SAF: Benefits for US economy beyond carbon reduction

opinion

by Fayaz Hussain

August 19, 2024

Nicolaus Otto the father of the internal combustion engine, showed the benefits of ethanol as a fuel back in 1860. But it took more than 100 years for the US to really take it seriously.

With government support, favourable policies and demand, US ethanol is now a more than $44bn industry employing nearly 500,000 people in direct and indirect jobs.

A recent report by Third Way, a US think tank, says that the same thing could happen with sustainable aviation fuel (SAF). At its peak in 2035, the SAF industry could support up to 153,000 direct jobs and more than 240,000 additional indirect and induced jobs in the broader economy.

The study, conducted in partnership with Evolved Energy Research and Industrial Economics, projects that building a robust SAF industry in the US to fully replace conventional jet fuel by 2050 would require investments of up to $1.5tr over the coming decades.

The total gross domestic product (GDP) impacts are projected to peak at approximately $78bn in 2035, driven by increased investment in production infrastructure.

The Great Plains states, particularly Texas and Oklahoma, are positioned to lead in SAF production due to their competitive advantages in renewable energy generation and availability of biomass. Other regions, including the Midwest and Southeast, also show significant potential for SAF production.

Many of the jobs created in the SAF industry are expected to offer competitive salaries, with 14 out of 16 analysed subsectors having average incomes exceeding the US median household income of $75,000.

A significant portion of these jobs will be located in predominantly rural areas, potentially helping to reduce the income gap between urban and rural communities.

The report highlights that the transition to SAF will result in some job losses in the conventional fossil jet fuel industry. However, the analysis finds that SAF-related jobs are projected to far exceed these losses at the national level. Many of the skills required in the fossil fuel industry are expected to be transferable to SAF production, potentially easing the transition for workers.

While the economic benefits of scaling up SAF production are promising, the report emphasises that realising these benefits is not guaranteed. Similar to the ethanol industry, the future landscape of SAF production in the US, in the short-term, will depend heavily on federal and state policies that facilitate investment and end-use.

The passage of the Inflation Reduction Act, which included tax credits for SAF, is a step towards this direction. However, the report suggests that continued and expanded support will be crucial for the industry’s future growth and for realising the projected economic benefits.

But it cannot take 100 years.