Sustainable Aviation Fuel: Investing in the Future
General Jimmy Doolittle is typically remembered for his exploits as a test pilot and combat leader during War II. Yet his greatest contribution to the war effort may have come years earlier, when Doolittle was an executive with Shell Oil Company in the 1930s. There, he convinced Shell to invest in producing a new grade of aviation fuel — 100 octane — to replace the 87 octane fuel then in use. 100 octane fuel, combined with other advances in engine technology, provided American aircraft with a significant performance advantage over competitors. It was a prescient investment.
With the new fuel came increased performance, such as greater speed and climb rates along with reduced takeoff distances. It was just one of many edges the Allied air forces used to ultimately prevail in the conflict. The massive growth in 100 octane fuel use during the war fueled the next generation of civilian aircraft; even today, general aviation aircraft use a modified version of the same 100 octane fuel that powered American fighters and bombers in the skies over Europe and Japan.
Today, private industry and government have an opportunity to invest in another new kind of fuel to provide for the national defense: sustainable aviation fuel. There are challenges, just as there were in the 1930s, but the opportunity for the United States is significant. A commitment by the Department of Defense to buy a set quantity of sustainable aviation fuel could help catalyze further private-sector investment and deliver meaningful benefits to national security. While sustainable aviation fuel will not yet provide an equivalent performance increase as 100-octane did, it brings with it other strategic benefits meriting consideration. These benefits include increased energy security, more stable aviation fuel prices for defense consumers, and diplomatic victories. The United States has a once-a-century opportunity to position itself on the leading edge of a new energy source; it would do well to not let the opportunity pass it by.
The Air Force, the Department of Defense’s largest consumer of aviation fuel, spends approximately $7 billion a year on aviation fuel. While the United States is endowed with considerable crude oil reserves, it is not immune from market dynamics. Even small fluctuations in pricing can have significant impacts on defense budgets. For example, Russia’s invasion of Ukraine and other inflationary pressures drove the Pentagon to spend $3 billion more than anticipated on fuel in 2022. Other historical events, such as the Iran-Iraq War or the Iraqi invasion of Kuwait, resulted in similar price increases. These large changes in fuel prices adversely affect the Defense Department’s ability to plan and budget effectively. In some cases, such as in the Middle East, concerns about the oil market have driven the United States to deploy and maintain costly military forces to ensure price stability.
Sustainable aviation fuel could help lessen these problems. Today, sustainable aviation fuel is constructed out of sustainable feedstocks and then blended with regular fuel, at ratios varying from 10 percent to 50 percent, depending on the demands of consumers. Feedstocks are the building blocks of sustainable aviation fuels. Researchers have developed four major feedstock pathways: hydroprocessed esters and fatty acids (HEFA), alcohol-to-jet (AtJ), gasification / Fischer-Tropsch (gas/FT), and power-to-liquid (PtL). Each of these is fundamentally about constructing the same hydrocarbon chains currently found in fossil fuels. For example, corporations such as Neste collect used cooking oils from food producers and refine them into aviation fuel for the commercial airline market. Importantly, these feedstocks can be domestically sourced, increasing the control American policymakers can have over production and pricing. An additional benefit is the ability to construct sustainable aviation fuel refineries in strategically relevant areas, like Hawaii, which currently receives the majority of its fuel by ship.
Today’s sustainable aviation fuel can give a slight increase in aircraft performance (on the order of 1 percent) and requires no change in logistics requirements, although there are some manageable issues with NATO interoperability. For example, NATO’s aviation fuel pipeline — the Central Europe Pipeline System — does not currently support sustainable fuels. However, the United States has led the way on this front and could serve as a model for Europe with the right investments.
There are also tactical advantages for military aircraft. A cleaner burning fuel not only provides a small performance increase but also leads to fewer contrails; both of which translate to tactical advantages for combat aircraft. Additionally, there is the potential to produce more energy-dense fuel, increasing aircraft payload and range.
The real short-term challenge is that sustainable aviation fuel is currently not cost-competitive with regular jet fuel because of its higher material and refining costs. The market incentives are also a challenge. Building new refineries takes significant capital investment and it is unclear exactly how much demand there will be for this fuel or whether the demand will justify the investment. However, a commitment from the Department of Defense to buy sustainable aviation fuel could catalyze private investment to help bring costs down and help companies secure a lower capital cost to help with start-up costs. Such a purchase would have a significant impact on the sustainable aviation fuel industry.
Initial government investment is a theme of many new innovations, particularly those in the energy space. Demand — oftentimes stimulated by government action — interacts with innovation, investment, and new market entrants to increase supply and lower prices. For example, in the 1930s the Air Corps’ commitment to 100-octane drove private investors to build capacity and innovate, which then helped drive down refining costs. In the early-1930s, 100-octane gasoline cost over $30 / gallon while lower octane gasoline cost a mere 20 cents. However, by the mid-1930s, the price of 100-octane had fallen to around 35 cents. By the mid-1940s, it was selling for approximately 15 cents. Similar trends existed with coal, oil, solar, wind, and other forms of renewable energy. Thus, it is reasonable to assume sustainable aviation fuel will follow a similar trend over the next several decades.
The benefit, of course, is that the United States will be able to decrease its carbon emissions, while also creating a domestic alternative to imported fossil fuels. Thus, looking beyond the obvious environmental impact, the national security imperatives to diversify supply and control supply chains should also encourage broader investments to bring down sustainable fuel costs.
Many of America’s staunchest allies and most valuable potential partners view climate change as one of the biggest issues of the century. This is especially true in the South Pacific, where the United States and China are competing for influence. As America looks to differentiate itself from China and bring countries into its network, it could use its investments in mitigating climate change as a pillar of cooperation.
Although many argue that America’s system of government and way of life already differentiates it from China, the benefits of capitalism or democracy are lessened if your home will be underwater soon. Thus, island nations could rationally choose to take Chinese investment in climate-change mitigating infrastructure, even if they would prefer an alliance with a democratic nation. China has already invested significantly in its diplomatic efforts in the Pacific region and is signing numerous security and aid agreements. Part of the reason China has been able to make such inroads is because Pacific Island nations have very real concerns about their ability to fund projects necessary as the climate changes around them. As officials from the Solomon Islands have indicated, “[China] …is showing leadership and commitment to help lead our global efforts against [climate change].”
The United States should be a critical partner for allied and prospective partner nations investing in climate-related infrastructure. One element of this can be building out sustainable aviation fuel refineries and storage facilities to spur local development. This effort could be done in conjunction with existing energy producers to build buy-in, ensure market stability, and to leverage private capital. Investments could also be targeted toward strategically meaningful areas. For example, the Philippines is currently heavily reliant on jet fuel imported from South Korea and Taiwan. Leveraging existing supplies of cooking oil and waste feedstocks could allow for local production of 160 million gallons per annum (enough to fill approximately 3,000 B-52 bombers). Not only would this act as a form of economic assistance to allied nations, but it would also result in a network of aviation fuel facilities more insulated from trade disruptions and more conducive to American power projection in the Pacific.
The United States has already taken many of the steps necessary to minimize risk and prove the utility of sustainable aviation fuels. For example, in 2007 the United States Air Force demonstrated the efficacy of sustainable aviation fuels on a C-17 aircraft. Later, in 2016, the United States Navy demonstrated its “great green fleet.” An entire carrier strike group, including the embarked aviation wing, operated with green energy and sustainable aviation fuels for several months. And a provision to pilot the use of sustainable aviation fuels more broadly is part of the 2023 National Defense Authorization Act.
To build on these successes and create actual alternative energy capabilities, the Department of Defense should commit to purchasing a certain volume of sustainable aviation fuel over the next several years. Practically, this means that instead of mere pilot programs, the Department of Defense should negotiate with new and existing producers to guarantee a certain volume and price. For example, the Department could commit to buying two hundred million gallons of sustainable aviation fuel per year, starting in 2028, for a price point of $5.25 a gallon.
Here, the private sector can provide an example. For example, American Airlines recently announced it would purchase 100 million gallons of sustainable aviation fuel per year, starting in 2027, for around $5.50 per gallon. This represents a substantial increase in the total market, although the actual impact is smaller given expected production by 2027. While the cost is more than Jet A — the standard fuel used by jet aircraft — at current market prices, American Airlines has accomplished four things. First, it has helped stabilize its fuel prices for the future. Second, it has secured a non-oil-based source of fuel. Third, it has helped market itself as a leader in sustainability. Fourth, it has created demand certainty for sustainable fuel producers. These benefits promise to increase producers’ ability to plan and grow revenue, likely translating into future cost reductions. Other airlines, such as Lufthansa and United, are engaged in similar initiatives.
Critics may argue that the private sector and existing government investments preclude the need to invest Department of Defense budget dollars in buying sustainable aviation fuel. However, a minimal investment can lead to two tangible advantages: First, the military could require certain sustainable aviation fuel capabilities to be built in strategically relevant areas and with defense standards in mind; for example, refineries could be concentrated on the West Coast, in the Hawaiian Islands, or other areas with logistical benefits for operations in the Pacific. Second, Department of Defense investment would likely further encourage private sector funding, offering benefits far in excess of the initial cost.
According to my calculations, a Department of Defense program to source approximately 10 percent of its aviation fuel from sustainable sources would result, in the near term, in a 5 to 10 percent increase in fuel costs for service end users. This cost could be thought of as a hedge or insurance policy against potential oil market fluctuations and a further backfill for the Strategic Petroleum Reserve.
While such a cost increase is difficult for many to stomach in the short term, the example of 100-octane illustrates the potential payoff for these types of investments. The Department of War may have paid more for 100-octane gasoline in the 1930s, but its investment provided numerous benefits during the Second World War. Sustainable aviation fuel may follow a similar trend: cost increases today, but lasting strategic impact in the future.
The story of energy innovations is one of opportunity. From coal to oil or from 87 octane to 100 octane, innovation in the energy space has allowed shrewd nations to improve their security. Investing in sustainable aviation fuel today could likewise translate into significant strategic advantages throughout the 21st century. Money spent on sustainability need not always come at the expense of national security; in fact, sustainable defense might just be better defense.
David Alman is an officer and pilot in the Air National Guard. He holds a B.S. and M.S. in aerospace engineering. He is admittedly passionate about environmentalism and, when not flying jets, can be found in America’s national parks. The views expressed here are his alone.
The author is indebted to Damian McLoughlin for his expertise and feedback. Any errors are the author’s alone.