The term “sustainable aviation fuel” (SAF) is a vague, umbrella term used indiscriminately to describe a range of fuels with widely different environmental credentials, depending on the feedstocks they’re made from and the energy sources powering their production. This lack of clarity misrepresents these fuels’ environmental impact and can mislead consumers and investors. Therefore, this briefing refers instead to “alternative aviation fuels” as the catch-all term to describe non-fossil jet fuels.
SUMMARY
- The US regulatory landscape for alternative aviation fuel (otherwise known as “sustainable aviation fuel” (SAF)) is biased towards bio-based fuels, and particularly those made from crop feedstocks. Despite the Trump administration’s stated intentions to roll back support for such fuels in favour of fossil fuels, red state-favouring biofuel incentives and blending mandates have remained in place.
- Alternative aviation fuel plants in the US have overcome financial hurdles more quickly than European counterparts, and some investment has been funnelled towards e-fuel producers as disruptors in the alternative fuel market.
- The US’s departure from the Paris Agreement and its reluctance to enforce international obligations under CORSIA are posing challenges for raising ambition in global aviation decarbonisation efforts.
Due to its geography, the US is home to one of the most extensive aviation networks in the world, and its citizens take more flights per year than any other nation’s1. The US is also the world’s largest producer of crude oil, the critical feedstock of jet fuel, achieving record-level production in 20232. Aviation represents about three per cent of US total greenhouse gas (GHG) emissions, and this share will only increase, given that the sector is expected to see “rapid year-over-year growth”3.
As the global aviation industry increasingly recognises the importance of reducing GHG emissions, collaboration and harmonisation of alternative aviation fuel policies across countries are becoming more common through mechanisms like the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) led by the International Civil Aviation Organisation (ICAO). Previously, the US regulatory landscape took some distinct approaches to tackling aviation’s climate impact; while other governments have supported alternative aviation fuel by combining funding, legislation, incentives, and research and development initiatives, the US chose to heavily prioritise subsidy and tax credit mechanisms. However, much of this has changed under the new Trump administration, which made the significant decision to exit the Paris Agreement and the UNFCCC in 2025 and roll back many incentives set by previous Democrat-led administrations.
ICCT found that the US “has approximately 21.7 billion gallons of theoretical SAF production potential from available biomass, but only 12.2 billion gallons of that is from sustainably available biomass.”4 As such, alternative aviation fuel has become a highly politicised topic in terms of the environmental and socio-economic opportunities and risks it presents5.
The ongoing war in Iran has intensified the rise in biofuel feedstock prices, which was already driven by stricter biofuel blending mandates in the US and Asia6. While some reporting suggests that price differentials between fossil kerosene and certain biofuels have narrowed7, the main implication of the conflict for biofuels lies in the renewed emphasis on energy security and supply diversification8.
International frameworks
There are many questions about the US’s commitment to CORSIA. In September 2025, US Secretary of Transportation Sean Duffy criticised ICAO for diverting resources to climate initiatives, threatening funding cuts and signaling reluctance to enforce CORSIA obligations on major US carriers like United, Delta, and American, which rank among the top global emitters under the programme9. CORSIA Phase 1 (2024–2026) applies to airlines from participating states for international flights above 2019–2020 baseline. However, no US national law enforces CORSIA penalties, and the Trump administration has shown no intent to implement active enforcement. In this context, the US blocked an agreement on a global tax on maritime emissions agreed at the International Maritime Organisation (IMO) level10, but it is not expected that it will try to actively undermine the CORSIA global framework11.
When compared to the alternative aviation fuel policy landscapes of other developed countries, the US’s is much more accommodating to biogenic fuels — particularly crop-based fuel derived from corn or sugarcane — which are not permitted under environmental legislation in the EU12 or the UK13. The change in government in the US in early 2025 has posed several challenges in Europe, particularly for raising ambition on aviation decarbonisation via mechanisms like the EU’s Emission Trading System14,15, which the US administration is trying to prevent from expanding to cover international flights16. Political tension between the regions — though progressing in areas such as trade17 — remains high. Particularly, the recent US-UK trade deal will penalise UK ethanol production18, which is mainly aimed at road and maritime transport, but which is relevant in the context of UK authorities who are currently consultation on the inclusion of crop-based fuels in their SAF Mandate19.
The early months of Trump’s second term saw many environmental measures rolled back, risking an additional 2–4 billion tonnes of CO2 emissions by 203020. That has included removing the US from the Paris climate accords, facilitating new fossil fuel extraction, deregulation via the Environmental Protection Agency (EPA) and reconciliation bills which have made changes to the Inflation Reduction Act (IRA) tax credits21.
Inflation Reduction Act
Since 2022, the IRA has had a significant impact on the alternative aviation fuel market in the US by offering comprehensive support to encourage the production and adoption of these fuels. In addition to previously providing research funding, infrastructure investment, and market stability measures, the IRA offered key financial support for alternative fuels through the 45Z Clean Fuel Production Credit (CFPC). This technology‑neutral production tax credit replaced the previous 40B tax credit and rewards lower‑carbon fuels (including alternative aviation fuels such as e-fuel) based on verified lifecycle emissions of at least 50 per cent lifecycle GHG reduction using approved models to qualify.
This credit awarded alternative aviation fuel producers a tax credit equal to a base rate of up to $1.75 per gallon of fuel produced, multiplied by a carbon dioxide emissions factor set annually by the Secretary of the Treasury22. 45Z was also key to underpin the first wave of e‑fuel projects. Existing e-fuel production comes from Twelve’s Moses Lake (Washington) AirPlant One with 40,000 gal/year (≈122 tonnes/year), and Infinium’s Project Pathfinder in Corpus Christi, Texas, which shipped commercial volumes of e‑fuels to customers in the US and Europe. It is expected that Infinium’s Project Roadrunner in Pecos, Texas, will start production in 2027 with about 23,000 tonnes/year of e‑fuel. Though these e-fuel projects have seen success in the US, none have yet reached FID in Europe.
Certain stakeholders have pushed to exclude alternative aviation fuels made from imported feedstocks from eligibility in favour of domestic biofuels23. Also, there have been proposals to extend the credit locking-in such incentives for a longer period24,25. NGOs have opposed such moves on the basis that they exclude potentially lower-carbon e-fuels from eligibility for the tax credits26. However, changes in 2025 through the “One, Big, Beautiful Bill” have seen the eligibility of conventional biofuels for 45Z broadened even further27, risking wasted investment into already established technologies, alongside “eliminating any accounting for indirect land use change (ILUC) in estimates of life cycle emissions from alternative aviation fuels”28 via a model that yields lower lifecycle emission estimates than the international benchmark (ICAO’s CORSIA).
Since the introduction of the IRA — which was widely compared and contrasted to the EU’s Green Deal29 — European policy makers have been responding to the implications of the legislation within their own markets30. The approach to a regulatory framework to support alternative aviation fuel has differed between the two regions, but neither approach is yet viewed as “complete” in terms of assuring market certainty31.
President Trump rolled back large parts of the IRA as part of his administration’s deregulatory environmental agenda. Conservative states are the beneficiaries of the majority of the legislation’s alternative fuel incentives32, leading to what was described as a “handout for conventional biofuels” like corn ethanol and biomass-based diesel at the expense of innovative new technologies in the form of 45Z tax credits33.
SAF Grand Challenge
The Biden Administration launched the SAF Grand Challenge in 2021 with the aim of scaling domestic production, establishing a production target of three billion gallons by 2030 and 35 billion gallons by 205034 (compared to around 15.8 million available today35). The Grand Challenge is a collaborative programme between the Department of Energy (DOE), Department of Transportation (DOT), the Department of Agriculture (USDA), and other federal agencies, allowing for a harmonised approach to strategy and resource allocation, alongside acknowledging the need to engage the wider supply chain for SAF and diverse industry stakeholders with a role to play.
Some examples of initiatives and funding linked to the Grand Challenge include:
- Department of Energy grants: Some 13 alternative aviation fuel projects have received support, with the DOE awarding over $100 million in funding36 and $64.7 million given for projects producing cost-effective, low-carbon biofuels for heavy-duty transportation37.
- Bioenergy Technologies Office (BETO): The DOE has provided $16.7 million for biofuel and biochemical projects via BETO “that will significantly reduce GHG emission” in support of the SAF Grand Challenge38. BETO provides funding and support for alternative aviation fuel research, development, and demonstration projects39.
- Fueling Aviation’s Sustainable Transition (FAST) programme: The Federal Aviation Administration (FAA) has made $291 million available to support the goal of net-zero GHG emissions from aviation by 2050, comprising $244.5 million for alternative aviation fuel projects, and $46.5 million for low-emission aviation technology projects.
- The DOE Loan Programs Office (LPO) offers loan guarantees for large alternative aviation fuel projects.
In January 2025, a 2021–2024 Progress Report was published40 while the Trump administration approved a government-backed loan guarantee for an aviation biofuel refinery — Montana Renewables — that will “allow it to expand production to 315 million gallons per year, and produce about half of North American SAF, a fuel made from fats from seed oils and tallow that is lower in greenhouse gas emissions than conventional jet fuel.”41
Renewable Fuel Standard
While primarily focused on transportation fuels like ethanol and biodiesel, the Renewable Fuel Standard (RFS) also includes provisions for advanced aviation biofuels. The Standard sets annual targets for the blending of renewable fuels, called Renewable Volume Obligations (RVOs), requiring Renewable identification numbers (RINs) credits purchases if targets are not being met. This policy creates market incentives for alternative aviation fuel production, supporting investment into biofuel production infrastructure.
In March 2026, the EPA issued a final rule to establish required RFS volumes and percentage standards for 2026 and 202742. It set the highest RFS volumes in the programme’s history, while maintaining the 15 billion gallon conventional biofuel level for 2026 and 2027. The rule also removes renewable electricity from the program and gives foreign fuels and feedstocks only half the RFS compliance value starting in 2028. Additionally, the EPA will reallocate small refinery exemptions granted for 2023–2025 requiring other obligated parties to cover those volumes in 2026 and 2027.
State-level initiatives
US states are pursuing their own alternative aviation fuel initiatives, including California’s Low-Carbon Fuel Standard, Oregon’s Clean Fuels programme, and Washington’s Clean Fuels Standard, all of which have aviation fuels as “opt-in” fuels whereby alternative aviation fuel can generate credits; however, conventional jet fuel use is not penalised43. Illinois offers an airline alternative aviation fuel use credit of about $1.50 per gallon, with similar credits in Minnesota, Washington, Nebraska and Arkansas, typically in the $0.75–1.50/gal range for produced or blended alternative aviation fuel.
There are a handful of alternative aviation fuel projects scaling up across the US44 and some investments are starting to flow into e-fuel first-of-a-kind (FOAK) projects at the state-level. Examples include Project Roadrunner in Texas, which will convert waste carbon dioxide and renewable power into alternative aviation fuel and other low-carbon fuels through financial support from Breakthrough Energy Catalyst, Citi and American Airlines45.
Other financial mechanisms
In early 2025, the Trump administration approved a loan of $1.67 billion for a plant that utilises “vegetable oils, fats, and greases” to produce aviation fuel alongside other commodities like diesel and naphtha46. Also, in October 2025 the DOE granted an extension to the conditional commitment to guarantee approximately $1.46 billion of project debt to Gevo for its ATJ North Dakota plant due by April 202647. The US government has deployed several other funding, tax credit and subsidy schemes that can benefit the alternative aviation fuel market, as outlined in Table 1. However, it must be noted that key programmes once offered by the USDA, such as the Biomass Crop Assistance (BCAP) and Rural Energy for America (REAP) programmes, have now been stalled, and there is uncertainty over whether they will be reopened48.
| Department | Scheme | Purpose |
| USDA | BioPreferred programme, Advanced Biofuel Payment Program, Bioenergy Program for Advanced Biofuels (section 9005) | Aim to increase the use of bio-based products, including fuels, across federal agencies. They provide opportunities for alternative aviation fuel producers to gain visibility and access federal procurement opportunities. Also, payments to advanced fuel producers are allowed and payments based on volume, duration of production and energy content. |
| Department of Defense (DOD) & NASA | Federal procurement | The US Government has shown interest in using alternative aviation fuels for its own fleet of aircraft. Federal agencies have been exploring opportunities to incorporate alternative aviation fuels into their operations, setting an example for the broader aviation industry. |
| DOT & FAA | Commercial Aviation Alternative Fuels Initiative (CAAFI) | CAAFI works to promote the development and deployment of alternative aviation fuels. It facilitates collaborations between government, industry, and academia to accelerate the commercialisation of these fuels. |
| Research and development programmes | The FAA also supports alternative aviation fuel testing and analysis through Aviation Sustainability Center (ASCENT) research projects and the Continuous Lower Energy, Emissions, and Noise (CLEEN) programme. | |
| Cross-government | SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programmes | Agencies must allocate a small percentage of their R&D budgets (around 2.5–3.2 per cent) to small‑business innovation. Some specific examples include Air Company’s CO₂‑to‑SAF catalyst STTR project funding of about $3.5 million across multiple awards, or the Blue Biofuels $200,000 grant to advance a cellulose‑to‑sugars alternative aviation fuel pathway. |
Our aviation programme focuses on Europe as a key region where action on addressing the climate impact of aviation is needed through scaling high-integrity synthetic aviation fuel, challenging dominant industry narratives and accelerating zero emission flight. The US is an influential global player in the alternative aviation fuel space, and its regulatory framework is actively shaping investment and action in Europe and beyond, which this briefing aims to summarise. To hear more about our aviation work, get in touch.
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