Given the different SAF technologies, each defined by specific chemical processes such as hydrogenation (HEFA) or gas synthesis (FT), there is significant variability in the types of feedstock used. As a result, feedstock procurement cannot follow a "one-size-fits-all" approach.

The immense opportunities in the SAF industry stem from the diversity of feedstock options. While there are multiple pathways, this optionality also adds complexity, making it a multidimensional process for SAF suppliers to identify an optimal supply chain:

1. LAND SUITABILITY LAYER: While certain crops may thrive in specific regions, achieving maximum crop yield depends on numerous factors, with even the smallest details potentially making one parcel of land more viable than another. 

Physical characteristics. Land suitability for a crop depends on physical factors like soil pH and temperature. Switchgrass thrives in well-drained soils with a pH of 6 or higher and grows best at 77 to 86°F. Corn, meanwhile, performs optimally in soils with a pH of 6 to 6.5 and temperatures of 68 to 73°F. Strategic crop rotation can also boost soil productivity and health while maximizing the yield of high-demand crops like corn. Even slight changes in soil acidity levels and temperature can significantly impact maximum crop yield, emphasizing the variability across even similar regions. 

Climate-related parameters. Considering climate-related factors like rising temperatures and rainfall is crucial, as these changes can render previously suitable land no longer viable.  Suppliers must consider the risks of severe floods or droughts, which can significantly impact crop yields and feedstock availability at any time. Investing in carefully selected land that meets the required conditions will save capital and operating costs in the long run.

2. DEMAND LAYER: SAF has a lower energy density than jet fuel, meaning more SAF is needed for a plane to reach the same destination. Recently, the first commercial transatlantic flight using 100% SAF made from cooking oil feedstock was completed, demonstrating that while challenging, it is indeed possible.

Distance traveled. Accounting for distance traveled is critical due to the varying energy densities of different types of SAF. Although SAF made from waste feedstock typically has lower energy density due to its complexity and high moisture content compared to HEFA (which uses fats and oils), advancements in technology and conversion processes have successfully addressed these challenges.

Flight routes. Additionally, flight routes indicate the types of feedstock and the volumes needed to meet demand. For example, sorghum is not native to California or the Northwest, making it less suitable for SAF production in those regions. Moreover, airports like LAX in Los Angeles, with around 1,800 international flights weekly and 600 commercial flights daily, require significantly more feedstock than a smaller hub like BNA in Nashville, which handles 300 flights per day. Therefore, a SAF supplier in California would need to secure larger volumes of feedstock or expand supplier networks compared to a supplier in Tennessee.

3. POLICY LAYER: Current policy implementations are major drivers of the SAF market, as they directly influence both supply and demand dynamics.

Regional mandates. As mentioned above, the destination, a key factor, also impacts blending requirements and the types of feedstock permitted. The United Kingdom recently passed a SAF mandate to phase out crop-based feedstock (palm oil, sugarcane, soybean oil, etc.), aligning with the EU's plans to phase out crop-based biofuels. Although this policy doesn't immediately affect aviation in the EU, the strong emphasis on advanced feedstock signals an inevitable shift in the industry.

Types of tax incentives. Moreover, SAF suppliers must consider the various tax incentives available in each region, as these can significantly influence the market. Tax incentives can be categorized into three types*: 

• Volumetric target incentives, such as the UK SAF mandate, require 2% of total UK jet fuel demand to be met with SAF by 2025 — and increase to 22% by 2050. This type of regulation encourages SAF production from the most cost-effective feedstock to achieve the mandated volumes.

• Threshold carbon-intensity-based tax credits, as seen in the U.S. Inflation Reduction Act, reward SAF producers for reducing GHG emissions. This encourages SAF production that meets the carbon intensity threshold at the lowest breakeven price. 

• Carbon abatement credits, such as those provided by California's Low Carbon Fuel Standard (LCFS), allow SAF producers to sell credits, enabling jet fuel producers to meet carbon intensity reduction targets. This incentivizes the use of feedstock with the lowest cost of carbon abatement and the highest potential for reducing GHG emissions.

While corn might be a preferred option for meeting volumetric targets, switchgrass sequesters more carbon than it produces compared to corn, making it a more attractive feedstock in regions with carbon-intensity-based tax credits. On the other hand, carbon abatement credits will require benefits of both. 

4. COST LAYER: SAF suppliers must consider not only production costs but also planting costs, as these inputs directly influence final balance sheets for end-use sales.

Breakeven price (Agriculture). Capital and operational costs vary depending on the type of crop. Perennial crops like switchgrass yield returns over their 10-to-20-year lifespan, while annual crops like corn and soy require yearly planting, with costs and yields assessed annually. Thus, initial land preparation for switchgrass is a one-time capital expenditure spread over its lifetime, but for corn and soy, land preparation is an ongoing annual investment. 

The determinant factors influencing a high IRR and the lowest breakeven price ultimately depend on crop yield (planting the right plants) and market conditions (producing the right volumes).

Cost variability across SAF production. In addition to variability in crop yield on farmland, there is variability in feedstock yield used for SAF production. For instance, though soybean oil typically yields more SAF than biomass feedstock, prices range around $800/ton for soybean oil and $100/ton for biomass. Furthermore, capital and operating investments in SAF facilities also vary depending on the type of technology and the energy needed for each process.

Ultimately, SAF is highly attractive due to its potential to reduce GHG emissions by up to 65% with immense opportunities for supply. To successfully integrate SAF into the market, suppliers must build a robust network of farmers, production facilities, and end-users, while carefully considering the factors mentioned above. With airlines committed and nations onboard, it's time for SAF to move from the runway to takeoff.