LUBBOCK, TX – High diesel prices are improving the competitive position of biofuels, but sustainable aviation fuel still faces tougher economics than renewable diesel. CoBank lead economist Jacqui Fatka says facilities capable of producing both fuels currently have stronger financial incentives to make renewable diesel.
Sustainable aviation fuel remains more expensive to produce than conventional alternatives, although federal tax incentives can narrow the gap. Recent policy changes also reduced the incentive available for sustainable aviation fuel production.
Many renewable diesel facilities can shift some production toward aviation fuel, giving operators flexibility when market conditions change. For now, Fatka says renewable diesel generally offers the better return.
That matters for agriculture because both fuels can compete for similar feedstocks, including soybean oil, animal fats, and other renewable oils. Production economics can influence where those supplies ultimately move.
Fatka says airlines could increase demand through purchasing commitments, but sustainable aviation fuel currently faces more economic headwinds than tailwinds in the U.S. market.
Farm-Level Takeaway: Renewable diesel currently offers stronger economics than sustainable aviation fuel, shaping competition for agricultural feedstocks.