The Energy Department says industry is surpassing goals for the production of so-called sustainable aviation fuel, or SAF. That is aided by loan guarantees amounting to billions for companies to increase their capacity to make lower carbon jet fuel. Vanessa Chan, director of the Energy Department’s Office of Technology Transitions and the chief commercialization officer, joined the Federal Drive with Tom Temin with a progress report.

Interview transcript:

Tom Temin: Well, tell us about this program that Energy is trying to foster, I guess, capacity to make SAF or sustainable fuel and maybe tell us what exactly sustainable aviation fuel is, something better than kerosene.

Vanessa Chan: Yeah. So the reason why I say sustainable aviation fuel is really important is that aviation represents about 3.3% of total U.S. greenhouse gas emissions, and that we are also projecting for jet fuel consumption to be increasing by 2 to 3% annually through 2050. And if we really want to be able to decarbonize aviation, the only way to do that is to do sustainable aviation fuel because until we have a hydrogen or electric aircraft, they are still very much in their infancy technically. It’s really unlikely for any other thing than sustainable aviation fuel to be actually getting us to those reductions. And so what sustainable aviation fuel is basically when you are using routes that are lower carbon. So, for example, we can take hydroprocessed esters and fatty acids known as HEFA or alcohol to jet fuels, that will allow us to convert these feedstocks into a liquid, which is less carbon intensive than what we currently use, which is basically the fuel that is coming out of the ground. And so the reason why SAF is important is really there’s no other way to decarbonize aviation other than using SAF.

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Tom Temin: Right. So SAF then the decarbonization or the lowering of decarb of carbon comes from the production of it and not necessarily from the burning of it?

Vanessa Chan: Correct.

Tom Temin: And it comes out in a way that it has the same amount of power per gallon or something so that if you fill a plane up, it’ll go just as far with the SAF as it would with the conventional fuel.

Vanessa Chan: Exactly.

Tom Temin: And what does energy specifically do to foster production of this? Is it mostly loan guarantees or what else do you do?

Vanessa Chan: Yes. When you think about commercialization, there’s basically four stages to it. There’s research and development and then there’s demonstration deployment. And so we are doing work both in the research and development side as well as on the demonstration and deployment side. So on the research and development side, we have a Bioenergy Technology Office. And what they have done is they’ve award $150 million in funding, 28 pre-pilot, pilot and demonstration scale projects related to SAF. And they also were the folks that had released the SAF Grand Challenge Roadmap in 2021. So to give an example of the kinds of things that BETO does. There were two recent Phase II awards on scale up, including a demonstration project scale with AVAPCO and a pilot scale project with marquee energy. And the thing that’s really neat about this is roughly $156 million in private cost share was also accompanying this funding. In addition, there also is a funding opportunity that BETO has announced, which is $12 million to support the scale up of integrated biorefinery technologies. So that’s kind of on the earlier stage side. Then in LPO in 2024 of October, so a few months ago, they announced two conditional loan guarantees for SAF production facilities. There is $1.4 billion to Montana Renewables, which will finance expansion of renewable fuels facilities in Great Falls, Montana. That’s going to use vegetable oils, fats and greases to produce SAF. And then a $1.46 billion loan guarantee to Gevo Net-Zero 1, which will help finance the first of a kind large-scale corn starch to jet fuel for sale in the United States. And this would be located in South Dakota, which is going to use a low cost, low carbon filled corn, and also on the back end of it, have carbon capture and sequestration in order to lower the emissions.

Tom Temin: And to get the horse to drink out of the trough, though the single largest cost factor in getting your Airbus from Chicago to Miami, is the fuel in airlines that are extremely sensitive to fuel costs. Can this be done economically so the companies are going to want to use it?

Vanessa Chan: Yes. So that is so critical. Like whenever we’ve been thinking about commercialization here at the Department of Energy, it’s about how do we get the unit economics to the point where this is economically viable for the private sector. And right now, we’re not there yet and the reason why is we’re not at the tipping point where you’re able to scale things up so that costs go down. And so this is why it’s important that we are catalyzing the industry by helping with these loan guarantees and so forth, so that we can end up getting to a point where we’re scaling and the economics can come down.

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Tom Temin: And just a brief detailed question. The one in Great Falls, Montana, that got the loan for vegetable oils, fats and greases, that’s not leftovers. That’s new stuff because there’s not enough fast food fryers in the world to produce enough fuel to keep aviation going.

Vanessa Chan: Yeah. So it’ll be a combination of things, right. So absolutely. And I think the key thing right now going back to the cost is right now staff costs 2 to 10 times more than fossil jet fuel, depending on the technology and pathway that is used to reduce it. And so it’s really important to either have mandates, which is what we’re seeing in other countries in order to help drive it, but also tax credits are critical as well. And so those two things in conjunction with things like the loans that we’re giving will help us to scale production so that we can end up getting to a point where the cost can become economically viable.

Tom Temin: We’re speaking with Vanessa Chan. She’s the chief commercialization officer and also the director of Energy Department’s Office of Technology Transitions. And you also made an announcement the other day about a new report, a series of reports. And normally, we don’t find the issuance of reports newsworthy. But there’s something about these reports that is noteworthy.

Vanessa Chan: Yes. So when I joined the Department of Energy, we were very much here focused on research and development. And then what happened was, through the passage of BIL and IRA, we now had $500 billion going to demonstration deployment, the last two stages of commercialization. And what we realized was in order for us to commercialize any technologies, it doesn’t matter if it’s in the energy space or even in the pharma space, in the end, you need the private sector to be doing this. So the question we had was how do we take the $500 billion that we got from BIL and IRA to buy down the risk so that the 23 trillion that the private sector has can take over? In order to do that, we really needed a series of roadmaps to coordinate the private sector so that we could end up doing this together. So these reports that we have started releasing since March of 2023 were written with the private sector, and they are basically a dozen commercialization roadmaps which talk about things like unit economics, issues with like any regulatory or permitting, any issues with workforce and so forth. And you can find that liftoff on energy.gov. And the reason why these reports are really important is they’re not static reports. They are constantly updated because what we knew, for example, in March of 2023 is different than what we know now in December 2024. And so, for example, when Palisades was announced where we restarted that nuclear reactor, we also updated the liftoff report because there were different things that were happening in the market that needed to align every year on the roadmap. So that’s why these are not the typical federal report. These are written with the private sector and we’ve jointly own them in terms of what it’s going to take for these technologies to actually get to scale.

Tom Temin: So the series then don’t just concern aviation fuel, but all of the energy developments that are headed toward that kind of greener future.

Vanessa Chan: Yes. So we have everything from virtual power plants to geothermal to nuclear to long-duration energy storage. You can find them at liftoff.energy.gov. And it’s really amazing the amount of work that has been done with the private sector on this to get us on the same page of how we got there.

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