ALTERNATIVE JET 

FUELS

Federal Activities 

Support Development 

and Usage, but Longterm Commercial 

Viability Hinges on 

Market Factors

Report to Congressional Requesters

May 2014

GAO-14-407

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-407, a report to 

congressional requesters

May 2014

ALTERNATIVE JET FUELS

Federal Activities Support Development and Usage, but Long-term Commercial Viability Hinges on Market 

Factors

Why GAO Did This Study

The federal government has 

encouraged the development and use 

of alternative fuels to reduce 

greenhouse gas emissions associated 

with aviation and to enhance economic 

development and energy security for 

the United States. To help achieve 

these goals of reducing greenhouse 

gas emissions, the aviation industry is 

actively supporting alternative jet fuels. 

GAO was asked to provide information 

on the progress and challenges to 

developing and using alternative jet 

fuels in the United States. This report 

examines (1) the role of the federal 

government in the development and 

use of alternative jet fuels and (2) key 

challenges to developing and using 

alternative jet fuels and actions that the 

federal government plans to or could 

take to help address those challenges. 

GAO interviewed officials from five 

federal agencies—FAA, USDA, DOE, 

DOD, and EPA. GAO selected these 

agencies for review because GAO 

identified them as the federal agencies 

most involved in the development and 

use of alternative jet fuels. GAO also 

reviewed relevant literature and federal 

and industry documents and discussed 

challenges and potential federal 

actions with 23 stakeholders from

government, academia, and the private 

sector, selected to represent a range of 

perspectives and expertise in areas 

related to each step in the 

development and use of alternative jet 

fuels. GAO is not making 

recommendations in this report. DOT, 

USDA, DOE, DOD, and EPA reviewed 

a draft of this report and provided 

technical comments that were 

incorporated as appropriate.

What GAO Found

The federal government supports the development and use of alternative jet fuels 

through both broad and targeted initiatives. Broad national strategies promote the 

development of a variety of alternative fuels—including alternative jet fuel—to 

help achieve national goals, such as securing energy independence, fostering 

economic development, and reducing greenhouse gas emissions. In addition, the 

renewable fuel program—established by law in 2005 to encourage greater use of 

renewable fuels and administered by the Environmental Protection Agency 

(EPA)—requires that U.S. transportation fuels contain certain amounts of 

renewable fuels annually, increasing from 9-billion gallons in 2008 to 36-billion 

gallons in 2022. The other four federal agencies that GAO reviewed—

Department of Transportation’s (DOT) Federal Aviation Administration (FAA), 

Department of Agriculture (USDA), Department of Energy (DOE), and 

Department of Defense (DOD)—directly support alternative jet fuels through 

targeted goals, initiatives, and interagency and industry coordination efforts. For 

example, FAA set a goal for the U.S. aviation industry to use 1-billion gallons of 

alternative jet fuels annually by 2018. The four agencies also sponsor research 

that specifically targets alternative jet-fuel development or provide direct support 

for its future commercial production, or both. For example, FAA and DOD support 

research to determine the technical feasibility of using new alternative jet fuels on 

aircraft and in existing infrastructure. Also, USDA, DOE, and DOD have 

coordinated their activities to support the future construction or retrofit of multiple 

domestic commercial- or pre-commercial-scale production facilities to produce 

alternative fuels, including alternative jet fuels. Specifically, in May and June 

2013, four private fuel producers received awards totaling $20.5 million in federal 

funds, with private industry paying at least 50 percent of the cost. 

Achieving price competitiveness for alternative jet fuels is the overarching 

challenge to developing a viable market. No alternative jet fuels are currently

commercially available at prices competitive with conventional jet fuels. The 23 

stakeholders that GAO interviewed most frequently cited high development costs 

and the uncertainty of federal regulations and policies as primary reasons why 

alternative jet fuels are not priced competitively and believe that federal activities 

are needed to help advance the alternative jet-fuels industry. For example, 

according to 10 stakeholders, fuel producers face difficulties in obtaining private 

investment to help construct commercial-scale fuel production facilities, in part 

because of concerns about the supply and high cost of feedstock (the source 

used to produce the fuel, such as crops) and high capital costs. Also, 13 

stakeholders stated that continued uncertainty about the future of current federal 

policies—particularly the renewable fuel program—generally causes potential 

investors to discount the value of federal subsidies, discounting that, in turn,

limits the support these policies may provide the industry. Stakeholders identified 

a variety of federal actions to advance alternative jet-fuels development, 

including continuing current federal research efforts, providing greater regulatory 

and policy certainty, and giving more direct financial support. However, even if 

the cost to produce alternative jet fuels is reduced, market factors may still 

determine the long-term success of the industry. The main market factors 

identified by stakeholders were (1) comparative value of competing end products, 

(2) feedstock prices, and (3) the costs of conventional jet fuels. 

View GAO-14-407. For more information, 

contact Gerald Dillingham at (202) 512-2834, 

dillinghamg@gao.gov or Zina Merritt at (202) 

512-5257, merrittz@gao.gov
Page i GAO-14-407 Alternative Jet Fuels

Letter 1 

Background 4

Both Broad and Targeted Federal Alternative-Fuels Initiatives 

Support the Development and Use of Alternative Jet Fuels 8

Price-Competitiveness Is the Main Challenge; Federal Activities 

Help Address Challenge, but Market Factors Affect the Longterm Commercial Viability of Alternative Jet Fuels 21

Agency Comments 37

Appendix I Objectives, Scope, and Methodology 40

Appendix II Comments from the Environmental Protection Agency 44

Appendix III GAO Contacts and Staff Acknowledgments 46

Figures

Figure 1: Alternative Jet Fuel Supply Chain 5

Figure 2: Logistics of Transporting Feedstock from Source to Fuel 

Production Facility 25

Contents
Page ii GAO-14-407 Alternative Jet Fuels

Abbreviations

BBEDCA Balanced Budget and Emergency Deficit Control Act 

BETO Bioenergy Technologies Office 

CAAFI Commercial Aviation Alternative Fuels Initiative 

CLEEN Continuous Lower Energy, Emissions and Noise 

COE Center of Excellence 

DOD Department of Defense 

DOE Department of Energy 

DOT Department of Transportation 

EPA Environmental Protection Agency 

EISA Energy Independence and Security Act 

EPA Environmental Protection Agency 

FAA Federal Aviation Administration 

HEFA Hydroprocessed Esters and Fatty Acids

USDA Department of Agriculture 

MOU memorandum of understanding 

NASA National Aeronautics and Space Administration

NextGen Next Generation Air Transportation System 

R&D research and development 

RFS Renewable Fuel Standard

RIN renewable identification number

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Page 1 GAO-14-407 Alternative Jet Fuels

441 G St. N.W.

Washington, DC 20548

May 7, 2014

Congressional Requesters

Governments and the international aviation community are seeking to 

limit aviation greenhouse-gas emissions, which according to many 

scientists and the Intergovernmental Panel on Climate Change,1

negatively affect the earth’s climate. While aviation emissions represent a 

small share of total U.S. carbon dioxide emissions—the most significant 

greenhouse gas emission emitted by aviation2

—we have found that the 

aviation sector’s share is estimated to increase at a greater rate than 

other sources of fossil fuel combustion, in part due to projected growth in 

the aviation industry and the fact that unlike other transportation modes, 

the aviation industry does not have near-term alternatives to liquid fuels.3

The development and use of alternative jet fuels, particularly fuels derived 

from renewable sources (renewable fuels), have the potential to reduce 

greenhouse gas emissions associated with aviation, in part because 

crops used to produce these fuels, called feedstock, remove carbon 

dioxide from the air as they grow.4 In addition to potentially reducing 

greenhouse gas emissions associated with aviation, developing 

dependable domestic sources of alternative fuels could help enhance 

energy security for the United States. According to the Energy Information 

Administration, jet fuel prices more than tripled from 2002 to 2012.5 Over 

this time period, jet fuel’s share of airlines’ total operating costs increased 

 

1

The Intergovernmental Panel on Climate Change is a United Nations organization that 

assesses scientific, technical, and economic information on climate change.

2

According to a 2009 Environmental Protection Agency study, carbon dioxide emissions 

from domestic aviation accounted for about 3 percent of the total U.S. carbon dioxide 

emissions in 2009. 

3

GAO, Aviation and Climate Change: Aircraft Emissions Expected to Grow, but 

Technological and Operational Improvements and Government Policies Can Help Control 

Emissions, GAO-09-554 (Washington, D.C.: June 8, 2009) and Aviation and the 

Environment: NextGen and Research and Development Are Keys to Reducing Emissions 

and Their Impact on Health and Climate. GAO-08-706T (Washington, D.C.: May 6, 2008). 

4

There is no globally agreed-upon approach, however, for determining the greenhouse 

gas effects of renewable fuels and the magnitude of any greenhouse gas reductions 

attributable to their production and use.

5

Specifically, the retail price of jet fuel per gallon in 2002 was $0.92 in 2014 dollars, and 

the price of jet fuel per gallon in 2012 was $3.19 in 2014 dollars. 
 

Page 2 GAO-14-407 Alternative Jet Fuels

from 13 percent to 31 percent, making fuel the largest component of 

operating costs in 2012, based on analysis of airlines’ financial reports to 

the Department of Transportation (DOT). As a result, the cost of 

producing alternative jet fuels is an important factor in the extent to which 

they provide a viable option for the aviation sector to replace more 

conventional petroleum-based jet fuel.

To encourage greater use of alternative fuels for all sectors, the federal 

government has taken steps to encourage the development of a 

commercially viable, alternative-fuels industry.6 In 2005, Congress, 

through the Energy Policy Act of 2005,7 established the renewable fuels 

program, establishing the basis for the Administrator of the Environmental 

Protection Agency (EPA) to adopt standards through regulations, which 

for the first time require that surface transportation fuels sold in the United 

States contain a minimum amount of renewable fuels.8 In March 2011, 

the White House put forward a plan to produce more domestic oil and 

reduce U.S. dependence on foreign oil by leveraging alternative fuels and 

increasing fuel efficiency. In June 2013, the President released a Climate 

Action Plan stating that renewable alternative fuels play an important role 

in reducing greenhouse gas emissions from the transportation sector, 

increasing energy security, and fostering rural economic development. 

The plan proposed increased funding for research, development, and 

deployment of advanced biofuels.9 The aviation industry also has efforts 

under way, including partnerships with fuel producers and other 

stakeholders, to enhance the development and use of alternative jet fuel 

 

6

In addition to encouraging the development of an alternative fuels industry, the federal 

government continues to support a variety of other energy sectors.

7

Pub. L. No. 109-58, § 1501, 119 Stat. 594, 1067-1076 (2005), codified as amended at 42 

U.S.C. § 7545(o) (2014).

8

EPA has adopted regulations establishing a Renewable Fuel Standard (RFS). 40 C.F.R. 

ch. 1, subpart K. EPA annually issues regulations that establish the percentage of 

transportation fuels that fuel refiners, importers, and other obligated parties must ensure 

are renewable fuels. The law generally requires that surface transportation fuels contain 9-

billion gallons of renewable fuels in 2008, and that volumes increase to 36-billion gallons 

by 2022. See 42 U.S.C. § 7545(o).

9

Advanced biofuels are defined as renewable fuel other than ethanol derived from corn 

starch that meet certain criteria, including life-cycle greenhouse gas emissions, as 

determined by the EPA, that are at least 50 percent less than baseline life-cycle 

greenhouse gas emissions. Lifecycle emissions include all stages of fuel and feedstock 

production and distribution, from feedstock generation or extraction through the 

distribution and delivery to and use of the finished fuel by the ultimate consumer.
 

Page 3 GAO-14-407 Alternative Jet Fuels

to help achieve the industry’s goals of reducing greenhouse gas 

emissions.10 Currently, some types of alternative jet fuels are approved 

for use in civilian and military aircraft.

You asked us to provide information on the progress in and challenges to 

developing and using alternative jet fuels in the United States. This report 

examines (1) the role of the federal government in the development and 

use of alternative jet fuels and (2) key challenges to developing and using 

alternative jet fuels and actions that the federal government plans to or 

could take to help address those challenges.

To identify the role of the federal government, we interviewed officials and 

reviewed strategic plans, performance reports, and other documents 

relevant to alternative jet fuels from five federal agencies: the DOT's 

Federal Aviation Administration (FAA), the Department of Agriculture 

(USDA), the Department of Energy (DOE), the Department of Defense 

(DOD) and its military departments (Army, Navy, and Air Force), and the 

EPA. We selected these agencies for review because we identified them 

as the federal agencies most involved in the development or use of 

alternative jet fuels. We also reviewed White House and other broad or 

government-wide documents relevant to alternative fuels generally. We 

reviewed relevant memorandums of understanding or other agreements 

between the five selected federal agencies and other entities. To identify 

key challenges and planned or possible actions to address key 

challenges, we selected and interviewed 23 stakeholders representing 

government, academia, and the private sector. We selected these 

stakeholders based on criteria that included type and depth of experience 

and knowledge in the area of alternative jet fuels, recognition in the 

professional community, and representation of a range of expertise in 

areas related to each step in the development and use of alternative jet 

fuels, such as feedstock development or fuel production. We asked these 

stakeholders a series of semi-structured, open-ended questions about 

economic, policy, and technological issues related to developing and 

 

10In 2010, the International Civil Aviation Organization—an advisory organization affiliated 

with the United Nations that aims to promote the establishment of international civil 

aviation standards and recommended practices and procedures—set a goal for the global 

aviation industry to achieve carbon neutral growth from 2020 onward. Two airline industry 

groups—the International Air Transportation Association and Airlines for America—also 

established a goal of achieving carbon neutral growth by 2020 onward. Also, the 

Department of Transportation’s Federal Aviation Administration adopted a goal of 

returning carbon emissions to their 2005 levels by 2020.
 

Page 4 GAO-14-407 Alternative Jet Fuels

using alternative jet fuels. In addition, we interviewed officials from the 

five selected federal agencies, as well as other non-federal alternative jetfuels industry stakeholders, including fuel producers, airlines, aircraft 

manufacturers, and environmental groups. We also reviewed literature on 

challenges to developing and using alternative jet fuels. We focused our 

study on federal efforts, except to the extent that international or private 

sector efforts are coordinated with federal efforts. We did not provide an 

exhaustive list of federal initiatives related to alternative jet fuels or rank 

the planned or potential federal actions to address the key challenges that 

we identified. Appendix I provides a more detailed description of our 

scope and methodology.

We conducted this performance audit from February 2013 to May 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

Definitions vary somewhat, but for the purpose of this report, we define 

alternative jet fuels as drop-in liquid fuels that are derived from nonpetroleum feedstocks, including renewable biomass (such as crop and 

tree residues, algae, or separated municipal solid waste) and some 

nonrenewable sources (such as natural gas or coal). Because they are 

“drop-in,” alternative jet fuels can replace conventional petroleum-based 

jet fuel (i.e., conventional jet fuel) without the need to modify aircraft 

engines and fuel distribution infrastructure. This definition means that 

alternative jet fuels are a substitute for conventional jet fuel and would 

directly compete with it on the commercial market. Most development 

activities—both federal and private industry activities—are focused on 

alternative jet fuels derived from renewable sources, in part, because of 

the prominence of environmental sustainability in national strategies and 

a federal requirement that any alternative jet fuel for operational use 

Background
 

Page 5 GAO-14-407 Alternative Jet Fuels

procured by any federal agency must have lifecycle greenhouse gas 

emissions less than or equal to conventional fuel of the same purpose.11

Alternative jet fuels are generally derived from the same feedstocks and 

processes as other advanced fuels (e.g., renewable diesel) and even 

some industrial products (e.g., plastics). As a result, alternative jet fuel 

producers have some flexibility in producing a variety of fuels and other 

products, seeking to maximize their profit relative to demand and costs. 

Figure 1 describes the six segments of the supply chain for the 

development and use of alternative jet fuels.

Figure 1: Alternative Jet Fuel Supply Chain

Note: The alternative jet fuel supply chain and segments were developed through GAO review and 

analysis of documents from federal agencies and industry with input from officials of each federal 

agency and department that we interviewed.

a

Fuel testing and approval activities may occur at various stages of the supply chain. They may also 

include environmental testing, such as tests to evaluate fuel-cycle energy use and lifecycle 

greenhouse gas emissions directly associated with producing an alternative jet fuel.

The first three segments of the alternative jet-fuel supply chain—

feedstock production, feedstock logistics, and fuel production—are 

common to all alternative fuels, and the first two segments are generally 

independent of the end-use product or co-products that are produced. For 

 

11Energy Independence and Security Act of 2007, Pub. L. No. 110-140, § 526,121 Stat. 

1492, 1663 (2007), codified at 42 U.S.C. § 17142, states that “no Federal agency shall 

enter into a contract for procurement of an alternative or synthetic fuel, including a fuel 

produced from nonconventional petroleum sources, for any mobility-related use, other 

than for research or testing, unless the contract specifies that the life-cycle greenhouse 

gas emissions associated with the production and combustion of the fuel supplied under 

the contract must, on an ongoing basis, be less than or equal to such emissions from the 

equivalent conventional fuel produced from conventional petroleum sources.” This law 

does not specify how to measure life-cycle greenhouse gas emissions.
 

Page 6 GAO-14-407 Alternative Jet Fuels

example, the camelina crop can be processed, converted, and refined 

into multiple end-use products, including renewable gasoline, diesel, and 

jet fuel, with the relative quantities of each of these end-use products 

determined by the fuel refiner. The activities associated with producing 

the camelina (e.g., growing the crop) and the logistical activities of 

collecting, storing, and transporting the camelina feedstock before it is 

converted to fuel are the same regardless of the relative quantities of 

renewable diesel or jet fuel produced. In the third segment of the supply 

chain, alternative jet fuels are generally co-produced with other end-use 

products, although fuel producers do have some flexibility in the mix of

products they make.

The remaining three segments of the supply chain—fuel testing and 

approval, fuel distribution, and end use—include activities that are 

specific to jet fuel. For example, this supply chain includes a segment for 

fuel testing and approval because before any alternative jet fuel can be 

approved for commercial or military use, it must meet unique safety and 

performance standards that are more rigorous than standards for other 

alternative transportation fuels. Standards for alternative jet fuels are set 

out in applicable standards controlled by ASTM International12 and the 

appropriate military department within DOD (the Navy and the Air 

Force).13 The requirements for fuel testing and approval under ASTM 

International and military standards vary by the characteristics of the fuel 

and the feedstock and production process used, but generally the 

requirements include a significant amount of fuel, engine, and aircraft 

testing. Initially, a fuel may be tested in a laboratory using small quantities 

of fuel (as little as 500 milliliters), but as it progresses through the 

approval process, fuel quantity requirements could reach as much as 

225,000 gallons if extensive engine testing is required.

The last two segments of the alternative jet fuel supply chain—fuel 

distribution and end use—also include activities specific to jet fuels, but 

 

12ASTM International, formerly known as the American Society for Testing and Materials, 

is a globally recognized leader in the development and delivery of international voluntary 

consensus standards.

13ASTM Standard D7566 covers the manufacture of jet fuel containing synthesized 

hydrocarbons (those not derived from petroleum hydrocarbons) for commercial use. 

Manufacture of synthesized jet fuel for military-grade, Jet Propellant-8, is covered in 

military standard, MIL-DTL-83133H. Synthesized jet fuel for military grade, Jet Propellant5 is covered in both ASTM Standard D7566 and military standard, MIL-DTL-5624V. 
 

Page 7 GAO-14-407 Alternative Jet Fuels

not specific to alternative jet fuels relative to conventional jet fuel. 

Specifically, according to the applicable ASTM International and military 

standards, once an alternative jet fuel is produced, certified, and released 

under the applicable standard, it also meets the standards for 

conventional jet fuel. Accordingly, alternative jet fuels can be seamlessly 

integrated into the existing jet fuel distribution system and onto aircraft 

without changes to any infrastructure.

Although no alternative jet fuels are currently available in the United 

States at a competitive price, as discussed later in this report, two 

alternative jet fuel production processes—referred to as the FischerTropsch process14 and the HEFA process15—are approved for use by 

commercial and military aviation. Under the previously mentioned ASTM 

International and military standards, fuels produced through these two 

processes are approved for up to a 50 percent blend with conventional jet 

fuel. As with conventional jet fuel production processes, both of these 

processes produce multiple end-use products, including, for example, 

diesel and jet fuel. The fuel producer, to a limited extent, determines the 

relative quantities of jet fuel, diesel, and other products to be produced. 

For many feedstocks used in the HEFA process, changing the product 

ratio to produce more jet fuel and less diesel, however, is more costly 

because it requires additional processing and increases the proportion of 

output that is comprised of less-valuable co-products, such as liquefied 

petroleum gas. Seven other production processes for alternative jet fuels, 

such as converting alcohols to jet fuel, are undergoing review in the 

ASTM International testing and approval process and in some military 

departments’ testing and approval processes.

 

14Under the Fischer-Tropsch process, biomass (such as switchgrass or wood waste), 

coal, or natural gas is processed through gasification and that gas is then converted to 

synthetic liquid fuels.

15Under a HEFA process (or Hydroprocessed Esters and Fatty Acids process), renewable 

oil (e.g., vegetable oils, animal fat, waste grease, and algae oil) is processed using 

hydrogen treatment (hydroprocessing) to yield a fuel in the distillation range of jet fuel and 

diesel.
 

Page 8 GAO-14-407 Alternative Jet Fuels

The White House has developed broad national strategies that promote 

the development of alternative fuels to help secure energy independence, 

foster economic development, and reduce greenhouse gas emissions. 

For example, the Blueprint for a Secure Energy Future (March 2011), the 

National Bioeconomy Blueprint (April 2012), and the President’s Climate 

Action Plan (June 2013), all describe how supporting the development of 

alternative fuels can contribute to achieving these broad national goals. 

However, these strategies also note that alternative fuels are only part of 

a wide variety of other complementary activities working toward the same 

goals. For example, according to the President’s Climate Action Plan, 

meeting U.S. greenhouse gas-emission reduction goals16 depends not 

only upon the development and use of alternative fuels, but also on 

numerous other activities such as increasing fuel economy standards, 

expanding and modernizing the electric grid, and improving the energy 

efficiency of homes and businesses.

 

16In 2009, the President made a commitment to reduce U.S. greenhouse gas emissions in 

the range of 17 percent below 2005 levels by 2020 if leaders from all other major 

economies agreed to limit their emissions as well.

Both Broad and 

Targeted Federal 

Alternative-Fuels 

Initiatives Support the 

Development and 

Use of Alternative Jet 

Fuels

Broad Federal Strategies 

and Initiatives Have 

Supported Alternative JetFuel Development and 

Use
 

Page 9 GAO-14-407 Alternative Jet Fuels

Some initiatives led by one or more of our five selected federal agencies 

involved in the development or use of alternative jet fuel17 help support 

these broad national strategies and are often similarly broad—focusing on 

issues that are common to a variety of alternative fuels, including 

alternative jet fuels. For example, to support the development of 

technologies and processes necessary for the commercial production of 

biofuels at prices that are competitive with conventional fuels, USDA and 

DOE jointly administer the Biomass Research and Development Initiative, 

which assists in developing these technologies through research, 

development, and demonstration projects. According to USDA and DOE 

officials, most of the initiative’s projects do not target alternative jet fuels 

specifically. However, officials from these agencies noted that general 

scientific advancements that broad initiatives identify can also advance 

alternative jet fuels development specifically. For example, research that 

improves the efficiency of a particular fuel-conversion process often 

supports the development of all fuels that the process could produce.

In 2007, the Energy Independence and Security Act (EISA) of 2007

expanded the Renewable Fuel Standard (RFS) to cover most surface 

transportation fuels, such as fuels for use in motor vehicles and engines 

and nonroad vehicles and engines, but not jet fuel.18 Overall, jet fuel is a 

fraction of the total transportation fuel consumed in the United States.19

The expanded RFS generally required that covered transportation fuels 

contain 9-billion gallons of renewable fuels in 2008, with renewable fuels’ 

volumes increasing annually to 36-billion gallons in 2022. To demonstrate 

 

17Other federal agencies, including the National Aeronautics and Space Administration 

(NASA) and the Department of the Treasury, also play a role. For example, NASA recently 

launched the Alternative Fuel Effects on Contrails and Cruise Emissions research, which 

includes a series of flights using the agency’s DC-8 flying laboratory to study the effects of 

alternative biofuel on engine performance, emissions, and aircraft-generated contrails at 

altitude. And the Department of the Treasury administers tax expenditures—tax credits or 

special exclusions, exemptions or deductions through which the government provides an 

indirect subsidy by foregoing tax receipts. GAO, A Glossary of Terms Used in the Federal 

Budget Process, GAO-05-734SP (Washington, D.C.: 2005) 94. The production of some 

alternative jet fuels may qualify, for example, for biodiesel credit and the special allowance 

for second generation biofuel plant property. However, by their nature, tax expenditures 

represent a substantial federal financial commitment.

1842 U.S.C. § 7545(o)(1)(L). EPA issued its final rule for the expanded RFS in March 

2010. See 75 Fed. Reg. 14670 (Mar. 26, 2010). 

19Specifically, according to the Energy Information Administration jet fuel represents about 

11 percent of all petroleum consumed by the transportation sector in 2012.
 

Page 10 GAO-14-407 Alternative Jet Fuels

compliance with the RFS, fuel producers or importers use renewable 

identification numbers (RINs). Fuel producers or importers can obtain 

RINs by purchasing and blending renewable fuels themselves, or they 

can purchase RINs from renewable fuel producers, importers, blenders, 

or other parties. In this way, the renewable fuel program has created a 

market for RIN credits. While jet fuel is not used to calculate a fuel 

producer’s or importer’s renewable fuel obligation, EPA determined in its 

March 2010 final rule for the expanded renewable fuel program that some 

feedstocks and conversion processes for renewable jet fuel qualify as 

“advanced biofuels,” one of the new categories of renewable fuel 

established by EISA.20 In addition, through regulations issued in March 

2013, EPA clarified that some renewable diesel processes that had been 

previously evaluated included jet fuel and also approved additional jet-fuel 

pathways.21 If alternative jet fuels produced through these approved 

processes generate RIN credits—which the fuel producer may then sell to 

others—their sale may help subsidize the cost of producing qualifying 

alternative jet fuels.

Four of the selected agencies—FAA, DOD, USDA, and DOE—support 

initiatives that target alternative jet-fuel development or use specifically. 

FAA and DOD have established specific goals for using alternative jet 

fuels in commercial and military aircraft and support research and 

development (R&D) activities—such as testing to approve new alternative 

jet fuels—to help them to achieve these goals. DOD, USDA, and DOE 

also have initiatives that provide direct financial support for future 

alternative jet-fuel production on a commercial-scale. All of these 

agencies coordinate their alternative jet fuel-related efforts with industry 

and other stakeholders through partnerships and agreements.

FAA and DOD have established usage goals specifically for alternative jet 

fuels. In fiscal year 2012, FAA set a goal for the U.S. aviation industry 

(including commercial and military aircraft) to use 1-billion gallons of 

alternative jet fuels annually by 2018 with the intent of encouraging 

 

2075 Fed. Reg. 14683 (Mar. 26, 2010).

2178 Fed. Reg. 14190, 14682, 14685-14686 (Mar. 5, 2013).

Four Federal Agencies 

Support Alternative Jet 

Fuels Development and 

Use through Targeted 

Goals, Initiatives, and 

Coordination Efforts

Federal Agencies’ Usage 

Goals
 

Page 11 GAO-14-407 Alternative Jet Fuels

commercial production.22 According to FAA officials, this represents about 

5 percent of the predicted jet fuel consumption for domestic airlines and 

the military in 2018. Achieving this goal, however, will depend on a variety 

of factors, including support from other federal agencies and industry 

stakeholders. USDA and other nongovernmental stakeholders have 

stated their intent to help enable commercial production of alternative jet 

fuels in support of FAA’s goal through existing programs and expanded 

collaboration.

Two of DOD’s military departments—the Navy and the Air Force—have 

also established usage goals for alternative fuels, including alternative jet 

fuels.23 To support these usage goals, the Navy and Air Force are willing 

to purchase alternative fuels that meet specific criteria, including 

availability at a price that is competitive with conventional fuels.

• The Navy’s 2010 A Navy Energy Vision for the 21st Century24 states 

that increasing its use of alternative energy—including alternative jet 

fuels—will help protect it from energy price volatility and supply 

disruptions. The plan sets a goal of deriving 50 percent of total Navy 

 

22DOT’s strategic plan for fiscal years 2012-2016 includes a goal to advance 

environmentally sustainable policies and investments that reduce carbon and other 

harmful emissions from transportation sources. Within that strategic goal, DOT states its 

support for advancing alternative fuels for aviation. FAA also has other emissions goals, 

such as the U.S. aviation industry returning its carbon emissions to their 2005 levels by 

2020, which are supported by the advancement of some alternative jet fuels. Because 

achievement of these goals is not solely dependent on alternative jet fuels, we do not 

consider them to be specific goals for advancing the use of alternative jet fuel.

23Although the Army uses jet fuel in its ground vehicles and aircraft and participates in 

DOD’s efforts to test and approve alternative jet fuel for use in this equipment, the Army 

does not have specific alternative jet-fuel-usage goals in its operational energy policy. In 

addition, DOD’s Office of the Assistant Secretary for Operational Energy Plans and 

Programs—the office responsible for leading and overseeing operational energy plans 

and programs which includes establishing the operational energy strategy and monitoring 

and reviewing all operational energy initiatives in DOD—has established the high-level 

goal of expanding DOD’s operational energy supply options in the 2011 Energy for the 

Warfighter: Operational Energy Strategy. The strategy also includes the military 

departments’ steps to certify aircraft to use alternative jet fuel as one component to 

achieve this goal.

24Navy, Office of the Chief of Naval Operations, A Navy Energy Vision for the 21st 

Century (Washington, D.C.: October 2010).
 

Page 12 GAO-14-407 Alternative Jet Fuels

energy consumption afloat25—including its jet fuel consumption—from 

alternative sources by 2020, which, according to Navy estimates, 

would require using about 336-million gallons of alternative fuels 

annually (both marine and jet fuels) by 2020.26 The Navy consumes 

over 600-million gallons of petroleum-based aviation fuel each year, 

which according to a Navy official, constitutes about 40 percent of its 

total petroleum consumption. In addition to setting quantitative goals, 

the plan established a goal of demonstrating (which the Navy 

completed in July 2012) and deploying the Great Green Fleet—a 

group of ships and aircraft fueled by alternative jet fuels and other 

alternative energy sources—by 2016.

• The Air Force’s 2013 U.S. Air Force Energy Strategic Plan27 includes 

a goal of increasing the use of cost-competitive drop-in alternative jetfuel blends for non-contingency operations to 50 percent of total 

consumption by 2025. According to the plan, the Air Force consumes 

about 2.5 billion gallons of jet fuel each year, accounting for about 80 

percent of its total energy consumption. The plan states that using 

alternative jet fuels could help to diversify the types and secure the 

quantities of energy that are needed to perform the Air Force’s 

missions, which are currently “heavily dependent” upon petroleum and 

petroleum-derived fuels, posing significant strategic and security 

vulnerabilities on energy supplies.

Two types of federal initiatives specifically support the development and 

use of alternative jet fuels—sponsoring R&D and direct financial support 

for future commercial production. FAA, DOD, and DOE support R&D 

activities to target alternative jet fuels specifically, such as testing to 

approve new alternative jet fuels or research to determine the 

environmental or economic impact of using them. USDA, DOE, and DOD 

 

25The Navy includes two broad categories for its energy consumption: afloat and ashore. 

The Navy uses almost 75 percent of its total energy afloat and over half of that relies upon 

liquid petroleum-based fuels.

26This quantity includes international alternative-fuels purchases.

27U.S. Air Force, U.S. Air Force Energy Strategic Plan (March 2013).

Federal Agency Initiatives for 

R&D and Direct Financial 

Support
 

Page 13 GAO-14-407 Alternative Jet Fuels

have also taken some steps to provide direct financial support for future 

commercial-scale production of alternative jet fuels.28

Research and Development Activities

DOT—primarily FAA—supports activities to determine the technical 

feasibility and impact of using alternative jet fuels, including ways to 

reduce the cost of production, through FAA’s Continuous Lower Energy, 

Emissions and Noise (CLEEN) program and Centers of Excellence 

(COEs), and through other DOT activities.

• CLEEN Program: Launched by FAA’s Office of Environment and 

Energy in 2010, CLEEN is a cost-sharing program that, among other 

things, supports fuel-testing activities to generate data that can be 

used to support the approval of new alternative jet fuels.29 According 

to FAA officials, under the program, FAA is providing about $125 

million in matching funds (of which about $93 million was provided 

through fiscal year 2013) to five projects with engine and airframe 

manufacturers. According to FAA officials, four of these projects 

address issues related to alternative jet fuels development or use. For 

example, through fiscal year 2013, FAA has awarded about $5.5 

million through the CLEEN program to conduct laboratory and enginecomponent tests of advanced alternative jet fuels that could be 

approved for commercial use by ASTM International. FAA has 

announced its plans to implement a follow-on program in 2015, called 

CLEEN II—when FAA plans to end the initial CLEEN program. Like 

the initial program, CLEEN II’s goals will include developing and 

demonstrating drop-in sustainable alternative jet fuels. However, FAA 

officials told us that under CLEEN II they intend to place an emphasis 

on advancing coordinated test methods and capabilities to reduce 

testing cost and time and the possibility of redundant testing by 

multiple engine manufacturers. 

 

28USDA and DOE administer a variety of programs that address issues related to 

feedstock production, feedstock logistics, and fuel production. Officials told us that 

although some projects supported by these programs had an alternative jet-fuel 

component, they generally had a broader focus. For this reason we did not highlight them 

here.

29CLEEN is part of the Next Generation Air Transportation System (NextGen)—FAA’s 

program to transform the nation’s ground-based air-traffic control system to an air-traffic 

management system using satellite-based navigation and other advanced technology. In 

addition to supporting alternative jet-fuel testing, CLEEN also supports environmentally 

promising aircraft technologies.
 

Page 14 GAO-14-407 Alternative Jet Fuels

• Centers of Excellence: FAA also sponsors research studies related 

to the environmental impact of using alternative jet fuels through its 

COEs. Beginning in 2003, FAA sponsored the Center of Excellence 

for Aircraft Noise and Aviation Emissions Mitigation, named 

Partnership for AiR Transportation Noise and Emissions Reduction 

(PARTNER), a collaborative effort that researched solutions for 

existing and anticipated aviation-related noise and emissions 

problems.30 According to FAA officials, five PARTNER projects 

focused on alternative jet fuels specifically. For example, one project 

studied the economic feasibility, production potential, and 

environmental impact of alternative jet-fuel use. Upon the expiration of 

PARTNER’s 10-year cooperative agreement in September 2013 and 

as required in the FAA Modernization and Reform Act of 2012,31 FAA 

selected a team of universities to form a new COE for Alternative Jet 

Fuel and Environment, named the Aviation Sustainability Center 

(ASCENT), with research goals that include better understanding 

ways to reduce the costs of production processes and ways to meet 

FAA’s goal of using 1-billion gallons of alternative jet fuels by 2018. 

ASCENT is being led by Washington State University and the 

Massachusetts Institute of Technology, and is expected to receive at 

least $4 million annually for 10 years to explore ways to meet FAA’s

environmental and energy goals, including sustainable alternative jet 

fuels.

• DOT activities: DOT also helps fund research through broad agency 

announcements for FAA-sponsored projects that address specific 

alternative jet fuels’ testing needs. Specifically, in 2010 DOT invited 

research in four priority areas: development of novel “drop-in” 

alternative jet fuels, alternative jet fuels’ quality control, sustainability 

guidance for alternative jet fuels’ users and performance, and 

durability testing of new fuels. According to FAA officials, DOT’s John 

A. Volpe National Transportation Systems Center has administered

six FAA-sponsored broad agency-announcement research projects 

related to alternative jet fuels at a total cost of about $7 million. For 

example, DOT provided funds to three alternative jet-fuel producers to 

 

30PARTNER is a cooperative research organization sponsored by FAA, NASA, DOD, 

EPA, and Transport Canada that includes 12 collaborating universities and about 50 

advisory board members who represent aerospace manufacturers, airlines, airports, state 

and local governments, and professional and community groups.

31Pub. L. No. 112-95, § 911, 126 Stat. 11, 142.
 

Page 15 GAO-14-407 Alternative Jet Fuels

develop and optimize conversion processes for alternative jet fuels. 

These funds better positioned the fuel producers to produce fuel for 

testing purposes and develop knowledge to help overcome key 

technical hurdles to commercial-scale production.

DOD also supports activities to test and approve alternative jet fuels. All

three DOD military departments coordinate their alternative jet-fuel testing 

and approval efforts through the Tri-Service Alternative Fuels Working 

Group. According to Air Force officials, this working group helps share 

data, reports, testing, and certification practices across DOD and is 

working toward developing a department-wide certification strategy. 

Specifically, the Army, Navy, and Air Force test alternative jet fuels to 

ensure that they are safe to use on military ships, aircraft, and fuel 

distribution systems. Their testing programs capture technical data 

through laboratory, component, engine, fuel system, and weapon system 

tests that evaluate the effects of changes in fuel chemistry and properties 

on the performance and reliability of military equipment. According to 

DOD officials, the department purchased about 1.5-million gallons of 

alternative jet fuels to conduct the department’s testing and approval 

activities from fiscal years 2007 to 2013 at a total cost of almost 

$40 million.32 Officials from the Navy and Air Force told us that these 

activities will help enable them to achieve their stated goals for alternative 

jet-fuels use. DOE also, on behalf of DOD, recently solicited applications 

for R&D projects that help enable conventional coal-to-liquid production 

plants to produce commercially viable quantities of jet fuel that have equal 

or lower greenhouse gas emissions and make significant progress toward 

being cost-competitive to conventional jet fuel. DOE expects to select and 

award applications by the end of August 2014, with about $20 million 

available under the solicitation.33

 

32This is the total cost, incurred over the past 7 years and is not adjusted for inflation. 

According to DOD officials, the funding source of the quantities purchased included each 

military department’s Research, Development, Test, and Evaluation funds and the 

Department of the Navy’s Operations and Maintenance funds, and other funds DOD 

identified as connected with the American Recovery and Reinvestment Act of 2009, Pub. 

L. No. 111-5, 123 Stat. 115 (2009). 

33According to the Senate conferees, money was included in the Department of Defense, 

Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act of 

2013 (Pub. L. No. 113-6, 127 Stat. 198 (2013)) for research, development, test and 

evaluation to reduce emissions of coal-to-liquid fuels to meet the goals established in the 

DOD’s Operational Energy Strategy and its Implementation Plan. See 159 Cong. Rec. 

S1497 (Daily Ed., Mar. 11, 2013) (explanatory statement).
 

Page 16 GAO-14-407 Alternative Jet Fuels

In addition, federal agency officials representing eight federal agencies 

recently formed an interagency working group that is currently drafting a 

national R&D strategy for alternative jet fuels. According to members of 

the working group, a national R&D strategy is needed to create a national 

vision for alternative jet fuels specifically and a unified federal government 

approach to help facilitate interaction with external stakeholders, such as 

industry and academia. As part of the working group’s efforts, in January 

2014, the working group sponsored a workshop attended by government 

and industry stakeholders. The workshop identified a variety of 

challenges to making alternative jet fuels, including challenges associated 

with feedstock logistics, fuel production and scale-up, fuel certification 

and qualification, as well as other cross-cutting issues. According to 

members of the working group, the national strategy for alternative jet 

fuels will focus on R&D challenges and will not address policy issues.

Direct Financial Support for Future Commercial Production

In June 2011, USDA, DOE, and one of DOD’s military departments (the 

Navy) signed a memorandum of understanding (MOU) that initiated 

cooperation among these agencies in assisting the development and 

support of a sustainable commercial biofuels industry, which could 

produce alternative jet fuels among other types of biofuels. The MOU 

explained that given the current economic environment, significant startup risks, and competitive barriers of an established conventional fuels 

market, it is necessary for the federal government to cooperate with 

private industry to create a strong demand signal and to make targeted 

investments to achieve the necessary alternative-fuels-production 

capacity. The stated objective is to construct or retrofit multiple domestic 

commercial- or pre-commercial-scale advanced drop-in biofuel production 

facilities.34 Specific characteristics required for the facilities include that 

the biofuels that they produce must be capable of meeting military fuel 

standards at a price that is competitive with conventional jet fuel and have 

no significant impact on the supply of agricultural commodities for the 

production of food.

 

34Agencies signed the MOU in response to the President’s March 2011 Blueprint for a 

Secure Energy Future, which challenged the Secretaries of Agriculture, Energy and the 

Navy to investigate how they can work together to speed the development of “drop-in” 

biofuels substitutes for diesel and jet fuel, citing that competitively priced drop-in biofuels 

could help meet the fuel needs of the Navy, as well as the commercial aviation and 

shipping sectors.
 

Page 17 GAO-14-407 Alternative Jet Fuels

Under the MOU, USDA, DOE, and the Navy stated their intent to 

contribute $170 million each over 3 years, for an aggregate total of $510 

million. Under the authority of the Defense Production Act, Title III,35 DOE 

and the Navy planned to fund their share of $340 million for capital 

investment and production. USDA planned to provide its contribution 

under the authority of the Commodity Credit Corporation Charter Act.36

Under this MOU, in June 2012, USDA, DOE, and DOD announced the 

initiation of and a solicitation for the Advanced Drop-In Biofuels 

Production Project, which would provide awards for biofuels production 

facilities over two phases.37 In May and June 2013, four private 

companies were selected to receive awards totaling $20.5 million, with 

private industry paying at least 50 percent of the cost. According to 

Defense Production Act Title III program officials, the Advanced Drop-In 

Biofuels Production Project should provide production capacity for about 

35 million gallons per year of renewable jet fuels that meet military 

standards and are available at a price that is competitive to conventional 

fuels by 2016. But the amount of production capacity is dependent, in 

part, on the timing and the number of awards for the Advanced Drop-In 

Biofuels Production Project’s second phase. According to DOD officials, 

the department plans to make its determination for the second phase of 

awards in July 2014.

 

35Pub. L. No. 81-774, codified at 50 U.S.C. Appx. The Defense Production Act of 1950 

was enacted to ensure the availability of industrial resources to meet defense needs. 

Amendments to the Act allow the funds contributed under its authority to be used for 

energy supply, emergency preparedness, and critical infrastructure protection and require 

agencies to report on foreign offsets, which are incentives to foreign governments to 

purchase U.S. goods and services. 

36The Commodity Credit Corporation Charter Act, Act of June 29, 1948, ch. 704, 62 Stat. 

1070, codified as amended at 15 U.S.C. ch. 15, established the Commodity Credit 

Corporation within the USDA for the purpose of stabilizing, supporting, and protecting farm 

income; assisting in the maintenance of an adequate supply of agricultural commodities; 

and facilitating the orderly distribution of such commodities. USDA, through the 

Commodity Credit Corporation, has access to capital stock and is authorized to support 

agricultural commodity prices through loans, purchases, and payments; procure 

agricultural commodities to meet domestic requirements; purchase agricultural 

commodities for sale to federal agencies, foreign governments, and international relief 

agencies; and carry out conservation or environmental programs authorized by law, 

among other things.

37Phase 1 included awards for planning and preliminary designs for biofuel production 

facilities. Phase 2—available to those entities that participated in Phase 1—would include 

awards for construction, commissioning, and performance testing of biofuel production 

facilities.
 

Page 18 GAO-14-407 Alternative Jet Fuels

More recently, in December 2013, the Secretaries of USDA and the Navy 

announced another initiative that complements the Advanced Drop-In 

Biofuels Production Project called Farm to Fleet, which is intended to help 

the Navy meet its alternative-fuels usage goals. Under the initiative, DOD 

plans—through its regular domestic bulk-fuel purchases—to issue 

solicitations in 2014 for the purchase of about 80-million gallons of any 

combination of jet and marine diesel fuels in 2015 that are blended with at 

least 10 percent alternative fuels.38 USDA plans to contribute up to about 

$161 million (under the authority of the Commodity Credit Corporation 

Charter Act) toward these fuel purchases to help defray any domestic 

feedstock costs that would have caused the final alternative fuel to not be 

price competitive with conventional fuels.

In addition, DOE provides direct financial support for future alternative jet 

fuels production through its integrated biorefineries program, which was 

initiated in 2005. Under the program, DOE’s Bioenergy Technologies 

Office (BETO) works in partnership with industry to develop, build, 

operate, and validate integrated biorefineries at various scales (pilot, 

demonstration, and commercial). The purpose of these projects is to 

provide federal support to private industry to help bridge the gap between 

promising R&D scientific advancements and commercial-scale production 

by validating fuel conversion technologies at progressively larger scales. 

According to BETO, federal financial support is essential to help offset the 

technical and financial risks associated with producing alternative fuels at 

a commercial-scale. According to BETO officials, DOE has obligated 

almost $198 million for 14 integrated biorefinery projects related to the 

development or use of alternative jet fuels.39 For example, it obligated 

about $50 million to a fuel producer to demonstrate the technical and 

economic feasibility of refining algal oil into gasoline, diesel, and jet fuel.

 

38While DOD has the authority under appropriate circumstances to enter into certain 

contracts for procurement of services or property, including contracts for the purchase of 

alternative fuels for up to 5 years with options to extend the life of such contracts to 10 

years (10 U.S.C. § 2304a), officials stated that no such long-term contracts have been 

awarded to date. Instead, DOD has used 1-year purchasing contracts with options. 

39According to BETO officials, DOE uses an active project management process to 

ensure that projects meet key milestones, timelines, and budget parameters. When 

projects are not able to meet theses parameters, DOE discusses the issue with grantees 

and gives them a chance to address the issues. If DOE and the grantee cannot agree 

upon appropriate action to address the issues, they may agree to mutually terminate the 

project.
 

Page 19 GAO-14-407 Alternative Jet Fuels

Because of private industry’s indispensible role throughout the alternative 

jet fuel supply chain—such as producing feedstock and fuel—it is critical 

that the federal government’s activities are coordinated with external 

stakeholders. As a result, USDA, DOE, FAA, and DOD participate in a 

variety of coordination efforts, such as partnerships with industry and 

other stakeholders, to identify opportunities to work toward common goals 

and needs. For example, FAA and other federal agencies participate in 

the Commercial Aviation Alternative Fuels Initiative (CAAFI), a publicprivate partnership40 formed in 2006 to facilitate the development and 

deployment of drop-in alternative jet fuels that are intended to reduce all 

aviation emissions, improve price stability, and support supply security. 

Key CAAFI efforts have included developing and sharing user guides and 

tools, as well as organizing workshops for alternative fuel producers and 

other stakeholders. For example, in December 2013, CAAFI published a 

user’s guide to help alternative jet-fuel producers understand and comply 

with ASTM International’s process to test and approve new alternative jet 

fuels. The partnership also developed a “Path to Alternative Jet Fuel 

Readiness” tool that describes the testing and environmental evaluations 

required to show a new alternative jet fuel’s suitability for aviation use and 

how to best facilitate ASTM International approval. In addition, in January 

2013 and January 2014, CAAFI conducted workshops on current 

regulatory, voluntary, and research efforts related to alternative jet-fuel 

sustainability issues. Among other things, 2013 workshop participants 

identified the need to understand and reconcile differences among 

various approaches to calculating life-cycle greenhouse gas emissions 

that result from producing alternative jet fuels, and 2014 participants 

began assessing the differences.

USDA coordinates with private industry and other governmental 

stakeholders through the FARM to FLY initiative, which was initially 

established in July 2010 to accelerate the availability of a commercially 

viable and sustainable domestic alternative jet-fuels industry, increase 

domestic energy security, establish regional supply chains, and support 

rural development. USDA expanded the initiative by signing a 5-year 

FARM to FLY 2.0 resolution with CAAFI, FAA, Airlines for America,41 and 

others. Under the expanded resolution, participants agreed to designate 

 

40CAAFI is sponsored by FAA and three trade associations: Airports Council InternationalNorth America, Aerospace Industries Association, and Airlines for America.

41A domestic airline industry group.

Coordination Efforts with 

Private Industry and Other 

Stakeholders
 

Page 20 GAO-14-407 Alternative Jet Fuels

personnel for a working group tasked with assessing and proposing ways 

to support FAA’s goal of using 1-billion gallons of alternative jet fuels by 

2018. The working group plans to issue a final report by the end of 2018.

In addition to the two efforts described above, federal agencies participate 

in a variety of other coordination efforts, including the following.

• USDA, DOE, FAA, and DOD work with industry and other 

stakeholders through regional initiatives that are aimed at advancing 

alternative fuels within specific regions of the United States.42

• DOE’s BETO co-sponsored a September 2013 workshop to obtain 

input from industry, academia, and other experts on optimizing and 

integrating the use of natural gas and biomass to produce liquid 

transportation fuels, including alternative jet fuels.

• FAA has signed onto or agreed to engage in activities under 

international cooperative agreements with four countries: Australia 

(2011), Brazil (2011), Germany (2012), and Spain (2013). Under each 

of these agreements, FAA agreed to share information about R&D 

efforts, fuel testing or approval requirements, and environmental or 

sustainability studies, among other things. According to FAA, these 

international partnerships contribute to FAA’s ongoing efforts to 

support approval of additional sustainable alternative jet fuels by 

ASTM International. For example, representatives from all four 

countries participated and shared information about their respective 

initiatives at a recent meeting sponsored by CAAFI. Also, FAA and 

German Ministry of Transport officials recently participated in a 

technical and coordination exchange to share details on fuel testing 

and approval activities to identify complementary activities, among 

other things.

 

42These initiatives include Sustainable Aviation Fuels Northwest and the Midwest Aviation 

Sustainable Biofuels Initiative, both of which focus on accelerating the development of 

commercially viable, renewable alternative jet fuels.
 

Page 21 GAO-14-407 Alternative Jet Fuels

The dates FAA and DOD have established for meeting their alternative 

jet-fuel usage goals are several years or more away, and, to date, all 

alternative jet fuels purchased in the United States have been for fuel 

testing, approval, or demonstration activities, not for day-to-day 

operations. For example, in November 2011, two domestic airlines 

purchased alternative jet fuels for a limited number of commercial flights. 

According to DOD officials, DOD purchased about 150,000 gallons in 

fiscal year 2012 (about 1.5-million total gallons since fiscal year 2007) of 

alternative jet fuels, all for fuel testing and approval activities, including 

about 100,000 gallons for the Navy’s Great Green Fleet demonstration in 

July 2012. Commercial and military use is constrained because 

alternative jet fuels are not yet produced on a commercial-scale at a price 

that is competitive with conventional jet fuel. While FAA officials 

acknowledged that FAA’s usage goal is “aspirational,” they noted that 

alternative jet fuel use could increase substantially once the industry is 

capable of producing alternative jet fuels at a commercial scale and at a 

price that is competitive with conventional jet fuels.

Currently, the price for alternative jet fuels exceeds that of conventional 

jet fuel. Jet fuel end users—both commercial airlines and DOD—are 

extremely price sensitive when making purchasing decisions. Fuel 

purchasers are either unwilling to pay a premium for alternative jet fuels 

PriceCompetitiveness Is 

the Main Challenge; 

Federal Activities 

Help Address 

Challenge, but Market 

Factors Affect the 

Long-term 

Commercial Viability 

of Alternative Jet 

Fuels

While Some Progress Has 

Been Made, No Alternative 

Jet Fuels Are Currently 

Commercially Available at 

a Price That Is 

Competitive with 

Conventional Jet Fuels
 

Page 22 GAO-14-407 Alternative Jet Fuels

as compared to conventional jet fuel, or in the case of DOD, are 

precluded by law and department policy from doing so.43 The actual price 

differential depends on the feedstock, the production process used to 

produce the alternative jet fuel, as well as fuel distribution and quantities 

produced. Of the two alternative jet-fuel production processes approved 

for use in commercial and military aircraft (Fischer-Tropsch and HEFA), 

DOD, according to a DOD official, paid from about $3 to $150 per 

gallon.44 These prices, however, reflect purchases of small quantities of 

fuel for testing and approval activities, which according to government 

officials and a fuel producer we interviewed and literature we reviewed, 

are higher than what the price would be if the quantities were produced at 

a commercial scale. A study conducted by one of FAA’s COEs in March 

2013 estimated that alternative jet fuels produced on a commercial scale 

using the HEFA process would require a subsidy of $0.35 to $2.86 per 

gallon to be price-competitive with conventional jet fuels in 2020.45

Recent developments indicate that alternative jet fuel use may increase in 

the future, which could contribute to achieving FAA’s and DOD’s usage

goals. For example, as of January 2014, seven new potential alternative 

jet-fuel production processes are undergoing review by ASTM 

International for approval—at least one of which FAA officials told us may 

be approved by June 2014. According to a couple of government officials 

 

43DOD may not obligate or expend funds made available for fiscal year 2014 to make a 

bulk purchase of alternative jet fuel for operational use unless the price of that fuel is 

competitive with the price of conventional jet fuel. See National Defense Authorization Act 

for Fiscal Year 2014, Pub. L. No. 113-66 § 315, 127 Stat. 672, 730 (2013), Under agency 

policy, DOD may purchase alternative jet fuel at prices above conventional jet fuel if the 

fuels are used for research, development, and testing purposes—not for operational use.

44Specifically, a DOD official reported that the department paid a range of prices from 

about $3 per gallon for 315,000 gallons of alternative jet fuel derived from natural gas 

produced using the Fischer-Tropsch process to about $150 per gallon for 1,500 gallons of 

alternative jet fuel derived from algal oil produced using the HEFA process.

45Partnership for AiR Transportation Noise and Emissions Reduction An 

FAA/NASA/Transport Canada sponsored Center of Excellence, Market Cost of 

Renewable Jet Fuel Adoption in the United States (A PARTNER Project 31 Report) 

(Cambridge, MA: March 2013). In this study, the estimated subsidy depends on the 

model’s underlying assumptions, such as the quantity of renewable jet fuel produced from 

rotation crops. Under one set of assumptions, called the “Reference Scenario,” no HEFA 

jet fuel is produced in 2020, and the estimated price of conventional jet fuel is $3.41 per 

gallon. Four other scenarios resulted in the production of 1 billion gallons of HEFA jet fuel 

in 2020; in three of these scenarios the implicit per-gallon subsidy to renewable jet fuels 

exceeds 60 percent of the average price of jet fuel per gallon.
 

Page 23 GAO-14-407 Alternative Jet Fuels

and an industry representative whom we spoke with, a range of approved 

production processes could diversify and expand the future supply of 

alternative jet fuels. Another potential alternative jet-fuel production 

process that will be submitted to ASTM for approval involves using a type 

of renewable fuel that is currently used in ground transportation. Because 

production capacity already exists for this fuel, it could be made available 

more quickly to meet demand from the aviation industry. In addition, two 

airlines—United Airlines and Alaska Airlines—have entered into 

agreements, known as “off-take agreements,” to purchase alternative jet 

fuels from fuel producers’ future production.46

We interviewed 23 academic, federal government, and private industry 

stakeholders with expertise in various segments of the supply chain to 

help identify challenges to developing and using alternative jet fuels (see 

app. I for more information on the criteria used to select the stakeholders 

interviewed). Through interviews with these stakeholders using openended questions, we identified two major factors—high development 

costs for alternative jet fuels and uncertainty with respect to federal 

regulations and policies—as the primary contributors to the overarching 

challenge that alternative jet fuels are not commercially available at a 

price that is competitive with conventional jet fuel.

Almost all of the stakeholders whom we interviewed (22 of 23) cited at 

least one factor related to high development costs. While one of these 

stakeholders discussed the challenges associated with high development 

costs broadly, the remaining 21 of them highlighted development cost 

challenges associated with specific supply-chain segments.

• Feedstock production: Stakeholders we interviewed most commonly 

cited the high cost of feedstock in connection with the first segment of 

the supply chain (15 of 23 stakeholders). Five of these stakeholders 

noted that for fuel produced using the HEFA production process, the 

cost of some types of feedstock—even before it is transported or 

converted—currently exceeds that of conventional fuel. For example, 

 

46United Airlines and AltAir Fuels announced an off-take agreement in June 2013 that 

includes the airline’s agreement to purchase 15 million gallons of renewable alternative jet 

fuels over 3 years beginning in 2014. Alaska Airlines and Hawai’i BioEnergy announced 

an agreement in July 2013 to purchase an unknown quantity of renewable alternative jet 

fuels as early as 2018.

The Overarching 

Challenge to Developing 

an Alternative Jet Fuels 

Market Is Making the Price 

Competitive with 

Conventional Jet Fuels

High Development Costs 

across the Alternative Jet Fuel 

Supply Chain
 

Page 24 GAO-14-407 Alternative Jet Fuels

when comparing conventional jet-fuel prices reported by the Energy 

Information Administration and soybean oil prices reported by the 

World Bank between 1990 and 2012, the price per gallon of soybean 

oil exceeded the price per gallon of conventional jet fuel in almost 

every year.47 In addition, an increase in demand for alternative jet 

fuels could increase the derived demand for feedstocks (as alternative 

jet fuel producers increase their production output) and the price of 

feedstocks could rise. 

Six stakeholders noted that the expansion of low cost natural gas 

production in the United States could help lower production costs for 

alternative fuels derived from nonrenewable sources, such as natural 

gas. However, jet fuel produced from nonrenewable sources, such as 

natural gas, does not meet the statutory definition of “renewable 

biomass,”

48 and therefore could not generate RINs. Expanding the 

production of different types of renewable feedstocks could also help 

lower feedstock production costs, but three stakeholders noted that 

the agriculture community does not have much experience in growing 

crops that could be used to produce alternative fuel, and farmers are 

hesitant to grow those crops without a guarantee that they can be sold 

or the certainty that the energy crop would be more profitable than 

what the farmer could otherwise grow.

• Feedstock Logistics: While the logistics differ depending on the type 

of feedstock, one private-industry stakeholder and studies we 

reviewed explained that feedstock used to produce alternative fuels is 

generally costly to collect, store, handle, and transport. For example, 

oil producing feedstocks—such as camelina, soy, or jatropha—require 

special handling, including proper moisture and temperature 

conditions for storage and cleaning, drying, and de-hulling before the 

process for extracting the oil from the plant occurs. And, some other 

feedstock crops, such as wood residues or switchgrass—which are 

fibrous, have a low energy density, and have variable moisture 

content—are costly to collect, store, and transport because of this 

complexity. Moreover, to be more cost effective, these feedstocks 

 

47The average difference between a gallon of soybean oil and a gallon of conventional jet 

fuel between 1990 and 2012 was $1.19 in 2010 dollars. See Partnership for AiR 

Transportation Noise and Emissions Reduction An FAA/NASA/Transport Canada 

sponsored Center of Excellence, Market Cost of Renewable Jet Fuel Adoption in the 

United States (A PARTNER Project 31 Report) (Cambridge, MA: March 2013).

4842 U.S.C. § 7545 (o)(1)(l).
 

Page 25 GAO-14-407 Alternative Jet Fuels

may need to be grown near fuel production facilities; otherwise, they 

may need to be shipped by bulk freight transportation (such as by rail 

or pipeline), which increases the transportation cost. That is why a 

demonstration-scale ethanol biorefinery that we visited that 

anticipates producing alternative jet fuels acquires its feedstock 

(woody biomass) from a poplar tree plantation less than 10 miles 

away (see fig. 2). Operators of the biorefinery told us that the close 

proximity of the feedstock source to the biorefinery helps reduce its 

feedstock logistics costs.

Figure 2: Logistics of Transporting Feedstock from Source to Fuel Production Facility

• Fuel production: More than half of the stakeholders we interviewed 

(14 of 23), as well as literature we reviewed, indicated that the high 

costs associated with transitioning to commercial scale production—

such as the capital costs required to construct a commercial-scale 

production plant—is a key contributing factor affecting the cost of 

producing alternative jet fuels. For example, one study conducted by 

the National Research Council estimated that the costs to construct a 
 

Page 26 GAO-14-407 Alternative Jet Fuels

single biorefinery converting biomass into a liquid transportation fuel 

using different conversion technologies range from $200 million to 

$606 million.49 Stakeholders (5 of 23) also noted that the capital 

investment costs for constructing alternative fuel-production plants 

would be even higher when producing fuel from nonrenewable 

feedstock, such as natural gas.

Ten stakeholders we interviewed highlighted fuel producers’ difficulty 

in obtaining the private investment needed to help construct

commercial-scale alternative fuel production plants. According to 

stakeholders and literature we reviewed, private financiers are 

hesitant to invest, in part, because of risks associated with the 

uncertainty about access to a steady supply of feedstock, high 

feedstock and capital costs, and an unwillingness on the part of fuel 

end users to pay a premium price for alternative jet fuels. This is 

generally true of many capital-intensive start-ups, including other 

renewable energy industries; four stakeholders noted to us, for 

example, that the ethanol industry would not be as commercially 

viable today without considerable federal support. One privateindustry stakeholder whom we spoke to noted that fuel producers 

learn and adapt their processes as they gain experience building and 

operating commercial-scale production plants. In other words, once 

fuel producers construct a commercial-scale plant and begin 

operating it, they can work to create efficiencies in the production 

process to reduce costs in other ways. Another private-industry 

stakeholder underscored that the amount of time and funding it takes 

to move from a good idea in the lab to a commercial scale of 

production is substantial. Another stakeholder highlighted the cyclical 

nature of the challenge—that is, fuel producers typically require 

outside investment finance to construct a commercial-scale plant that 

can create efficiencies sufficient to decrease costs, while a private 

financier is hesitant to invest funds unless the producer can lower 

development costs and guarantee that the fuel price will be 

competitive with the price of conventional fuels.

• Fuel testing and approval: Ten stakeholders, as well as literature we 

reviewed, explained that the time and testing requirements associated 

with the testing and approval process for alternative jet fuels add 

 

49National Research Council of the National Academies, Renewable Fuel Standard: 

Potential Economic and Environmental Effects of U.S. Biofuel Policy (Washington, D.C.: 

2011).
 

Page 27 GAO-14-407 Alternative Jet Fuels

additional cost—in part because alternative jet fuels, in contrast to 

alternative fuels used for other purposes such as surface 

transportation, require a more rigorous testing and approval process. 

According to an industry report, the ASTM International’s testing and

approval process can last as long as 3 years and cost upwards of $30 

million.50 One stakeholder explained that the fuel testing and approval 

process requires producers to demonstrate that their production 

processes are “robust and repeatable” and can reliably control 

product quality. With regard to the time required to reach fuel 

approval, the commercial and military approval process for HEFA 

generally took about 3 years. One stakeholder highlighted that given 

the amount of time required to get approval for alternative jet fuels, 

producers may opt to produce other products, such as diesel, that 

they can get to market more quickly.51 

In addition, as an alternative fuel progresses through the testing and 

approval process, the sequence of tests—ranging from laboratory 

tests on the fuels to potentially full-scale aircraft tests—require an 

increasing quantity of fuel to conduct. Some stakeholders (5 of 23) 

elaborated that since most fuel producers are generally companies 

with limited funds and small-scale operations, it is extremely costly for 

them to produce fuel in large quantities. For both the Fischer-Tropsch 

and HEFA approval processes, the federal government has in some 

cases provided funding—including purchasing fuels for testing and 

providing the equipment needed to conduct the tests—to help relieve 

some of the costs for producers. Air Force officials estimated that 

DOD generated about 80 percent of the testing data for past 

approvals, while private parties are leading most of the current fuel 

certifications. Four government and private-industry stakeholders 

whom we interviewed, as well as other FAA and DOD officials, 

expressed concerns that recent cuts to the Air Force Alternative Fuels 

Certification Division overseeing testing and approval will add to the 

time and cost of getting additional alternative jet fuels approved. 

Specifically, the Air Force’s Alternative Fuels Certification Division 

was eliminated in fiscal year 2013 and the funding for the other Air 

 

50Midwest Aviation Sustainable Biofuels Initiative, Fueling a Sustainable Future for 

Aviation (2013). This report did not provide a range of the time and cost of the ASTM 

International certification and approval fuel process, only an upward estimate. 

51As discussed above, other end products or co-products—such as, diesel fuel, 

cosmetics, and plastics—are produced through the same production process. 
 

Page 28 GAO-14-407 Alternative Jet Fuels

Force division involved in fuel testing and certification—the Air Force 

Research Lab—is also being cut. A senior Air Force Energy official 

noted that the Air Force plans to request that funding for its fuel 

testing and approval activities be restored once the budget situation 

has improved. The official did not know what the consequences of the 

recent cuts would be, but indicated that because none of these 

alternative jet fuels would be immediately commercially available, the 

short-term impact would be minimal.

As discussed above, federal policies and regulations can support the 

development and use of alternative jet fuels, but uncertainty regarding the 

future of this federal support may limit the support that these policies 

provide to the alternative jet-fuels industry. More than half of the 

stakeholders we interviewed (13 of 23) indicated that continued 

uncertainty in federal regulations and policy contribute to the overarching 

challenge of making the price of alternative jet fuels competitive with the 

price of conventional jet fuels, a situation that undermines the viability of 

the alternative jet-fuels industry as compared to conventional jet fuel. 

Specifically, these stakeholders cited uncertainty about the RFS and 

federal tax expenditures52 as a challenge to developing and using 

alternative jet fuels.

• RFS: Government, academic, and private-industry stakeholders (8 of 

23) highlighted legal and political challenges to the RFS, which 

creates uncertainty about requirements in the future. These 

challenges include multiple lawsuits53 filed regarding the validity of the 

program’s volumetric requirements, and political opposition for the 

program from some lawmakers.54 The uncertainty about the future of 

the RFS contributes to private financiers’ hesitancy to invest in the 

biofuels industry, including alternative jet fuels. Even though 

 

52Tax expenditures are provisions, such as tax credits or special exclusions, exemptions 

or deductions that reduce taxpayers’ tax liability as a loss of federal revenue. See footnote 

17.

53For example, see American Petroleum Inst. v. EPA, 706 F.3d 474 (D.C. Cir., 2013); 

Monroe Energy, LLC v. U.S. Environmental Protection Agency, No. 14-1014 (D.C. Cir., 

filed Jan. 28, 2014).

54For example, see H.R. 1461, Renewable Fuel Standard Elimination Act (introduced Apr. 

10, 2013); S. 1195, Renewable Fuel Standard Repeal Act (introduced June 20, 2013); and 

H.R. 426, Remove Incentives for Producing Ethanol Act of 2011 (introduced Jan. 25, 

2011).

Uncertainty of Federal Policies 

and Regulations
 

Page 29 GAO-14-407 Alternative Jet Fuels

renewable jet fuels produced from specified feedstocks and 

conversion processes can qualify as a renewable fuel to meet the 

advanced biofuels requirement of the RFS, EPA officials reported that 

no RINs for the production of renewable jet fuel have been generated 

as of January 2014.55 However, four stakeholders noted that 

alternative jet-fuel producers could use RIN credits to help offset fuel 

development costs and to make the fuel’s price more competitive with 

the price of conventional jet fuel. Four stakeholders, as well as a 

private financier whom we spoke with, noted that, generally, private 

financiers wholly or partly discount any potential RIN credit value 

when evaluating a fuel producer’s financial prospects and deciding 

whether to invest because of uncertainty about the future of the 

program. Discounting the value of a RIN credit in financial models 

makes the investment in an alternative fuel producer look less 

profitable and overall less attractive than the same investment would 

look with a stable and fully valued RIN credit. Thus, while the 

uncertainty does not increase the actual price of alternative jet fuel, it 

may hinder investments that could make alternative jet fuels more 

price-competitive to conventional jet fuels.56 Two other stakeholders 

pointed to the EPA’s recent proposal to reduce the total advanced 

biofuels standard in 2014 under the RFS as indicative of this 

uncertainty.57 Specifically, one stakeholder highlighted that when EPA 

uses its statutory authority to reduce the statutory standards, for 

example, for volume under RFS, it creates uncertainty, which 

ultimately makes supporting the research, development, and 

 

55As discussed earlier in this report, fuel producers or importers can obtain RINs by 

purchasing and blending renewable fuels themselves, or they can purchase RINs from 

renewable fuel producers, importers, blenders, or other parties. In this way, the RFS has 

created a market for RIN credits. While jet fuel is not used to calculate a fuel producer’s or 

importer’s obligation with respect to renewable fuel, alternative jet fuels produced through 

approved processes can generate RINs, which the fuel producer may then sell to others, 

and their sale may help subsidize the cost of producing qualifying alternative jet fuels.

56The average RIN credit value for biomass-based diesel—which we use as a proxy for 

renewable jet fuels since no RINs for the production of renewable jet fuel have been 

generated—between September 2013 and February 2014 was $0.40 per RIN. RIN credit 

values ranged from $0.26 to $0.61 per RIN during this time period.

57In proposing the 2014 volume standards, EPA for the first time exercised its authority to 

reduce the statutory standards for advanced biofuels, which has raised additional concern 

among the renewable fuels industry.
 

Page 30 GAO-14-407 Alternative Jet Fuels

production of alternative fuels—including alternative jet fuels—less 

attractive to private financiers.58

• Tax expenditures: Two private-industry stakeholders pointed out that 

tax credits to incentivize alternative jet fuels and general biofuels 

investment and production are authorized for short periods of time, 

such as 1 year, and on occasion, were not renewed. For example, 

since its enactment in 2004, the biodiesel tax credit expired in 2010, 

2011, and again, most recently, on December 31, 2013.59 This 

introduces uncertainty and, similar to the RIN credits, generally 

causes private financiers to minimize or discount the tax expenditures’ 

value when assessing fuel producers’ future expenses and 

profitability. Literature we reviewed highlighted the potential for stable 

federal tax policy to contribute to the growth of the renewable energy 

sector.60 For example, one study noted that investments in new 

commercial scale wind and solar power production facilities were 

fostered by production and investments tax credits, respectively. We 

also found that the long-term ethanol tax credit was important in 

creating a profitable ethanol industry when the industry had to fund 

investment in new facilities.61

 

58EPA annually issues regulations that establish the percentage of conventional 

transportation fuels that refiners, importers, and other obligated parties must ensure are 

renewable fuels. The Administrator of the EPA is authorized to waive the RFS levels 

established under EISA under certain circumstances. See 42 U.S.C. § 7545(o)(7).

59Subsequent to the expiration of the credit in 2010 and 2011, when Congress later 

extended the credit, Congress also made it retroactive back to the date of expiration.

60National Renewable Energy Laboratory, §1603 Treasury Grant Expiration: Industry 

Insight on Financing and Market Implications. (Golden, CO: June 2012). 

61GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save 

Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: March 1, 2011)
 

Page 31 GAO-14-407 Alternative Jet Fuels

Stakeholders and studies we reviewed identified a variety of actions that 

could assist in the development of alternative jet fuels, ranging from 

continuing the current federal efforts to providing greater regulatory and 

policy certainty to providing greater financial support. Stakeholders 

identified a variety of federal actions as being the most critical for the 

federal government to take.

• Research and development efforts: A majority of the government, 

academic, and private-industry stakeholders that we interviewed (19 

of 23) generally agreed that the federal government should continue 

research and development efforts to advance the development and 

use of alternative jet fuels. Seven of the government, academic and 

private-industry stakeholders suggested, however, that the federal 

government could be more targeted in its feedstock research and 

development efforts, such as finding scientific breakthroughs to 

converting algae and cellulosic feedstocks into fuels; developing more 

feedstock options; and identifying what feedstocks may be particularly 

well-suited to producing alternative jet fuels. Five private-industry 

stakeholders noted their support of the federal government’s current 

efforts related to fuel testing and approval activities. For example, 

FAA and DOD have helped or plan to help fund specific fuel tests for 

seven new potential alternative jet-fuel processes that, as of January 

2014, are undergoing review by ASTM International for approval. 

According to federal agency officials, they anticipate that at least one 

of these new processes may be approved by June 2014. Four 

government and private-industry stakeholders proposed that the 

federal government use and increase access to its jet engine assets 

for testing purposes or help streamline the fuel-testing and approval 

process for commercial use. For example, one of these government 

stakeholders suggested that the federal government use an outside 

contractor to manage the fuel-testing and approval process with 

subcontracts with facilities for fuel testing, so fuel samples would be 

sent to a centralized location. All entities with a role in the fuel-testing 

Stakeholders Generally 

Believe Federal Actions 

Are Needed to Advance 

the Development of 

Alternative Jet Fuels, 

While Market Factors Also 

Affect Long-term 

Commercial Viability

Federal Actions
 

Page 32 GAO-14-407 Alternative Jet Fuels

and approval process (laboratories, engine and aircraft 

manufacturers, and administrative functions) could then coordinate 

and agree upon a final approval determination within several months. 

Ultimately, this approach, the stakeholder noted, could help shorten 

the ASTM International’s approval timeline, lower the fuel testing 

costs, and add clarity and regularity to the process. Three 

stakeholders believed that expanding the range of approved 

production processes would diversify and expand future supply of 

alternative jet fuels.

• Regulatory and policy certainty: More than half of the government, 

academic, and private-industry stakeholders we interviewed (15 of 23) 

generally agreed that the federal government should provide greater 

regulatory and policy certainty to support the development and use of 

alternative jet fuels. The most commonly cited actions (12 of 23 

stakeholders) were providing greater certainty that the renewable fuel 

program will not be repealed and changes minimized—specifically, 

reductions—in mandated volumes from year to year. Multiple 

stakeholders (8 of 23) told us that this may encourage private 

financiers to value RIN credits when making investment decisions. 

Ultimately, these stakeholders believe that this certainty would attract 

more private investment in the industry and help it advance. Other 

actions mentioned by stakeholders included expanding the RFS by 

expanding the types of feedstocks that would generate a RIN or 

mandating a minimum volume standard for alternative jet fuels. EPA 

officials told us, however, that because the definition of transportation 

fuel in Section 211(o) of the Clean Air Act,62 which pertains to the 

RFS, does not include jet fuels, having the fuel refiner or importer 

include the jet fuel they produce or import in determining their annual 

renewable fuel obligation would require Congress to revise the 

program. Two stakeholders noted that some tax expenditures that are 

authorized for short periods of time, such as 1 year, should be 

authorized for a longer period of time—such as a minimum of 10 

years. They said that this would be helpful in spurring additional 

private investment in producing alternative fuels, including alternative 

jet fuels. Researchers currently studying the impacts of government 

subsidies on this industry told us that government mandates, such as 

the RFS, and tax subsidies, as well as their duration, are key factors 

in making the production of alternative jet fuels profitable.

 

6242 U.S.C. § 7545(o). 
 

Page 33 GAO-14-407 Alternative Jet Fuels

• Direct financial support: A majority of stakeholders (15 of 23) and 

literature we reviewed also highlighted that greater financial support 

for alternative jet fuels derived from both renewable and 

nonrenewable sources would advance the industry. The two most 

common potential federal government actions cited by stakeholders 

included entering into long-term contracts for fuel purchases (6 

government, academic, and private-industry stakeholders) and 

stabilizing existing federal direct support programs (6 government and 

private-industry stakeholders). Both of these actions would provide 

greater certainty and reduce some of the risks of private investment. 

Currently, DOD has statutory authority to enter into certain contracts 

procuring services or property, including contracts for the purchase of 

alternative fuels, for up to 5 years with an option to extend the 

contracts up to 10 years.63 However, stakeholders we interviewed, as 

well as industry experts said that the length of the initial contract 

period is too short to stimulate the private capital market or to 

encourage potential alternative fuels suppliers to construct or expand 

production facilities. Alternative fuels producers have told DOD that 

initial contracts for fuel purchases of at least 10 years in duration 

would help advance the industry beyond the small production volumes 

currently planned. Because this would require a statutory change to 

DOD’s authority to contract for jet fuel purchases, DOD has drafted 

legislative proposals over the past several fiscal years that would 

allow it to enter into longer-term contracts. One proposal advanced for 

congressional consideration, but was not adopted. A senior DOD

official told us that under current law, DOD would be required to 

obligate sufficient funds in the first year of a long-term contract—for 

example, 10 years in length—to pay for the total guaranteed minimum 

purchases over the duration of the contract, unless it received a 

specific statutory exemption to do otherwise. Without such an 

exemption, according to this official, long-term contracts would have a 

major effect on DOD’s budgets and obligational authority. Also, 

according to a senior DOD official, obtaining and exercising the 

authority to enter into longer-term contracts could commit DOD to a 

particular type of alternative jet-fuel production process, while the 

technological advancements in this industry are changing quickly and 

could provide a newer and potentially less expensive production 

process, which DOD may not be able to take advantage of. This DOD 

official also noted that conventional fuel providers prefer 1-year fuel 

 

63See 10 U.S.C. § 2304a.
 

Page 34 GAO-14-407 Alternative Jet Fuels

purchase contracts. Thus, if DOD had and exercised authority to issue 

longer-term solicitations for bulk fuel purchase, the department could 

find itself subjected to a bifurcated procurement strategy where the 

majority of its fuel contracts would be 1-year contracts with 

conventional fuel providers and the remainder would be longer-term 

contracts with alternative fuel providers. 

Some stakeholders (6 of 23) suggested ensuring stability in the 

funding stream for the existing Advanced Drop-In Biofuels Production 

Project, discussed previously, which was to be jointly funded by the 

USDA, DOE, and DOD. To date, the funding put toward the project is 

less than the intended amount of $170 million from each federal 

agency for an aggregate total of $510 million. According to DOD 

officials, $100 million in fiscal year 2012 funds were applied to this 

project. For fiscal year 2013, the explanatory statement for the 

Consolidated and Further Continuing Appropriations Act, 2013,64

listed an additional $60 million for this purpose, which was conditioned 

by a provision in the authorization act providing that the funds 

appropriated would not be obligated or expended until matching funds 

were received from DOE and USDA.65 And, only in fiscal year 2014, 

did DOE receive specific authorization to contribute $45 million, which 

will be applied to Phase 2 of the project. According to a senior USDA 

official, while USDA was apportioned66 about $23 million in fiscal year 

2013 for these activities, it has not expended any funds to date toward 

 

64159 Cong. Rec. S1456 (daily ed. Mar. 11, 2013); see, also, Pub. L. No. 113-6, § 4, 127 

Stat. 198, 199 (2013).

65National Defense Authorization Act for Fiscal Year 2013, Pub. L. No. 112-239, § 315, 

126 Stat. 1632, 3693 (2013) (requiring matching funds before money was obligated or 

expended for biofuels refinery construction).

66Apportionment is the action by which the Office of Management and Budget distributes 

amounts available for obligation to executive branch agencies, including budgetary 

reserves established pursuant to law, in an appropriation or fund account. An 

apportionment divides amounts available for obligation by specific time periods (usually 

quarters), activities, projects, objects, or a combination thereof. The amounts so 

apportioned limit the amount of obligations that may be incurred.
 

Page 35 GAO-14-407 Alternative Jet Fuels

this initiative.67 In May and June 2013, four private fuel producers 

were selected to receive awards totaling $20.5 million for Phase 1.

The 23 stakeholders whom we interviewed had varying views about the 

future of the alternative jet-fuels industry if current federal activities 

continue at the same level and no additional federal government action is 

taken. Specifically, 5 stakeholders believed that the industry would remain 

commercially unviable—that is, continue to produce small quantities of 

fuel at prices that are not competitive to conventional jet fuels’ prices. 

Another 6 stakeholders believed that the alternative jet-fuels industry 

would continue to progress, but at a slow pace. The remaining 12 

stakeholders did not articulate a specific prediction for the future of the 

alternative jet-fuels industry. Some highlighted their concerns that existing 

policies and programs—such as, the RFS or the Advanced Drop-In 

Biofuels Production Project—would be repealed, while others expressed 

pessimism about the future of the industry if the federal government does 

not address larger industry-related economic or policy challenges.

More than half of the stakeholders (15 of 23) highlighted that market 

factors, such as the favorable economics for developing competing 

products (e.g., diesel), will ultimately be a key factor in determining the 

long-term success of the alternative jet-fuels industry. These stakeholders 

highlighted three key market factors—favorable economics for competing 

end-use products or co-products, dependence on commodity markets, 

and the cost of conventional jet fuel—that they believe will affect the 

future prospects for the alternative jet-fuels industry. The remaining 8 

stakeholders did not offer comments on market factors.

• Favorable Economics for Competing End Products: Nine 

stakeholders, as well as literature we reviewed, highlighted that, 

currently, end-use products or co-products (such as diesel fuel, 

 

67According to a senior USDA official, the federal sequestration reduced USDA’s initial 

intended contribution of $170 million to about $161 million. In this regard, the Balanced 

Budget and Emergency Deficit Control Act (BBEDCA) established discretionary spending 

limits for fiscal years 2012 to 2021. 2 U.S.C. § 901, as amended. BBEDCA required the 

Office of Management and Budget to calculate, and the President to order, a 

sequestration, i.e., cancellation, of budgetary resources on March 1, 2013. See 2 U.S.C. § 

901a. For fiscal year 2013, the President ordered a sequestration of about $85 billion. 

Sequestration Order for Fiscal Year 2013 Pursuant to Section 251A of the Balanced 

Budget and Emergency Deficit Control Act, As Amended, 78 Fed. Reg. 14633 (Mar. 6, 

2013). 

Market Factors
 

Page 36 GAO-14-407 Alternative Jet Fuels

naphtha, cosmetics, and plastics) from the same production 

processes used to produce alternative jet fuels are often cheaper and 

easier to produce and therefore more profitable as compared to 

alternative jet fuels. For example, a study of the HEFA process, 

funded, in part, through one of FAA’s COEs, found that if the 

production goal was to maximize the total amount of all types of liquid 

fuel, rather than specifically jet fuel, then less than 13 percent of the 

product mix output would be jet fuel, while almost 70 percent would be 

diesel; the remaining product mix would consist of propane, naphtha, 

and liquefied petroleum gas.68 Maximizing the amount of jet fuel 

produced would reduce a fuel producer’s profitability due to higher 

operating costs and lower revenues. Two stakeholders that we spoke 

with who have expertise in fuel production told us that they choose to 

produce more of the other end products over alternative jet fuels 

because the other products are more profitable. For example, one 

stakeholder stated that he has experience selling renewable diesel in 

one state at a price premium and market demand is higher for 

renewable diesel.

• Dependence on Commodity Markets: Because some alternative jet 

fuels are made from tradable commodities, the cost of jet fuel 

production depends on prices in commodity markets. As noted earlier, 

the price of soybean oil—an input to alternative fuels—has historically 

exceeded the price of conventional jet fuel. Consequently, it has been 

impossible for a producer of alternative jet fuels that uses the HEFA 

production process and soybean oil as a feedstock to compete on 

price alone with conventional jet fuels, even if the producer’s other 

production and transportation costs were negligible. Furthermore, in 

many instances, the input commodities (feedstock) have alternative 

uses. For example, oil-producing and cellulosic feedstocks can be 

used to generate heat, power, and other ground transportation fuels. 

Therefore, an increase in demand for these feedstocks in alternative 

uses could raise their price and the costs of producing alternative jet 

fuels.

• Cost of Conventional Jet Fuels: Increases in the supply of 

conventional jet fuels would make it harder for alternative fuels to 

compete based on price alone. And although international petroleum 

 

68M. Pearlson, C. Wollersheim, and J. Hileman, “A Techno-Economic Review of 

Hydroprocessed Renewable Esters and Fatty Acids for Jet Fuel Production,” Biofuels, 

Bioprod, Bioref, vol. 7:89-96 (2013).
 

Page 37 GAO-14-407 Alternative Jet Fuels

markets heavily influence the prices of conventional fuels, which can 

be volatile and difficult to predict into the future, domestic policies can 

affect jet fuel supply and fuel prices. For example, five stakeholders 

highlighted that there has been significant previous federal investment 

in establishing the conventional petroleum industry, such as through 

long-standing federal tax expenditures that encourage exploration and 

drilling for conventional petroleum oil. In addition, two stakeholders 

highlighted that the price of conventional jet fuel does not reflect its full 

life-cycle cost. Costs not reflected in the price of conventional jet fuel 

could include environmental externalities, such as the impact of 

greenhouse gas emissions from aviation on climate change, or direct 

negative effects on human health from the combustion of jet fuel. If 

comparing the full life-cycle costs of conventional versus alternative 

jet fuels, alternative jet fuel could be more cost competitive. However, 

there is no globally recognized approach for determining the 

greenhouse gas effects of renewable fuels and the magnitude of any 

greenhouse gas reductions attributable to their production and use.

We provided DOT, USDA, DOE, DOD, and EPA with a draft of this report 

for their review and comment. DOT provided technical comments that we 

incorporated as appropriate. In addition, in comments emailed to us, DOT

highlighted that alongside its federal agency partners, it is fully committed 

to the development and use of sustainable alternative jet fuels to address 

the nation’s energy security, economic development and environmental 

needs. DOT also stated that it believes that it has taken a comprehensive 

approach to overcome barriers to the development and deployment of 

sustainable alternative jet fuels that are drop-in replacements to fuels 

derived from petroleum and that these fuels hold great promise and are 

an essential component of ensuring that the flying services the nation 

relies upon today remain affordable and available into the future. USDA, 

DOE, DOD, and EPA also provided technical comments that we 

incorporated as appropriate. In addition, EPA provided written comments, 

reprinted in appendix II, stating that the report’s findings related to 

approved jet fuel pathways under RFS are accurate. 

We are sending copies of this report to interested congressional 

committees and the Secretaries of Transportation, Agriculture, Energy, 

and Defense, and the Administrator of the EPA. In addition, the report is 

available at no charge on the GAO website at http://www.gao.gov.

Agency Comments
 

Page 38 GAO-14-407 Alternative Jet Fuels

If you or your staff have any questions about this report, please contact 

Gerald Dillingham at (202) 512-2834 or dillinghamg@gao.gov or Zina 

Merritt at (202) 512-5257 or merrittz@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix III.

Gerald L. Dillingham, Ph.D.

Director

Physical Infrastructure Issues

Zina D. Merritt

Director

Defense Capabilities and Management
 

Page 39 GAO-14-407 Alternative Jet Fuels

List of Requesters

The Honorable John D. Rockefeller, IV

Chairman

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Bill Shuster

Chairman

The Honorable Nick J. Rahall, II

Ranking Member

Committee on Transportation and Infrastructure

House of Representatives

The Honorable Frank A. LoBiondo

Chairman

The Honorable Rick Larsen

Ranking Member

Subcommittee on Aviation

Committee on Transportation and Infrastructure

House of Representatives

The Honorable John L. Mica

House of Representatives

The Honorable Thomas E. Petri

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-14-407 Alternative Jet Fuels

This report examines (1) the role of the federal government in the 

development and use of alternative jet fuels and (2) key challenges to 

developing and using alternative jet fuels and actions that the federal 

government plans to or could take to help address those challenges.

To examine the role of the federal government, we first identified the 

federal agencies most involved in the development or use of alternative 

jet fuels through review of relevant documents and preliminary interviews 

with stakeholders. We selected five federal agencies: the Department of 

Transportation’s (DOT) Federal Aviation Administration (FAA), the 

Department of Agriculture (USDA), the Department of Energy (DOE), the 

Department of Defense (DOD) and its military departments (Army, Navy, 

and Air Force), and the Environmental Protection Agency (EPA). For 

each of these five selected federal agencies, we interviewed officials and 

reviewed strategic plans, performance reports, and other relevant 

documents to obtain information about key federal programs, initiatives, 

or goals that targeted the development or use of alternative jet fuels. We 

also reviewed literature related to alternative jet fuels and interviewed 

other stakeholders, including representatives from the private industry, 

such as fuel producers and airlines, as well as representatives from 

public-private partnerships. To identify activities that federal agencies are 

involved in to coordinate their alternative jet fuel related activities with 

other federal agencies, private industry, and stakeholders, we reviewed 

relevant memoranda of understanding; international cooperative 

agreements; reports from public-private partnerships—such as the 

Commercial Aviation Alternative Fuels Initiative—and regional initiatives; 

as well as interviewed officials from the five selected federal agencies and 

relevant interagency working groups. In addition, to identify broad federal 

strategies and initiatives related to alternative fuels generally, we 

reviewed key White House and other relevant government-wide 

documents, including the National Plan for Aeronautics Research and 

Development and Related Infrastructure (December 2007); Growing 

America’s Fuels strategy (February 2010); the Blueprint for a Secure 

Energy Future (March 2011); the National Bioeconomy Blueprint (April 

2012); and the President’s Climate Action Plan (June 2013). Finally, we 

also reviewed applicable federal laws and regulations related to 

alternative transportation fuels, including the Defense Production Act of 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-14-407 Alternative Jet Fuels

1950;1 Commodity Credit Corporation Charter Act;2 Energy Policy Act of 

2005;3 Energy Independence and Security Act of 2007;4 the Food, 

Conservation, and Energy Act of 2008;5 the FAA Modernization and 

Reform Act of 2012;6 and EPA’s regulations for the renewable fuel 

program.7 We focused our study on federal efforts, except to the extent 

that international or private-sector efforts are coordinated with federal 

efforts. We did not provide an exhaustive list of federal initiatives; rather, 

we discussed key programs or initiatives that federal agency officials told 

us and our review of agency documents identified as playing a key role in 

supporting the development or use of alternative jet fuels or in achieving 

related goals.

To examine key challenges to developing and using alternative jet fuels 

and actions that the federal government plans to or could take to help 

address those challenges, we (1) identified the extent to which alternative 

jet fuel has been purchased for commercial and military use in the United 

States; (2) selected and interviewed 23 stakeholders representing 

government, academia, and the private sector to obtain their views on key 

challenges and planned or possible federal actions;8 (3) reviewed relevant 

literature on challenges to developing and using alternative jet fuels to 

help corroborate the views obtained from the 23 stakeholders; and (4) 

interviewed officials from the five selected federal agencies, as well as 

representatives from other non-federal entities involved in the alternative 

jet-fuels industry. To identify the extent to which alternative jet fuel has 

been purchased for commercial and military use, we obtained alternative 

 

1

Pub. L. No. 81-774, codified at 50 U.S.C. Appx.

2

Act of June 29, 1948, ch. 704, 62 Stat. 1070, codified as amended at 15 U.S.C. ch. 15.

3

Pub. L. No. 109-58, § 1501, 119 Stat. 594, 1067-1076 (2005), codified as amended at 42 

U.S.C. § 7545(o) (2014).

4

Pub. L. No. 110-140, § 526,121 Stat. 1492, 1663 (2007), codified at 42 U.S.C. § 17142.

5

Pub. L. No. 110–234, May 22, 2008, 122 Stat. 923.

6

Pub. L. No. 112-95, 126 Stat. 11.

7

40 C.F.R. ch. 1, subpart K.

8

Government stakeholders included employees of federal government agencies and a 

municipal airport and seaport authority. In addition, one expert we interviewed had a 

colleague present during the interview that shared all of the same views, so for the 

purpose of this report, we treated them as one stakeholder. 
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-14-407 Alternative Jet Fuels

jet-fuel purchase information for fiscal year 2012 from Airlines For 

America—a domestic airline industry group—and for fiscal years 2007 to 

2013 from DOD. While we obtained actual quantities from Airlines For 

America and from DOD, we did not assess the data’s reliability because it 

is not material to our findings and reported the fuel purchase quantities on 

an order of magnitude in this report. As part of our methodology for 

selecting the 23 stakeholders, we first identified a list of potential 

stakeholders by reviewing background information, including federal 

agency documents; articles published in scholarly journals; and 

documents produced from conferences and by regional initiatives related 

to alternative jet fuels. In addition, we considered names of stakeholders 

recommended during initial interviews we conducted with federal 

government officials, as well as representatives from professional 

associations and private industry. We selected the 23 stakeholders 

representing government, academia, and private industry based on 

criteria that included:

• type and depth of experience and knowledge in the area of alternative 

jet fuels;

• recognition in the professional community;

• relevance of published work to the scope of our review;

• representation of a range of expertise across the alternative jet fuel 

supply chain, such as feedstock development or fuel production;

• representation of a range of stakeholders with knowledge about 

alternative fuels derived from renewable, nonrenewable, or both 

sources; and

• representation of a range of stakeholders with knowledge about 

alternative fuel use in commercial, military, or both settings.

We asked each of the 23 stakeholders a series of semi-structured, openended questions about economic, policy, technological, and other key 

challenges related to developing and using alternative jet fuels and 

actions that the federal government plans to or could take to help address 

them. We synthesized the stakeholders’ views to identify categories of 

key challenges and planned or potential federal actions to help address 

those challenges. The views of these stakeholders are not generalizeable 

to those of all stakeholders with expertise in the area of alternative jet 

fuels; however, we believe that they represent a balanced and informed 

perspective on the topics discussed. In addition, we reviewed relevant 

literature obtained through background research and from federal agency 

officials that discussed challenges to developing and using alternative 

fuels and planned or potential federal actions to help address those 

challenges. We also conducted a literature search and reviewed five 
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-14-407 Alternative Jet Fuels

documents that we identified as relevant to challenges related to 

developing and using alternative jet fuels. Our literature search targeted 

bibliographic databases containing content on commercial and defense 

aviation, energy, or both, including Transportation Research International 

Documentation (TRID); SciSearch; and the Defense Technical 

Information Center (DTIC). Within these resources, the search focused on 

scholarly journal articles, conference papers, government reports, and 

industry trade press published in 2011 and forward. Through the literature 

search and review of abstracts, we initially identified 36 documents that 

potentially discussed economic, policy, technological, or other challenges 

to developing and using alternative jet fuels. We could not obtain 2 of the 

36 documents because they were not readily available. Ultimately, after a 

review of the remaining 34 documents, we identified 5 relevant to our 

review and reviewed them to help corroborate the key challenges 

identified by the 23 stakeholders we had interviewed. For those studies 

we cited in the report, we reviewed their methods, assumptions, and 

limitations to ensure that they were sufficiently methodologically sound 

and determined that they were sufficiently reliable for the purposes of our 

report. Lastly, we interviewed officials from the five selected federal 

agencies and representatives from other non-federal entities involved in 

the alternative jet-fuels industry, including fuel producers, airlines, 

airframe and engine manufacturers, environmental groups, and a private 

financier to also obtain their views on key challenges to developing and 

using alternative jet fuels and actions that the federal government plans to 

or could take to help address those challenges. We did not rank the 

planned or potential federal actions to help address the key challenges 

that were identified.

We conducted this performance audit from February 2013 to May 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the 

Environmental Protection Agency

Page 44 GAO-14-407 Alternative Jet Fuels

Appendix II: Comments from the 

Environmental Protection Agency
Appendix II: Comments from the 

Environmental Protection Agency

Page 45 GAO-14-407 Alternative Jet Fuels
Appendix III: GAO Contacts and Staff 

Acknowledgments

Page 46 GAO-14-407 Alternative Jet Fuels

Gerald L. Dillingham, (202) 512-2834 or dillinghamg@gao.gov

Zina D. Merritt, (202) 512-5257 or merrittz@gao.gov

In addition to the individuals named above, Paul Aussendorf, Assistant 

Director; Marilyn K. Wasleski, Assistant Director; William Colwell; Leia 

Dickerson; Bert Japikse; Delwen Jones; Shvetal Khanna; Sara Ann 

Moessbauer; Chris Murray; Josh Ormond; Madhav Panwar; Richard 

Scott; Marylynn Sergent; Gretchen Snoey; Benjamin Soltoff; Ardith 

Spence; Maria Stattel; and Elizabeth Wood made key contributions to this 

report.

Appendix III: GAO Contacts and Staff 

Acknowledgments

GAO Contacts

Staff 

Acknowledgments

(540257)
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