E+E Leader Team
With the
aviation sector under growing pressure to reduce emissions, Sustainable Aviation Fuel (SAF) has emerged as one of the most immediate pathways to decarbonization. In a significant step forward, Michigan has introduced a state-level incentive program aimed at jumpstarting local SAF production. The new legislation—supported by lawmakers on both sides of the aisle—offers targeted tax credits for producers and blenders that can meet stringent emissions and sustainability criteria.
The program is part of a broader shift toward state-led climate and energy action, as federal direction under the Trump administration remains uncertain. While the Michigan initiative establishes a modest tax credit cap of $4.5 million in its first year, it lays the groundwork for regional market development—an essential piece of a national SAF strategy still waiting for clearer federal support.
SAF: A Scalable, Drop-in Solution
SAF is derived from renewable or waste-based feedstocks—such as agricultural residues, municipal solid waste, and captured carbon—and can reduce lifecycle greenhouse gas (GHG) emissions by at least 50% compared to petroleum-based jet fuel. It’s also compatible with existing aircraft and fueling infrastructure, enabling airlines to cut emissions without significant capital investment.
But production volumes remain limited. While U.S. airlines have committed to bold SAF procurement targets, the supply chain is still in early stages of scale-up. This is where state action becomes critical.
Industry Expands Despite Federal Policy Ambiguity
Across the U.S., SAF producers continue to ramp up operations:
- World Energy is expanding its Paramount, CA facility to become one of the largest SAF hubs in North America, aiming for 250 million gallons per year.
- Gevo Inc. is building its Net-Zero 1 facility in South Dakota, expected to produce 60 million gallons of SAF annually with the help of carbon capture and renewable energy.
- LanzaJet, headquartered in Illinois, is completing its Freedom Pines Fuels plant in Georgia with support from Microsoft and the U.S. Department of Energy.
- Neste has expanded its U.S. footprint with SAF supply agreements at San Francisco and Los Angeles airports and a new Houston terminal.
- Honeywell UOP and Chevron continue to scale up SAF production through co-processing infrastructure.
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Trump Administration: Mixed Signals on SAF
Federal support, however, has become less consistent under the current administration. In February 2025, the Department of Energy (DOE) approved a $1.44 billion loan guarantee for Montana Renewables to expand its SAF facility in Great Falls—signaling at least some support for the sector. But that move contrasts with broader federal inaction:
- On his first day in office, President Trump froze funding for numerous climate and energy programs, including clean energy tax incentives established under the Inflation Reduction Act (IRA). This freeze has placed the future of SAF-related federal tax credits in limbo, creating deep uncertainty for developers and investors.
- The administration has also rebranded SAF as "synthetic aviation fuel" in public documents—a rhetorical shift some interpret as a pivot toward domestic fossil-based alternatives.
- While Trump has praised SAF as an economic boon for rural America and farmers, especially those producing corn and soy feedstocks, critics note the absence of any cohesive SAF strategy or commitment to lifecycle GHG accounting standards.
This has created what many in the industry describe as a “policy vacuum” at the federal level—one that is now being filled by states like Michigan, California, and Illinois.
What’s Next for SAF in the U.S.?
As SAF production technologies mature and airline demand continues to rise, the question is not whether the U.S. will expand its SAF market—but how quickly and under what regulatory structure. States that proactively support SAF may gain a competitive edge in attracting clean energy investment and positioning their airports as hubs for low-emissions travel.
With uncertainty clouding the future of federal tax credits and lifecycle emissions standards, industry players are increasingly turning to state programs, private capital, and long-term offtake agreements to derisk investments.
