With a theme of Connected Energy, the 20th Clean Fuels Conference was held in Fort Worth, Texas, in early February. Hosted by Clean Fuels Alliance America (formerly known as the National Biodiesel Board), the event has expanded in recent years to include renewable diesel and SAF—and has also attracted some prominent companies including BSNF Railways, PepsiCo and American Airlines. However, the addition of the renewable diesel and SAF markets wasn’t necessarily what drove these companies to attend, said Donnell Rehagen, CEO of CFAA during his keynote address. “These companies are committed to decarbonization like never before, and they can’t wait for nascent or future technologies to come along if they’re going to meet their own aggressive decarbonization targets. They are looking for solutions now, especially in heavy duty applications, and here we are ... &nbsp;ready to assist them in their journey.”Rehagen discussed the conference in years past and the strides technology and fuels have made parallel to each other over the decades. “Today, our industry’s vision is that the use of our fuels will exceed 6 billion gallons by 2030 and, with advancements in feedstocks, that we will reach 15 billion gallons by 2050,” Rehagen said. “Now, for the first time, it feels like the world is ready to meet us in that vision, because companies have realized they have to adapt and evolve, too. And, that they have a critical role in leading others to sustainable practices in support of our planet. Our paths have finally crossed in a way that we always hoped that they would; corporate decarbonization goals are ruling the day and driving demand. The government and major Fortune 500 companies have looked at us and really see us for what we are: an immediate low-carbon solution that works with the existing infrastructure.”As for emerging and potential markets, the marine market alone could mean another 7 billion gallons of demand of bio-based diesel fuel in the U.S. alone, Rehagen said, highlighting a recently introduced bill, The Renewable Fuel for Ocean-Going Vessels Act, which would allow companies to earn RIN credits under the Renewable Fuel Standard for ocean-going vessels.Rehagen also discussed challenges regarding low RFS renewable volume obligation numbers set by the U.S. EPA and the impacts it has had on producers but expressed confidence the market would right itself. “I’m a strong believer in the marketplace. I always believe we’ll adjust and settle,” he said. “We’ve seen an increase of renewable diesel over the past several months as the market response to lower RVOs, and if that continues, it should provide us with some relief with RIN values. The market almost always tends to right itself, and in our case, the market has to right itself, because the demand for our low-carbon fuels is so high. Markets tend to pay the most attention when there is growing demand and growing supply. Why is that? Because opportunity exists in the marketplace under those conditions. As an industry, we should take a position of confidence and optimism. We should focus on the opportunities, some of which might be extremely hard to see at this moment. Our challenge is always to see the changing market dynamics and to respond with the appropriate adjustments to our businesses.”Now is not the time to hunker down and wish for the good old days, Rehagan said. "These can be the good new days. There is a bounty of market opportunities due to these unprecedented carbon reduction goals, and we as an industry must lean into those.”Soaring with SAF&nbsp; A panel focused on SAF explored topics including airline decarbonization commitments, government support and policy, SAF production and infrastructure challenges and more.Moderated by CFAA director of environmental science Veronica Bradley, participants included Jill Blickstein, vice president of sustainability at American Airlines; John Briere, director of fuel supply and trading at Southwest Airlines; and Nancy Young, chief sustainability officer at Gevo.American Airlines has a goal to reach net-zero emissions by 2050, and “SAF is a huge part of that,” Blickstein said, adding that it’s unlikely AA will be able to reduce all those emissions within the business, and therefore will probably buy carbon offsets. “But what we’re really trying to focus on is our strategy [regarding] what we can do to reduce the impact of the jet fuel that we burn, and jet fuel is about 99% of our total carbon footprint. We’ve got to focus on jet fuel. We have a goal of 10% SAF by 2030.”Blickstein discussed the SAF Grand Challenge, segueing into the offtake agreements the airline has made to date, describing it all as “exciting, but also incredibly daunting. It’s really just the beginning of what will one day be a very big market,” she said. “Nobody knows how long it will take, but it’s a big challenge, and I feel like every day we trip over what we call transition issues. It’ll be one thing to actually have the SAF, and even if we do have it, then there are questions like, how will we get it to the airports? How will we get it into the planes? These are the kinds of issues that come with it.”Briere discussed Southwest Airlines’ sustainability goals, initially branded as “Nonstop to Net Zero,” but recently amended to “Net Zero by 2050.” That includes some nearer-term goals of 10% SAF by 2030, with carbon emission-intensity reductions of 25% by 2030 and 50% by 2035. “And of course, SAF is our North Star and ultimately how we’re going to decarbonize,” he said.Young said Gevo’s big goal is to deliver its alcohol-to-jet Net-Zero 1 Project in Lake Preston, South Dakota, which the company says will have an eventual SAF production capacity of 65 MMgy. “We’re true believers in ethanol-to-jet, and we’ve done a lot in terms of developing that opportunity,” she said. “We’re very dedicated in supporting our farmers and helping with climate-smart agriculture to realize additional values in the supply chain. We’re also focused on every element of decarbonization in our supply chain.”Panelists all agreed on how critical government support and policy will be in reaching SAF production goals. “There are a lot of people who want to make SAF and a lot of ways to make it ... but those efforts will be really slow to develop if we don’t have the right federal and state policy in place,” Blickstein said. “It’s amazing that Congress passed a SAF blenders tax credit, and it does show that there is the will to create this, but there are a lot of problems.”For one, it’s more profitable to make renewable diesel today than it is to make SAF, she said. “You can’t just take those processes and shift them over to SAF and make the same money; there are yield losses as well. Evening out the playing field so that SAF is as profitable as renewable diesel will definitely start to help, and providing the incentives so that alcohol-to-jet producers can get off the ground and scale ... we just had a list of 10 companies that we're talking to, and all were having trouble getting financing. American and Southwest can contract for all the fuels they want, but we won’t get them if there’s no fuel. So there are financing issues to solve—I don’t know if the government can help with that or if there are other things that have to happen—but I think there’s a really big policy [issue] that has to be solved.”When asked if the SAF blenders tax credit and the 2025 producers tax credit is enough to impact the industry, Young was quick to say that it will not be enough. “Part of it is the short length of those tax credits,” she said. “Two years is not enough time to send that signal to the market. And right now, policies are not favorably crediting on-farm ag practices that sequester carbon in the soil, whether in California or at the federal level ... ”Briere emphasized the lofty challenge and cost of getting fuel to where it can be consumed. “You’re talking about an industry that’s had 150 years to refine and perfect the distribution system ... we have to be able to connect where the SAF is produced to the existing infrastructure that supplies the airports,” he said. “A penny in 2030 is going to be $50 million a year to American and $30 million to Southwest. We’re focused on fractions of a penny in terms of cost. When you look at what it takes to move SAF from the middle of the country to the coast, we could be talking about 25 cents, maybe projecting 10, 15 years down the road, maybe close to 60 or 75 cents. Our business is not going to be able to support that, and I think that’s why the federal and state incentives ... for SAF are so crucial.”Airlines doing offtakes for SAF allows for other private money for SAF to be invested, Blickstein pointed out. “We’ll pay a lot more for SAF than conventional jet fuel, but in the end ... the airline industry doesn’t have the deep pockets to get the industry off the ground. I fear there is this idea, or too much reliance on the airline industry.”Author: Anna Simet&nbsp; Editor, SAF Magazine

2024-03-12 - Connected Energy (SAF Magazine)

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SAF Magazine attended Clean Fuels Alliance America’s annual conference in Fort Worth, Texas, in early February.

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