Photo illustration: Sarah Grillo. Photo: Jim Watson/AFP via Getty Images
Democratic VP pick Tim Walz's embrace of sustainable aviation fuel in Minnesota could shorten a long runway for the industry.
Why it matters: Aviation accounts for roughly 3% of global emissions and could reach 22% by 2050. The airline industry currently has few viable options to wean itself off petroleum-based conventional jet fuel.
The big picture: Walz's campaign with Vice President Kamala Harris is likely to feature his goal of growing Minnesota's economy while decarbonizing a polluting industry, SAF supporters say.
- "I'd be surprised if we don't hear him talking about SAF on the national stage," said Peter Frosch, CEO of Greater MSP, which is spearheading a Minnesota SAF hub aimed at scaling up the industry.
- Walz has "been very engaged on this and has been one of the leading champions" of growing the market, Frosch said.
- As governor, Waltz signed a SAF tax credit into law last year and launched the hub with founding partners Delta, Bank of America, Xcel Energy and Ecolab.
- "We have all the components right here in Minnesota," Walz told Brownfield Ag News last year. "We've got a refinery nearby, we've got North America's top-rated airport, and, of course, we are the leaders in biofuels."
Between the lines: The Inflation Reduction Act included a $1.25-a-gallon federal tax credit for SAF that achieves at least 50% lower emissions than conventional jet fuel.
- But that 40B credit expires at the end of this year, subsumed by the 45Z tax credit for clean fuels.
- SAF producers could claim the 45Z credit but may see less benefit from making SAF than with other fuels, such as renewable diesel, said John Hebert, a policy advisor for transportation at Third Way.
Reality check: SAF is derived mostly from plant oils and cooking fats. It faces doubts that producers can ever churn out enough fuel for the airline industry — and whether it's truly a net climate benefit.
- The Biden administration has set a goal of 3 billion gallons of SAF by 2030, which would be key to achieving net-zero carbon emissions from the transportation sector.
- In 2023, just 158 million gallons of SAF were produced globally and 24.5 million gallons were consumed in the U.S.
- "We're probably not on track" to meet Biden's goal, Hebert said.
- State hubs could fill a gap, he added: "On the federal side, the policy is just lacking."
Lindsay Fitzgerald, senior vice president of public affairs at Gevo, which is trying to build a SAF plant in South Dakota, also wants more federal activity.
- "When are we going to have gallons?" Fitzgerald asked. "We'll have gallons when we have long-term consistent policy in place."
- Environmentalists have attacked SAF as a "false solution" that threatens global food security and enables airlines to greenwash their marketing.
What's next: Renewable fuels producers are pressing Congress to extend the existing IRA tax credits as the Treasury Department works on guidance for the 45Z tax credit, which is scheduled to begin incentivizing clean fuels production Jan. 1.
- Bipartisan legislation was introduced in July to extend the 40A biodiesel tax credit, and similar legislation supporting SAF is expected soon.
- "There is growing apprehension around these tax credits, and as a result of that you're going to see increased pressure to extend the existing suite of tax credits," said Geoff Cooper, the Renewable Fuels Association's CEO. "At least until there's a clear and certain path forward for 45Z."
