Key Risks
- Rollback of the Inflation Reduction Act
- The IRA, enacted under President Joe Biden, includes incentives for SAF production, which experts credit with jumpstarting investment in the sector. Trump's stated intention to repeal the IRA could discourage new SAF projects, although Congress would have to approve such a rollback.
- Global SAF Expansion at Stake
- SAF currently accounts for just 1% of global jet fuel use. For the aviation industry to achieve its climate goals, production must scale dramatically, requiring long-term policy support.
- Europe's airlines, which will face a 2026 mandate to use SAFs, have lauded the IRA as a model for fostering investment in production facilities. A U.S. policy reversal could stall progress globally.
- Investor Uncertainty
- The lack of policy consistency may deter companies from committing to SAF production. "The market needs certainty," noted Ronce Almond, head of intergovernmental affairs at American Airlines.
Industry Reactions
- IATA (International Air Transport Association): Chief economist Marie Owens Thomsen described the potential risks of Trump's policies as a significant threat to climate change efforts within aviation.
- Airlines: U.S. carriers like American Airlines have expressed concern that SAF expansion, already at a nascent stage, could falter without government support.
Broader Implications
- Meeting Climate Goals
- Aviation accounts for approximately 2.5% of global CO₂ emissions. Without rapid SAF adoption, the sector risks falling short of its net-zero targets.
- Global Leadership
- A U.S. withdrawal from SAF development could weaken its leadership in green aviation, leaving the field open to regions like Europe and Asia, which are pursuing similar mandates and policies.
- Existing Facilities
- While current SAF production plants are expected to continue operations, the cancellation of tax credits could make future projects economically unviable, slowing expansion.
Outlook
The aviation industry is at a crossroads where clear, stable policy support is essential to foster innovation and growth in SAFs. While the IRA has been a pivotal driver, its potential repeal under a Trump administration casts uncertainty over the sector's ability to scale up green jet fuel production. As airlines and industry bodies rally for continued government backing, the next administration's stance will significantly influence the trajectory of sustainable aviation.