Sustainable Aviation Fuels:
A 30,000 Foot Perspective
Chapter 5
Regulatory and Policy Frameworks
5.1
The Fundamentals of Policy Options

Strategies to promote SAF adoption include “sticks” (regulatory mandates) and “carrots” (incentives). “Sticks” such as Renewable Fuel Standards, carbon pricing, tax credits, and feed-in tariffs drive immediate market compliance and investment in SAFs. “Carrots” like public-private partnerships, regulatory support, and R&D investments foster long-term growth and innovation.

Incentives

Often metaphorically referred to as “sticks” and “carrots,” these strategies represent mandates and incentives, respectively. “Sticks” signify regulatory measures that mandate actions or impose financial penalties for carbon emissions, thus driving immediate market compliance. “Carrots,” in contrast, are supportive policies offering benefits to stimulate SAF production and usage without compulsory measures.

Primary Drivers of SAF Uptake (“Sticks”):

Renewable Fuel Standards (RFS) or Mandates: Obligate fuel suppliers to incorporate a specific percentage of SAF into their fuel mix or require airlines to procure a minimum amount of SAFs. These mandates create immediate demand by placing responsibility on either fuel producers or aviation operators.

  • Carbon Pricing or Emissions Trading Schemes (ETS): Through the monetization of carbon emissions, these schemes economically disadvantage fossil fuels in favor of SAFs, encouraging the adoption of lower-emission fuel options.
  • Tax Credits or Incentives: Offer economic benefits that diminish the cost barrier associated with producing or acquiring SAFs, thereby stimulating market entry.
  • Feed-in Tariffs (FITs): These provide energy producers using SAFs with guaranteed pricing, fostering investment in SAF production by assuring consistent financial returns.

Supportive Policy of SAF Innovation (“Carrots”):

  • Public-Private Partnerships and Grants: Involve collaborative ventures between governmental bodies and private entities to bolster SAF initiatives, thus sharing the risks and rewards. These partnerships may not translate into immediate SAF uptake but are crucial for long-term support.
  • Regulatory Support and Streamlining: By minimizing red tape, these policies accelerate the market entry for new SAF technologies. While they don’t ensure market demand, they facilitate the availability of SAF options.
  • Research and Development Support: Investments in R&D can lead to advancements in SAF production efficiency and cost reduction. The influence of such support is typically indirect on current supply and demand but pivotal for future scalability.

These policy options form the bedrock of strategies to drive SAF adoption. While “sticks” push the market towards immediate action, “carrots” lay down a nurturing environment for the growth and eventual uptake of SAFs. Together, they create a holistic policy landscape conducive to the advancement and proliferation of SAFs.