Potential Avenues for Significant Biofuels Penetration in the U.S. Aviation Market

Industry associations have set goals to reduce greenhouse gas (GHG) emissions and increase fuel efficiency. One focal area for reducing GHG emissions is in the use of aviation biofuel. This study examines assumptions under which the United States could see large production in aviation biofuel. Our results suggest that a high penetration (6 billion gallons) of aviation biofuels by 2030 could be possible, but factors around policy design (in the absence of high oil prices) contribute to the timing and magnitude of aviation biofuels production: 1) Incentives targeted towards jet fuel production such as financial incentives (e.g., producer tax credit, carbon tax) can be sufficient; 2) Investment in pre-commercial cellulosic technologies is needed to reduce the cost of production through learning-by-doing; 3) Reduction of investment risk through loan guarantees may allow production to ramp up more quickly through accelerating industry learning. In cases with high levels of incentives and investment in aviation biofuels, there could be a 25 percent reduction in overall GHG emissions from the aviation sector.