As the United States seeks to achieve net-zero greenhouse gas emissions by 2050, one of the most challenging sectors to decarbonize will be aviation. Aviation makes up nearly 7% of the total U.S. transportation sector emissions (Figure 1). As planes are expected to remain reliant on liquid fuels for the foreseeable future, commercializing non-fossil, low-carbon alternatives is a critical need. 

Sustainable aviation fuels (SAFs) are drop-in fuels that can substitute for fossil fuels. SAFs are derived from feedstocks ranging from cooking oil and woody biomass to captured CO2 (the latter referred to as ‘electrofuels’ or ‘e-fuels’). Currently, there is only one facility in the U.S. that produces SAF at a commercial scale. A recent Rhodium Group report found that a fully-scaled SAF industry could create hundreds of thousands of new jobs while substantially reducing CO2 and criteria pollutant emissions.

Governor Newsom recently called for the California Air Resources Board (CARB) to decarbonize the state’s aviation sector, which emits nearly 38 million tons of CO2 per year, an amount greater than all the oil refineries in the state.[1] The state can heed this call by scaling in-state SAF production.

California’s SAF opportunity

California has favorable attributes to spearhead the research, development and deployment of next generation SAF technologies for state, national and global climate goals. These include:

• Phase-out of agricultural burning. As the nation’s breadbasket, the Central Valley generates millions of tons of farming residues (almond trees, nut shells, etc.) each year that are often field burned. CARB recently mandated a phase-out of agricultural burning from 2025. However, it is unclear how this mandate will be enforced given the limited waste disposal options currently available to farmers. A robust plan to collect and convert the residues into SAF and other fuels could address this problem while generating significant climate and local air pollution benefits.
  
  
• Planned increase in forest treatments. California’s plan to increase forest treatments to 1 million acres per year to reduce wildfire risk will generate hundreds of millions of tons of waste biomass over the next two decades. Similar to the above, these residues will otherwise be burned in piles or left to decay. Collecting and converting the residues into fuels can not only drive rural economic development but also support the high cost of forest treatments.

• Need for direct air capture (DAC). In the Scoping Plan, CARB identified scaling in-state DAC as essential for California to achieve net-zero emissions by 2045. This need can also support pioneering e-fuels production – where captured CO2 is combined with green hydrogen to form (in this case) a SAF. The state has promising attributes to be one of the nation’s four Regional DAC Hubs, including world-class geologic storage potential, significant renewable energy in the form of solar and geothermal, and an experienced oil and gas workforce that could transition to carbon management. The Central Valley is a promising option for a DAC Hub in California. 

Recommendations to accelerate in-state SAF production

The state could consider the following policies to accelerate SAF production in California:

• Low Carbon Fuel Standard. CARB technically offers incentives under the Low Carbon Fuel Standard (LCFS) for SAF. However, as a matter of practice these incentives are challenging to access. CARB could streamline the path to these incentives by clarifying the emissions benefits from avoided woody biomass pile burning and decay. This can provide more certainty to SAF developers who are otherwise hesitant to invest resources in LCFS pathway development.

• Federal coordination. The federal government is committed to supporting SAF production, as evidenced by the SAF Grand Challenge Roadmap and the recent creation of the 40B tax credit under the Inflation Reduction Act, which provides up to $1.75 per gallon for SAF made from biomass, direct air capture and other sources. The state – whether via the Governor’s Office or at agency – should seek to more formally coordinate with the White House and Department of Energy on the nation’s SAF deployment goals. This can assure that California is at the forefront of the latest federal initiatives and positioned to attract federal funding for in-state projects.

• Research and development funding. SAFs are newer low-carbon technologies that will require dedicated support to get to scale. The state could establish a new SAF program to provide grant funding to in-state SAF developers, particularly for feasibility, engineering design and permitting project development stages. This would not only reduce the risk of pursuing these projects but underscore the state’s commitment to becoming a SAF innovation hub. There are a number of existing programs at the California Energy Commission (e.g., Clean Transportation Program, Electric Program Investment Charge Program) which could be broadened to include explicit SAF components.

Conclusion

Sustainable aviation fuels are crucial to achieving net-zero ambitions around the world. California can position itself as a global innovation hub for SAFs to enable state and national climate goals. The abundance of agricultural and forest residues that will otherwise be an emissions problem could be turned into emissions solution with a robust plan to collect and convert them into low-carbon fuels. California can pioneer e-fuels production by scaling direct air capture within the state, including access to about $800 million in federal funding if it is selected as one of the four Regional DAC Hubs.

For more information, please contact Amanda DeMarco (amanda@csgcalifornia.com) or Sam Uden (sam@csgcalifornia.com).

[1] Although CARB tracks California’s entire aviation footprint, it technically only counts a portion of these emissions (from in-state air travel only) within the state’s emissions inventory. Emissions from international and interstate air travel are counted in the US EPA’s federal inventory.