SAF stocks soar amid tax incentives
Sustainable aviation fuel (SAF) is gaining momentum with new tax incentives and industry interest. As a result, SAF stocks are becoming more popular, presenting investment opportunities, analysts predict.
US News reports that investment opportunities in the SAF market include companies like Gevo Inc., Neste Oyj, Calumet Specialty Products Partners, and Aemetis Inc. These companies are leading the charge in SAF production and development. As demand grows, larger firms like Shell and ExxonMobil might acquire smaller SAF-focused companies, potentially benefiting investors.
SAF companies are becoming popular investment targets for good reasons, the report explains. As climate change remains a critical concern, the aviation industry is turning to sustainable aviation fuel (SAF) to reduce its carbon footprint. Unlike the electric vehicle revolution in the auto industry, electric planes are still far from mainstream. However, SAF is emerging as a viable alternative – for now. The eco-friendly fuel, derived from non-petroleum feedstocks like used cooking oil and soybean oil, offers significant lifecycle carbon emission reductions.
New tax rules for SAF
Particularly in the U.S. things are looking up for the SAF industry, as the U.S. Treasury Department and the Internal Revenue Service recently clarified tax rules for SAF, enhancing the regulatory framework for producers. These guidelines, combined with subsidies between $1.25 and $1.75 per gallon for SAF reducing greenhouse gas emissions by at least 50%, are part of the Biden administration's goal to boost domestic SAF production to 3 billion gallons annually by 2030. This is a significant increase from the 24.5 million gallons consumed in 2023.
Big corporations are taking notice. The Sustainable Aviation Buyers Alliance, including companies like Meta and Netflix, has pledged to buy $200 million in SAF credits over five years. Major airlines are also adopting SAF, though its higher cost compared to traditional jet fuel limits widespread use. The Biden administration's subsidies aim to offset this cost.
SAF remains crucial
While electric and hydrogen planes are long-term alternatives, SAF remains crucial for the current aviation fleet. Its compatibility with existing technology makes it a necessary transitional solution, according to aviation experts. The SAF sector holds promise for both the environment and investors. With regulatory support and increasing corporate interest, SAF is poised to play a significant role in the future of sustainable aviation, US News reports.
