The trans-Atlantic SAF flow that policy modelers assumed would balance the global market, with US molecules flowing east into a structurally short EU compliance market, is not happening at the volumes ReFuelEU mandates require. In the first two months of 2026, US exports of renewable diesel and other biofuels averaged less than 35,000 barrels per day, down from almost 50,000 b/d in the second half of 2025. The gap is not demand. It is design.

US producers are now starting to redesign for the EU gate rather than ship around it. DG Fuels’ August 25, 2025 announcement that approximately 25% of its first Louisiana Fischer-Tropsch plant’s 200 million gallon annual output will be re-engineered to qualify for ReFuelEU compliance — which the company markets as ‘E-SAF’ — is the most explicit producer-level adaptation to date. It is also a useful diagnostic of what the new SAF export market actually looks like.

What Makes a US SAF Molecule ReFuelEU-Eligible

ReFuelEU Aviation (Regulation (EU) 2023/2405), anchored in Renewable Energy Directive III (RED III) and its Annex IX feedstock list, accepts only a narrow set of inputs as countable toward the EU’s stepped SAF mandate. Annex I of the regulation sets the SAF share at 2% from 2025, 6% from 2030 with a 1.2% synthetic-aviation-fuel sub-mandate averaged over 2030-2031 stepping to 2% averaged over 2032-2034, 20% from 2035, and 70% from 2050.

Annex IX Part A (advanced feedstocks including the biomass fraction of municipal solid waste, agricultural and forestry residues, ligno-cellulosic material, manure, sewage sludge, palm oil mill effluent, and algae) and Annex IX Part B (used cooking oil and Category 1 and 2 animal fats including tallow) are both eligible. Unlike RED III road-fuel accounting, ReFuelEU Aviation counts SAF on its energy content without applying RED’s 2x Part A multiplier, and it does not cap Part B contribution (the European Commission’s ReFuelEU Aviation FAQ explicitly confirms there is no Part B cap): each tonne of compliant SAF counts once toward the supplier’s blending obligation. Everything else, including food and feed crops, palm and soy derivatives, intermediate crops grown on dedicated land, palm fatty acid distillate, and soap stocks, is excluded.

That exclusion list is what strands most US SAF. US ATJ from corn ethanol qualifies for the domestic 45Z Clean Fuel Production Credit but is categorically ineligible to count toward ReFuelEU because corn is a food and feed crop and therefore not on Annex IX. US HEFA from soybean oil is excluded on the same food/feed-crop ground, not on a current high-ILUC designation: under Commission Delegated Regulation (EU) 2019/807, only palm oil is presently classified as high-ILUC-risk, though a separate Commission proposal would add soy to that list with a 2030 phaseout (adoption pending). Soap stocks and palm fatty acid distillate, important byproducts in US lipid refining, are also out. The eligible US lipid pathways collapse to used cooking oil, tallow (Category 1 and 2 animal fats), and distillers corn oil — all classified under Annex IX Part B.

The certification chain is also a hurdle. To count toward ReFuelEU, fuel must be certified under a Commission-recognized voluntary scheme such as ISCC EU, with mass-balance chain-of-custody under RED III Article 30 and reporting through the EU’s Union Database for sustainable fuels (RED III Article 31a). The ISCC EU material list updated February 2026 governs what counts. A US plant cannot retrofit its way into ReFuelEU compliance by paperwork alone. The feedstock, process, and chain of custody all have to clear.

ReFuelEU is no longer a market US producers can plan around. It is a design specification they have to plan into.

How DG Fuels Is Redesigning for the EU Gate

DG Fuels’ St. James Parish, Louisiana facility, set to be operational in 2028 with Johnson Matthey and bp’s Fischer Tropsch CANS technology, is the largest announced FT SAF plant in the world, with target output now at approximately 200 million gallons per year (about 13,000 barrels per day), up from an earlier 120 MMgy projection. FID is targeted for Q3 2026. On August 25, 2025, the company announced that approximately 25% of that output, roughly 50 million gallons per year, will be re-engineered to qualify for ReFuelEU compliance — labeled by DG Fuels as ‘E-SAF.’ Two independent third-party consultants reviewed the modified design. The regulatory category is worth flagging: under ReFuelEU Aviation, ‘synthetic aviation fuel’ (e-SAF) is defined as renewable fuel of non-biological origin produced from renewable hydrogen and captured CO2 (Power-to-Liquid). A biomass-gasification Fischer-Tropsch pathway using blue hydrogen, as DG Fuels has publicly described, classifies under ReFuelEU as advanced biofuel under Annex IX Part A. The redesigned volume would count toward the 6% ReFuelEU SAF mandate; it would not count toward the 1.2%-rising-to-2% synthetic-aviation-fuel sub-mandate reserved for RFNBOs.

The redesign exists because of price. Europe’s eligible-SAF market is structurally short. Per Transport & Environment’s June 2025 e-SAF market report, Europe has roughly 41 announced large-scale e-SAF projects targeting around 1.3 million tonnes per year of production by 2030 (2.8 million tonnes per year of total announced capacity), none of which has reached final investment decision. EU airlines including SAS have publicly warned about the looming supply gap. For DG Fuels, the relevant premium is for Annex IX-compliant SAF clearing the ReFuelEU compliance gate, a smaller spread than the dedicated RFNBO sub-mandate premium but still meaningful given the structural shortage in eligible feedstocks. Published spread assessments remain thin.

DG Fuels separately holds a 60,408 tonne per year (21 MMgy) ten-year offtake with Air France-KLM, originally announced October 2022, with first deliveries scheduled for 2026. That contract is denominated in EU compliance volume, so the redesign is what allows the company to deliver on it.

Why HEFA Producers Are Reshuffling Feedstocks, Not Plants

Unlike DG Fuels’ FT process, US HEFA producers are not reconfiguring their plant designs to get into Europe. They are reconfiguring their feedstock slates. Phillips 66’s Rodeo, California complex, at full production of approximately 50,000 b/d of renewable diesel with capability to produce up to 20,000 b/d of SAF, has been increasing renewable diesel and SAF exports to Europe through 2025 and 2026 even as domestic margins weakened (per QCIntel biofuels reporting). Diamond Green Diesel’s Port Arthur, Texas project, sized to produce SAF from roughly half of the 470 MMgy renewable diesel base (per Valero’s January 2023 FID; project completed late 2024), is positioned similarly.

The HEFA pivot is feedstock-driven. Imported UCO is ineligible for the 45Z credit on the 45ZCF-GREET pathway used for renewable diesel: IRS Notice 2025-10 and the 45ZCF-GREET model do not contain a pathway for foreign-origin UCO pending forthcoming substantiation rules. A narrower CORSIA-model pathway remains technically available for SAF but is not commercially used at scale. UCO and tallow from US sources clear both 45Z and ReFuelEU. Late-2025 trade-press coverage has described an emerging arbitrage in which US refiners import tariffed foreign tallow, process it domestically, and export the resulting SAF or renewable diesel to Europe under duty drawback to recover the import duty. The loop only works as long as the EU certification chain holds and the lipid economics remain favorable. Both are now under pressure as Brazilian and Australian tallow volumes reroute away from the US toward European and Asia-Pacific markets, putting downward pressure on European lipid prices.

The Cover Crop Bet

The structural answer to the feedstock chokepoint is cover crops: camelina, carinata, pennycress, and winter canola, grown on the off-season between conventional commodity crops and harvested for low-carbon-intensity oil. The greenhouse gas reduction profile is strong: per a 2025 ACS Sustainable Chemistry & Engineering peer-reviewed life-cycle study, camelina-derived HRJ delivers a 50.4% reduction versus petroleum jet, carinata 65.2%, and pennycress 65.7%. The same study calculates negative indirect land use change values for all three species, reflecting carbon savings from soil cover and reduced erosion.

Bayer announced on May 14, 2026 a strategic alliance with bp to scale camelina production for biofuel feedstock, citing what a Bayer spokesperson described as policy support that is “stronger than ever” for low-carbon fuels. The challenge is regulatory. USDA’s January 2025 interim rule listed cover cropping among the climate-smart agriculture practices eligible to reduce a feedstock’s carbon intensity under 45Z, but the practices have not yet been operationalized in the 45ZCF-GREET model that producers use to monetize the credit, and that integration gap is what makes carinata and camelina less economic today than they would be once the model finalizes. On the European side, the open question is whether cover crops qualify as “intermediate crops” (excluded from ReFuelEU) or sit in a separate Annex IX category. A recent Transport & Environment briefing on Annex IX intermediate crops concluded that intermediate and short-rotation crops together could cover only around 4% of ReFuelEU’s estimated 26 million tonnes per year bio-SAF demand by 2050.

Why ATJ Producers Are Stuck Behind the Gate

The ATJ pathway, which converts ethanol to jet fuel, faces the hardest redesign problem. US ATJ producers including Gevo are built around domestic corn ethanol, economic under 45Z, ineligible under ReFuelEU. LanzaJet’s Freedom Pines facility in Georgia could process ReFuelEU-eligible ethanol from waste-based sources, but those volumes are constrained. The European response is not to import US ATJ but to build domestic ATJ from steel-gas-derived ethanol, as the FLITE consortium is now doing at North Sea Port Ghent.

For US ATJ producers, the redesign trade is shifting feedstock, switching from corn ethanol to cellulosic ethanol from biomass residues, or partnering with a European ATJ plant that can run on US-supplied compliant ethanol. Neither path is fast. Neither is cheap. Both are forced by ReFuelEU’s exclusion list rather than chosen on engineering merit.

What This Pattern Says About Trans-Atlantic SAF Flow

The stranded molecules problem we covered on April 30 was a policy diagnosis. The DG Fuels-style redesign is the producer response. What the response reveals: trans-Atlantic SAF flow at scale will not be generic US SAF molecules crossing the ocean. It will be a smaller volume of specifically designed, specifically certified US molecules targeting the EU compliance premium.

For US producers, the strategic question is whether the EU premium justifies the redesign cost. For DG Fuels, the answer was yes, and a 21 MMgy ten-year Air France-KLM offtake denominated in EU compliance volume is the structural validation. For most other US producers, the math is still being worked. Whether they redesign or stay domestic determines how much US SAF the European market actually gets.

Key Takeaways

• DG Fuels announced August 25, 2025 that approximately 25% of its first Louisiana Fischer-Tropsch plant’s 200 MMgy expected output will be re-engineered to qualify for ReFuelEU compliance — labeled by the company as ‘E-SAF,’ though the biomass Fischer-Tropsch pathway with blue hydrogen classifies under ReFuelEU as advanced biofuel rather than synthetic aviation fuel — validated by two independent third-party consultants.
• The eligible US HEFA feedstocks under ReFuelEU collapse to used cooking oil, tallow, and distillers corn oil. Soy oil, palm fatty acid distillate, soap stocks, and corn ethanol pathways are excluded.
• US renewable diesel and biofuel exports averaged less than 35,000 b/d in the first two months of 2026, down from almost 50,000 b/d in the second half of 2025; the gap reflects feedstock-design mismatch, not weak demand.
• Cover crops (camelina, carinata, pennycress) deliver 50-66% GHG reduction versus petroleum jet with negative ILUC values, but USDA’s January 2025 interim CSA rule has not yet been operationalized in 45ZCF-GREET, and a recent Transport & Environment briefing estimates intermediate and short-rotation crops could cover only around 4% of ReFuelEU bio-SAF demand by 2050.
• ATJ producers face the hardest redesign because corn ethanol is categorically excluded from ReFuelEU; the European response so far is to build domestic ATJ on Annex IX-eligible ethanol (FLITE in Ghent) rather than import US ATJ.

Sources: DG Fuels (Aug 25, 2025); DG Fuels / Air France-KLM offtake; U.S. Energy Information Administration; Regulation (EU) 2023/2405 (ReFuelEU Aviation); European Commission ReFuelEU Aviation FAQ; Commission Delegated Regulation (EU) 2019/807; ISCC EU material list (Feb 2026); Federal Register, 45Z Proposed Regulations (Feb 4, 2026); USDA CSA Interim Rule (Jan 15, 2025); ACS Sustainable Chemistry & Engineering (cover crop LCA); AgTech Navigator (Bayer/bp camelina); Transport & Environment, e-SAF market report (June 2025).