On 25 August 2025, DG Fuels announced that roughly 25 percent of its first Louisiana Fischer-Tropsch plant’s output would be re-engineered to qualify as RefuelEU-compliant e-SAF, with two third-party consultants reviewing the modified design. The reason the company gave was simple: the baseline US-design output, optimized for the 45Z Clean Fuel Production Credit, would not clear Europe’s certification gate. That single disclosure is the operational proof of a thesis the Issue 1 and Issue 2 entries in this series have been building toward. The trans-Atlantic SAF trade that should be filling Europe’s RefuelEU shortfall is not blocked by price or capacity. It is blocked by regulation, and US producers are now redesigning hardware to work around it.

This third and final installment of The 45Z Reckoning closes the arc. Issue 1 mapped which 45Z pathways survive the credit cut. Issue 2 followed the capital flows. Issue 3 asks the harder question: even if 45Z economics stabilize and US capacity scales on schedule, why won’t those molecules cross the Atlantic to fill the structural gap in Europe’s mandate? The answer is a five-hurdle certification chokepoint and a trade-defense overlay that together render most US SAF stranded for European compliance purposes.

How Big Is Europe’s Mandate Gap?

RefuelEU Aviation (Regulation 2023/2405) sets a 2 percent SAF blend in 2025, 6 percent by 2030 with a 1.2 percent e-SAF sub-mandate, 20 percent by 2035, and 70 percent by 2050. Year one missed badly. EASA’s RefuelEU Aviation Annual Technical Report 2025 pegs 2024 actual SAF supply at EU airports at 0.6 percent of jet fuel uplift, roughly 193 kt, well below the 2 percent stepping-stone target.

The forward gap is wider. EASA reports operating EU SAF capacity of approximately 1.0 to 1.4 Mt per year. Announced 2030 capacity reaches 3.6 Mt realistic, 5.2 Mt optimistic, plus 0.7 Mt synthetic, against roughly 9.6 Mt needed for the 6 percent mandate at projected 2030 jet demand. Globally the picture is no better. IATA’s 9 December 2025 update placed 2025 global SAF output at 1.9 Mt, 0.6 percent of global jet fuel, with 2026 forecast at 2.4 Mt or 0.8 percent. IATA Director General Willie Walsh’s verdict was unusually blunt: “If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park.” IATA pegs the SAF-related additional cost burden on airlines in 2025 at USD 3.6 billion above the fossil jet equivalent.

European obligated parties are already heavily import-dependent. EASA reports that 69 percent of EU 2024 SAF feedstock originated outside the EU, with used cooking oil supplying 81 percent of inputs (China 38 percent, Malaysia 12 percent), and more than 40 percent of finished SAF was also imported. Germany’s penalty backstop sits at €4,700 per tonne for missing SAF and €17,000 per tonne for missing e-SAF, a hard ceiling on what an obligated party will pay before defaulting. The system needs imports. The question is which imports it will accept.

What Does US SAF Capacity Actually Look Like in 2026?

The US side of the equation is the opposite story. EIA’s 2025 update placed operational US HEFA-only SAF capacity at the start of 2026 at roughly 30,000 b/d, with a 2026 SAF production forecast of plus 20 percent year on year. Confirmed HEFA expansions include Diamond Green Diesel Port Arthur (15,000 b/d, Q4 2024), Phillips 66 Rodeo (10,000 b/d, completed Q3 2024 and paused Q4 2024), New Rise Reno (3,000 b/d, February 2025), and Par Pacific Kapolei (2,000 b/d, second half 2025). Montana Renewables is ramping to 150 MMgy SAF in Q2 2026 and approximately 300 MMgy at full plant under a US Department of Energy Loan Programs Office guarantee of USD 1.67 billion that closed in January 2025.

The announced US HEFA pipeline by 2030 reaches 5.1 Mt or 1.7 Bgal. The ATJ pipeline is even larger at 4.8 Mt per year across 34 projects globally, anchored by LanzaJet’s Freedom Pines facility in Soperton, Georgia, which produced its first commercial ETJ output in November 2025. On paper, the molecules exist. The feedstock pool that supports them is another matter. Stillwater Associates noted in 2025 that US biofuel production capacity already exceeds 2024 domestic feedstock supply by 87 percent, with roughly 70 percent of UCO supply import-dependent and roughly 30 percent of total lipid feedstock imported.

Why Can’t a 45Z-Qualified Molecule Just Be Sold Into Europe?

A US batch of SAF must clear three independent regulatory hurdles to count toward an EU obligation, and most fail at hurdle two.

Hurdle 1: ASTM technical qualification

Eleven ASTM D7566 pathways are approved (HEFA-SPK, ATJ-SPK, FT-SPK, SIP, and others), with a 50 percent blend cap on conventional Jet A. This step is jurisdiction-neutral and not the binding constraint.

Hurdle 2: Sustainability scheme certification, regime-specific

This is where the trans-Atlantic flow breaks. ICAO has approved three Sustainability Certification Schemes for CORSIA Eligible Fuels: ISCC, RSB, and ClassNK. The EU recognizes a different (overlapping but not identical) list of voluntary schemes against RED III for RefuelEU compliance, principally ISCC EU and RSB EU RED. A US producer holding ISCC CORSIA certification is CORSIA-compliant. It is not, by that fact alone, RefuelEU-compliant.

To count toward an EU obligation, the molecule’s chain of custody must be audited under an ISCC EU or RSB EU RED certificate, with separate Proof of Sustainability documentation issued at each step in the supply chain. ISCC and RSB recognize each other’s certificates within scheme equivalents (ISCC CORSIA aligns with RSB CORSIA). They do not make CORSIA certification equivalent to EU RED certification. The two regimes share auditors and infrastructure but not legal force.

Hurdle 3: Feedstock and ILUC eligibility

This is the regime mismatch that strands most US output. RefuelEU Aviation goes beyond RED III by excluding food and feed crops, palm and soy derivatives, intermediate crops, palm fatty acid distillate, and soap stocks from counting toward SAF targets, even where the underlying RED III sustainability criteria are satisfied.

• US ATJ from corn ethanol, the LanzaJet Freedom Pines pathway and the basis for most announced US ATJ growth (Gevo’s ATJ-60 and several Midwest projects) qualifies under 45Z with climate-smart-ag practices applied. It is categorically ineligible to count toward RefuelEU. Growth Energy, the Renewable Fuels Association, the US Grains Council, and LanzaJet intervened in the ePURE / Pannonia Bio EU court challenge in 2024 specifically to fight this exclusion. The General Court of the EU dismissed the case in February 2025 on standing grounds; the underlying RefuelEU regulation remains in effect.
• US HEFA from soy oil, economically attractive under 45Z given USDA-supported soybean supply, is excluded from RefuelEU on ILUC grounds.
• That leaves US HEFA from used cooking oil, tallow, and distillers corn oil as the only meaningfully exportable pathway under both regimes. Annex IX Part B feedstocks are themselves capped under RED III, with RefuelEU pushing obligated parties toward Annex IX Part A, feedstocks the US has limited at-scale supply of.

RefuelEU does not just impose a stricter sustainability test on US SAF. It rules out, by category, the feedstock base that 45Z economics push US producers toward.

Hurdle 4: Mass balance and double-counting

Once a batch’s Proof of Sustainability is surrendered to the EU Union Database for RefuelEU compliance, the same molecule cannot also be claimed under CORSIA. ISCC published a Proof of Compliance Guidance Document in September 2025; an industry-wide PoC mechanism for the SAF / Union Database / CORSIA interface remains under discussion. For a US producer this means choosing the destination market upstream, and once chosen, surrendering the option to redirect.

Hurdle 5: Trade defense overlay

EU Implementing Regulation 2025/261, dated 10 February 2025, finalized antidumping duties on Chinese biodiesel and simultaneously activated import tracking on SAF using six new ten-digit CN codes. SAF itself is not yet inside the duty perimeter, but US, Canadian, Argentinian, and Indonesian SAF was explicitly included in the import-monitoring framework “to prevent tariff evasion.” S&P Global Commodity Insights reported on 11 February 2025 that the Commission has signaled it will pursue further trade-defense action if subsidized third-country SAF is judged to threaten the European producer base. That is a direct shadow over 45Z-credited US exports. Neste contested SAF’s exemption from the existing biodiesel measures on interchangeability grounds. EcoCeres publicly urged the Commission on 27 February 2025 to keep the EU SAF market “open and competitive” and warned that further trade defense on imported SAF would undermine EU climate objectives.

What Are US Producers Actually Doing About It?

Producer behavior in 2025 and 2026 is the cleanest evidence that the certification chokepoint is binding and not theoretical. Three responses are visible.

Re-engineer the plant. DG Fuels’ 25 August 2025 announcement is the most direct case. Roughly 25 percent of the first 200 MMgy plant’s output will be redesigned to qualify as RefuelEU e-SAF, with two third-party consultants reviewing the modified Fischer-Tropsch design. DG Fuels has a separate 60,408 t/yr (21 MMgy) ten-year offtake with Air France-KLM, with first deliveries in 2026, per Biofuels International. The decision tells the market that the certification gate is binding enough to justify capital expenditure on a different technical specification for a single sub-stream of one plant.

Sell the credit, not the molecule. Gevo holds RSB Global and RSB CORSIA certifications. Its April 2025 deal with Future Energy Global covers Scope 1 and Scope 3 voluntary credits from 10 MMgy at the ATJ-60 plant, an explicitly book-and-claim voluntary structure rather than a physical-delivery EU compliance pathway. Montana Renewables and World Energy’s February 2026 partnership for more than 70 MMgy of SAF deliveries over three years sits in similar territory, both producers RSB-certified, no public RefuelEU-compliance offtake disclosed. The interoperability work among three major SAF registries is meant to make this voluntary channel more credible. It does not make book-and-claim certificates eligible against a RefuelEU compliance obligation.

Litigate. Growth Energy, the Renewable Fuels Association, the US Grains Council, and LanzaJet intervened in 2024 in the ePURE / Pannonia Bio EU court challenge to the RefuelEU crop-feedstock exclusion. Their position: the regulation creates a de facto ban on US corn-ethanol-derived SAF supply to Europe. A ruling for the intervenors would be the single biggest swing factor for US ATJ economics into Europe. As of late April 2026 the case remains open.

What Have European Buyers Done in Response?

European obligated parties have not waited for harmonization. EU airline groups’ 2024 SAF blend rates tell the story: IAG at approximately 3.9 percent intra-EU (the most aggressive), Air France-KLM at approximately 1.25 percent group-wide, Lufthansa Group at approximately 0.2 percent. None has publicly disclosed a physical-delivery US SAF import contract that qualifies for RefuelEU compliance. Partnerships with US producers, including DHL with Air France-KLM and BCG with World Energy, are predominantly book-and-claim or voluntary-market constructs.

The structural shortage that obligated parties cannot fill physically pushes hard against the price ceiling Germany set with its €17,000 per tonne e-SAF backstop. SkyNRG’s 2025 open letter calling for five EU policy interventions to derisk e-SAF flagged that no commercial EU e-SAF facility has reached financial investment decision. The eFuel Alliance has argued for raising the 2030 e-fuels share to at least 5 percent and emphasized that e-fuels can be imported globally, an implicit argument for harmonized cross-border certification. The EU has already signaled it will not enforce the 2030 e-SAF sub-mandate, which removes a stick but not the underlying volume problem.

What Would Actually Open the Trans-Atlantic Channel?

Seven things would, individually or in combination, change the picture.

1. Mutual scheme recognition. A formal EU acknowledgement that ISCC CORSIA and RSB CORSIA chain-of-custody certification satisfies RefuelEU’s RED III–derived sustainability criteria for shared pathways and feedstocks. ICAO’s STIP gestured at “dual conformance” but produced no binding rule.
2. CORSIA-CEF expansion. Updated ICAO default LCA values, approved by Council on 19 November 2025, plus broader CORSIA Eligible Fuels feedstock recognition could narrow but not eliminate the gap. The EU’s exclusions go beyond CORSIA’s.
3. Operational Proof of Compliance. ISCC and RSB are designing a PoC mechanism so a single batch’s documentation can serve both EU and CORSIA claims. Not yet live.
4. EU ETS and book-and-claim recognition. The EU ETS Directive 2026 review could permit cross-border purchase-based SAF claiming, opening a non-physical channel for US molecules.
5. Bilateral trans-Atlantic aviation fuel agreement. No precedent specific to SAF exists; an Open-Skies-style fuel sustainability protocol would be required to override unilateral feedstock exclusions.
6. Resolution of the EU court challenge to the crop-feedstock ban. A ruling for ePURE, Pannonia Bio, and the US intervenors would unlock corn-ethanol-derived ATJ for EU compliance.
7. Trade-defense forbearance. A Commission commitment not to extend biodiesel-style anti-dumping or anti-subsidy measures to SAF, given that 45Z is a producer credit and a likely target if the EU industry petitions.

None of these is on a near-term timeline that aligns with the 2030 RefuelEU compliance window. The rational base case is that the trans-Atlantic SAF flow remains predominantly book-and-claim through the rest of the decade, with physical-delivery EU compliance volumes coming from a narrow band of US HEFA-from-waste producers and bespoke re-engineered streams of the DG Fuels variety. The molecules exist. The paperwork does not. That is the closing chapter of The 45Z Reckoning: a US production base optimized for a domestic credit, an EU mandate optimized for a domestic feedstock pool that is too small to fill it, and a regulatory architecture that does not yet reconcile the two.

Key Takeaways

• EU 2024 SAF supply hit 0.6 percent of jet fuel uplift (~193 kt) against the 2 percent target. Announced 2030 capacity reaches 3.6 Mt realistic against ~9.6 Mt needed for the 6 percent mandate (EASA RefuelEU Annual Technical Report 2025).
• US SAF capacity is large and growing (~30,000 b/d operational at start of 2026, 5.1 Mt HEFA pipeline by 2030) but most of it cannot count toward RefuelEU because the dominant 45Z-qualifying feedstocks (corn ethanol for ATJ, soy oil for HEFA) are categorically excluded.
• DG Fuels’ 25 August 2025 decision to re-engineer ~25 percent of its first 200 MMgy plant for RefuelEU e-SAF compliance, reviewed by two third-party consultants, is the operational proof that the certification gate is binding enough to drive plant-design changes.
• EU Implementing Regulation 2025/261 (10 February 2025) activated SAF import tracking with six new CN codes, naming US-origin SAF “to prevent tariff evasion.” The trade-defense overlay sits on top of the certification problem.
• The base case for the rest of the decade is parallel-supply: US producers earn 45Z at home and sell into CORSIA voluntary markets; EU obligated parties chase a tightly defined waste-lipid pool the US cannot economically supply at scale. Without mutual scheme recognition, an operational Proof of Compliance, or a court ruling on the crop-feedstock exclusion, the supposed safety valve in Europe’s mandate stays closed.

Primary sources: EASA RefuelEU Aviation Annual Technical Report 2025; IATA “SAF Production Growth Rate is Slowing Down,” 9 December 2025; EIA “U.S. sustainable aviation fuel production takes off,” 2025; ICAO CORSIA Sustainability Certification Schemes (June 2025); EU Implementing Regulation 2025/261 (10 February 2025); S&P Global Commodity Insights, 11 February 2025; DG Fuels press release, 25 August 2025; Treasury 45Z Clean Fuel Production Credit guidance, January 2025; USDA FAS Biofuel Mandates in the EU by Member State 2025; Stillwater Associates 2025; Growth Energy, May 2024 ePURE intervention notice; Biofuels International on DG Fuels / Air France-KLM offtake.