The green jet fuel fantasy that never took off - Airline industry's dirty secret

A once-promising California refinery has gone dark, a $2 billion expansion has been abandoned, and the world’s biggest green jet fuel project is already years behind schedule.

California: In 2019, United Airlines chief executive Scott Kirby hailed a new contract with green jet fuel producer World Energy as an example for the industry’s path to cutting emissions. Six years later, that partnership is over.

Boston-based World Energy was among the first to produce commercial quantities of sustainable aviation fuel (SAF) — a renewable fuel made from used cooking oil, agricultural residues, and other waste. Its Paramount refinery near downtown Los Angeles, launched in 2016, supplied millions of gallons annually to airlines such as United and JetBlue. The plant was central to carriers’ pledges to use a 10% SAF blend by the decade’s end.

In April, the refinery shut down. Plans for a second plant in Houston have stalled, CEO Gene Gebolys said, citing a lack of industry commitment. “Some airlines were engaged in a pretty disingenuous effort to put out press releases,” he told Reuters, without naming companies. “People sometimes said too much in the past and did too little.”

United confirmed it ended the World Energy deal “a few years ago” without giving a reason. JetBlue called World Energy a “valued partner” and said it will continue working with the company.

World Energy’s setback reflects the struggles of dozens of clean-fuel startups. Nearly 20 years after the first commercial biofuel flight from London to Amsterdam, Reuters found the industry’s plan to go green before regulators intervene remains far from reality.

No clear pathway

The International Air Transport Association (IATA) expects SAF to make up 0.7% of jet fuel this year, up from 0.3% in 2024. Air passenger traffic is forecast to grow 6% in 2025. IATA’s goal of net zero by 2050 requires SAF use to hit 118 billion gallons a year — over 300 times current output.

Airline leaders compare their SAF push to the rapid rise of electric vehicles and solar energy. But the sector has yet to publish a transparent roadmap of future projects.

Reuters built a database of 165 airline-announced SAF projects over the past 12 years. Only 36 have produced any fuel. Of those, three of the largest — including World Energy — face serious problems. Another 23 were abandoned, 27 delayed or on hold, 31 have yet to produce fuel, and four are merely SAF credit deals with no physical fuel delivered. The rest have no public updates.

Even if all pending projects hit full capacity, they would produce only 12 billion gallons — about 10% of what’s needed.

Airlines blame oil companies for not producing enough SAF. “These guys are the cause of the problem, and they’ve got to start playing their part,” said IATA director Willie Walsh, a former British Airways CEO.

At present, SAF costs three to five times more than conventional jet fuel. Oil executives counter that demand is limited at those prices. “I’d like there to be a shortage. I actually see an overcapacity,” said Bernard Pinatel, head of downstream at TotalEnergies.

Paramount ‘reset’

Paramount’s refinery used cooking oil and animal fat from a local abattoir to make fuel but struggled to expand. All 35 employees were laid off in April, two sources told Reuters. The future is unclear after partner Air Products withdrew from a $2 billion expansion in February, citing “challenging commercial conditions.”

Gebolys called the closure a “reset” after the refurbishment ran over budget and behind schedule. He declined to comment on layoffs but said the plant would reopen without giving a timeline.

Most airlines play minimal roles in SAF project execution, committing only to buy fuel if production happens. Many rely on unproven technology or startups with no track record.

Of the 36 active projects, all but one use Hydroprocessed Esters and Fatty Acids (HEFA) technology, which converts waste oils and fats into jet fuel. Experts warn HEFA is constrained by raw material shortages and cannot meet long-term demand.

IATA sustainability chief Marie Owens Thomsen disputed that airlines play a minimal role, citing purchase agreements, investments, and research partnerships. She agreed, however, that alternatives to HEFA must be developed.

‘Exercise in futility’

Aviation accounts for 2.5% of global carbon dioxide emissions, a share expected to rise as air travel more than doubles from 2019 levels by 2050.

Environmental groups argue airlines’ green promises mask the reality that growth is incompatible with deep emissions cuts. “This is first and foremost about justifying never-ending growth… which you cannot do,” said Almuth Ernsting of Biofuelwatch.

The EU will mandate SAF use on departing flights starting at 2% in 2025, rising to 70% by 2050. IATA estimates this will cost airlines $2.9 billion in extra fuel purchases and compliance this year.

In the U.S., a second Trump term could roll back many SAF incentives introduced under President Biden.

One high-profile U.S. project is already faltering. SGP BioEnergy promised in 2022 to build the world’s largest SAF facility in Panama using hemp oil and cooking oil. Originally set to open this year, production is now planned for 2027. CEO Randy Letang blamed waning airline interest and warned the plant could switch to renewable diesel for trucks and ships if aviation demand stays weak.

“Without airline consortiums investing in large-scale projects, it’s an exercise in futility,” he said.

Letang’s previous company, SG Preston, signed big SAF deals with JetBlue and Qantas in the mid-2010s. None of its planned plants were built. SG Preston filed for bankruptcy in 2022.

New technology, same delays

British startup Velocys uses Fischer-Tropsch technology to convert waste into fuel. Backed at times by IAG and Shell, it has announced four SAF projects in 15 years, none yet in commercial production.

An early project to turn London landfill methane into jet fuel collapsed when its main backer went bankrupt. Later ventures, including a plant in Oklahoma, proved too costly and complex.

Velocys is now focused on projects in England and Mississippi. Shell withdrew from the UK venture in 2021, though the government has awarded £30 million in grants. Production is not expected until 2029.

The Immingham site, meant to supply British Airways last year, is currently just an empty field. Velocys has yet to deliver a single gallon of SAF to IAG or any other airline.