The Biden administration announced a series of industry-backed actions aimed at reducing carbon emissions from air travel with a goal of cutting aviation emissions by 20 percent by 2030. The intent is to meet 100 percent of aviation fuel demand—around 35 billion gallons a year—with “sustainable” aviation fuels by 2050. To be sustainable, aviation fuels must reduce lifecycle greenhouse gases by half compared to conventional fuels. According to a fact sheet released by the White House, the production targets would produce 3 billion gallons of sustainable aviation fuel by the end of the decade. Fourteen grants totaling more than $3.6 million will support the development and testing of new sustainable aviation fuels. The U.S aviation industry used about 18.3 billion gallons of fuel in 2019 with less than 0.1 percent coming from sustainable aviation fuels.

To meet Biden’s goal, the current version of the reconciliation bill written by House Democrats contains a provision to subsidize aviation biofuel mixtures starting at $1.25 per gallon beginning in 2023, and going up from there depending on the emission reductions those fuels achieve. The value of the credit is determined on a sliding scale, equal to $1.25 plus an additional $.01 for each percentage point by which the lifecycle emissions reduction of such fuel exceeds 50 percent. The credits expire after December 31, 2031.

The carbon footprint will vary depending on the feedstock from which the sustainable aviation fuel is made. Sustainable aviation fuels can be made from soybean oil and a number of other feedstocks, including oilseeds, grease and waste fats, in conventional petroleum refineries. But the legislative language includes a methodology adopted by the International Civil Aviation Organization for measuring greenhouse-gas impact that may preclude fuels made from soybean oil and corn ethanol from qualifying for the credit.

U.S. airlines are making an effort to support sustainable aviation fuels and to reduce aviation emissions:

  • United Airlines set a target of reducing its emissions intensity by half compared to 2019 by 2035.
  • Delta Air Lines secured deals with three sustainable aviation fuel producers and set a target of replacing 10 percent of jet fuel use with sustainable aviation fuels by 2030.
  • American Airlines plans to procure 10 million gallons of sustainable aviation fuel from Prometheus Fuels by 2025 through a process that produces fuels from captured carbon dioxide and renewable electricity.
  • Alaska Airlines plans to purchase sustainable aviation fuel to offset corporate travel on key routes and has agreements in place with two producers.
  • Southwest Airlines is partnering with the National Renewable Energy Laboratory to develop and commercialize sustainable aviation fuel.
  • JetBlue committed to electric and hydrogen aircraft development in partnership with Joby Aviation and Universal Hydrogen.

The legislation also would extend through 2031 a $1.01-per-gallon, second-generation biofuel tax credit for fuels such as ethanol made from plant cellulose.

Feedstock Costs Increase

Whether the subsidies can make the sustainable aviation fuels economic depends on several factors, one of which is feedstock cost. As more new renewable fuels projects are announced, feedstock supply tightens. While lower carbon intensity feedstocks like beef tallow and used cooking oil are more valuable, soybean oil is most in demand due to availability. However, soybean oil has suffered from a recent drop in production. U.S. soybean oil production for 2021/2022 was reduced by 290 million pounds to 25.42 billion pounds due to lower soybean crush. Imports also fell—by 10 percent (50 million pounds) to 450 million pounds, reducing supply and supporting higher prices.

In quarter 3 of 2021, soybean oil prices averaged around 65 cents per pound, up by 25 percent compared with 52.13 cents per pound in quarter 2. While prices for renewable feedstocks declined recently, the decline is expected to be short-term as plants restart from Hurricane Ida and other storms.

Obama Administration’s Aviation Biofuel Initiative

During the Obama administration, attempts were made to jump-start biofuel and sustainable fuels for aviation and other purposes. A frequent avenue utilized by the government during Obama’s tenure was to use Department of Defense funding, especially within the U.S. Navy. Part of the argument at that time was that the United States was too dependent upon foreign sources for its energy. For example, Navy Secretary Ray Mabus touted the “Great Green Fleet,” which would run on biofuels purchased for $26 a gallon. The Air Force committed to buy biofuels for jet aircraft for $59 per gallon. These examples of the high cost put an end to renewable projects committed to weaning the military from oil, especially in light of growing U.S. production of oil and gas owing to horizontal drilling and hydraulic fracturing. With the United States gaining energy independence in 2019, little was heard on this front until the Biden administration began to push climate change as a justification for new federal programs.


President Biden has initiated subsidies and grants for aviation fuel in his goal to make the United States 100 percent carbon-free by 2050. Taxpayers need to be aware because once the subsidy taps are opened, they are next to impossible to close. The reconciliation bill drafted by House Democrats has left no stone unturned in their quest to hand out dollars to projects that the free market would not touch, including sustainable aviation fuel. Such actions have occurred in the past, to little avail.

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