Can we produce aviation fuel sustainably to meet the rise in air travel?

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It is now well known that air travel by humans has risen and that it will continue to rise in the foreseeable future. Therefore, if future air travel is to be sustainable then one key question that we must answer concerns our ability to produce aviation fuel in a sustainable manner. In this regard, we need to address the critical challenge of scaling up sustainable aviation fuel (SAF) production in the United States to satisfy the government’s goal of meeting 100 percent of aviation fuel demand with SAF by 2050.

Since current SAF production is only a fraction of total jet fuel use, scaling up requires a shift from food-based feedstocks to high-yield, low-carbon, cellulosic biomass sources such as miscanthus, switchgrass, and corn stover. However, the problem is that miscanthus—despite its high yield and carbon sequestration potential, entails large upfront establishment costs, longer maturity periods, and greater yield uncertainty, which discourage adoption by farmers with limited credit or higher risk aversion. On the other hand, switchgrass and corn stover, while lower yielding, pose fewer financial and intertemporal risks.

New research sheds interesting light on the potential of cellulosic feedstocks — specifically perennial bioenergy crops like miscanthus and switchgrass, and the crop residue corn stover — to provide a low-carbon alternative to petroleum-based jet fuel. The point to note is that the adoption of these feedstocks, particularly high-yielding miscanthus, is hindered by significant barriers for farmers, including high upfront establishment costs, delayed returns, and risks that differ from conventional annual crops like corn and soybeans.

The research demonstrates how different farmer characteristics, i.e., risk aversion, time preferences (discount rates), and access to credit, influence the supply and mix of these feedstocks. Furthermore, it evaluates the cost-effectiveness of two alternative carbon payment designs in overcoming these barriers and incentivizing the production of feedstocks that maximize carbon mitigation.

Integrated, economic-biogeochemical modeling yields three noteworthy provoking insights. First, the characteristics of U.S. farmers affect their feedstock choice and SAF supply. Under a “Low-Constraint” scenario (meaning low risk aversion, low discount rate, and access to credit), farmers predominantly choose the high-yielding, low-carbon miscanthus at moderate biomass prices, leading to substantial SAF production. In contrast, “High-Constraint” farmers (meaning highly risk-averse, present-biased, and credit-constrained) overwhelmingly prefer the lower-yielding but less risky switchgrass, resulting in up to 48 percent lower SAF production at the same biomass price. Importantly, credit constraints are the single most significant barrier to miscanthus adoption.

Second, the design of carbon payments is pivotal. The research under discussion compares an “Annual Payment” (which is a yearly payment per ton of carbon dioxide mitigated) with an “Upfront Payment” (which is a lump sum paid in the first year for the total carbon mitigated over a 15-year crop lifespan).

For credit-constrained farmers, upfront payments are far more effective. Put differently, upfront payments are more cost-effective per dollar spent on carbon mitigation for this group. In contrast, for farmers with access to credit, annual payments are generally more cost-effective. These farmers, less burdened by initial costs, respond better to a steady income stream and choose the most efficient feedstock for carbon mitigation in their region without needing a large upfront sum.

Third, the spatial pattern of feedstock production shifts with policy and farmer characteristics. Without carbon payments, “High-Constraint” farmers avoid miscanthus even in the high-yielding Midwest. Upfront payments uniquely change this pattern, enabling miscanthus production in the Midwest while switchgrass remains dominant in the Southern U.S. This demonstrates that effective policy can alter the geographic distribution of bioenergy crops.

Policies that ignore farmer heterogeneity are likely to overestimate the potential for bioenergy crop production. One-size-fits-all policies, such as tax credits like annual payments, may fail to engage credit-constrained or risk-averse farmers. Instead, a targeted approach is necessary. Policymakers should consider hybrid incentives that include upfront cost-share components or risk-mitigating instruments like insurance, tailored to the carbon performance of different feedstocks and the financial realities of different farmers.

In sum, we learn that the successful decarbonization of aviation through SAF depends not only on feedstock agronomy and conversion technology but critically on the nuanced design of economic incentives that account for the diverse risk, time, and financial constraints of the farmers who will ultimately produce the necessary biomass.

Batabyal is a Distinguished Professor, the Arthur J. Gosnell professor of economics, and the Head of the Sustainability Department, at RIT, but these views are his own.

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