Towards a Federal Low Carbon Fuel Standard for Aviation
Following the passage of the US Inflation Reduction Act of 2022 (IRA) in August 2022 and the release of the Sustainable Aviation Fuel Grand Challenge in September 2021, it is all but indisputable that there has never been more momentum towards establishing Sustainable Aviation Fuel (SAF) production and use in the United States. Specific implementation details aside, addressing aviation emissions is clearly moving up on the US federal government’s ‘to do’ list. New tax credit incentives, grant programs, and increased research and development funding have created a strong foundation for expanding the currently nascent SAF industry. However, the industry still lacks the required policy elements to enable sufficient long-term growth and stability in this emerging market.
This paper contends that the key missing ingredient in the US’s approach to SAF is the creation of firm demand through a federal, carbon intensity (CI) based aviation-specific Low Carbon Fuel Standard (LCFS) that incorporates a minimum volumetric requirement alongside a CI reduction target. Clear demand-side policy is arguably the essential ingredient to transition SAF from a boutique fuel with relatively limited production volumes to one that is used in levels similar to, if not surpassing, renewable fuels in gasoline and diesel, with the potential to meet the SAF Grand Challenge’s vision of complete jet fuel replacement by 2050.
While some legislative proposals exist for an aviation-specific LCFS, or the inclusion of aviation within a broader federal LCFS, this paper suggests that the statutory authority for implementing such a standard already exists. This paper further argues that issuing an aviation-specific LCFS under this existing authority would provide an important investment signal for SAF at a critical time in the industry’s development.