When the United States and Israel launched their war on Iran in February, the ensuing blockade of oil and gas shipments through the Strait of Hormuz sent prices of all fossil fuels soaring, but especially jet fuel, which accounts for less than 10% of the global market. Prices for this specialized form of diesel more than doubled almost immediately after the first attacks, to more than $200 (all figures in U.S. dollars unless otherwise noted) per barrel, with the escalation outpacing hikes in Brent crude, the benchmark rate.
The perennially besieged airline industry responded by cancelling thousands of flights, cutting in-flight passenger services and threatening to impose fuel surcharges on tickets. The European Union also announced it would seek to “optimize” jet fuel distribution among member states and look for alternative supply.
You’d think this geopolitical convulsion might mark the long-promised inflection point for sustainable aviation fuel (SAF), a class of biodiesel additives seen by some as a way of weaning air travel from its reliance on fossil fuels. “Iran really is a ‘sharpen the markets’ case for domestic-waste-based SAF,” says Chris Cooper, CEO of XCF Global, a Reno, Nevada–based producer. The war, he adds, “[exposes] the fragility of the fossil crude inputs and supply. We’re fighting with other countries just to produce a product that brings more conflict to the global economy.”
Yet the reality is that SAF – despite years of research and development and policy stimulus on both sides of the Atlantic – has failed to establish itself as a bona fide low-carbon additive to one of the highest-emitting fossil fuels. There has been a conspicuous silence on the part of aviation players that, not so long ago, enthusiastically promoted SAF as a pathway to reduce the sector’s carbon consumption and meet its climate goals. Neither Air Canada nor the Greater Toronto Airports Authority responded to requests for comment on their own adoption timelines. Nova Sustainable Fuels, the company behind a planned multibillion-dollar SAF plant in Nova Scotia, won’t talk. And Delta yanked references to SAF from its sustainability reports a month into the war, Bloomberg reported.
All this circumspection is telling. If SAF can really decarbonize the aviation industry, why are the proponents staying quiet in the midst of the worst fossil fuel crisis since the 1970s?
Mixed signals
Among all transportation modes, aviation has been the most resistant to the adoption of alternative fuels, despite years of efforts to develop jet fuel substitutes. About 5% of fuel for road transport comes from low-carbon sources, such as biofuels, according to the International Energy Agency. Aviation has seen the highest growth in fuel demand; however, SAF still accounts for only 0.7% of all jet fuel production, with European carriers among the main users.
Not so long ago, the prospect of fostering an SAF market and supply chain generated all kinds of official and policy enthusiasm, such as the “SAF Grand Challenge Roadmap” concocted in 2022 by the U.S. departments of Energy, Transportation and Agriculture, as well as the Environmental Protection Agency. The European Union last year even mandated that all jet fuel supplied at European airports contain 2% SAF, with that benchmark rising to 70% by 2050.
The Trump administration has gutted climate policy, yet the waning of enthusiasm for SAF predates his election. In 2024, the International Air Transport Association bemoaned the “disappointingly slow growth” in SAF production, despite all the mid-pandemic progressive hype. “Governments are sending mixed signals to oil companies, which continue to receive subsidies for their exploration and production of fossil oil and gas,” the association’s director general, Willie Walsh, said at the time. “Investors in new-generation fuel producers seem to be waiting for guarantees of easy money before going full throttle.”
The regulatory nudges didn’t seem to be working. “Several countries have put policies and regulations in place to increase SAF use, such as SAF mandates in the European Union and the United Kingdom,” the International Energy Agency noted in a 2025 report. “In the accelerated case, the global SAF share climbs to 15% by 2035.” However, the operative term here is “accelerated,” which makes it more of a fond wish than a takeoff trajectory.
In the United States, some of the SAF-related tax credit from the Biden-era Inflation Reduction Act survived Trump’s backsliding. But the new credit tends to favour biodiesel, says Andy Navarrete, a researcher for the International Council on Clean Transportation, so SAF production remains limited.
Technical holdups
The delays in SAF adoption are also a direct result of the difficulty in ensuring that the chemistry behind these formulations is both reliable and resilient. “We identified very early on that aviation was going to be a particularly difficult sector to decarbonize,” says renewable-energy expert Warren Mabee, a Canada Research Chair at Queen’s University. Jet fuel, he says, has to remain stable under extreme temperatures and pressure changes to ensure that planes don’t suddenly experience a loss of power in mid-air.
Emerging SAF technologies that rely on cellulosic materials, like corn husks and other types of agricultural residues, or certain forms of municipal solid waste, promise lower carbon emissions but have not yet reached full commercial viability, Navarrete says. “There is a good amount of that material that’s available, but it’s not easy to convert into a liquid fuel.”
So for now, the adoption continues to be dogged by the same sorts of hard questions that orbit around other types of biofuels – namely, the source and quality of the feedstock. The EU discourages the use of waste cooking oils because of limited supply, even though such feedstocks, on average, promise an 80% reduction of greenhouse gas emissions compared to conventional jet fuel and are considered to be the least expensive feedstock. “SAFs that use crops as feedstock may not reduce life-cycle [greenhouse gas] emissions at all,” Navarrete adds. “When land is cleared and repurposed for agriculture, carbon stored in the soil and vegetation can be released.”
The EU, in turn, has pushed producers to disclose the full life cycle of their production methods.
Sustainable aviation fuel made from virgin oilseeds like canola, Mabee points out, also tends to be insufficiently dense in terms of chemical makeup, rendering it less suitable for power-hungry jet engines. “This is one of the things about these fuels, they’re not chemically identical to what goes into today’s jet fuels,” he says. “But it has to be similar enough that the engines respond the same way, because there’s really no room for error in these fuels.”
Alternatives to the alternative
Some investors are looking at new alternatives to the old alternatives, such as waste biomass from forestry or municipal solid waste. Nova Sustainable Fuels, based in Halifax, late last year won conditional approval for a large-scale SAF and renewable methanol processing plant powered by wind and solar energy. The facility is to be located in Goldboro, N.S., and will run on a diet of sawmill waste and underbrush from forest management operations, with the resulting SAF exported overseas.
While the company hasn’t formally released the size of the investment, recent media reports estimate that it will cost $4 to $6 billion, with the bulk of the financing coming from Octopus Energy, a leading British renewable-energy supplier with operations around the world. Despite the size of the project (situated on 313 hectares of private and public land) and its positioning as a future mainspring of Nova Scotia’s green energy sector, Octopus didn’t respond to requests for comment, while Nova declined to schedule an interview.
XCF, the Reno firm, has an annual production capacity of 38 million gallons of SAF on a 10-acre site and is expanding its Nevada plant as well as building two others in Australia, thanks in part to new incentives adopted by that country’s national government. Cooper, an oil industry veteran, says XCF uses waste oils created by the ethanol industry, as well as by soybean processing. “We produced the product through our refinery, and then we sold all of the production back to [the oil refiner] Phillips 66,” he says. XCF’s current off-take agreement is with BGN, an energy trader based in Houston.
The most established player in this space is the Finnish energy giant Neste, which generated €19 billion in revenues last year and earned profits of nearly €1.5 billion. The company has plants in Finland, the Netherlands, California and Singapore and is the world’s largest producer of biodiesel. SAF, which is just one of Neste’s products, is processed using waste materials such as residual biomass and cooking oil.
According to its 2025 annual report, Neste’s global SAF production capability is 1.5 million tons per annum, which will grow to 2.2 million tons per year by 2027 after the expansion of its Rotterdam facility. (The company, which is partially owned by the Finnish government, makes most of the world’s SAF.) “We have seen very positive developments recently within the U.S. and in Europe regarding renewable fuel policies,” a Neste spokesperson said in a statement to Corporate Knights. “They provide a solid outlook for years ahead. Renewables provide an alternative for fossil markets that are heavily Middle East–dependent, therefore governments should see renewables as a means to increase energy supply security.”
Perhaps the most promising policy can be found in the United Kingdom, Navarrete says. There, regulators have mandated a minimum ratio of SAF for all jets. But over time, a progressively smaller proportion of the SAF can come from spent cooking oils. As well, the government has fixed a price floor for producers, an approach they also used to drive wind power investment. A combination of a mandate and a price guarantee provides demand-side and supply-side incentives for SAF refiners looking to invest in newer technologies that offer scalable production – without gobbling up valuable agricultural land. “We don’t have anything similar to that in the US,” he says.
Asking the right question
For the foreseeable future, there’s no technology competition for SAF, notwithstanding a very limited number of experiments with battery-powered small planes, such as Harbour Air’s “e-plane,” a refurbished six-seat de Havilland Beaver, which flies around B.C.’s lower mainland. If a large aviation manufacturer like Airbus or Boeing decided to develop a battery-powered passenger jet, it would likely take well over two decades to design, engineer, test and certify such a vehicle, Mabee says. “The commercial biofuels are the only real option on the table.”
Besides the lingering technical difficulties associated with blending biodiesel into jet fuel, the SAF industry’s main problem is that the price differential is too great; the financial incentives, too thin. Mabee learned this implacable fact while working with farmers on the potential for biodiesel. “Farmers will tend to deviate towards the market that’s going to give them a lot of value,” he says. “I can tell you that with biofuels, the value-add is not necessarily there. They can generally make more money selling their product for food than they can for fuel.” Which is just as well, given how ethanol distorted U.S. corn farming.
Indeed, when the International Council on Clean Transportation a month prior to the Iran war tallied up the cost of SAF compared to conventional jet fuel, the price differential was bracing. A litre of SAF cost about eight times more than a litre of jet fuel, and a range of EU-adopted regulatory subsidies reduced the gap by less than a half.
XCF’s Chris Cooper says that state and federal tax and carbon offset credits, both to biofuel refiners as well as to suppliers of the feedstock, have been instrumental in making a business case for its product. (In Canada, Mark Carney’s Liberal government last year launched a consultation about amending federal clean-fuel regulations so they stay abreast of what’s on offer for biofuel producers in the United States.) But, Cooper adds, the most salient selling point is that SAF offers essentially a hedge against the price volatility caused, in part, by geopolitical conflict. “What we’re actually providing the airlines is a bit of stability when these prices are moving.”
Should climate-forward governments be stoking a fuel that’s stuck in neutral? To answer that question, it’s worth noting the largesse that fossil fuels enjoy. As the International Energy Agency has noted, the world spent $600 billion on fossil fuel subsidies in 2023. The calculus around SAF, in other words, might finally change if the price of jet fuel wasn’t being kept artificially low.
“The danger is that the environmental element gets lost in the shuffle,” Navarrete warns. “If [policymakers] start to see SAF as a good on its own, without thinking about the sustainability implications, then we might be shooting ourselves in the foot.”
John Lorinc is a journalist and author specializing in urban issues, business and culture.
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