Calumet produces a wide range of products for various industries. What products in the current portfolio cater specifically to aerospace?
We’ve always produced traditional jet fuel and specialized lubricants, including biodegradable ester-based lubricants, which are critical because of the extreme conditions aircraft operate under—high altitudes and extreme temperatures. These lubricants must perform under strenuous conditions, making them an important part of our offerings. But perhaps the most consequential development for us in aerospace is our focus on sustainable aviation fuel (SAF).
We converted a refinery in Great Falls, Montana, to become North America’s largest SAF producer. This was a fast turnaround by industry standards, and today, we’re the largest supplier not just in North America but the entire Western Hemisphere. SAF is still in its early stages, but it’s rapidly becoming one of the fastest-growing energy niches.
What was the motivation behind Calumet widening its offering and capitalizing on the SAF niche in 2020?
Our entry into the SAF space in 2020 was partly a result of good timing and recognizing an opportunity. Our Great Falls facility was initially built to handle highly acidic crude oils, which are similar to renewable feedstocks like vegetable oils and animal fats. This made our equipment ideal for producing SAF without the need for significant modifications. Being located in Montana also gave us access to abundant feedstocks within a 500-mile radius, more than we could even process.
We saw the renewable diesel and SAF market as a major growth area and realized we were perfectly positioned to take advantage. The equipment, location, and timing all aligned, so we decided to move forward with the project. In 2021, we raised financing; by 2022, we constructed the facility, and in 2023, we fully commissioned it. Just a few months ago we delivered our first full clean production quarter in Montana. Calumet is the leading SAF producer in North America, producing over 30 million gallons annually, and we’re looking to increase that to over 200 million gallons in the next 2-3 years.
From a production point of view, how exactly does sustainable aviation fuel (SAF) work compared to the more traditional fuels produced for the aerospace industry?
SAF is essentially the same as traditional jet fuel, but it’s made from a different feedstock. Instead of using fossil fuels, we use renewable feedstocks like animal fat or vegetable oil. The process is similar to traditional refining: we fractionate the feedstock, treat it at temperature and pressure, and isomerize it to produce the jet fuel cut needed for aircraft engines.
The big difference is in the feedstock, but the refining process remains largely the same. Once produced, the SAF is typically blended with traditional jet fuel to form the into-wing blend. This blended fuel can then be used in planes without requiring any changes to the engines or infrastructure. It’s a drop-in solution, meaning it works within the existing supply chain without any major and expensive infrastructure overhauls for the end customer.
While there are widespread commitments and considerable willpower from airlines and OEMs to adopt SAF, the sheer cost difference remains a barrier to adoption. How can the price point of SAF be brought down?
Balancing economic factors like cost is crucial—we can't create more problems by making energy unaffordable. The U.S. government’s Grand Challenge aims for 3 billion gallons by 2030 and the International Air Transport Association (IATA) has said that 60% of airline fuel needs to be sustainable by 2050, but right now, we’re at less than 0.1%. There’s a huge challenge ahead, but also a tremendous opportunity. Like any new technology, the cost of SAF will decrease over time. One of the reasons we’ve focused on renewable diesel and SAF (which are both in their infancy and early growth phases) is that we can produce them efficiently using proven technologies, and we have a location advantage.
Unlike other emerging energy forms, SAF doesn’t require ancillary costs such as significant infrastructure changes for the end customer. We can use the existing infrastructure that airlines already have in place, so we’re not talking about a massive overhaul of the entire fleet. SAF fits into the current system, making it more cost-effective in the long run. It’s a "drop-in" fuel, meaning it can be used in existing engines without modifications. That’s why we believe SAF has an advantage in terms of cost, speed, and risk compared to other options.
Outside of Calumet, which countries and companies do you view as driving the revolution in the industry’s transition to SAF?
Countries like the UK, Singapore, and Japan are also mandating SAF growth, but there’s a long way to go. Our biggest partner in the SAF space, Shell, has been a real leader. They’re not just setting ambitious goals; they’re actively investing in the supply chain needed to make SAF a reality, having formed partnerships with us, they are committed to buying the product, and are helping to transport and sell SAF, and perform the quality assurance to end customers. In the airline industry, most companies are leaning into SAF adoption. Many have set targets for 10% of their fuel demand to come from SAF, which is a significant jump from where we are now. There are still challenges around cost and availability, but the willingness to invest early and push this transition forward is there. Companies like Phillips 66, Diamond Green, and Neste are also doing great work in this space.
Many people ask us about the threat of competition, but frankly, we don’t think of others as competitors. More companies producing SAF is essential since there is such a huge gap to fill. We have taken a meaningful first step, but actually the biggest risk is there being insufficient capacity to accommodate for the demand growth within the industry. Without the supply, it doesn’t really matter what the demand is. It’s a continuously growing area that we need to keep up with as an industry, as opposed to more mature areas where the market growth is not enough to consume new supply.
