternate production of Renewable Diesel, and a price ceiling developed from long term jet fuel prices. This analysis is explained in detail in our SAF Price Outlook section.
SAF imports into the US grew dramatically in 2024 although we expect them to reduce significantly in 2025 as the switch from the Blenders Tax Credit to the Clean Fuel Production Credit disincentivizes imports, significant new capacity starts up in 2025, and SAF mandates on consumption start in the UK and EU. It is possible that the US will switch from a net SAF importer to a net exporter this year.
The Illinois Sustainable Aviation Fuel Purchase Credit (SAFPC) is successfully promoting sales of SAF at Chicago airports, as this credit is available to airlines directly rather than to SAF producers.
Prices for feedstocks Soybean Oil, Tallow, UCO and DCO all remained relatively depressed in December but are increasing now in January.