Sustainable Aviation Fuels: A not so cost-effective solution

TL;DR

Sustainabile Aviation Fuels may be one of the best (and only) ways to decarbonize long-haul flights. But we may be better off reducing investment and deployment of SAFs given the price premium relative to other carbon abatement options and limited low-cost waste resources for conversion.

Sustainable aviation: a considerable challenge

Aviation presents one of the toughest challenges in decarbonizing our global economy. Unlike cars or even ships, planes demand incredibly energy-dense fuels to carry heavy loads over vast distances at high altitudes. While electric and hydrogen options are promising for short-haul, they face significant technical hurdles for long-distance travel. This is where Sustainable Aviation Fuels (SAFs) have entered the conversation, promoted as a direct "drop-in" replacement to reduce the carbon footprint of flying.

The excitement around SAFs is large, with significant investment and policy support. But amidst the enthusiasm, a critical question arises: Are SAFs the most effective and economic way to achieve significant carbon abatement right now, especially compared to other climate solutions? From an economic perspective, the goal should be to pursue the "lowest hanging fruit" – the carbon reductions that cost the least per ton of CO2 equivalent ($/ton CO2e) to achieve and are easiest to implement. Let's look at the numbers.

Levelized Cost of Carbon (LCCA): a metric for comparing technologies

To compare climate solutions effectively, we use metrics like the Levelized Cost of Carbon Avoided (LCCA). Simply put, LCCA tells us the cost incurred to avoid one ton of CO2e emissions compared to a baseline. It considers the lifecycle costs of a project (capital, operations) and divides by the total lifecycle emissions avoided. It's important to remember that LCCA focuses only on the abatement cost and doesn't necessarily capture a project's overall profitability or revenue streams, but it's a vital tool for comparing the climate "bang for your buck."

SAFs are fuels derived from non-petroleum sources like biomass, waste fats, oils, or even captured CO2. The idea is that the carbon emitted when SAF is burned is offset by the carbon absorbed during feedstock growth or captured from the air, resulting in lower lifecycle emissions compared to conventional jet fuel. Their key advantage is compatibility – they can be blended with or replace fossil jet fuel in existing planes and infrastructure.

To understand the cost of carbon abatement with SAFs, we can look at different analyses.

Analysis 1: $400-6000/tonne CO2 abatement cost

A recent 2024 paper analyzing various SAF production pathways showed a wide range of costs per ton of CO2e abated. Based on the data presented, the lowest cost pathway (HEFA-SPK, often derived from fats/oils) came in around $400/tonne. However, other pathways analyzed, like those using synthetic methods (FT-SPK) or advanced biomass (ATJ-SPK, CHJ-SPK, HFS-SIP), showed significantly higher abatement costs, ranging from roughly $1000 up to over $6000 per tonne of CO2e abated. Even the most optimistic pathway in this paper is relatively expensive.

Analysis 2: $200-1600/tonne CO2 abatement cost

A report from Columbia University focusing on LCCA across different sectors also analyzed SAFs. It found the lowest LCCA for SAFs was approximately $209/ton for pathways using Used Cooking Oil (UCO). Municipal Solid Waste (MSW) based SAF was estimated around $342/ton, and plant biomass via Fischer-Tropsch at $391/ton. Other SAF technologies featured were even more expensive. While the UCO figure is lower than some abatement options, it still sits above the cost of most.

Analysis 3: $400-1000/tonne CO2 abatement cost

Finally, a simple back-of-napkin calculation using recent market prices for jet fuel and SAFs in different US regions provides a current snapshot. Taking the price premium of SAF over conventional jet fuel and dividing by estimated carbon reduction per liter (assuming different reduction percentages), the estimated cost per ton of CO2e abated ranged from approximately $400/ton (under an optimistic 100% reduction assumption) to $500/ton (at 80% reduction) and approaching $1000/ton (at 50% reduction). Given that these are current SAF prices, these are most likely based on UCO sources, which are the lowest cost options, bringing this roughly in line with the more involved analyses in the papers above.

Synthesizing these analyses suggests that the lowest plausible cost for SAF carbon abatement currently sits around $400-$500 per ton of CO2e, with many pathways being significantly more expensive.

SAF waste streams are limited and more valuable in other solutions

Crucially, the SAF pathways showing the lowest abatement costs in analyses often rely on limited waste streams like Used Cooking Oil (UCO) and Municipal Solid Waste (MSW). However, these feedstocks have alternative uses that might be more carbon-effective or economically beneficial. For instance, UCO can be converted to renewable diesel for road transport, where some analyses suggest it achieves a greater carbon intensity reduction per unit and dollar than when used for SAF.

Similarly, MSW can be used in waste-to-energy plants to generate electricity and heat. This often results in a lower LCCA than converting MSW to SAF and provides the additional benefit of generating revenue from energy sales, unlike SAF production which incurs the abatement cost reflected in the fuel's price premium. Directing these limited waste resources to potentially less efficient abatement pathways like SAF might not be the optimal use from a system-wide perspective.

SAF prices are not competitive relative to other options

When we compare the estimated cost of SAF carbon abatement ($400 - $6000+/ton, with a likely floor around $400) to other climate solutions, the picture becomes clearer. Figure 1 summarizes the above results and average or representative alternative carbon abatement costs considered in the reports. SAFs Low is the lowest price calculated in the Columbia report and SAFs scale is the lowest price of SAFs for a pathway that doesn't rely exclusively on waste streams and is therefore scalable.

Figure 1: Rough carbon abatement costs for different solutions. Solutions like solar and industry decarbonization are affordable relative to DAC and SAFs. DAC sets the ceiling for what we should be willing to pay for carbon abatement, SAFs are more expensive than many DAC options.

Based on this, investing a dollar in scaling up renewables or energy efficiency often achieves significantly more tons of CO2e abated than investing that same dollar in SAF production from currently viable pathways. From a purely cost-per-ton perspective, it suggests we might be better off continuing to use conventional jet fuel and investing in lower-cost abatement elsewhere, potentially even DAC to offset aviation emissions, than paying the high premium for most SAFs today.

Beyond cost, there's the issue of scale. Even if the cost were lower, the potential global supply of the most cost-effective SAF feedstocks like UCO and MSW is limited. Estimates suggest these sources could only ever meet a small fraction of the projected future demand for aviation fuel, which is expected to grow considerably by 2050. Meeting a significant portion of demand would require developing vastly more expensive or technically challenging pathways.

SAFs are still our only near-term solution to aviation emissions, but we’re better off focusing on emissions elsewhere

Despite the high current abatement costs and feedstock limitations, SAFs do have arguments in their favor that aren't strictly economic in the LCCA sense. They are currently the only viable option for significantly reducing emissions from long-haul flights using existing aircraft and infrastructure – a critical advantage that avoids the need for massive fleet turnover. They can also offer potential energy security benefits by diversifying fuel sources away from petroleum and could stimulate rural economies if biomass feedstocks are used. Furthermore, investment in current SAF technologies can drive R&D that could lead to more advanced, lower-cost pathways in the future, such as synthetic e-fuels made from renewable electricity and captured CO2.

While SAFs offer a path to decarbonizing aviation, particularly long-haul flights, the current analysis suggests they are a relatively high-cost method for carbon abatement compared to many other available climate solutions. Prioritizing the lowest-cost abatement opportunities first is crucial for maximizing global emissions reductions with limited resources. While research into SAFs should certainly continue, a critical look at the scale of commercial investment relative to its current cost-effectiveness and feedstock constraints compared to other climate technologies is warranted.