US corn ethanol-to-jet production outlook remains cloudy
US ethanol producers eye ATJ fuel markets as EV growth threatens gasoline demand. But hurdles like missing EPA RIN pathways for corn ethanol and unfavorable 45Z math slow progress. LanzaJet leads with sugarcane-based ATJ, while US farmers push for support via the Farmers First Fuel Incentive Act. Policy clarity is crucial to unlock ATJ’s full potential.
Producing jet fuel from ethanol, commonly known as alcohol-to-jet or ATJ, has generated extraordinary interest in recent years as the biofuels industry braces for waning on-road ethanol demand due to increased electric vehicle penetration and a concurrent decline in gasoline demand. US ethanol output reached a record 16.2 billion gallons in 2024, nearly all of which was made from corn.
S&P Global Commodity Insights analysts expect US ethanol exports to decline in 2025 as producers clamor for new markets to sell their fuel. The absence of Renewable Fuel Standard pathways for making jet fuel from corn ethanol is one hurdle slowing down progress. Unfavorable math involving the 45Z Clean Fuel Production Credit is another.
ATJ is one of several production methods used to make sustainable aviation fuel. Whether it is made from corn ethanol or some other feedstock, the value of SAF depends highly on the values of various blending credits and compliance credits.
On the federal level, a SAF blending credit with a floor of $1.25/gallon and a ceiling of $1.75/gallon expired at the end of 2024, so it is gone for now unless it is renewed retroactively. Renewable Identification Numbers, which are the compliance credits for the RFS, do not have a price ceiling. Most SAF generates 1.6 biomass-based diesel (D4) RINs per gallon. At the average price from April 1-24 of $1.05 per D4 RIN, RINs add $1.68 to the value of each gallon of SAF — nearly 25% of the fuel’s total value.
The US Environmental Protection Agency administers the RFS. Biofuels must be produced under an EPA-approved pathway to generate RINs. The EPA has already established what it calls “generally applicable” pathways for SAF made from common feedstocks such as vegetable oils, waste oils and greases. It has not yet approved a pathway for SAF made from corn ethanol, although at least one petition for such a pathway is pending.
This does not suggest that the EPA is working too slowly. Evaluating pathway petitions is complex and time-consuming. Undenatured ethanol falls within the definition of a biointermediate under the RFS and strict rules govern using biointermediates as feedstock.
As time passes, however, policy is changing and the industry is itching to find out whether approval for RINs for SAF made from corn ethanol is forthcoming. The economics of ATJ are unappealing without it.
LanzaJet first to market with ATJ in US
LanzaJet was the first company to open a commercial ATJ facility in the US and remains the only company to do so as of April. It petitioned the EPA to generate RINs from various feedstocks and received approval to generate RINs from ATJ made from imported undenatured sugarcane ethanol in January 2023. EPA delayed deciding on corn ethanol feedstock pending further evaluation.
One concern is whether an ATJ pathway using corn ethanol as feedstock meets the requirement of a 50% reduction in lifecycle greenhouse gas emissions from a 2005 petroleum baseline in order to generate D4 RINs. Otherwise, it may only qualify for less-valuable D6 RINs, which only require a 20% GHG reduction.
LanzaJet has pressed forward with making ATJ from sugarcane ethanol imported from Brazil. Further, LanzaJet’s pathway is facility-specific to its 10 million gallon/year plant in Soperton, Georgia, so it cannot be used by other potential ATJ producers such as Summit NextGen, which is petitioning for pathways of their own.
Unfavorable 45Z math
With respect to compliance credits, producing corn ethanol for gasoline blending is vastly different from producing corn ethanol for SAF feedstock.
If ethanol is produced for blending into on-road fuel, the producer generates RINs and then claims the 45Z credit if its carbon intensity score is within the proper range. However, if the ethanol is used as a feedstock for jet fuel, it would be considered a biointermediate, and the ethanol producer would forego the RINs and claiming the 45Z. These credits would be generated and claimed by the SAF producer.
It takes around 1.6-1.7 gallons of corn ethanol to produce a gallon of SAF. The value of the 45Z credit is much higher per gallon if the ethanol is sold for on-road transportation than used to make SAF. The exact amount would depend on the carbon intensity value of the ethanol. Ethanol producers would need to recover the higher amount from the SAF producer, which would affect the SAF price and make it even less competitive compared to petroleum-based jet fuel.
SAF potential with supportive policies
Domestic SAF production is off to a slow start in 2025, according to the data from the EPA, due mostly to the expiration of the SAF blenders credit at the end of 2024 and the uncertainty surrounding the regulations for the 45Z credit, which was designed to replace it. Less than 30 million gallons of SAF were produced domestically in the first quarter. No breakdown was available as to how much, if any, of this came from LanzaJet’s ATJ facility.
The Farmers First Fuel Incentive Act, introduced in the US Senate in April, is intended to support US farmers by only allowing feedstock produced or grown in the US to qualify for the 45Z credit. If passed, it would be good for US farmers and ethanol producers but would hinder ATJ companies using Brazilian sugarcane ethanol as a temporary solution while waiting for corn ethanol pathways to be approved.
US ethanol producers have communicated to Commodity Insights that they are willing to provide billions of gallons of corn ethanol to make SAF. SAF made in the US would fit squarely in the Trump Administration’s “America First” and “National Energy Dominance” agendas. But progress won’t be made without RIN pathways and other favorable policies.
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Source : SP Global
