April 28, 2024

For SAF’s Take-off, look to India’s policies

The political question is simple: Is fighting climate change a war? Or is appearing to “fight” climate change, improve air quality and create domestic jobs merely a way to raise some campaign funding from major oil companies in exchange for doing nothing?

We win wars by issuing Cost Plus contracts to defense contractors so they can build new production capacity to produce the weapons of war.

SAF is just such a weapon, but our leaders have not been willing to enforce firm mandates of SAF blends with clear incentives in order for airlines and industry to work together to build renewable fuels to fight the war against climate change and for cleaner air.

SAF is not the first renewable fuel that has been proposed and then developed successfully. Please note the informative experience of the Government of India as it responded with a plan to replace imported petroleum diesel with domestic renewable biodiesel – in the year 2007 National Biofuels Policy of India.

The Cost-Plus model

To avoid delay for busy readers, the India government has now mandated that the three large companies that own 70% of the oil refineries in India must purchase biodiesel on a “Cost Plus“ basis. Thereby, the price of biodiesel offered by the three oil marketing companies in India considers all of the input costs and then adds a profit margin in order to increase the production of renewable fuel, while transferring the risks and benefits of incentives to the customer.

The airline industry should do the same in order to rapidly grow the production of sustainable aviation fuel in order to decarbonize aviation. Airlines are much better positioned than startup renewable fuels producers to influence the creation and expansion of government and private industry incentives such as Scope 3 emissions credits, IRA production tax credits, LCFS credits, and federal RFS RIN credits.

By Eric McAfee, CEO, Aemetis, Special to The Digest, biofuelsdigest.com

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