California pushes major airlines to adopt renewable fuels

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The California Air Resources Board (CARB) has announced a new initiative to nudge major airlines to transition to sustainable aviation fuel.

The goal of the new program is to ramp up sustainable aviation fuel use in California airports to 200 million gallons by 2035. Based on CARB estimates, the goal would meet about 40% of current intrastate demand and represent a tenfold increase from current levels of sustainable aviation fuel usage.

Sustainable aviation fuel made from renewable biomass and/or waste has been proposed as a significant step forward for major U.S. airlines targeting net-zero carbon emissions in the decades ahead. By issuing state-level requirements, CARB is also opening the door for pushback from other states.

For renewable fuel investors, the potential impact of the new effort could have a massive impact. California leads the nation in air travel by a wide margin with 214 airports.

For companies like Darling Ingredients

DAR

and Valero Energy

VLO

who are active in the sustainable aviation fuel sector, the push to ramp up capacity to meet this fresh demand will be significant. Both firms recently announced new contracts to supply sustainable aviation fuel for delivery to both Midway International Airport in Chicago and John F. Kennedy International Airport in New York.

The Department of Energy reports that production capacity of sustainable aviation fuel in the United States could increase from around 2,000 barrels per day to nearly 30,000 barrels per day in 2024 if all announced capacity additions come on line.

Two massive projects — the Phillip 66’s facility in Rodeo, California and the Diamond Green Diesel facility in Port Arthur, Texas — are expected to account for the lion’s share of this growth.

While the industry group Airlines for America estimates that jet travel accounts for only 2% of U.S. carbon emissions, the organization’s member pledge to achieve net-zero emissions by 2050 has made it a highly visible voice.

More stories we’re tracking at Equities: Leaon, Nuveen investing in Longevity Partners The London-based consultancy Longevity Partners announced on Friday strategic investments from Leon Capital and Nuveen. Founded in 2015, Longevity focuses on sustainability technology for real estate and infrastructure markets. The investment is the latest in a string of green real asset investments for Nuveen. In 2021, the asset manager acquired sustainable real estate credit investor Greenworks Lending which was rebranded as Nuveen Green Capital.

Canadian regulators announce new emissions regulations The Canadian Ministry of Environment and Climate Change revealed new proposed regulations on Monday to cap greenhouse gas emissions from the oil and gas sector by 35% from 2019 levels. The proposed rules lower the target for fossil fuel producers from the 38% originally discussed levels outlined for comment earlier this year. The new rules, expected to come into effect in early 2025, have received strong pushback from Canadian energy industry groups who claim that the measures will cost jobs.

New impact ETF issuance in Europe outpaces US While the stream of new impact focused ETF offerings in the U.S. has slowed to a trickle, the European market continues to expand. Last week, Fidelity International announced the debut of the Fidelity Sustainable High Yield Bond Paris-Aligned ETF — in both Euro and U.S. dollar denominated versions, on the London Stock Exchange.

The listing follows one on the Deutsche Boerse for both funds over the summer. Fidelity International has been an entirely separate company from Fidelity Investments following a spin-off in the 1980s, although the Johnson family remains a significant shareholder of the Bermuda-based firm.

Read more: Ford shuts electric truck plant as sales slow

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