European airlines have dramatically increased their use of sustainable aviation fuel (SAF), tripling consumption in just one year to meet the European Union's 2% blending mandate that took effect in 2025. While airlines initially warned the target was unreachable, they not only met but likely exceeded it, driven by both regulatory requirements and changing economics.
The ongoing Iran conflict has significantly altered SAF's competitive position. Traditional jet fuel prices have nearly doubled as the Strait of Hormuz remains disrupted, while SAF prices have remained stable since its feedstocks aren't tied to Middle Eastern crude. Before the conflict, European jet fuel cost about a third of SAF's price — that gap has now narrowed considerably.
For American farmers, the impact is indirect but significant. Europe produces SAF almost entirely from used cooking oil and waste animal fats, with 70% imported from China and Malaysia. However, recent U.S. tariffs and the 45% tax credit have blocked Chinese used cooking oil from entering American markets. China has redirected these supplies to Europe instead.
This shift forces U.S. renewable diesel and SAF producers to rely more heavily on domestic feedstocks — particularly soybean oil, tallow and distillers corn oil. USDA data already shows domestic vegetable oil prices running above world prices, with soybean oil demand expected to strengthen further as American producers compete for limited domestic supplies to meet their production needs.