SAF Industry at a Glance
May 21, 2025
The key SAF market developments in May 2025 include:
Global economic turmoil reduced this month with the rowing back of US tariffs, but significant economic uncertainty and the potential risk of recession remain which are affecting markets ranging from crude oil and renewable feedstocks right through to airline leisure ticket demand.
World Energy’s Paramount, CA facility, the U.S.’s first commercial-scale SAF producer, remains closed due to financial pressures, with no restart expected before September 2025, tightening U.S. SAF supply and prompting customers to seek alternative sources.
The U.S. House of Representatives Ways and Means Committee’s May 2025 proposal extends the 45Z tax credit to 2031, restricts eligible feedstocks to U.S., Canada, or Mexico origins, and eliminates indirect land use change (ILUC) emission figures from carbon intensity calculations which would benefit domestic soybean oil HEFA and ethanol-based SAF. However imported feedstock restrictions will further reduce US SAF competitiveness and potentially impact some major new SAF projects.
Crude oil prices remain volatile on geopolitical concerns but crude oil, jet fuel and SAF prices all fell in April compared to March levels.
The European Commission identified serious irregularities in the certification of Chinese biodiesel imports to Germany involving ISCC, potentially leading to stricter sustainability checks due to concerns over virgin palm oil contamination in Used Cooking Oil (UCO) shipments to the EU and US.
Despite the removal of imported UCO from 45Z, US imports of UCO increased in March as the material continues to be advantaged over other feedstocks in pricing and carbon intensity scores.
Last week the EPA formally delivered its draft Renewable Volume Obligation (RVO) targets, sparking rumors that the biomass-based diesel target was as much as 1 billion gallons below the industry’s planned 5.25 billion gallons, causing D4 RINs prices to collapse.
Major RD/SAF producers Neste, Marathon, Phillips 66 and Valero all reported Q1 2025 results this month highlighting challenging SAF markets in the US, especially compared with returns on renewable diesel.
Gevo reported better than expected 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.
Our proprietary analysis of costs of production for generic US HEFA and EtJ units, with current market price movements for April sales of blended SAF to US customers, shows a further deterioration of margins across the board for April.
In early May, Filip Cornelius, head of the EU Commission department DG Move, reinforced the position that despite increasing airline pushback there would be no delay in EU SAF mandate implementation.
Also in early May, the UK announced an increase in the allowable concentration for SAF of co-processed HEFA feedstocks with conventional feedstocks in existing refineries from 5% to 30%. This represents a potential game-changing development for rapidly scaling up cost-effective SAF production using the existing fuel distribution infrastructure, and may have implications for other regions and for potential SAF projects under consideration.