Reports > Energy

Sustainable Aviation Fuel (SAF): Beyond Fuel to Carbon Finance

2026.06.25 Hee-sung Kim

Hee-sung Kim

#Hashtag

#carbon neutral #energy #ESG #SAF
The SAF market is expanding beyond simple fuel trading into a carbon finance market that monetizes Carbon Intensity (CI) differences through regulatory incentives—such as RIN, LCFS, and Section 45Z—as well as Voluntary Carbon Market (VCM) certificates via Book & Claim. As of January 2026, the combined total of multiple carbon reduction incentives applied simultaneously to one gallon of SAF in California (USD 2.59/gal) accounts for approximately 59% of the SAF price (USD 4.4/gal), demonstrating that incentives serve as the core driver of SAF project profitability. Accordingly, the capability to track, allocate, and monetize carbon attributes is projected to become increasingly vital for SAF businesses alongside physical production capabilities.
Table of Contents

  • 1. Expansion of SAF into the Carbon Finance Market

  • 2. Monetization in Compliance Markets: RIN, LCFS, and Section 45Z

  • 3. Monetization in Voluntary Carbon Markets: Book & Claim

  • 4. Maximizing Incentive Returns: The Value Stack

  • 5. Strategic Implications

Executive Summary

  • ○ The SAF (Sustainable Aviation Fuel) market is expanding beyond physical fuel trading into a carbon finance market that monetizes Carbon Intensity (CI) differentials through credits, tax credits, and certificates.

    • For fuel producers, trading companies, and investors, CI management capabilities directly translate into revenue-generating capabilities; this report analyzes these dynamics across compliance markets, Voluntary Carbon Markets (VCM), and the Value Stack.

  • ○ In compliance markets, U.S. federal and state mechanisms—including RIN, LCFS, and Section 45Z—provide additional revenue streams for SAF.

    • SAF secures its largest revenue via D4 RINs (USD 2.11/gal), while LCFS generates an additional credit revenue of USD 0.36/gal (as of January 2026) depending on the feedstock's CI.

    • Section 45Z provides tax credits of up to USD 1.0/gal (reduced from the previous USD 1.75) based on CI; the newly introduced North American feedstock requirement directly impacts the profitability of projects reliant on non-North American low-CI feedstocks.

  • ○ In voluntary markets, the Book & Claim system enables the trading of SAF's environmental attributes unbundled from the physical fuel.

    • Corporations purchase SAF certificates (SAFc) as a tool for mitigating Scope 3 emissions, with prices trading at levels 50 to 60 times higher than conventional voluntary carbon credits (approx. USD 6/tCO₂e).

    • However, whether these certificates are eligible for compliance under major regulatory frameworks such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) remains an evolving area, making regulatory alignment a key variable for market expansion.

  • ○ The United States has established and is operating a market that underpins SAF business viability through a "Value Stack" structure combining RINs, LCFS-type credits, and Section 45Z.

    • The cumulative scale of incentives (as of January 2026) ranges between USD 2.59 and 3.15 per gallon, accounting for approximately 59% of the SAF price (USD 4.4/gal in California) and substantially offsetting the green premium against conventional jet fuel (averaging USD 2.26/gal).

  • ○ Looking ahead, the capability to track, allocate, and monetize carbon attributes—alongside physical production capacity—will become even more critical in the SAF business.

    • The realized revenue from the identical carbon reduction value varies depending on the choice of feedstocks, supply regions, production allocation, and off-take markets.

    • Given that the U.S. centers on policy incentives while the EU focuses on mandatory blending mandates via ReFuelEU Aviation, business strategies must be regionally differentiated.

To list