The green jet fuel that never showed up

This summer, air travelers got a preview of what happens when oil markets panic. The war between the U.S., Israel, and Iran doubled jet fuel prices in a matter of weeks, briefly topping $200 a barrel. SAS and Lufthansa cut flights. Governments across Europe dipped into emergency fuel reserves. For a few tense weeks, the aviation industry warned of a summer of grounded planes and canceled vacations.

Then the panic eased. Suppliers in the U.S., West Africa and Norway rerouted shipments to cover the shortfall. Prices drifted back down. But the scare exposed something the industry has known for years and mostly avoided saying out loud. Aviation has one strategy for surviving oil shocks like this one, and that strategy barely exists.

The promise that never scaled

Sustainable aviation fuel was supposed to clean up the skies. Current airplanes can't run on batteries the way cars increasingly can. A plane needs fuel that packs enormous energy into very little weight, and it needs that fuel to behave predictably at 30,000  feet in extreme cold. 

Electric motors and hydrogen tanks are still years from doing that job at commercial scale, especially on long-haul routes. That left the industry with one real option for cutting emissions without waiting decades for new aircraft technology, swapping out the fuel itself.

SAF fits that need because it's a "drop-in" fuel, meaning it can be poured straight into the fuel tanks airlines already have. Made from used cooking oil, agricultural waste, captured carbon, or green hydrogen, it promised a fraction of the lifecycle emissions with none of the infrastructure headache. Airlines spent the last five years talking about it like a foregone conclusion, the thing that would let people keep flying, guilt-free.

Big carriers signed offtake deals. The E.U. and U.K. adopted mandates. Oil majors made public commitments. Corporate travel departments started buying credits. Every year brought another round of press releases promising the supply gap would close.

Instead, global SAF production sits at roughly two million tons a year against nearly 300 million tons of total jet fuel demand. When the Iran war hit and airlines needed an alternative to volatile crude, there was almost nothing to reach for.

Why the fuel never came, and whether this time is different

The gap between promise and supply comes down to money. SAF costs far more to make than fossil jet fuel, and the price gap hasn't narrowed the way solar and battery costs did over the past decade.

Oil majors that could have retooled refineries mostly chose not to, because selling conventional fuel remains more profitable than manufacturing an alternative one. Most of the projects that do exist are run by small startups scraping together financing one deal at a time, and only a small fraction of announced facilities have come online.

Still, there are signs of life. Twelve, a startup that turns captured carbon dioxide into jet fuel, opened a commercial-scale plant in Washington state this summer backed by Microsoft $MSFT and Alaska Airlines. Deutsche Bank just signed a deal to fund SAF for Lufthansa flights. 

United, FedEx $FDX, and DHL have all announced new supply agreements in the past year. Researchers at the University of Illinois recently published a method for turning food waste into jet-grade fuel, adding one more feedstock to a very short list.

None of it adds up to the volume the industry needs. IATA’s  own leadership has started walking back the industry's 2050 net zero target, with the airline industry trade group pointing fingers at everyone else in the supply chain, from refiners to plane makers to regulators.

Even the mandates meant to force the issue are running into physics. Europe and the U.K. require a small and rising percentage of SAF in jet fuel, but the next generation of fuels those mandates depend on, made from captured carbon and renewable hydrogen, barely exists outside of proof-of-concept projects.

What the Iran scare made clear is that SAF was never really built to be a buffer against a real supply shock. It was built as a long-term decarbonization bet, financed one voluntary purchase at a time, with no mechanism to scale fast when the market actually needed it. 

Now that this climate bet is also a hedge against being this dependent on oil, maybe that is what finally gets SAF taken seriously. Airlines got a preview this summer of what an oil shock looks like without an alternative fuel supply worth mentioning. If SAF still isn't there next time, airlines and Americans with summer plans in Italy may not get so lucky.