US policy support for SAF ‘not sufficient’: Montana Renewables


Nestled in the feedstock-rich region of North America, Montana Renewables is the largest sustainable aviation fuel (SAF) producer in the western hemisphere.

“I never get tired of saying that. It maybe doesn’t mean that much because there are no large SAF suppliers anywhere in the world. But we make 30m gallons a year,” says Bruce Fleming, CEO, Montana Renewables speaking to SAF Investor.

After a quick turnaround time of 18 months, Montana Renewables came online in 2022. The company uses the HEFA pathway using Topsoe’s Hydroflex Catalyst technology to process bio feedstocks. The site’s current SAF and RD ratio stands at 15% and 85% respectively.

But that can change quickly. “We’re in the process of installing the flexibility to have complete latitude to slide back and forth between SAF and renewable diesel percentages in our output mix. So, that requires some changes in the process operation, different catalysis and we’ve acquired the reactor that we need to install alongside our existing equipment,” explains Fleming. “Once the equipment is upgraded, we’ll have the ability to swing as high as 300m gallons a year.”

To put that number into perspective, that is 10% of US SAF Grand Challenge to produce 3bn gallons of SAF by 2030.

But dedicating 100% capacity towards SAF away from renewable diesel is a hard balancing act. Currently, the credits for renewable diesel outweigh those of SAF. Recent US Treasury guidance on SAF credits offers a tiered incentive structure. Producers can earn between $1.25 and $1.75 per gallon contingent upon the lifecycle greenhouse gas emission reduction achieved by their SAF – lower than existing state and federal credit incentives for renewable diesel.

“The policy support in place at the moment in North America is not sufficient,” says Fleming. “Unless the off-taker will pay or, in some fashion, guarantee SAF to remain above diesel, it’s going to be very, very difficult to contract any of this.”

Shell Aviation offtakes all of Montana’s 30m gallons of SAF output. “Shell Aviation, for their own strategic reasons, was willing to provide that commercial premium. Without it, I think the recovery of SAF from renewable diesel is going to be a lot less, take a lot longer, and yield a smaller prize than any of the forecasts,” adds Fleming.

Unlike other large aviation markets like Europe, UK and Singapore, where governments have set mandates in place, the US has adopted the incentive approach. But should the US have a mandate?

“Normally, the energy industry policy is not to support mandates. Normally, the policy is to let the market sort that out. You have to provide the structure and the requirements and then let the operators determine the best way. The mandate is not inconsistent with that. If you simply told the airlines, and the EU has, the UK has, Singapore has, this is really, I think, the most elegant way to solve the problem,” he adds.

“Because then, collectively, we’re all going to find how to get the SAF into wing at the lowest cost. The energy industry is always organised around the lowest cost to serve the customer. Frankly, the entire renewable energy transition is a mandate anyway.”

The US can extend the same scheme in place for renewable diesel to SAF producers. This mandate could be implemented nationally or even at the state level.

“In California, the California Air Resources Board is considering now identifying SAF as one of the obligated fuels. It’s already eligible for their low-carbon fuel credits. We go to California with our SAF,” adds Fleming.

Fleming suggests that requiring a minimum percentage of SAF blend, say 2%, is the simplest solution. This approach avoids complex trading schemes and relies on the market to adjust.

Fuel suppliers like Shell Aviation already use SAF to benefit from these credits. Fleming believes this is a clear and effective way forward.

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