SAF production surges in US despite uncertainty

opinion

by Fayaz Hussain

May 12, 2025

When the US President Donald Trump took office earlier this year, many in the renewables space (including SAF) held their breath. His early announcements about pausing the funding announced through the Inflation Reduction Act – especially the 45Z credits which US-based SAF producers were banking on – hinted at fears of plant shutdowns and cancellation of capacity increases.

Yet remarkably, latest data released by the US Energy Information Administration (EIA) this week showed a doubling of domestic SAF production capacity since the end of 2024 with capacity additions during the first quarter of 2025.

Major projects have come online as scheduled, including Phillips 66’s 10,000 barrels per day (bpd) facility in California, Diamond Green Diesel’s 15,000 bpd operation in Texas and New Rise Renewables’ 3,000 bpd plant in Nevada.

Another 2,000 bpd of SAF production is scheduled to come online in the second half of 2025 at Kapolei in Hawaii. The project, run by Par Pacific, will increase the total production to nearly 30,000 bpd of SAF by the end of this year.

This development tells two things about SAF in the US. First, the momentum behind SAF production appears to have hit a critical point where market dynamics are driving growth despite ambiguity surrounding the federal incentives. Major producers like Phillips 66 and Diamond Green Diesel seem determined to produce SAF in the US, prioritising a long-term foothold in the market despite short-term uncertainties.

Second, it seems that contrary to early fears, state-level programmes and existing federal frameworks beyond the frozen 45Z credits have provided sufficient financial incentive to keep projects moving forward.

Project developers are also adapting, looking for other ways to ensure their operations remain profitable. These include efficiency improvements, feedstock optimisation and negotiating premium pricing from airlines eager to secure limited SAF supplies to meet their sustainability commitments.

Although this capacity expansion is a welcome sign and will play an immense role in decarbonising aviation, the question remains whether this represents a temporary surge of projects already in motion before the regulatory uncertainty, or whether the industry has truly found sustainable economics independent of the suspended 45Z credits.

The true test of the industry’s commitment will come in the next investment cycle. Will companies continue to invest billions in setting up new facilities without clarity on federal incentives or will this surge represent a high-water mark before a period of stagnation?

This is one of the many topics we will be discussing at SAF Investor London Conference on May 28th and May 29th. You can sign up using this link.