Will sustainable aviation fuel take off for American farmers?

As U.S. agriculture and biofuel producers look to the sky for new market opportunities, the outlook for sustainable aviation fuel is cloudy.

Just a few years ago, the nascent industry was buzzing with announcements of projects and investments. The market is quieter of late.

The Trump administration hasn't embraced former President Joe Biden’s “SAF Grand Challenge,” which calls for the country to make 3 billion gallons of lower-emitting jet fuel by 2030. And Congress last year slashed the 45Z tax credit for SAF production from $1.75 a gallon to $1 a gallon, putting it at the same level as renewable diesel, which competes for many of the same key feedstocks.

“We've had a lot of headwinds on the SAF side over the last few years,” Kevin Lindemer, head of the Americas Downstream Consulting practice at S&P Global Energy, said at a briefing Tuesday while releasing a report on how markets like SAF are crucial for grain and oilseed farmers grappling with excess supply and weakening demand.

“There have been issues with, ‘do I do SAF or do I do renewable diesel?’” Lindemer said. “A lot of the renewable diesel plants can shift to SAF, so we need to see on the producer side the incentive to be able to move on a longer-term basis to SAF production.”

A study led by Washington State University says the U.S. could potentially produce about 2.1 billion gallons a year by 2030, or roughly two-thirds of the former Biden administration’s target, though major obstacles must be overcome. These include project delays and getting adequate policy support. “There are people saying this industry is going to explode overnight and others saying nothing will happen at all,” said lead author Kristin Brandt of WSU’s Voiland College of Engineering and Architecture. “The reality is somewhere in between.”

To be sure, momentum in the SAF market continues, just at a slower pace. 

U.S. domestic production of SAF grew to 240 million gallons in 2025, a jump from 39 million gallons in 2024, Jade Patterson, a BloombergNEF renewable fuel specialist, told Agri-Pulse. “Now all that new supply needs to find a home." 

The U.S. has some of the world’s “most generous incentives” to cover the cost difference between SAF and petroleum jet fuel, a gap of over $3 a gallon in California last year, Patterson said. That helps encourage deals like the “record-breaking agreement” announced last week between American Airlines and Google. 

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The roughly three-year agreement involves American buying SAF made from waste feedstocks such as used cooking oil and beef tallow, and taking delivery of the fuel for Chicago’s O’Hare International Airport.

Illinois is the largest U.S. producer of soybeans, a SAF feedstock. It also was one of the first U.S. states with an SAF tax credit. Established in 2023, the incentive is $1.50 a gallon for air carriers that purchase or use qualifying fuel in Illinois.

Along with incentives under low-carbon fuel programs in California, Washington and Oregon, states including Minnesota, Nebraska and Colorado have SAF incentives in place. In April, Democratic Kentucky Gov. Andy Beshear signed a bill creating a tiered SAF credit valued at as much as $3 a gallon.

“Kentucky is very excited about the potential of a growing aviation fuel market,” Heidi Heitkamp, a former Democratic senator from North Dakota, who now serves as director of agriculture at the consultancy alliant, said in an interview with Agri-Pulse.

Heitkamp, who recently visited Kentucky, also noted the planned $5 billion Minnesota SAF Hub backed by a coalition including Delta Air Lines. The facility plans to use feedstocks like novel oilseeds, which can include crops like camelina.

Such initiatives are crucial for boosting crop demand amid heightened competition from rival producing regions like South America. 

“As we lose markets directly, or see increased competition for our raw production, whether that's soybeans or corn, we need to look at what it's going to take to grow a domestic market for those products,” Heitkamp said. “Certainly, biofuels including aviation fuels are a path forward for many farmers.” 

Challenges ahead 

Even optimists on the future of green jet fuel say here's a lot of work to do before SAF moves from a potential demand driver to a fully developed market. 

The U.S. lacks a government mandate for SAF, unlike markets including the European Union, Japan and British Columbia, and the UK.  "We just don't have those kinds of supportive policies here in the United States," Lindemer said.

Construction aimed at increasing SAF production capacity in the U.S. is starting to slow, Patterson said. A plant from Calumet Inc.’s Montana Renewables is on track to begin operating this year. “After that, we expect things to level off,” he said. 

Further, the Trump administration’s historic biofuel-blending quotas for biomass-based diesel, coupled with the reduction of the SAF credit under 45Z, likely means more plants will shift production plans from SAF to higher-margin renewable diesel, Patterson said.

Another hurdle is that SAF is roughly two to five times costlier than traditional jet fuel, posing a barrier to bigger investment flows.

The California startup Circularity Fuels is hoping to change that trend. The company earlier this week said it completed the world’s first end-to-end conversion of raw agricultural biogas into SAF, edging the firm closer to making SAF less expensive to produce.  

The trial’s success puts commercial SAF within reach of being about a fifth the capital cost of green jet fuel plants currently under construction in Europe, an achievement Circularity says would make its product cost-competitive with fossil jet fuel. 

In the near term though, the International Air Transport Association estimates that global SAF production will reach only around 2.4 million tons this year, representing 0.8% of aviation fuel use, at a cost to airlines of $4.3 billion.

The outlook is especially disheartening given that war in the Middle East severely disrupted the petroleum jet fuel market, spotlighting the advantages of SAF, according to the trade group. 

“It looks to be another disappointing year for SAF production,” said Willie Walsh, director general of IATA. “The current energy shock should add even more urgency to the development of renewables, including SAF. But we have yet to see either the energy shock, the need to develop energy independence and jobs or the urgency to mitigate climate change materialize in the incentives needed to create a viable SAF market.”