Will Sustainable Aviation Fuel Ever Take Off?

September 10, 2026

The jet fuel that could replace kerosene is made from used cooking oil. It costs two to six times more, and there isn't enough of it. This week's guest is Lauren Riley, Chief Sustainability Officer at United Airlines, which buys more sustainable aviation fuel than any other airline in America and still only gets 0.7% of its fuel that way. She calls that a pacing problem: we know how to make the fuel, the money and the policy just move too slowly. The harder limit is the cooking oil itself. The world is not going to fry more food to fill jet tanks, and the three other ways of making the fuel are years from scale. The policy is not helping either. America cut its credit just as producers needed certainty, Europe mandated the fuel without doing anything to make more of it, and the banks Riley talks to want ten years of durability and are being offered two. So the question in the title stays open. Riley expects the economics to arrive eventually. Jigar is putting his chips on hybrid planes instead. In this episode: The four ways to make jet fuel without oil Why a refinery that could make this fuel today makes diesel instead What the banks told Lauren they need before they will finance a plant, and why nobody is offering it Europe's rule where you miss the blend, pay the fine, and still owe the fuel Oscar the Grouch, United's first Chief Trash Officer, has retired Jigar's case for skipping ahead to hybrid planes Submit a question to Ask Jigar: https://octopusenergy.com/ask-jigar S2G Investments: https://www.s2ginvestments.com/insights/report-illusion-of-crowds Octopus Energy: https://octopusenergy.com/faas Our merch store: https://energy-empire.bonfire.com/collection/all-products

Transcript

INTRO

Jigar Shah: My name is Jigar Shah, and I'm a clean energy entrepreneur.

Jamie Nolan: And I'm Jamie Nolan, a clean energy communications executive, and this is Energy Empire. Hi, Jigar. How are you?

Jigar Shah: I'm fantastic. Back from vacation, fully refreshed.

Jamie Nolan: How was your vacation? Where did you go? What did you see?

Jigar Shah: I went to Alaska, and we're looking at all the glaciers before they all melt and go away.

Jamie Nolan: And you cruised. How do you feel about that? I can't do it. I don't like being on the ship.

Jigar Shah: I get why people don't like cruising. But the thing about cruises is they're just so damn easy. You just pay them and then you board the ship and then the whole itinerary is set for the week. As somebody who sometimes runs out of time in terms of planning a vacation, that's easy.

Jamie Nolan: It's great for a multi-generational trip. Groups of people with differing mobility and activity levels, I think, is what's up with the cruise.

Jigar Shah: By the way, did you see the EDF announcement this morning?

Jamie Nolan: Are we talking about the French energy company, the enviro group, or the office formerly known as LPO?

Jigar Shah: This one is the office formerly known as LPO. But it is kind of funny that you pick an acronym that is so heavily used in the target demographic.

Jamie Nolan: That's why I'm just calling it LPO forever, because otherwise I truly every single time have to ask for clarification. I did see that email come out and I opened the attachment for this quote unquote strategic plan. And it's like 12 or 13 pages. I had to scroll through it three to five times because it includes no plan. So I was so confused. It actually reads to me like the about us section from the website, but just put in a document that we're calling a strategic plan.

Jigar Shah: Yeah, it was neither strategic nor a plan. But it was an accurate description of how much money they have left and what other programs are. What I thought was interesting, and I think really good, is that, as you suggested, it's basically all the old language with obviously they added energy dominance framing, because why wouldn't you? And then basically sort of suggested that nothing was different or had changed, which in some ways I guess makes it more bipartisan and open for business, which I take as a win.

Jamie Nolan: I mean, listen, they're doing good work over there. They've announced some great deals actually in the last few months. There's a battery deal in Puerto Rico that almost reads like something we would have done. I'm proud of the team that's there.

Jigar Shah: Well, it was our deal that they finalized.

Jamie Nolan: Okay, yes, we did leave behind a full pipeline of deals for them. So it's great to see that they executed on something. I did command F in that document and found the word coal twice. And so I don't think you would have seen the word coal in a document that came out during our tenure. But that being said, there was nothing in it that freaked me out. I was prepared to be very frightened. And instead, it read like a nothing burger, and like somebody just decided to take the about me language from the website and toss it in a plan to make it look like they're doing things.

Jigar Shah: Well, if it gets more people excited about putting the $300 billion worth of loan authority that is still there out the door, then I'm all for it.

Jamie Nolan: I totally agree. I hope to continue to see momentum out of the office, and it needs to be there no matter what happens in two years. And so I appreciate everyone who's still working there and trying to get good work done to support American innovators and entrepreneurs. That's the name of the game.

Jigar Shah: Well, speaking of American innovators and entrepreneurs, we have an awesome guest. I didn't really spend any time thinking about sustainable aviation fuels until I joined the Loan Programs Office. But we ended up doing that big deal, Montana Renewables in Montana. And then we also did a conditional commitment for Gevo. And so we had to get fully up to speed. I remember meeting with Lauren Riley from United Airlines, but I also met with the folks from Alaska Airlines and Delta Airlines and others. And we did a lot of work on this. We even put out a SAF liftoff report.

Jamie Nolan: Yes. I'm really excited to cover this topic today because our background is in solar, so it makes sense on this pod. We've mostly focused on electrons and not as much on molecules. But they are such an important part of the story. And particularly with what we're seeing with the Strait of Hormuz and its ongoing closure, I think I'd like an update. It's been a while. I haven't had my ear to the ground on what the latest is with SAF in light of the fuel shortages that we're seeing and, of course, rising prices for airline tickets as a result of shortages in jet fuel, particularly in Europe. We're not experiencing as many of those impacts in the United States, but it's very much front of mind for other people across the world. And also, I fly United a lot, as I know you do. And I always opt in to pay a little bit extra to cover their sustainable aviation fuel, because it matters to me and my values personally. So I have to admit, sometimes I get really excited at the people I get to meet because of this podcast. And I am very excited to meet Lauren Riley, Chief Sustainability Officer of United Airlines.

CREATING A MARKET FOR A FUEL THAT BARELY EXISTS

Jamie Nolan: Lauren Riley, thank you for coming. Welcome to the pod.

Lauren Riley: Oh, this is my pleasure.

Jamie Nolan: So United buys more sustainable aviation fuel than any other American airline. Set the scene for us. What are you guys actually doing?

Lauren Riley: Well, we're out there trying to create a market for sustainable aviation fuels. That is what we are trying to do here. This is one of those technologies that is really, really early stage. And it's fundamentally about aligning the technology with the policy and the financing and the demand, and really trying to get that sustainable aviation fuel up and off the ground, literally, into the sky. So we're really pleased at United. We have the most sustainable fuel of any airline, as you mentioned, and we're going to continue to drive the market forward.

Jamie Nolan: And so in your role as Chief Sustainability Officer, what does that cover in terms of sustainable aviation fuel and other sustainability measures that United is taking?

Lauren Riley: So we are one of those industries, as you both well know, that is a hard-to-abate industry, which means we don't have the technology today at the scale we need it, commercially available, at the price we need it, to really make a difference in terms of reducing our carbon impact. We have a goal at United, net zero by 2050, without using carbon offsets, traditional carbon offsets. And that was really a declaration that we made to be a focusing principle, almost. How we make sure that we take our money, our resources, our attention, and really reduce in-sector emissions.

And so a lot of my time is really around decarbonizing aviation. And when you look at our greenhouse gas inventory on an annual basis, 97% of our emissions are from the fuel that we combust when we fly our planes. So that is a lot of what I do, is really focus on building a market for sustainable aviation fuels, which I know we'll talk about today. But that's not it. Ground equipment is really important. The facilities where we maintain our aircraft, that's very important. It's a whole host of ecosystems. We fly to 75 different countries. There's different operations that support all of that. And really, we're looking at our entire environmental impact.

27.7 MILLION GALLONS AGAINST 4 BILLION

Jigar Shah: Yeah, you've been on this journey for some time, right? I think that a lot of these big goals were set sort of in that 2020, 2021 timeframe. And it's a big hurdle to cross. You guys burn 27.7 million gallons a year. And it is super hard to decarbonize this, as you suggested. I think you guys are at 0.7% of your total fuel coming from SAF.

There are certainly goals that are much higher, I think 10% or so, from some of the airlines. And there are certainly regulations that are higher than that from the EU or Japan or others that folks have either proposed or have put in place. How do you think about this trajectory? Because, like you suggested, these are early stage technologies. Some of the feedstock is in short supply for some of the processes. People have been talking about electric aviation. How do you think about all this?

Lauren Riley: It's a little overwhelming at some points, I have to be honest. It's a lot. We have a big responsibility. As an airline, it's important to us that we continue to provide opportunity for travel. That's what we want. We want to connect communities everywhere. That's exactly the business that we're in, but we have to do it responsibly. And so really trying to make sure that we're addressing the core issue of emissions themselves and impact themselves, versus the travel associated with it. That's really important to do.

As you mentioned, Jigar, we used almost 28 million gallons of sustainable fuels last year. But if you compare that to the conventional fuel that we consumed, it was over 4 billion gallons of conventional jet fuel. That got us to 150 international locations, 340 domestic locations. We're a big operation. We're the largest airline by some measures, by far. And we want to maintain that and continue to grow. I'm sure you heard our CEO talk about that. He's very passionate about United's growth. But we need to replace the fuel that we use with sustainable alternatives, and that's really what we're leaning into.

If you look at the global supply of sustainable aviation fuel, it's about 0.6% of global fuel supply. So United is trending right there with the supply and sort of the conversion of the fuel supply for aviation to sustainable alternatives. But it's going to take all of us. If you look at sort of the value chain of driving toward sustainable aviation, we are the demand signal. We buy the fuel. We don't make it. We don't make the engines. We don't make the airplanes. So we are really, by and large, an influencing party at the table, albeit a big one, because we buy all those things. We're a big buyer. But we don't make it.

And so how do we work together to accelerate? And if I were to say what the challenge is in one sentence, it's really a pacing challenge. How fast can we go? Because we know what tools we need in the toolkit. We just need to build those outcomes much faster and have an effect in a degree that we're not seeing right now. So it's pace.

NOT ENOUGH SUPPLY, AND IT COSTS TOO MUCH

Jamie Nolan: So what are the biggest obstacles to United moving faster? What is slowing down that pacing?

Lauren Riley: So it's two fundamental things. One, there's not enough supply. As I mentioned, there's 0.6% of all jet fuel out there is sustainable aviation fuel. There's simply not enough. We need more supply. And two, it's pricing.

So if you look at sustainable aviation fuels, there's many different types of SAF that you can create. And that's how the industry refers to it. We call it SAF. So there's many different types of SAF that you can create. They're all priced differently. Some of them are twice as much as conventional jet fuel. Some of them are five to six times more than conventional jet fuel. It's very regional. It depends on what geography you're in, how much that premium is associated with the sustainable fuels.

And if you look at sort of the balance sheet of any airline anywhere, and United is one of the more competitive ones, we are usually a single digit margin industry. We cannot carry a product that we use 4 billion gallons of a year at a minimum of twice the premium. That would really have material financial impact. So we've got to find a way to spread the risk, drag more production, finance new production, and then we'll be the demand side of that and we'll take the offtake.

THE CUSTOMERS WHO PAY THE PREMIUM

Jigar Shah: Now, one of the ways you've done that in the past is by having corporate partners who pay for some of that. Jamie and I click the button when we're asked to pay a premium to decarbonize our travel, right? But it does feel like some of those corporate partners have lost some of their enthusiasm for some of these programs, particularly some of the data center companies, et cetera. How are you seeing that play into your ability, and the other 60 airlines who've made this 10% SAF commitment? How do you see the interplay there?

Lauren Riley: Yeah, it's interesting. I would encourage that we consider that maybe a change in rhetoric, or maybe in silence right now, less rhetoric. That doesn't mean there's no progress. And I'm sure you've heard this across many industries right now. There is a tremendous amount of progress happening. In fact, United doubled the amount of SAF that we used from 2024 to 2025 because customers partnered with us to finance the purchase of that SAF. That was a very significant portion of the funding to enable us to be a leader in sustainable fuels in the United States.

So I have not seen any retreat. I have not seen any lack of engagement from customers, from shareholders, from leisure travelers or other. I so appreciate that you click that button. It's a dollar, could be $7. You have a choice to go somewhere in between. That's really not about the money. For us, when we're trying to replace 4 billion gallons with the sustainable alternative, that's not going to drive the change. That was really about education.

That was really about our Jamie and Jigar as travelers on United, curious to find out more about sustainable fuels, to find out more about what United is doing, and frankly, what an emission unit is. Can we sort of demystify that whole process? And we have seen consistent interest in contributing to that from travelers that are just opting in and saying, I'd like to learn more, and I'm going to give my dollar. And so that's been a really interesting customer engagement. I'll call it a beta test of sorts, because I was skeptical to say, do they care? Do they want to know about an emission? And it has been absolutely consistent since we introduced it about three years ago.

FOUR FLAVORS OF JET FUEL

Jamie Nolan: So you mentioned that there are a few different ways to make SAF. So I want to get into that a little bit. The industry kind of just uses one name, but really they're talking about multiple different fuel types here. So can you walk us through those types, and which one is in the tank the next time I fly United?

Lauren Riley: So somebody said to me once, they're like, oh, SAF is like ice cream. You go to the ice cream store and you've got all these different flavors and you kind of pick the line. Yeah, there are many different flavors of SAF out there. And indeed, that's true.

So there's lots of different ways that you can make SAF, which makes it more complicated and a little more difficult to convey from a communications point of view what it means when you say SAF. So today there's really four primary pathways. We like to think of them in the context of their maturity and their commercialization.

The first one is really around using fats, oils, and greases. So literally think about the restaurant down the street, taking the French fry oil from the fryer and converting that into a jet fuel. That is what we fly on today. That is the fuel that we use, the alternative fuel. It's using a waste product and converting that into a jet fuel.

The second type is really around alcohols. So think about ethanol. You go to the gas pump, you go fill up your tank. There is a blend of ethanol in that gas that you put in your car today. Same thing for jets. We can actually do alcohol to jet and have that.

The third is really around biomass. So can we take trash out of your trash can as one example, or agricultural residue, and convert that into a jet fuel? You can do that.

And then the fourth, which is the most interesting to me, but also the furthest away, is can you pull carbon out of the atmosphere? What do we have an abundant source of? Carbon in the atmosphere. Now, of course, we need abundant clean energy that is priced right. We need green hydrogen, as you well know. We need an entire sort of infrastructure to enable that. So over time, as that infrastructure comes online, we can literally pull CO2 out of the atmosphere and convert that into a jet fuel.

And so there's lots of different ways that we can fly. Today, what's available is the fats, oils, and greases. You can go on the airplane and see if you can smell French fry oil when you fly out of O'Hare or London or San Francisco. I challenge you to get that sniff test. That is what we fly on today. The next generation that we're going to see come online is really around the alcohol as well as the biomass. And so those are the two technologies that are really being worked. And then the third one, the CO2, we just need other technologies to mature, and we need the power infrastructure to really settle for us to have access to all of those technologies so that we can then go ahead and produce power to liquid.

So it's really kind of exciting. The technologies are really interesting when you sort of peel back the layer, but there's a lot of dependencies there that we just need to bide our time, make sure that we have the right incentives in place to accelerate. So again, it's about pace.

Jamie Nolan: I think you've given me another incentive to eat a lot of French fries, which are my very favorite food. So thank you very much for that. I appreciate it.

THE CARROT OR THE STICK

Jigar Shah: When we were running the Loan Programs Office, we actually got a lot of loan applications in, right? Two of the deals that we got done were the Montana Renewables deal, which was Calumet. And then we got a conditional commitment out the door to Gevo, which I don't think has been closed yet. There were lots of other loan applications that came in. But one of the things that I found fascinating was just how complicated the regulatory pathways were.

So I know for Calumet, they were doing mostly waste, and so it qualified for Europe, for instance. But Gevo was using sort of ethanol, corn. And that would not qualify, that I could tell, in Europe, right? Because they didn't want farmland to be used. So that sort of had to work with Japan's mandate. I'm curious, as you think through all of these technologies and their first-of-a-kind deployments, it does feel like some of these regions are putting their thumb on the scale and saying, we want this feature or that feature from the technologies of the SAF, right?

Lauren Riley: Well, it's the carrot or the stick story. Which way do you go? How do you build a market?

It's interesting. The US clearly took a market-based approach. We had tax credits, really wonderful policy structures. Europe and the UK today currently have SAF mandates, is what you're referring to. That requires suppliers of aviation fuel in Europe to have an increasing percentage of their fuel supply be SAF for aviation. And what's interesting about that is they were also quite prescriptive in what technologies and feedstocks are allowed in and which ones are not.

United, we are technology and feedstock neutral. We are really focused on the outcome. We want to understand what is the impact of this whole fuel supply chain, and can we actually pull down emissions? So the carbon accounting, the methodology around greenhouse gas emissions and life cycle, all of that is so crucial. And we need methodologies that are durable and that are rigorous and that enable transparency.

And then, frankly, my opinion is let the smart innovators innovate. Give them space to actually figure out what type of feedstock makes sense for this market, given the feedstock accessibility, given the fueling infrastructure, given blending tanks that are available, et cetera. And let them do their thing. And then we go buy the stuff that we want to buy. The best valued product at the end of the day is going to yield out.

That's how this all works, right? And what's been interesting here in the US is with the original federal SAF tax credit, it was performance-based. So the more you reduced emissions, the more credit you receive. So that really incentivized innovation in the right direction around efficiencies and reduction in emissions. That's what we want to see. And so that really put the United States on the path to true leadership around sustainable aviation fuels. And we're still on that path today. Behind us is China and then Europe. But we are still the market leaders today.

And so that was a really, really wonderful foundation for us to catapult forward. Today, the credit's a little bit different. And it's not, frankly, enough for us to continue that momentum, that pace, that acceleration that we so desperately need. And so revisiting that policy structure and making sure that we have an opportunity to incentivize at the right levels with the right time frame is really crucial right now. This is really going to enable the industry to propel forward, or to continue sort of at a slower clip.

WHY A REFINERY MAKES DIESEL INSTEAD

Jigar Shah: Yeah, that makes a lot of sense. Our good friend Campbell Howe, I think, led the charge on writing the SAF liftoff report at the US Department of Energy. And she's, I think, now part of Lucia's team over at Google. It's an extraordinary thing, when we wrote the liftoff report. Because part of the challenge today is figuring out how to crowd in the capital.

And I think the tax credits are part of it. Your commitment to SAF was a part of it. But part of it is also, what is the technology pathway? And is there a cost reduction pathway here? Is there a feedstock pathway here? I just think it gets so complicated. And for a lot of investors, they don't really know how to look at all the competing proposals. And having the Department of Energy and the airline industry educate them, I think, is critical to getting there. I'm curious whether you have seen more enthusiasm for one pathway over another since the OBBBA has passed.

Lauren Riley: Well, what I can say is that some are more complicated than others. And so, for example, the French fry oil we fly on today, the fats, oils, and greases, that is the same production pathway as renewable diesel. So in the same facility, you create renewable diesel, you create SAF.

What we're not seeing right now is sort of a tipping of the scales towards SAF with the incentives available. It's not enough for producers to take those extra steps to actually produce SAF over renewable diesel. But it uses infrastructure that exists today. It uses technology that exists today. You don't actually have to put a shovel in the ground. And so that is a big deal.

When you talk about some of these next generation SAFs, it's greenfield. This is new construction. This is high capital. This is significant risk. That's where it gets into the question of how durable are these policy incentives, and are they going to stick around? I've heard from our friends in the financial institutions that have looked at investing in this space. They want not two-year policies. They want ten. And they don't necessarily care about value, but they want it to be consistent and predictable. And all of this is around sharing risk and making it bankable and an attractive market to them. And we haven't quite hit that right formula yet, as you well know.

INSIDE THE SUSTAINABLE FLIGHT FUND

Jigar Shah: One of the things that I was also curious about, though, is that you guys actually have a Sustainable Flight Fund. And you did actually back a company who was doing carbon capture and turning it into jet fuel. Why did you decide to do that?

Lauren Riley: So we have a group at United called the United Airlines Ventures Group. It's a venture group, just like any other corporate venture group that you would have. Part of their purview is to invest in innovations and startups that really can differentiate United and help accelerate a sort of premium experience when it comes to aviation. Included in that is propulsion technologies, as well as the fuel in which we fly on.

There's no secret that we are going to have to convert to lower carbon jet fuel. And so there's a huge market out there. So this group not only does direct investing in a bunch of different technologies, but we established several years ago what's called the Sustainable Flight Fund. It is 20 different investors across the value chain. So some OEMs, some corporate customers, some of our peers in the airline industry actually came and put some dollars on the table to really invest in the sustainable aviation fuel infrastructure side. So any of the enabling technologies like carbon capture, and any of the SAF production, we do have a couple of SAF producers in there as well.

And all of this was to say that we believe, as a group of 20 investors, that we can actually take this technology and scale. We know sort of the limitations and constraints of an airline that operates in 75 different countries around the world, and what we need to scale at that level. So we're there as a strategic partner to say, well, that would work across our operation. Or really, it's too contingent on a single location, and we don't have the infrastructure elsewhere to support that technology. So practically speaking, thanks, but no thanks. So that's really the partnership that we derived through that. And our United Airlines Ventures team continues to invest today in all these innovations that are really going to help us in the future.

EUROPE'S MANDATE AND THE PENALTY THAT COMPOUNDS

Jigar Shah: That's so cool. I don't know that I knew that. That's awesome.

All right, let's dig in deeper into Europe, because as I understand it, they have a mandate. As we've been told multiple times, Europe no longer includes the UK, so I'm assuming they have a separate set of rules. But if I took a direct flight, which I'm going to do, on United from Dulles to Brussels, right? Then presumably there is a mandate on that flight. Has that already kicked in in 2026?

Lauren Riley: So I'm going to fix that. And yes, Brexit was real. That did happen. If you leave Brussels and you go to Dulles, there is a mandate in the fuel that goes on that airplane.

Jigar Shah: I am definitely leaving Brussels and coming back to Dulles.

Lauren Riley: We like that. You do that. Yes. So the UK and the EU both introduced mandates last year. So it's the first time we've seen a mandate structure like this. It's 2% of fuel supplied to an airport has to be sustainable aviation fuel. There is some mass balance capability there, but by and large, 2%. If a supplier does not get that fuel, they're not able to get 2% sustainable aviation fuel, they pay a penalty. And then on top of that, that obligation for that fuel kicks forward into future years.

Jigar Shah: Oh, wow.

Lauren Riley: So it's a double penalty. It compounds, right? So you keep adding up if you're not able to source it. So the idea is to incentivize getting the fuel today so you don't carry that obligation forward.

Now, we are the buyer of that fuel. We are one of the buyers of that fuel. And so what we've learned from this experience, and again, it's only been a year or so unchanged, so we're still learning and sort of reflecting on what are the unintended consequences of this. One of them is that there is not a ton of price transparency. So it's very, very opaque. Are we going to pay the penalty as the consumer of the fuel? Are we going to get the fuel? What's the premium associated with the fuel? And how do we have certainty that we are not double paying? Are we paying for the penalty and the fuel again in the future? And so there's a lot around transparency in the transactions that we have to work through, to make sure that we're just not padding pockets of some of the intermediaries in that whole process.

Jigar Shah: And so that's one thing. The physical responsibility sits with Air BP, Air Shell, whoever it is that has the monopoly contract at that particular airport to supply the fuel, right? And then you guys sort of pay your percentage of fuel usage there.

And then what about credits? If you were to use the fuel that's coming out of Montana Renewables, right, and you bought that fuel and used it, I don't know, in California or at Dulles even, then do you get credit for that? Or how does that work?

Lauren Riley: No. So in the mandate markets in the EU and the UK, the fuel has to be produced in the EU and the UK. So they're trying to actually spur production. What we haven't seen, though, is new production come online, because this is really a demand side policy. It's not necessarily a production side policy. And what we're seeing is that you need both.

You can't have a demand side policy to actually use the fuel without having a policy that says produce the fuel. And so this is the friction that we're experiencing right now. They really want to scale a viable market in the UK and the EU. I get that, and we're fully supportive of it. But we need to make sure that there's balance in the policy structures, that we're doing both sides of the equation at the same time. Otherwise, we're just paying a whole lot more money for something that we may or may not get at the end of the year.

Jigar Shah: So the Europeans can't import fuel from America to meet their mandate?

Lauren Riley: It's got to be supplied by the supplier at the airport. You can bring it into port, and then it's got to go to the EU or the UK supplier.

Jigar Shah: Got it. So Montana Renewables could ship their fuel to Rotterdam, and then Rotterdam blends it with something else, and then they supply it to Brussels or whatever. Got it. Wow.

Lauren Riley: So let's talk about the carbon footprint of that one.

WHEN THE STRAIT OF HORMUZ CLOSED

Jigar Shah: Oh my God. Well, a lot of this stuff is crazy town. And so now we've got the Strait of Hormuz, right? So we jumped right into, we're all friends and we're all just trying to inch our way towards sustainable aviation fuels. And then suddenly we're like, wait, we're short sustainable aviation fuels.

I remember when the conflict started, people were like, don't go to Europe. They have like 42 days worth of jet fuel left. And you're not going to be able to get back, and whatever. And now it seems like a lot of the refineries have changed their mix and they're producing less gasoline and more jet fuel. And there's all sorts of heroics happening in the oil sector.

But I'm curious, how does this affect your job? Right? Because for a long time, you were sort of the green person, but now you're sort of the national security and economic security person, right? How does this change the role and all the expertise that you've developed? Are more people interested in your expertise today within the airline? And what responsibilities do you have now?

Lauren Riley: I think crazy town is probably a very good adjective for sort of what we've been going through. It's been interesting, right? It really has been an interesting time in so many different dynamics.

But from a pure fuel supply chain perspective, we started the Strait of Hormuz conflict thinking that there would be disruptions in supply. And so for a while, there were some implications there where we were not able to source sort of our conventional fuels, and sustainable aviation fuel was able to step in to plug that gap. So it really became a continuity play, a business resiliency play. How do we make sure that we can continue to fly our friends in and out of their destinations overseas? And that was really, really critical.

The second part, though, is that we continue to see this volatility in pricing. So it's all over the place what conventional jet goes for right now. And the impact on pricing for jet fuel in particular is sort of unique and distinct in that it's been so extreme. And so, as I talked about earlier, there's so many different ways to make SAF. All of them are more expensive. It could be twice as much as the conventional jet. It could be five to six times. But when you've got these volatilities in conventional jet fuel prices, suddenly that premium is beginning to dwindle over time.

I think the question that we're watching right now is, how long does that stick around? How long is that premium reduced to where it is, or can we hold it there? At the end of the day, what we're learning is having a jet fuel source that is decoupled from oil, from the whole fossil market, is a good thing for business.

Jigar Shah: Well, especially when we're losing refinery capacity around the world. The Ukrainians are bombing Russian refineries. There's refineries getting damaged in the Middle East. It feels like we're now long oil and short refinery capacity.

Lauren Riley: So diversifying your fuel supply chain is in the best interest of business. And so this is the first time, at least in my experience, that it's really become around business continuity, resiliency. I think it's going to be good for us in the long run.

Yes, we want the emissions reductions, but we don't only want the emissions reduction. We want airplanes to fly and we want passengers to get to their destination safely. We want to make sure we can get them back home. And if SAF happens to be one of the mechanisms by which we fly that aircraft back home, great. And so we're starting to have those conversations in earnest. And it's really kind of an exciting time to really look at the business case for sustainable fuels.

WOULD PASSENGERS PAY 7% MORE

Jamie Nolan: Absolutely. I love that. And that's one of those outcomes from this conflict in Iran that I don't think anyone was expecting. But here we are. And there have been some good things that have come out of it, right? We're seeing an accelerated growth of solar, for example, in a lot of countries. So if it gets more SAF into the blend, I do like that.

But we do have to think about, of course, what the long-term impacts are on consumer prices. So, of course, airline tickets cost more than ever. And the International Energy Agency says that a 15% SAF blend would add 5% to 7% to a fare. So I know that we discussed how Jigar and I, being very sustainability-minded, are willing to pay a premium to buy SAF. But has United tested whether passengers would be willing to pay 5% to 7% more on their fares in order to support additional SAF use?

Lauren Riley: So I will remind you that today's ticket prices are about 13% less than what they were before the pandemic in 2019. So in the macro sort of view of aviation fares, we are not at historic levels. But that being said, your question is well taken around, is there a willingness to pay additional for that lower carbon travel?

As I mentioned before, we do partner with our corporate and cargo customers with our Eco-Skies Alliance program. And these are folks that step forward and they raise their hand and they say, we've got our own commitments, or frankly, we've got cargo that we need to ship and we need to ship it quickly. And if you've got access to this fuel right now, we will take it. And we want to get our product to the next destination. And they're willing to pay for it. And that has allowed us to double our SAF consumption from 2024 to 2025. It is those customers raising their hand saying, yes, we want in.

Our hope, Jamie, is that over time, we are expecting economies of scale in this market. This is nascent. We are at year zero, frankly, when it comes to sort of kickstarting this market. We are going to achieve economies of scale at some point. And there hopefully will be almost no differential to conventional jet fuel over time. If we have durable policies, if we have confidence in the market, if we have bankable investments, if we have all these things that we all know we need, we will get there. It's just a matter of when and at what pace.

OSCAR THE GROUCH, CHIEF TRASH OFFICER

Jamie Nolan: Well, that's an excellent optimistic view. And I like that. So I'm taking that to the bank with me, Lauren. I love that.

All right. I do want to talk about Oscar the Grouch, because in 2023, United hired Oscar the Grouch as its first Chief Trash Officer to explain all this, all your work on SAF and where it comes from. I love this campaign. I think it's so brilliant. So tell us a little bit about the campaign and what the feedback has been.

Lauren Riley: Yes, my esteemed colleague, Oscar, the Chief Trash Officer. That was so much fun. That was actually a ton of fun, I have to say. It was kind of a goofy idea around, how do we educate the average flyer around what SAF is?

We've talked about this several times. It's kind of the kitchen sink of different approaches to SAF. People don't want to hear about waste. They don't want to hear about converting the French fry oil necessarily. They don't really want to understand what a greenhouse gas emission is. So how do you take something that is complicated, technical, wonky, based in science, and make it simple and make it accessible and make it fun?

And that's where this notion of the Chief Trash Officer came about with Sesame Workshop. It was really about educating about the different feedstocks, how all these different feedstocks can be converted into a jet fuel, and how there's a passion for the trash that goes in your trash can, because that banana peel can become your next fuel. And it worked. People loved it. And who doesn't love Oscar the Grouch? He's the grouchiest, happiest Chief Trash Officer in the world.

And it was a wonderful success. I do have to say, though, he is now in retirement. So I do not expect my colleague to come back out. But in terms of educating the average flyer in the US and across the United network, it was a very, very successful campaign. And I give tremendous credit to the collaboration between our communications group and Sesame Workshop, because I don't think we'll ever see something like that again. And it really helped bring the sophistication and understanding of what is happening in aviation to a new level. That benefits everybody. This really wasn't really a United play. This is really about educating about the future of flight.

Jigar Shah: So it sounds like you're saying we need a petition to bring back Oscar the Grouch. I mean, I would love that.

Jamie Nolan: I thought it was so charming. I think you're not expecting to see him in that context. And so it was really funny in that it made you kind of do a double take. Like, why am I seeing Oscar the Grouch right now in this context? And so I just thought it was brilliant and unique. You just don't see your peers doing things like that. So kudos to the communications and marketing team at United for that campaign. I loved it.

THE PART THAT SITS ON THE GROUND

Jamie Nolan: So, of course, when we're talking about decarbonizing aviation, there's more than just fuel. And, of course, airports are a central part of this. Amsterdam now tows aircraft to the runway with the engines off, which saves about 300 kilograms of carbon dioxide per flight. And then that airport would like all of its taxiing done that way by 2030. Only 14 airports worldwide have their own operations down to net zero, and none of them are here in the United States. So how much of the decarbonization of the airline industry actually sits on the ground in all this real estate?

Lauren Riley: So in the context of greenhouse gas emissions, it is very, very small single digits. It is not material. That being said, in terms of air quality and water quality and all the other particulate matter that goes into the atmosphere where we fly, it is very important. We want to make sure that we have healthy communities and airports and a great experience for our travelers. And so we're committed to that.

Our ground support equipment at the airports, across United's entire ground support fleet, we are more than 50% electrified when it comes to our core ground support equipment. So the stuff that pulls the aircraft to the runway, the stuff that moves your bags to get it from the aircraft back to the terminal so you can depart, all of those equipment, we've made a really profound investment in electrifying those. If you look at our hubs alone, it's more than 60%. So there's a lot going on at the ground level to really convert to electrification.

Now, is it powered by renewable? That would be wonderful. Do we have the substation capacity to go further? We are really beginning to push up against some of those constraints of the infrastructure to enable more electrification. And so we are engaged in partnership with the airport authorities and the states to really begin to look at the infrastructure, to really begin to understand what kind of investments we'll need. We're not talking about just electric ground equipment. We're talking about electric aircraft over time. So how do you make sure that we have the capacity online in a consistent manner, so that we have confidence that we can fly with some of these alternative propulsion, let alone charge that ground equipment that's moving your luggage? And so we're working all of those really important initiatives. And I would say our airport authorities, our state partners have been really, really incredible to try to advocate for that next generation of technology that is cleaner.

ELECTRIC PLANES BY 2031

Jamie Nolan: That's incredible. As someone who lives very, very close to an airport, I'm about five minutes from Washington National Airport, and I do hear flights from 5:30 a.m. to 11:30 p.m. But as a very committed traveler, I love the proximity. I will do whatever it takes to fly out of National and avoid going to Dulles, just for ease. It's so great.

But I'm glad you brought up electric aircraft, because there's no way we could get through this episode without asking you about that. Heart Aerospace flew its electric plane with a pilot on board on August 13th, just a few weeks ago, and United has ordered up to 200 of those aircraft. So is electric flying something that you think passengers might actually experience this decade?

Lauren Riley: Okay, can we just appreciate how cool that is? So cool. That is bananas. I think it's so wild. What a milestone. So last month, demonstration flight, this is a battery-operated airplane at its best. And it was really exciting to see that happen.

We are bullish on electrification. We are excited about it. We do have conditional investments to purchase, and we're hopeful that all of this comes together. The last I heard from Heart, which is a great partner of ours, is that they expect to come into commercial service just after 2030. So 2031 timeframe, but not far, if you think of it in the grand scheme of things.

Now, of course, our side of the equation is, can we power that? Can we charge it? Do we have that electrification infrastructure to enable it from destination to destination? Practically speaking, it'll probably be a regional jet. It will be a shorter distance flight. So DC to New York City, possible. Those are some of the sort of geographies that we're looking at. But really exciting to think about adding in new, having a really different customer experience. And it's something that is lower carbon and with lower impact on the environment. How exciting.

THE CASE FOR HYBRID

Jamie Nolan: Oh, I cannot wait. You have got me so excited. I'm going to definitely keep an eye out for that. And that will give me an excuse to fly to New York. I usually take the Amtrak, but it's a one hour flight. It's really nice. I have done it.

Jigar Shah: Yes. I'm going to be Oscar the Grouch on this. I'm really more of a hybrid person. I think the electric is awesome, but it uses up a lot of the space in the aircraft to have that much weight of batteries. It feels like it's going to be more like my parents' plug-in hybrid vehicle, where the taxiing and the ground is electric, the takeoff is electric, which is a lot of emissions, actually. And then it cruises on fuel.

I just feel like my whole thing is, I think for you guys to meet your 2050 goals, I feel like you're going to have to be at scale. And while I love a good regional jet, I don't take it that often. I'm flying mostly from DC to San Francisco. And so I'd like that hybrid jet, please, that reduces emissions by 50% and still takes me all the way to San Francisco.

Lauren Riley: Listen, Jigar, I'll take any of it. We need all of it, any of it. I do think this demonstration is light. It was a 30 minute flight, as I recall. We need the multi-hour. We need to make sure that when we have regular operations, we can continue to power. So there's a very pragmatic point of view, which I appreciate very much.

So who knows? Let the smart innovators innovate and they will figure this out. And then we will be there by their side to say, this is how you scale across an airline that travels to 75 different countries. Let's be real. If it doesn't make sense for business, it's not going to work. And so we do work hand in hand with them to make sure that their decisions align with how we actually function as an airline.

Jigar Shah: Well, as somebody who has been a dedicated United customer for so many years, I think I'm at 1.6 million miles or something, I'm super happy that you're doing all this and that you are leading this charge. I'm also happy that your title now includes national security and energy security, which is super important to the growth of all of these pilots to mainstream operation.

And I do think that there needs to be a more robust conversation around SAF versus what's happening in the electric space, what's happening in the hybrid space, et cetera. I just feel like this area is so ripe with so much innovation. So it's so wonderful to have you, Lauren.

Lauren Riley: Well, thank you for having me. It's an exciting time for sustainable flight. United is thrilled to be a leader in this space. There's so much more to come. It's going to be quite an era, but we have a lot to do. So let's roll up our sleeves and get it done.

DEBRIEF

Jigar Shah: Well, that was amazing. For somebody who has basically an impossible job, she was awesome. I can't even imagine how you would get to net zero by 2050.

Jamie Nolan: I love a very optimistic guest who teaches me something. And that is definitely how I feel walking away from that conversation with her. Learned so much. I'm so impressed with everything that United is doing. And what a fun job. That's why I was like, how do I go do that for a living? That sounds awesome.

Jigar Shah: Not yet, Jamie. We have so many podcasts to record. But no, I thought it was great.

I thought her explanation of what was happening in the EU was shocking. The fact that them filling up their tank from Dulles to Brussels doesn't count. It has to be already in Brussels on the way back. Seems like an own goal for the EU. So now our friends at Montana Renewables have to ship their fuel all the way to Rotterdam and then get it blended into some sort of fuel tank in Brussels to be able to get credit for it. That just seems dumb.

Jamie Nolan: It's wild. And as Lauren rightfully pointed out, that is not a carbon neutral way to do that. So I understand what they're trying to do by spurring the production of additional SAF in the EU and the UK. But this is what happens when policymakers don't talk to the private sector and actually institute a well-designed policy that moves the needle. We see that all the time, right? Why did they not? It seems like not a lot of foresight went into this, and they probably need to go back and redesign the policy so that it actually achieves what they're trying to do.

Jigar Shah: Yeah, no, look, and I'm a huge fan of everyone we met when we were at the LPO that was working on SAF. But it does feel like getting to the 6% that the EU is mandating is going to be a Herculean effort. And I'm putting my chips all in on these hybrid aircraft. I don't see how we're going to reduce aircraft fuel consumption by 50% without batteries and electric airplanes. I just think doing this all with SAF just seems like a Herculean task.

Jamie Nolan: Do you think that that 6% SAF goal that they have established in the EU and the UK is achievable? It seems like with United, an industry leader, tracking above the rest of the field at 0.7%, or as the rest of their competitors are at 0.6% average, that 6% is just so far away.

Jigar Shah: It's so hard. And remember, 60 airlines have committed to 10% SAF, right? There is no chance that we get to 60 airlines at 10% SAF unless you actually use prime farmland. There's no way to do that through waste, oils, fats, and greases. There's no way to do that by sucking CO2. Just to be clear, sucking CO2 out of the air is like $12 a gallon, right? It is so expensive. And then that only worked because we were putting in hydrogen tax credits from 45V, 45Q tax credits for carbon sequestration and storage. It was like tax credits all around. It was a Christmas tree of tax credits, right?

That is not how you're going to power the entire airline industry, right? And so I think the world of Lauren and people like her who are doing the Herculean task of just combing through gobs and gobs of detail to get this stuff done. But I really think that electric aviation in a hybrid mode is going to be how you and I reduce carbon emissions by 50% in the next decade.

Jamie Nolan: Okay. It's so interesting to hear this from you, because I do feel like you're usually the optimist in a given conversation. You're so optimistic about decarbonization broadly. What do you think is going to be the key to really decarbonizing aviation?

Jigar Shah: I think we're going to try our best, right? With, as she said, fuel is 97% of her carbon footprint. So all the stuff on the ground is sort of fine, but a rounding error. I think we're going to use as much electric aviation as we can, particularly for takeoff and landing.

The other piece of it is we need to get to next gen. It is shocking to me that 50% of all the fuel is used while they're trying to land, because our stupid air traffic control system doesn't let you just land in one fell swoop. You have to go down, then arrest your progress and stop at 20,000 feet, then go down and then arrest your progress at 10,000 feet. And that uses so much jet fuel. The reason FedEx is in Memphis is it is so open in Memphis that all of the airplanes from FedEx actually take one fell swoop and just land the airplane. And that reduces fuel consumption by like 25%.

Jamie Nolan: Wow. I've never heard anything about that. That's wild. So basically you're saying there are levers to pull here that are not SAF. We're not going to realistically see a fully net zero aviation industry in this country, are we?

Jigar Shah: Not from SAF. We have to do all of these things. I think electricity is going to be a big part of it. And they're just going to have to buy a crap load of credits. So when you think about direct air capture, carbon sequestration and storage, even solar radiation management, there's a new company out of Israel that's looking to put custom particles into the air, right? You could imagine shipping and aviation buying some of those credits, right, to help support those industries.

At least with ships, you can make them nuclear, like you saw the big announcement from the Trump administration to try to make some of those big shipping containers nuclear-powered, just like our nuclear navy. It's kind of hard to put nuclear into an aircraft. And so it is what you call hard to decarbonize, I think, is how you should characterize aviation.