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Policy Options to Achieve US Sustainable Aviation Fuel Targets

Author

Listed:
  • Mengying Wu
  • Kristen McCormack
  • William A. Scott
  • Aaron Smith
  • Jingran Zhang
  • James H. Stock

Abstract

Decarbonizing aviation in the short term will likely entail replacing large quantities of petroleum jet fuel with sustainable aviation fuels (SAFs), which are predominantly biofuels. In the United States, biofuels are currently used as substitutes for gasoline and diesel in road transportation and are supported by a complex set of federal and state policies including the Renewable Fuel Standard (RFS), state low carbon fuel standards, and state and federal tax credits. Policies promoting SAF therefore interact with surface transport biofuel policies. In this paper, we use a new detailed partial equilibrium model of road and air transportation fuel markets to compare various policy options designed to achieve a target of 3 billion gallons of SAF by 2030. Our results suggest that the target is attainable with current technology but not with current policy. Several potential federal policies, including modifications to the existing RFS, a federal SAF tax credit, or a clean aviation standard could meet the 3 billion gallon target with similar emissions reductions and costs but different incidence. The lowest cost policy we study entails replacing all current biofuels policies with a modest carbon tax on fossil transportation fuels paired with a SAF tax credit.

Suggested Citation

  • Mengying Wu & Kristen McCormack & William A. Scott & Aaron Smith & Jingran Zhang & James H. Stock, 2025. "Policy Options to Achieve US Sustainable Aviation Fuel Targets," NBER Working Papers 34326, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34326
    Note: EEE
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    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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