Very few people want to give up flying. It’s how we stay connected with family, expand business opportunities and take holidays to relax. This makes scaling the production of sustainable aviation fuel (SAF)—along with other technological developments such as battery-powered planes—critical if we want to continue flying while trying to stop climate change. Without it, we risk significantly reducing, or even losing, our freedom to connect. First-generation biodiesel (fatty acid methyl ester or FAME) producers who have the feedstock, capability and resources to switch to SAF production may hold the fate of air travel in their hands.

A Growing Market for SAF
Although SAF currently represents less than 1% of the overall jet fuel market, several countries including Japan, South Korea, Malaysia, Turkey and Brazil will introduce SAF mandates from 2026 or 2027. This will add to existing commitments from the United Kingdom and European Union. Meanwhile, several more countries are considering the introduction of SAF targets in the coming years. With growing global demand, supportive policy regimes and a significantly underserved market, now is the time for interested biodiesel producers to make the switch before feedstocks become difficult to secure.

With global SAF demand expected to rise 10-fold from 2024 to 2030, supply pressure on feedstock is already becoming apparent. For example, in late 2024, the Intercontinental Exchange launched a dedicated used cooking oil futures contract in response to rising demand, creating the opportunity for participants to better manage their price exposure.

Securing Long-Term Feedstock Contracts
When considering an investment in the construction of a SAF plant, one of the major constraints is the availability of feedstock on a long-term supply contract. Consequentially, existing biodiesel producers with contracts in place that can be diverted to make SAF start from a place of advantage.

The need for long-term contracts is further underscored by the changes we can expect to see in feedstock import and export volumes. Around 90% of the U.K.’s SAF is currently produced using imported cooking oil from China. However, with China’s plans to introduce its own SAF targets, some producers will need to begin sourcing alternate feedstocks closer to home. Altogether, having feedstock contracts locked in early in the project development process is essential for managing risk and optimizing project returns.

Financial Incentives Set to Expand
One of the key benefits of moving from biodiesel to SAF production within the next couple of years is the attractive financial incentives currently on offer, particularly in the U.S. market. On top of the RIN credits that both biodiesel and SAF collect through the U.S. Renewable Fuel Standard, SAF also attracts up to $1 per gallon credit through the 45Z Clean Fuel Production Credit scheme. State credits can also pay up to an additional $1-$2 per gallon for SAF. This brings total incentives for SAF to up to $3.50 per gallon more than biodiesel.

While in Europe there are no dedicated financial incentives yet, changes on the near horizon look promising. For example, there is a proposal to introduce a stronger price signal for SAF production through the Energy Taxation Directive, which would provide a tax exemption. The European Commission is also expected to release a Sustainable Transport Investment Plan later this year, in which industry bodies such as ACI Europe have called upon to allocate specific EU funds to develop SAF production facilities.

Although SAF plants are currently more expensive to build than an equivalent capacity biodiesel plant, incentive regimes, along with the premium price levied on SAF, make for attractive project returns. For most U.S. projects, the typical payback period has fallen to under three years, creating a compelling case for investment.

Technology Choice Significantly Impacts Project Economics
For biodiesel producers considering converting their facilities, a preliminary techno-economic assessment will estimate the cost of construction, the volume of SAF that will be produced, operational costs such as utilities and financial incentives available. Reusing auxiliary existing infrastructure from the biodiesel plant, such as housing, pretreatment systems and tankage, can reduce product costs by 20%-30%.

Currently, eight technology pathways exist to manufacture SAF, but the HEFA pathway (i.e. hydrotreating fats, oils and greases) offers the industry’s fastest payback and lowest total cost of production while producing comparable yields. This is made possible by the latest innovations which move away from traditional trickle-bed design, as well as opting for a modular build.

For example, Sulzer’s BioFlux technology is a two-stage liquid full hydrotreating process that first removes the oxygen from the oil and then isomerizes it so that the hydrocarbons resemble jet fuel. Rather than using a conventional trickle bed reactor design which is prone to hot spots, BioFlux uses a liquid full reactor design where the catalyst bed is completely submerged in liquid feed with hydrogen dissolved using a proprietary internals design, leading to homogeneous mixing. This significantly improves the efficiency and efficacy of the reaction, optimizes the volume of hydrogen needed and extends the life of the catalyst. In addition, the process has less equipment, so it is simpler to maintain and more reliable. For example, the traditional method requires gas compressors for recycling the vapor; instead, BioFlux eliminates the vapor recycle loop and gas compressors and uses pumps to move the effluent.

Modular Construction Paving the Way For Smaller Plants
The use of modular design is also transforming construction costs particularly for plants with capacities up to 200,000 tons per annum. For SAF production technologies that use less equipment, modular skids are a practical option that simplify integration, reducing time to market to within two years. These smaller plants are expected to become much more common, decentralizing production and bringing feedstock supply, production and offtake closer together.

For example, with several airline carriers in the Asia-Pacific region now buying SAF, Thailand-based Energy Absolute—who is also a first-generation biodiesel producer—has invested in a new plant in Rayong that will use used cooking oil and palm fatty acid to make about 15 million gallons of SAF a year. The plant has been designed so that it can seamlessly switch from SAF to winter-grade renewable diesel to meet local market demands.

When combining the latest innovations in SAF production with modular design, SAF producers can expect to reduce CAPEX by 20%-30% while benefiting from an ongoing saving of between 10%-20% in OPEX costs.

For biodiesel producers considering a shift to SAF, the window of opportunity to transition is open. With demand accelerating and policy momentum building, biodiesel producers making the switch now will not only corner the market for themselves but pave the way for the success of SAF into the future. Those who wait risk less favorable economics and considerable competition for feedstock.

Author: Luis Hoffman
Global Licensing Director, Sustainable Fuels
Sulzer

Printed in Issue 1, 2026 of Biodiesel Magazine

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