Policy uncertainty is swirling right now, and I’m looking forward to the International Biomass Conference &amp; Expo in just a few weeks, where industry leaders will, as oxymoronic as it sounds, discuss the unknowns. Perhaps by then they will have a little more insight than they do right now (the end of February), but that is far from a guarantee. In the meantime, we’ve included some expert commentary on the guidance, or lack thereof, released thus far regarding the 45Z Clean Fuels Production Credit and the 45ZCF-GREET model.&nbsp;In “Delayed Arrival for 45Z Tax Credit Guidance” on page 8, Paul Winters, director of public affairs and federal communications at Clean Fuels Alliance America, discusses the Treasury’s recent notice of intent to propose regulations, which he says, “falls short of the technology-neutral promise, yielding unequal impacts among fuel producers,” and also points out the shortcomings of the new GREET model criteria. While Treasury is taking public comments on the notices and is likely to make changes to the original proposal, as Winters points out, there are likely to be continued delays as the new administration takes shape.Also on 45Z, we have a contribution article by Jordan Godwin, director of biofuels markets at OPIS, that includes some industry perspective regarding what has transpired and how it might impact U.S. SAF Grand Challenge goals, as well as what OPIS has seen Low Carbon Fuel Standard credit and renewable identification number (RIN) prices do since release of the 45Z guidance. &nbsp;“For SAF to really start taking off in 2025,” Godwin says, “it’s going to need more help from RINs and LCFS credits beyond the 45Z credit.”&nbsp;Policy uncertainty is front and center right now, and all the industry can do is advocate, comment and wait, and speculate on the impacts any shortcomings, changes or delays might have on progress. As one industry expert said to me today, in light of all of the above, “The SAF industry is happening. The real questions are, at what pace will it be able to build out, and will goals be met?”&nbsp;Author: Anna Simet&nbsp; Editor&nbsp; asimet@bbiinternational.com

2025-03-10 - A Waiting Game  (SAF Magazine)

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A Waiting Game 

The new Clean Fuel Production Credit (Section 45Z of the Internal Revenue Code) is intended to be a technology-neutral incentive for U.S. production of renewable fuels. Low-carbon fuel producers of biodiesel, renewable natural gas, hydrogen, sustainable aviation fuel (SAF) and others are eligible. The value of the credit is based on the calculated emissions rates at each production facility. Unfortunately, the overdue, incomplete “Notice of Intent to Propose Regulations” that Treasury issued in January 2025 falls short of the technology-neutral promise, yielding unequal impacts among fuel producers.Treasury’s delay particularly hurt biodiesel and renewable diesel producers. Feedstock suppliers, fuel producers and their customers typically negotiate feedstock and fuel offtake agreements at least three months in advance, distributing the value of tax credits between all parties. Without available guidance on the value of the 45Z credit during the final quarter of 2024, many companies simply couldn’t put agreements in place for the first months of 2025.The devastating impact of the uncertainty is now apparent. According to EPA data, domestic biodiesel production in January 2025 was at the lowest monthly level in the past five years. U.S. renewable diesel production in January fell 17% below the average monthly production in 2024. SAF production (both domestic and foreign), by contrast, continued to ramp up. Imports and foreign production of biodiesel and renewable diesel came to a near halt for the month.&nbsp;Getting back to business is crucial for biodiesel and renewable diesel producers. According to the U.S. Energy Information Administration, biodiesel and renewable diesel are meeting 9% of U.S. demand for distillate fuels—the on-road diesel that powers heavy-duty transportation of goods across the nation. Demand for clean fuels is growing in new markets, and not just aviation but also rail, shipping, construction and heating.&nbsp;For some domestic producers, the pieces are now in place to claim the new 45Z credit. In May 2024, the Internal Revenue Service issued registration requirements and urged producers to complete the process before the 45Z credit’s start date on January 1. The IRS also finalized the instructions and paperwork (Form 7218) for claiming the credit as part of income or information returns. Similarly, the IRS finalized rules for monetizing the credit by transferring it to a third party in exchange for cash.Additionally, this past January, Treasury and the Department of Energy published guidance and a new 45ZCF-GREET model for calculating emissions rates. This new model enables nonaviation fuel producers to calculate the value of the tax credit. SAF producers can continue to use the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), or the 45ZCF-GREET model. All current U.S. SAF producers are CORSIA certified.At the end of January, Treasury published its notices of intended regulations and emissions rates in the Internal Revenue Bulletin. This bulletin guides IRS agents across the country and ensures uniform application of rules, even retroactively to the start of the year. While the publication is not the same as a finalized regulation, taxpayers can still rely on it as a precedent in calculating and claiming the credit.Other fuel producers may not have the certainty they need to claim the 45Z credit. The 45ZCF-GREET model includes a narrow list of feedstocks, fuels and production methods. Treasury did not establish a method for producers to obtain a provisional emissions rate for fuels and feedstocks that aren’t currently included in the model. And some fuels qualify for limited or no tax incentive because they don’t meet the lifecycle carbon threshold score. &nbsp;Treasury and the USDA did not finalize a promised method for improving feedstock carbon scores through farm conservation practices.Treasury is taking public comment on its January notices. The agency is likely to make changes to the original proposal but is also likely to experience continued delays as the new administration takes shape. Congress may also consider changes to the credit as it reevaluates tax policy this year.Shortfalls in biodiesel and renewable diesel production would take a significant bite out of an essential U.S. energy supply, impacting the price of nearly every consumer good shipped across the country. Policy stability is crucial to resume industry growth, reestablish parity among fuels and feedstocks, incentivize new technologies, and meet increasing demand in new markets. Clean Fuels is working with producers and feedstock suppliers to ensure that the credit works for all industry stakeholders going forward.Author: Paul Winters&nbsp; Director, Public Affairs and Federal Communications&nbsp;

2025-03-10 - Delayed Arrival for 45Z Tax Credit Guidance (SAF Magazine)

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Delayed Arrival for 45Z Tax Credit Guidance

2025-03-20 - Data Driving the SAF Industry (SAF Magazine)

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BBI International's Map Data & Content Coordinator Chloe Piekkola provides some statistics on the latest SAF and renewable diesel database update. 

Data Driving the SAF Industry

Comstock Inc., a legacy gold and silver mining company based out of Nevada, began pursuing investments into early stage decarbonization technologies in 2017. Fast-forward to 2025, and the company's subsidiary, Comstock Fuels Corp., is leading the way to woody feedstock-produced liquid renewable fuels by utilizing its revolutionary conversion technology. “Not only are we a producer, but we’re also a technologist,” says Comstock Fuels Director of Business Development Chad Michael Black. “We are the technology that enables the woody biomass to be converted into renewable fuels.” On that list, Black says, is sustainable aviation fuel (SAF).Far from an overnight success, the foundational patents crucial to Comstock Fuels’ technology and processes were initially filed in 2013, Black says. “There were three companies that were acquired in 2021, so since that time, we’ve been further perfecting the artwork on the patent to go all the way to liquid fuels,” he explains.The Comstock Legacy&nbsp; Comstock Mining was established in 2003 in Nevada, focused on the Historic Comstock District. The District’s legacy dates back to 1859, when over 8 million ounces of gold and nearly 200 million ounces of silver were discovered and mined from 1860-1880. Named the Comstock Lode, the strikes of silver and gold “stretched from Virginia City to Gold Hill to Silver City," roughly two and a half miles, says the Nevada State Historic Preservation Office. &nbsp;In 2010, Corrado De Gasperis was inducted into his role as Comstock Inc.’s CEO, and in 2015, he added on the title of executive chairman. Quickly after, with the support of the company board, Comstock began its investments in renewable energy. “In roughly 2017 ... the board made the decision to invest in early-stage decarbonizing technologies, with one of those technologies now being the wood-to-fuel technology that forms Comstock Fuels Corporation today,” Black says.Today, Comstock Fuels’ technology rivals that of Earth’s natural hydrocarbon formation process. “Our process, it accelerates that process. So, what takes Mother Nature millions of years to create crude oil from organic matter, our process can convert in hours,” Black says.&nbsp;The key to this is feedstock availability, Black explains. “The current constraint inside the system is feedstock availability, right? Our technology unblocks that constraint; we utilize woody biomass. Terrestrial biomass makes up roughly 80% of the world’s vegetation, so it’s an abundant supply of feedstock,” he says.An Evolution Revolution&nbsp; There are four key steps to Comstock Fuels’ production process. “The front-end component is separation; that’s pulping and digestion—no different than any pulp and paper facility,” Black explains. “They use sodium sulfate as a solvent; we use butanol as a solvent. That’s the only difference.“The second step is fermentation—that’s ethanol,” Black says. “The third step is esterification, or fat splitting, creating an ester—that’s biodiesel. And then the fourth step is hydrotreating, which is done at both renewable fuel and petroleum refineries around the world,” he says.“Because we’re using woody biomass as source material, we have best-in-class carbon intensity (CI) scores, so our finished fuel is around a 15 [CI], prior to any type of green energy, carbon sequestration,” Black continues. “And it’s extremely high yielding. We’re pushing upwards of 140 gasoline gallon equivalents (GGE) ... that's almost double our known competitor from a technology perspective.”This low-carbon, high-yielding technology is used to access lignin. “Historically, this separation-first mentality, you’ll see other technologies that can claim this cellulose fraction [50%],” says Black. “We take our pulp, we enzymatically convert it into sugar, and then we ferment it into cellulosic ethanol. That ethanol can be converted into SAF, given a number of dehydrating technologies that exist today.”Black says that Comstock Fuels' &nbsp;claim to fame is going after the other 50% of the tree—the remaining hemicellulose and lignin. “When these two products combine with the butanol in our front-end digestion, they form a unique blend of hydrocarbons that we call bioleum,” he explains. “Bioleum is suitable, with further treatment, to be a drop-in feedstock for both renewable fuel and petroleum refineries for coprocessing ... When it’s in its biointermediate states, its called bioleum oil, about 18% oxygen, 15 TAN (total acidic number).”“We also found with a little refinement, we can get that oxygen content down to about one percent,” Black continues. “That bioleum fraction, predominantly SAF range, about 60-70% of the byproduct of the HBO, the hydrodeoxygenated bioleum oil—is sustainable aviation fuel by ASTM standards.”Despite its advanced results and integrated processes, Comstock Fuels’ technology components primarily use off-the-shelf equipment. “We have a legacy dating back to 2003 with investments in and around lignin conversion technologies. Our front-end system uses an organosolv-separation digestion phase,” Black explains.The solution: Swedish company RenFuel’s exclusively licensed esterification technology. “It takes any lipid—fat, oil and grease—such as our crude bioleum, mixes it at about a 0.7 to one ratio of fats to bioleum, and then creates a lignin ester, the bioleum oil. Now we have a suitable feedstock to drop in at renewable fuel refineries. That product is geared toward a 100% drop-in sustainable aviation fuel,” he says.“Today, aviation fuel cannot be dropped in neat; it has to be blended to meet ASTM specs ... and the reason is because the aromatics are normally removed in the process,” Black explains. “Our process keeps the aromatics, so in theory, if there was a pathway approved for 100% drop-in SAF, we would be first to qualify because the aromatics remain in our process.”Making the Market&nbsp; As for its most recent news, Comstock Fuels recently scored a $14 million investment from Marathon Petroleum. Financing is a major roadblock that inhibits many industry hopefuls from finding success. “If you wanted to constantly apply for grants and go from benchtop scale to pilot scale, through commercial demonstration and full biorefinery with the USDA or the U.S. DOE—there’s a pathway for that, and it’s about a 25-year process," Black says. "So, it’s not practical. The deal we recognize is that to meet the grand SAF challenge by 2030, there needs to be $50 billion in capital placed into steel today.”&nbsp;Despite this gap, Comstock is confident it can play a notable role in meeting the U.S. Grand SAF Challenge, as well as an internal goal of its own: owning and operating 10 facilities in the next 10 years. Alongside several nationwide scouted states, Black cites three licensees in Australia and one licensee each in New Zealand, Vietnam, Pakistan and three more international sites on the move.&nbsp;These sites, above all, require space, water and access to feedstock. Colby Korsun, Comstock Fuels’ site development manager, points to a required 100-200 acres of space, 200,000-250,000 gallons of water on the supply side and 400,000-500,000 gallons of water on the disposal side, both needing the ability to be scaled up by 10 in five years, and 5-10 megawatts (MW) to be scaled up to 50-75 MW in five years, among other requirements. Feedstock in range is also a desirable trait in a potential site. To remedy this, Comstock has contracted Hexas Biomass Inc. for its energy crop, XanoGrass, which Comstock has exclusive access to, except for certain preexisting agreements.Comstock’s products and technologies apply to several markets, including SAF, the U.S. transportation system and mining. “There’s a major demand in the SAF arena to be able to decarbonize to lower transportation carbonization rates by 2030 and 2050,” Black explains. “What we’re able to do is incentivize whole countries into becoming energy independent ... our technology allows them to tap into terrestrial biomass, which again, is roughly 80% of vegetation that grows around the world.”This technology and the ability to convert woody biomass as well as purpose-grown energy crops allows the company to control its own destiny, &nbsp;Black says.When it comes to competition, from Black's perspective, nobody really benefits. “We want to enable an industry of SAF," he says. "One point of contention that a lot of early adopters want is exclusivity for the technology, and that’s something that we’ve never allowed in the system.“Right now, the missing link is that everyone’s doing it in their own vacuum,” Black adds. “Where collectively, we don’t believe in competition .... from the technology perspective, it hurts the industry every time something doesn’t work. We love our technology, but we want everyone to gain success.”Author: Caitlin Scheresky&nbsp; caitlin.scheresky@bbiinternational.com

2025-03-10 - Silver to SAF (SAF Magazine)

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With the U.S.-established SAF Grand Challenge’s 2030 deadline quickly approaching, Comstock Fuels is ready to answer the call.

Silver to SAF

Renewable naphtha is an expected derivative from producing renewable diesel (RD) and sustainable aviation fuel (SAF). Fuel refiners have been finding uses for this byproduct for decades, primarily as a blend stock with gasoline, and the renewable fuels space is no exception. Now, renewable naphtha is positioned with the potential to be used as a feedstock for plastics, hydrogen and other fuels.&nbsp;Located in Great Falls, Montana, Montana Renewables got its start in 2020 and began production of renewable diesel in 2022, followed by SAF in 2023. The facility produces 200 MMgy of renewable diesel and 30 MMgy of SAF, as well as roughly 10 MMgy of renewable naphtha derived from renewable feedstocks, including vegetable oils and waste inputs such as used cooking oil, animal fats and corn oil. “The target molecules, of course, are the diesel and the sustainable aviation fuel, which almost as they come out of the unit are fit for purpose to go into the diesel and jet fuel markets,” says Michael Wojciechowski, director of commercial optimization and compliance with Montana Renewables.For World Energy, the focus is primarily on SAF production. Its Paramount, California, facility produces SAF and sends its naphtha to the fuels market. Joe Ran, vice president of business development and innovation at World Energy, explains that the company works to offer its corporate customers low-carbon solutions to assist them in meeting emissions reduction goals across their supply chains by supporting the expansion of renewable biofuels in hard-to-abate sectors such as aviation. “When we’re intentionally making SAF, there will be some residual renewable diesel, and there will be renewable naphtha as a byproduct,” Ran says.Understanding the Chemistry&nbsp; Montana Renewables uses the hydrotreated esters and fatty acids (HEFA) process to produce its RD and SAF. Wojciechowski explains that the process breaks down triglycerides—made up of a propane molecule plus three diesel molecules—and separates the propane molecule, leaving molecules to make diesel and SAF. In the process, some of those molecules will break apart due to the chemistry, making slightly shorter-chain molecules: naphtha. This fuel has roughly 2%-3% lower energy density than RD or SAF. The fuels produced through the HEFA process are typically all given the same carbon intensity (CI) score—around 35 points is normal for Montana Renewables, according to Wojciechowski.&nbsp;“Renewable naphtha is paraffinic, meaning that it is a long-chain molecule with little to no carbon chains branching off,” explains Henrik Rasmussen, managing director and senior VP of the Americas for Topsoe. Topsoe’s HydroFlex technology utilizes the HEFA process to transform fats, oils and greases into RD, SAF and naphtha. Typically, naphtha is a byproduct of producing SAF and RD; however, the technology could be used to make 100% renewable naphtha if the customer so desires. “Up until this moment, we never had anyone come and ask us for that, but if they did, we could do that,” he says. “As a matter of fact, it’s easier to make naphtha than to make diesel and jet. You have to be very selective when you’re making jet and diesel, but if you just want naphtha, you could just crack the jet and diesel and make a large amount of naphtha.”Three main factors impact how much SAF and RD are produced as well as the naphtha yield, according to Wojciechowski. The first factor is the type of feedstock being sent into the process; each feedstock has a predisposition to produce more or less of each output. Secondly, the technology being used in the process also plays a role. The temperature, pressure and catalytic chemistry all have an impact. Finally, the severity of the process increases the amount of naphtha produced, he explains. “The reason for more severity is to try to make more sustainable aviation fuel,” Wojciechowski says. “The more you try to make sustainable aviation fuel out of the diesel, you will break more of these molecules into naphtha.”Similarly, Rasmussen explains that producing low-cloud diesel or “winter diesel” also requires the production team to operate the catalyst more severely, leading to increased naphtha production.&nbsp;As those three factors are adjusted, the naphtha yields may increase, but in Montana Renewables’ case, the shift is not drastic. At every facility that uses a HEFA process, these variables determine the process naphtha yield.Process Integration&nbsp; Using naphtha on-site as part of the HEFA production process is one of the solutions available to fuel producers, according to Rasmussen. About 20 HydroFlex units are in operation today, and two of those have Topsoe’s H2bridge technology integrated into the system, which is a hydrogen plant that transforms the off gases and naphtha byproduct into low-carbon-intensity hydrogen for use in SAF and RD production. “Topsoe is the only licensor that can license both a renewable jet and diesel plant and a hydrogen plant,” Rasmussen says. We license them as a combined integrated unit. This circular hydrogen production reduces the carbon intensity because you’re not importing fossil natural gas to make your hydrogen for jet and diesel [fuel]. You’re making your own hydrogen from a biogenic feedstock to produce the low-carbon-intensity hydrogen, and that benefits the carbon intensity of your jet and diesel.”Fueling Options&nbsp; Naphtha is derived from every refining process, whether that be from renewable sources or petroleum. Typically, naphtha is used as a gasoline blending component, according to Wojciechowski. Because it has a boiling point like gasoline, naphtha comes out of the process as an unfinished fuel, or a blend stock. “Just by using this material, the carbon footprint of your traditional gasoline will have a lower carbon count,” Ran says.&nbsp;Wojciechowski explains that Montana Renewables sells its naphtha to a singular customer, limiting direct market exposure. However, as the recipient of their fuel looks outward, there are plentiful opportunities beyond gasoline blending. The octane content of naphtha is too low for it to be used as a fuel on its own, he explains, as it would cause engine knocking. One potential strategy to make it usable as a fuel is to mix it with E85 to create a 100% renewable gasoline. “Ethanol can be well over 100 octane, and when you blend it with that type of naphtha material, it basically would raise that way up, and then you would have the benefits of an oxygenated fuel mixture made entirely of renewable components,” he says. “So, it doesn’t have contaminants, doesn’t have aromatics, but it lacks octane, and that’s why it needs other blending components to get it up to the specifications where our engines can process it without knocking.”World Energy sends the SAF facility’s naphtha into the E85 market for blending, replacing the gasoline percentage and making the fuel entirely low carbon.&nbsp;Another possibility is to use the naphtha as a denaturant for ethanol, Wojciechowski says. Currently, the ethanol industry must denature its fuel to keep it from being 100% alcohol; liquid natural gas derived from petroleum is mixed with it. “Why not put renewal naphtha in with ethanol and just make ethanol 100% renewable?” he says. “So, use it as an ethanol denaturant. That’s one of the [options]; nobody’s talking about it.”Plastic Potential&nbsp; Naphtha’s low octane number, around 40-45 points, opens up another opportunity, according to Rasmussen. This paraffinic naphtha can be used as feed to an ethylene cracker to make the chemical building blocks needed to produce renewable plastics. Once it is transformed into polyethylene and polypropylene, it can be used to make water bottles, phone packaging, polyester and medical devices, according to Ran.&nbsp;One of Topsoe’s recent initiatives has been PureStep, the company’s circular plastics technology, which makes a variety of plastics infinitely reusable. “The sorted plastic is processed in a pyrolysis unit,” he says. “And Topsoe’s PureStep unit upgrades the pyrolysis oil to an ethylene cracker naphtha feed. So, you see the circularity. The plastic is processed to a naphtha feedstock that goes into an ethylene cracker and this output is used to make plastics again.” Two units are currently in operation, according to Rasmussen.Implementation of this technology is limited by the lack of logistics and knowledge about recycling. If we want a greener approach, it will cost a bit more, Rasmussen explains. The technology to recycle plastic is here now, but the obstacle is economics. “I think you could pass it on to the consumer, but as of right now, the plastic consumers like Coca-Cola and all the other bottle companies have not been willing, as far as I can see, to pay extra for it,” he says. “It all starts with an off taker—somebody to say that they want it."&nbsp;World Energy’s mission to target the most challenging sectors meshes well with renewable plastic opportunities, according to Ran. The company has spoken with a few parties who would be interested in sourcing renewable plastics; however, no project is currently underway. &nbsp;“Ultimately, if you take a long view about this in ground transportation, light-duty vehicles, motor vehicles, gasoline, E85, that sector will eventually get electrified,” Ran says. “With plastics, there are limited substitutes. So, the long-term solution is that it needs to be deployed in that area.”Renewable plastics constitutes a significant opportunity for companies who are “thoughtful and mindful” about sustainability, and who see the potential for retail consumer appeal, Ran says. He sees the existing market for renewable plastics as a nascent—an emerging market, reminiscent of the biodiesel and SAF spaces in years past.&nbsp;The future value of naphtha depends on the economic incentive for it as a product, rather than a byproduct. For now, according to Ran, naphtha is both. However, the potential opportunities for the molecule are myriad. “There are a lot of places it could go,” Wojciechowski says. “I think the fun part and the interesting part is trying to figure out which one makes the most money for you and what that opportunity [is].” &nbsp;Author: Katie Schroeder&nbsp; Contributions Editor, SAF Magazine&nbsp; katie.schroeder@bbiinternational.com&nbsp; &nbsp;

2025-03-10 - The Ins and Outs of Naphtha (SAF Magazine)

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There are different market options for renewable naphtha, both as a SAF byproduct and coproduct.

The Ins and Outs of Naphtha

With an overall theme of “Accelerate,” the 2025 Clean Fuels Conference left no stones unturned, covering all aspects of the biodiesel, renewable diesel and sustainable aviation fuel sectors, from policy and tax incentives to market dynamics and technical developments. Donnell Rehagan, CEO of Clean Fuels Alliance America, delivered opening remarks at the event, which was held Jan 20-23 in San Diego, California. He began by highlighting important milestones the bio-based diesel industry has reached as of late, one being that U.S. production reached nearly 5 billion gallons in 2024. “That’s up almost 10% from 4.6 billion the previous year,” he said. “This steep growth—particularly in renewable diesel—underscores our growing relevance.”&nbsp;These fuels now make up about 10% of the diesel fuel supply in the U.S., according to Rehagen. “Our host state, California, is one of the single most important markets for our industry,” he said. “Biodiesel and renewable diesel have displaced 75% of all diesel sold in the state.” &nbsp;It is more difficult to find diesel fuel in California than bio-based diesel fuel, he said, adding that, so far, this industry is responsible for 45% of California’s progress under the Low Carbon Fuel Standard.&nbsp;Rehagen acknowledged the challenges the industry is facing along with its successes, but assured attendees that he believes it will pull through and become stronger. “We’ve been waiting for critical guidance on the new federal tax incentive system, known as 45Z, and the delays have already begun causing real hardships for our industry. Finally, the Treasury released guidance. It left us with a few answers, but a lot of questions. Now, more than ever, we need to stand united to ensure the new administration prioritizes addressing those gaps and finalizing the rule. Our feedstock producers and fuel producers deserve clarity on how the tax credit will impact them. Patience will still be necessary, but persistence will be key.”Rehagen referenced challenges the industry faced in 2018-‘19 as an example, when the production tax credit was lapsed for two years. “That was a tough time for all of us,” he said. “But together, we fought hard and secured a five-year tax credit—the longest and most stable period we’ve ever had, and a period of record growth for the industry.”Looking ahead, 2025 brings another major priority: Renewable Fuel Standard renewable volume obligations, Rehagen said. “Work has already begun to demonstrate our industry’s potential to the EPA. What we call 'Set 2.0' will shape the next several years of fuel production. The volumes were due last November, but the deadline was missed. This makes it all the more critical that we advocate for significant growth in those volumes and push this administration to finalize them soon, so we don’t find ourselves this time next year without RVO levels for 2026.”Feedstock Dynamics&nbsp; Moving onto feedstock, Rehagen discussed the crunch the industry is facing with increased production and subsequent feedstock demand. “Today, we have an interesting challenge—one those involved in the early days of the clean fuels industry may have never envisioned: a need for more feedstock,” he said. “We find ourselves trying to balance the push and pull of domestic and imported feedstock: products like soybean oil, canola oil, animal fats and used cooking oil. “The industry’s rapid growth has outpaced domestic feedstock availability, he added, saying that current calculations of domestic feedstock could support approximately 3.3 billion gallons of fuel production, though the industry produced 5 billion gallons last year. &nbsp;Imported feedstock has been filling demand gaps, but it hasn’t been without controversy—opinions on the proper role of imported feedstock differ and are strong on both sides, Rehagen admitted. “It has generated angst with domestic feedstock growers and processors,” he said. “This is not ideal. The clean fuels industry was built in the early 1990s around the need to provide a large-scale consumer for excess domestic soybean oil, and therein was born biodiesel. Back then, they would not have seen imported feedstock as playing any role. While it may be hard to square this current dynamic with our original vision, imported feedstock has become necessary to meet the demand.”Rehagen emphasized the importance of feedstock balance to the industry—the growing need for more vegetable oils with those of the food and feed industry, and the important role of waste feedstocks like used cooking oil, distillers corn oil and animal fats. “Growing volumes of domestic vegetable oils are just around the corner,” he said. “The soybean crush industry has invested over $6 billion dollars in the largest expansion of soybean crush in over 50 years. They’ve seen our industry grow, and like we do, they believe that growing demand for clean liquid renewable fuels is now the new norm ... the expansion of soybean crush is very important for the clean fuels industry as it brings significantly more feedstock to the table to support the growth in production capacity of our fuels.”&nbsp;Historically, Rehagen said, U.S. farmers have exported roughly half of their whole bean production, sending a substantial volume of domestic soybean oil away as well. “With this additional crush capacity—a 30% expansion—we can export fewer beans and keep more oil. A NOPA [National Oilseed Processors Association] analysis that looked at 2024 to 2030 shows that this extra crush could provide us with 900 million gallons of additional soybean oil annually, and soybean yields continue to climb.”Rehagen correlated the importance of crush expansion to advocating for higher RVOs. “Stagnation in feedstock availability—domestic or imported—makes arguing for higher RVOs much more difficult,” he said. “You know the adage about the rising tide lifting all boats. Well, that sure is applicable to the clean fuels industry at this time.”Ready to Battle&nbsp; Following Rehagen, Steven Cliff, executive officer of California Air Resources Board, provided an overview and update on the state’s Low Carbon Fuel Standard Program, first addressing the uncertainty the new administration has brought, assuring attendees that CARB is taking steps to defend California’s clean air climate and environmental protections. “We’re here to defend the programs that benefit Californians, and other states that take advantage of our programs to benefit the residents of their states,” he said. “You may have heard that the California Legislature is working to set up additional funds to shore up state and local defenses against this new administration. We're hoping that that's not necessary, but we are moving to make sure that our programs remain stable.”Cliff reminded attendees that CARB prevailed in lawsuits during the first Trump administration, “because they were founded on science and on good legal premises, so we believe that we'll continue to prevail. That's important, because that provides certainty to those of you who are investing in the programs that they will stay in place, and that's the type of work that we continue to do to make sure that the foundational parts of our efforts are very sound, but also married to a list of priorities for this year.” Author: Anna Simet&nbsp; Director of Content &amp; Senior Editor,&nbsp;&nbsp; SAF Magazine&nbsp; aimet@bbiinternational.com&nbsp;&nbsp; &nbsp;

2025-03-10 - Foot on the Gas (SAF Magazine)

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Despite the challenges it currently faces, the bio-based diesel industry is building on its successes and is ready to battle.

Foot on the Gas

If you’re still confused by the uncertainty that was brought on by the delayed and clunky rollout of the 45Z Clean Fuel Production Tax Credit, then you’ve come to the right place, because guess what? I’m still confused, too.&nbsp;At the Clean Fuels Conference in San Diego in January—just days after the tax guidance was finally released—there was a standing room-only panel discussion where seasoned federal tax experts were going through the facts and everything the federal government had released up to that point. But instead of coming to a consensus on 45Z and walking out of the packed room with a sense of clarity, we heard conflicting interpretations of the policy and how it might ultimately be implemented. “It left us with a few answers, but a lot of questions,” Clean Fuels Alliance America CEO Donnell Rehagen said at the event. “Our feedstock producers and fuel producers deserve clarity on how the tax credit will impact them.”&nbsp;Let’s review what we know. On Jan. 10, the Treasury Department and Internal Revenue Service released an 83-page notice of intent to propose regulations addressing 45Z, which is a tax credit available to producers of domestically produced clean transportation fuel sold from Jan. 1, 2025, through Dec. 31, 2027. Treasury and the IRS also released a 15-page interim guidance, seeking comments by April 10.&nbsp;The main takeaway from the release of that guidance was that the Biden administration, in its final days in office, decided to release the long-awaited 45Z guidelines as merely “interim guidance” rather than a final rule, meaning it would be up to the Trump administration to finalize the rule.&nbsp;Biofuel industry leaders said they were “deeply disappointed,” and that it was “too little, too late.” Renewable Fuels Association CEO Geoff Cooper said, “We do not believe this guidance alone will spur the investment, innovation and job creation in the clean fuels sector that Congress and the administration intended. It simply isn’t bankable, investible or otherwise actionable for the vast majority of biofuel producers.”&nbsp;Later in January, the U.S. DOE released a 45ZCF-GREET model for use in determining emissions rates, and the USDA released its interim guidance on climate-smart agriculture practices. If finalized, such practices could be used to garner the 45Z tax credit, which rewards fuel producers with a credit that increases in value based on the producer's ability to reduce the carbon intensity of their product below the 50 kg of CO2 per MMBtu baseline established in the Inflation Reduction Act of 2022.Under the model, the “applicable amount” of 45Z for SAF is a base amount of 35 cents per gallon, up to $1.75 per gallon. It’s unclear how many SAF producers—current or prospective—might be able to capitalize on the full amount of the tax credit, but at this point, it’s pretty safe to say this isn’t the pivotal catalyst for growth in the U.S. SAF industry that it was hailed to be when it was included in the IRA. And very few industry sources have expressed optimism that 45Z will help achieve the SAF Grand Challenge goals put forth by the Biden administration in 2021, with an aim to produce 3 billion gallons per year in the U.S. by 2030.&nbsp;Since the release of the interim guidance, we’ve had a bill introduced in Congress to extend 45Z for an additional 10 years, through 2037. On the flip side, we’ve also had a bill introduced to completely repeal 45Z. While neither of these bills are likely to go very far this year, it’s clear that there are very conflicting feelings around 45Z that aren’t going anywhere.Darling Ingredients, which operates joint-venture Diamond Green Diesel with Valero Energy to produce biofuels like SAF and renewable diesel, discussed 45Z on a February earnings call. “We have thoroughly reviewed the 45Z Clean Fuel Production Credit guidance with third-party auditors and are aligned in determining that it provides a clear safe harbor for the company's accounting treatment of the tax credit,” Darling CEO Randall Stuewe said. "As a result, we are confident in our ability to book the credit and fully realize its value. While there are a few details to iron out regarding feedstock options and certification by product and destination, DGD’s strategic location, logistical flexibility and capability to process a diverse range of feedstock positions us well to maximize the value of this credit.”Stuewe touts DGD’s SAF project as the largest in the world that’s “under budget and ahead of schedule.” Stuewe said that with clarity around 45Z and California’s Low Carbon Fuel Standard, which just wrapped up a major rulemaking aimed at ramping up the state’s greenhouse gas emissions reduction targets, that Darling believes “the market is stabilizing.”&nbsp;In the month following the release of the 45Z guidance, OPIS has seen LCFS credit prices somewhat choppy but largely holding just under $75 per credit. D4 biomass-based diesel renewable identification number (RIN) credits, however, rallied nearly 25% to 88 cents per RIN on Valentine’s Day. To that point, RINs haven’t hit $1 since September 2023. Similarly, LCFS credit prices haven’t hit $100 per credit since June 2022.&nbsp;For SAF to really start taking off in 2025, it’s going to need more help from RINs and LCFS credits beyond the 45Z credit. A November 2024 report from the DOE said 3 billion gallons of annual domestic production capacity by 2030 is possible, but it’s going to take $44 billion of investment to get there. The report also pointed out that the biggest barrier to SAF’s scale up is cost.&nbsp;Whether 45Z can be the motivating factor to help incentivize that growth for the SAF industry still remains to be seen and is clouded by uncertainty—just like its rollout.&nbsp;OPIS, a Dow Jones Company, is a price-reporting agency that offers daily price assessments for renewable diesel and SAF with an aim to provide the growing markets with accurate, fair and transparent price discovery that utilizes bids, offers and trades in the spot market.Author: Jordan Godwin&nbsp; Director of Biofuels Markets, OPIS&nbsp;&nbsp; jgodwin@opisnet.com

2025-03-10 - US SAF Market Still Digesting Uncertainty of 45Z Clean Fuel Production Tax Credit (SAF Magazine)

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Whether 45Z can be the motivating factor to help incentivize that growth for the SAF industry still remains to be seen and is clouded by uncertainty—just like its rollout. 

US SAF Market Still Digesting Uncertainty of 45Z Clean Fuel Production Tax Credit

Sustainable aviation fuel (SAF) is considered one of the most significant solutions to decarbonizing aviation, but currently, its availability is limited. According to a recent report by the International Air Transport Association, even though SAF production reached 1 million metric tons in 2024, doubling 2023 production, the growth rate is considerably slower than anticipated. So, how can the industry accelerate SAF production?&nbsp; There are some promising ways to ramp up SAF production from a technical perspective. Two of them are optimizing raw materials collection for existing production technologies such as used cooking oil, as well as exploration of the possibility of leveraging a new generation of raw materials and production technologies to produce SAF.Raw Materials Availability for the HEFA Production Process&nbsp; The most used pathway to produce SAF is hydroprocessed esters and fatty acids (HEFA). In this process, vegetable oils, waste and residue oils and fats are refined into SAF through this process, which uses hydrogen (hydrogenation). As a leading producer of renewable fuels, Neste developed its proprietary NEXBTL technology based on hydrogenation more than 25 years ago, enabling it to convert almost any vegetable, waste or residual oil or fat into SAF and other renewable products such as renewable diesel.&nbsp; Although the technology offers broader opportunities, Neste only uses waste and residue raw materials such as used cooking oil and animal fat waste to produce its SAF. This is because these raw materials are widely available, and their use contributes to a circular economy. The raw materials availability for HEFA is significant. According to a report by the World Economy Forum, total availability of waste and residue oils and fats is expected to exceed 40 million metric tons per year by 2030. Converting these raw materials into SAF could meet about 5% of total 2030 jet fuel demand globally. In short, the availability of raw materials is sufficient to significantly ramp up SAF production in the short term.&nbsp; The collection of these raw materials is quite granular and can be made more efficient by incentivizing proper disposal and collection, e.g. by restaurants and households, as well as partnering with waste management companies to streamline the process. For example, in the United States, Neste has access to used cooking oil from over 90,000 locations through its subsidiary Mahoney Environmental, a company Neste acquired in 2020. Acquisitions or partnerships like this can help SAF producers grow their waste and residue raw material platform and essentially help them keep pace with the world’s growing demand for renewable products.Innovative Technologies for SAF Production There are currently 11 SAF production pathways that have been approved by ASTM (including three for coprocessing). However, only a few of them are expected to contribute to actual SAF production in the near term. Right now, HEFA is the only commercially viable pathway and most of the SAF produced today is HEFA SAF. According to research, the U.S. Department of Energy estimates the HEFA and alcohol-to-jet (AtJ) pathways will make up approximately 89% of the expected 2030 SAF production (HEFA at 66% and alcohol-to-jet at 23%), while the industry needs to invest in technologies that are in early stages of development, such as power-to-liquids (PtL).&nbsp; PtL technologies use renewable hydrogen and carbon capture to produce a liquid hydrocarbon fuel, or e-fuel. This innovative process holds immense potential for decarbonizing the transportation sector. The versatility of PtL fuels is a key advantage, as they can be used in a wide range of vehicles, not only for aviation. Ships and both heavy- and light-duty vehicles can also utilize PtL fuels to be more sustainable. This flexibility makes PtL a promising solution for achieving significant reductions in greenhouse gas (GHG) emissions across the transportation sector. Another technology that producers are looking at is the development of novel vegetable oils produced by regenerative farming practices. Regenerative farming practices aim to trap carbon in healthier soils, promote biodiversity and reduce emissions from agriculture, while increasing farm productivity. In January 2024, Neste and Bayer, a global enterprise with core competencies in the life science fields of health care and agriculture, signed a memorandum of understanding aimed at developing a winter canola ecosystem in the U.S., including identifying partners and developing the value chain together, and scaling winter canola production as a raw material for renewable products. As these technologies continue to mature and become more cost-competitive, they are poised to play a crucial role in the transition toward a sustainable energy future.The Future of Aviation The future of aviation hinges on expanding HEFA SAF production, embracing innovative technologies such as PtL, and developing new raw materials. This will offer several advantages, including increased raw materials flexibility, better scalability and improved GHG emission reductions. At the same time, we need to move toward using 100% SAF safely in planes, as it is currently capped at 50% blends with conventional jet fuel.&nbsp; It is clear that SAF will remain a key solution for the aviation industry to decarbonize well into the future, but it will be an enormous challenge to accelerate production, which we can only take on by getting into action and cooperating across the whole aviation ecosystem. Author: Pratik Chandhoke Technical Fuel Manager, Neste www.neste.com

2025-03-10 - Ramping Up SAF Production: From Raw Material Collection to Innovative Pathways (SAF Magazine)

SAF Magazine Issue 1 2025

Columns

A Waiting Game

Delayed Arrival for 45Z Tax Credit Guidance

Featured

Silver to SAF

The Ins and Outs of Naphtha

Foot on the Gas

Contributions

US SAF Market Still Digesting Uncertainty of 45Z Clean Fuel Production Tax Credit

Ramping Up SAF Production: From Raw Material Collection to Innovative Pathways

Departments

Data Driving the SAF Industry

SAF Magazine Issue 1 2025.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Columns

A Waiting Game

Delayed Arrival for 45Z Tax Credit Guidance

Featured

Silver to SAF

The Ins and Outs of Naphtha

Foot on the Gas

Contributions

US SAF Market Still Digesting Uncertainty of 45Z Clean Fuel Production Tax Credit

Ramping Up SAF Production: From Raw Material Collection to Innovative Pathways

Departments

Data Driving the SAF Industry

SAF Magazine Issue 1 2025