The Specification Barrier: How Fuel Standards Create Sustainable Aviation Fuel's Price Premium

1. Introduction

The aviation industry consumes approximately 7 million barrels of jet fuel per day — roughly 100 billion gallons annually — making it the world's third-largest transportation fuel consumer after diesel and gasoline.¹ Unlike road transport, which is rapidly electrifying, commercial aviation has no viable near-term alternative to liquid hydrocarbon fuels for the vast majority of routes. Sustainable aviation fuel represents the primary decarbonization pathway available today, yet its market penetration remains negligible: U.S. SAF consumption reached 287 million gallons in 2024,² less than 0.3% of total jet fuel demand.

The standard explanation for SAF's limited adoption is its high cost — typically 2–3 times the price of conventional Jet A. But this framing obscures a striking paradox. Renewable diesel, produced from identical feedstocks (waste fats, vegetable oils, tallow) using nearly identical hydrotreating technology (HEFA — hydroprocessed esters and fatty acids), has achieved price parity with petroleum diesel in California, the world's largest renewable fuels market. In some periods, RD has sold below the price of fossil diesel at retail.³ California consumed over 3.3 billion gallons of renewable diesel in 2024⁴ — more than 40 times the nation's total SAF consumption.

This paper argues that the price gap between SAF and its petroleum equivalent is not primarily a function of production technology, feedstock cost, or chemistry. Rather, it is a structural consequence of how fuel specifications are written. The diesel specification (ASTM D975) treats renewable diesel as simply diesel — if it meets the property requirements, it enters the market with no process qualification, no blend limit, and no special distribution requirements. The aviation specification (ASTM D7566, administered through D4054) treats each SAF production pathway as a distinct product requiring years of qualification testing, OEM review, and ASTM balloting before it can enter the market at a blend ratio of 10–50%.

This architectural difference has cascading consequences for processing economics, capital investment, policy eligibility, and market access. We quantify each of these effects and argue that targeted specification reform offers an emissions reduction pathway that is orders of magnitude more cost-effective than non-drop-in alternatives such as hydrogen or electric propulsion.

2. The Price Evidence

The empirical evidence for the RD–SAF price disparity is unambiguous. The Alternative Fuels Data Center (AFDC) tracks California renewable diesel and petroleum diesel prices monthly. Since the state's Low Carbon Fuel Standard (LCFS) reached maturity in the late 2010s, renewable diesel has consistently traded at or near petroleum diesel prices, and has at times been available below ULSD at retail stations.⁵ OPIS spot data corroborated this pattern throughout 2023–2024.³

SAF, by contrast, commands a persistent premium. The European Union Aviation Safety Agency estimated average 2024 SAF production costs at €1,461/tonne for biofuel pathways — approximately twice the €700/tonne price of conventional Jet A.⁶ An RMI survey found SAF green premiums of $2.34–$3.93/gallon, implying delivered SAF prices of $9–$11/gallon against a $2.50/gallon jet fuel baseline.⁷

The volume asymmetry is equally stark. Figure 1 compares California RD and SAF volumes from 2019–2024. Renewable diesel consumption grew from 480 million gallons (2019) to over 3.3 billion gallons (2024). SAF grew from 1.9 million to 78 million gallons over the same period — two orders of magnitude smaller despite identical feedstock availability and largely overlapping production technology.⁸

[Figure 1: California RD vs SAF Volumes — see figures page]

3. Specification Architecture: The Root Cause

The fundamental asymmetry lies in how the two specifications define market access.

3.1 Diesel: Property-Based, Open Access

ASTM D975 defines seven grades of diesel fuel oil by their physical and chemical properties: viscosity (1.9–4.1 mm²/s at 40°C), sulfur content, flash point, cetane number, and distillation range. Cloud point — the cold-flow property most analogous to jet fuel's freeze point — is not specified to a fixed value but is subject to agreement between buyer and seller.⁹ Crucially, D975 makes no reference to how the fuel was produced. Any hydrocarbon mixture meeting the property requirements is diesel, regardless of feedstock or process. There is no qualification pathway, no blend limit, and no special chain of custody.

3.2 Aviation: Process-Based, Gated Access

ASTM D7566 defines aviation turbine fuel containing synthesized hydrocarbons through a fundamentally different architecture. Rather than a single property table, D7566 maintains a series of annexes — currently seven — each describing a specific production process (e.g., Annex A1 for Fischer-Tropsch, Annex A2 for HEFA). Each annex specifies not only the final fuel properties but also feedstock constraints, process parameters, and maximum blend ratios (10–50%) with conventional jet fuel.

Before a new production pathway can receive an annex in D7566, it must complete the D4054 qualification process: a multi-tier evaluation encompassing bulk property testing (Tier 1), fit-for-purpose testing (Tier 2), component/rig testing (Tier 3), and engine/APU testing (Tier 4), followed by OEM review and ASTM committee ballot. The U.S. Department of Energy has estimated this process requires "several million dollars" and 5–7 years.¹⁰ Industry participants report costs of $5–15 million.¹¹

A fast-track provision, introduced in 2018, allows fuels limited to 10% blend ratio to undergo an abbreviated Tier 1 evaluation. While this reduces cost and timeline, it constrains the fuel to a fraction of the addressable market.

4. The Processing Penalty

The cold-flow specifications in D7566 — particularly the freeze point requirement of ≤ −40°C and viscosity limits of ≤ 8 mm²/s at −20°C and ≤ 12 mm²/s at −40°C — have direct consequences for HEFA production economics. Because lipid hydrotreating naturally produces hydrocarbons in the C11–C22 range (diesel-length molecules), achieving jet-range carbon numbers (C8–C16) requires an additional hydrocracking step that is not needed for renewable diesel production.¹²

This hydrocracking step imposes three cost penalties:

Capital cost. A hydrocracking reactor, associated catalyst loading, hydrogen compression, and expanded fractionation equipment add an estimated $50–100 million to facility cost for a large HEFA plant.¹³

Yield loss. Cracking diesel-range molecules into jet-range molecules unavoidably produces lighter co-products — naphtha, LPG, and fuel gas — that earn lower or no environmental credits. In a RD-maximized HEFA plant, approximately 83% of output (by mass) is credit-eligible renewable diesel. In a SAF-maximized configuration, only about 70% of output earns full credits (50% SAF + 20% co-produced RD), with 30% going to low-value streams.^12,14 This 13 percentage point yield loss translates directly to higher effective feedstock cost per gallon of credited product.

Hydrogen consumption. Hydrocracking is hydrogen-intensive, increasing both operating cost and the facility's carbon footprint if hydrogen is sourced from natural gas reforming.

[Figure 3: HEFA Product Yield — RD-Max vs SAF-Max — see figures page]

5. Policy Amplifiers

The specification-driven cost penalty is amplified by policy structures that, whether by design or by omission, provide less incentive support for SAF than for RD.

In California — by far the most relevant market for both fuels — the total incentive stack for renewable diesel at a carbon intensity of 40 gCO₂e/MJ was approximately $2.34/gallon in February 2025, comprising D4 RINs ($1.45, reflecting a 1.7 equivalence value), LCFS credits ($0.42), Cap at the Rack ($0.30), and the 45Z Clean Fuel Production Credit ($0.17). The equivalent SAF stack was $1.94/gallon — a $0.40/gallon deficit.¹⁵

Two factors account for most of this gap:

Cap at the Rack (CAR). California's cap-and-trade program applies to diesel fuel sold at the loading rack, adding approximately $0.30/gallon to the effective price of petroleum diesel. This inflates the price of the fossil fuel against which RD competes, improving RD's relative economics. Jet fuel is not included in CAR, so SAF receives no comparable benefit. This single policy omission accounts for 75% of the incentive gap.

RIN equivalence value. Under the Renewable Fuel Standard, renewable diesel earns 1.7 D4 RINs per gallon, while SAF earns 1.6 — a structural 6% discount that reflects energy-content calculations rather than policy intent.¹⁶

[Figure 2: Incentive Value Stack — RD vs SAF — see figures page]

6. Specification Limits Under Review

6.1 Phosphorus (≤ 2 ppm)

D7566 Table 1 specifies a maximum phosphorus content of 2 ppm for the synthesized hydrocarbon blending component. This limit has significant implications for HEFA producers processing vegetable oils rich in phospholipids, requiring investment in degumming and pretreatment. However, the published literature supporting 2 ppm as a technically justified threshold is limited. The damage mechanism — presumed to be catalyst poisoning in aftertreatment systems — is better established for automotive catalysts than for aviation gas turbines, which lack catalytic converters. A systematic review of the evidence base for this limit is warranted.

6.2 Cold-Flow Specifications

The freeze point requirement of ≤ −40°C and viscosity limits at −20°C and −40°C reflect high-altitude, long-duration military operations where fuel temperature can approach −50°C. While these limits are clearly safety-critical for polar routes and high-altitude military operations, the majority of commercial aviation operates on routes where fuel temperatures rarely fall below −30°C. A route-based or grade-based approach to cold-flow specifications — analogous to the buyer/seller negotiation used in D975 — could reduce hydrocracking severity for fuels designated for warmer-climate or shorter-duration operations, improving yield and reducing cost without compromising safety on routes that genuinely require extreme cold-flow performance.

6.3 Blend Limits

Several D7566 annexes limit SAF to 10% or 50% blend ratios not because higher concentrations have been shown to be unsafe, but because the testing required to demonstrate safety at higher levels has not been completed. The contrast with D975 — which imposes no blend limit whatsoever — underscores a fundamental philosophical difference: the diesel specification presumes a fuel is acceptable if it meets property requirements, while the aviation specification presumes a fuel is unacceptable until proven otherwise through exhaustive testing of each specific production pathway.

7. The Non-Drop-In Alternative

The case for specification reform is strengthened by comparing its cost against non-drop-in decarbonization pathways.

Hydrogen propulsion. Airbus's ZEROe program — the most advanced hydrogen aircraft initiative — was officially delayed in February 2025 from a 2035 to a 2040–2045 entry-into-service target, with the company acknowledging that the hydrogen ecosystem is "5–10 years behind 2020 assumptions."¹⁷ The program has spent $1.7 billion to date¹⁸ and targets a 100-seat turboprop for regional routes — a segment accounting for less than 5% of global aviation emissions. Independent analyses estimate the total cost of deploying hydrogen aircraft for intra-European aviation at €299 billion through 2050,¹⁹ while the World Economic Forum and McKinsey estimate global alternative-propulsion infrastructure investment at $700 billion to $1.7 trillion.²⁰

Battery-electric propulsion. Current lithium-ion batteries offer approximately 250–300 Wh/kg, compared to jet fuel's ~12,000 Wh/kg — a 40-fold disadvantage. Even at a theoretical 1,000 Wh/kg (beyond any demonstrated chemistry), battery-electric aircraft remain infeasible for routes exceeding 500 nautical miles with payloads exceeding 50 passengers. Electric aviation will serve urban air mobility and ultra-short-haul segments representing less than 2% of global aviation CO₂.

New conventional aircraft. A clean-sheet aircraft program requires $15–32 billion in development cost (based on Boeing 787 and Airbus A350 precedent)^21,22 and 8–15 years from program launch to meaningful fleet penetration. Such aircraft would still require fuel.

SAF specification reform. By contrast, relaxing technically unjustified specification limits requires on the order of $2–50 million in confirmatory testing, 1–3 years for ASTM ballot processes, and — crucially — applies immediately to the entire existing global fleet of approximately 25,000 commercial aircraft without any hardware modification.

[Figure 5: Total System Investment by Pathway (log scale) — see aircraft cost analysis]

8. Path Forward

We propose a three-pronged approach to specification reform:

Transition toward property-based qualification. The most impactful structural change would be to move D7566 toward the D975 model: define fuel by its properties rather than its production process. If a synthesized hydrocarbon meets Table 1 requirements — including all safety-critical properties — it should qualify for use regardless of the specific pathway used to produce it. This would reduce qualification timelines from years to months and eliminate the multi-million-dollar D4054 process for fuels that are compositionally within the established property envelope.

Relax technically unjustified limits. A systematic, evidence-based review of trace-element limits (particularly phosphorus at 2 ppm) and cold-flow requirements (particularly the −40°C freeze point as a universal requirement) could identify opportunities for relaxation that reduce production costs without compromising safety. Route-based or grade-based cold-flow specifications merit particular attention.

Raise or eliminate blend limits. Accelerating the testing required to raise blend limits beyond 50% — and ultimately to 100% — would double or eliminate the constraint on SAF's addressable market and simplify supply chain logistics.

These reforms should be pursued in parallel with, not instead of, policy reforms such as including jet fuel in California's Cap at the Rack program, equalizing RIN equivalence values, and strengthening federal SAF production incentives. But the specification itself is the foundation on which all policy incentives rest — and it is currently structured in a way that makes SAF unnecessarily expensive to produce, qualify, and distribute.

References

Draft — Feb 21, 2026. ~4,200 words. Pre-publication. Do not distribute.