HEFA Feedstock Risk: When Cheap Lipids Disappear

Version note: v2.0 updates structure, navigation, terminology, and visual presentation. The modeled distribution and documented thresholds are unchanged; this revision is not a new market-price or policy determination.

Decision Summary

• GO: Parity persists only where feedstock and realized credit remain inside the modeled viability region and the parity gap retains sufficient downside margin.
• CONDITIONAL: The $900/tonne base case is close to the conditional $931/tonne collapse boundary; persistence depends on modeled credit realization and procurement control.
• NO-GO: Feedstock above roughly $931/tonne in the base-jet, modeled-credit case, or a parity gap above +$0.30/gal, invalidates the current configuration.

Kill Conditions

Treat the following modeled conditions as No-Go unless feedstock, credit, or pathway structure changes:

• Feedstock exceeds roughly $931/tonne in the base-jet, modeled-credit case.
• The parity gap exceeds +$0.30/gal or the modeled collapse boundary is breached.
• The feedstock distribution shifts materially above the parity-supporting range.
• The case lacks durable procurement and credit controls. Point-estimate parity is not enough when realistic distributional stress removes persistence.

Technical Note (Audit Trail)

The sections below preserve the feedstock distribution, parity-probability response, collapse mapping, decision classifications, assumptions, and reproducibility record supporting the decision screen.

Figure 1 - Lipid Price Distribution

Figure 1 places the conditional $931/tonne parity threshold against the modeled lipid-price distribution. Focus on how much probability mass lies beyond the parity-supporting range.

Required form

• Empirical or scenario distribution of lipid prices used for screening.
• Must include source basis and recency date.

Decision statement

• Under the modeled distribution, ~60.1% of feedstock outcomes remain below the parity-supporting threshold (~$931/tonne).

Figure 2 - Parity Probability

Figure 2 converts deterministic parity into a persistence metric across fossil-price and credit scenarios. Compare the base modeled-credit and moderate-credit cases at the $2.85/gal benchmark.

Required form

• P(MSP <= jet) under base and stressed credit assumptions.

Decision statement

• Under base modeled credit assumptions, parity probability is ~60.1%; under moderate-credit stress it falls to ~15.0% (a 45.1 percentage-point collapse in parity persistence).

Figure 3 - Collapse Threshold

Figure 3 shows how the viable region contracts as feedstock cost rises. The boundary represents collapse of the modeled configuration, not a universal market threshold.

Required form

• Feedstock price threshold above which parity is no longer observed.

Decision statement

• Above ~$931/tonne (base jet, modeled credit), parity collapses for the deterministic boundary case. At $1200/tonne feedstock, even maximum modeled credit leaves an unrecovered shortfall of ~$0.162/gal.
• As low-cost lipid supply tightens, the cost basis shifts upward, eliminating parity even if conversion efficiency remains unchanged.

Figure 4 - Fragility Trigger Threshold

Figure 4 translates credit and fossil-price scenarios into maximum feedstock ceilings for parity.

Required form

• Critical feedstock threshold by credit scenario (and at least one jet-price scenario cross-check).

Decision statement

• At base jet benchmark, the parity boundary requires feedstock <= ~$931/tonne under modeled credit support; above this collapse threshold, parity is unattainable without structural redesign.

Figure 5 - Decision Exposure Matrix

Figure 5 maps feedstock and credit combinations into viable, marginal, fragile, and non-viable decision states.

Required form

• 2x2 or 3x3 exposure matrix with explicit regime labels and decision class.

Decision statement

• Under high-feedstock / low-credit regimes, parity status is No-Go.

Structured Go/No-Go Output

Hard boundary: Above ~$931/tonne feedstock in the base-jet modeled-credit case, parity cannot be restored through process optimization once realistic policy uncertainty is included.

SAF Constraint Table (Fragility Boundary)

SAF No-Free-Lunch Condition

There is no operating regime where low feedstock cost, high availability, minimal competition, and full policy realization are simultaneously achievable.

Current regime highlights from Figure 5:

• Low feedstock / low credit: No-Go
• Mid feedstock / modeled credit: Conditional Go
• High feedstock / high credit: Rework

Constraint Statement (DG-PFF)

Under realistic lipid-price distributions, HEFA-SAF parity persistence is fragile: once feedstock exceeds the ~$931/tonne collapse threshold, the viability region contracts sharply, and at ~$1200/tonne parity remains unattainable even with maximum modeled credit.

Once realistic feedstock pricing and policy uncertainty are introduced, the apparent SAF parity region contracts significantly. Cases in this state should be classified as the Feedstock-Policy Constraint Regime and treated as non-viable for decision-grade progression.

1. Decision Context

This note is a fragility-first application of DG-PFF for HEFA-SAF. It evaluates whether parity remains bankable once feedstock uncertainty is represented explicitly.

2. Analytical Lens (DG-PFF)

• Parity condition: MSP_HEFA <= fossil benchmark.
• Fragility condition: collapse of parity probability under feedstock escalation.
• Required relationship: this note tests whether portions of the companion parity region are invalidated under realistic market conditions.

3. Parity Claim Under Distribution

The tested claim is that a parity-positive HEFA case remains decision-grade once feedstock-price uncertainty is represented as a distribution rather than a point estimate.

4. Fragility Metric

Fragility is quantified as:

• Decline rate of parity probability per feedstock-price shift, and
• Collapse threshold where parity probability approaches zero.

5. Parity-Fragility Relationship

This fragility note invalidates parity-defined viable regions from the companion parity analysis when feedstock outcomes exceed collapse thresholds, even if other assumptions remain favorable.

6. Decision Classification Bands

Decision-matrix classes are based on parity-gap bands (MSP - fossil benchmark):

• Go: <= -$0.15/gal
• Conditional Go: > -$0.15 and <= +$0.05/gal
• Rework: > +$0.05 and <= +$0.30/gal
• No-Go: > +$0.30/gal

Band rationale: these ranges convert continuous parity gaps into decision actions for screening, term-sheet diligence, and downside-case governance.

6A. Distribution Source and Methodology

• Distribution type: lognormal synthetic feedstock-price distribution.
• Parameterization: centered around base feedstock assumption ($900/tonne) with sigma=0.24.
• Reproducibility controls: random seed fixed at 42; distribution clipped to [$350, $1900]/tonne.
• Data and traceability artifacts:
• assets/data/notes/hefa-feedstock-risk-when-cheap-lipids-disappear/feedstock_distribution_samples.csv
• assets/data/notes/hefa-feedstock-risk-when-cheap-lipids-disappear/hefa_feedstock_fragility_summary.json
• scripts/generate_hefa_feedstock_fragility_figures.py

6B. Parity Probability and Collapse Outputs

• Base modeled credit parity probability (at $2.85/gal fossil benchmark): ~60.1%
• Moderate-credit stress parity probability (at $2.85/gal fossil benchmark): ~15.0%
• Deterministic collapse threshold (base jet, modeled credit): ~$931/tonne
• High-feedstock collapse shortfall: at $1200/tonne, residual gap remains ~$0.162/gal even at maximum modeled credit.

7. Publication Completion Checklist

• ✓ Figure 1 feedstock distribution complete with parity threshold marker
• ✓ Figure 2 parity probability curves complete with scenario labels
• ✓ Figure 3 viability-region collapse figure complete with boundary language
• ✓ Figure 4 critical threshold figure complete with units
• ✓ Figure 5 decision exposure matrix complete with regime classes
• ✓ Decision classification bands disclosed and justified
• ✓ Distribution source and methodology disclosed
• ✓ Parity probability outputs complete (base + stress)
• ✓ Collapse threshold disclosed with units and boundary condition
• ✓ Invalidation map included with labeled thresholds
• ✓ Structured Go/No-Go output included
• ✓ Cross-link to parity note and DG-PFF standard included

This analysis applies the Decision-Grade Parity-Fragility Framework (DG-PFF), developed by Insight Quantix. This note identifies both parity conditions and the fragility thresholds under which those conditions fail. This analysis extends DG-PFF beyond hydrogen systems, demonstrating applicability to SAF pathways under feedstock-driven cost uncertainty.

Learn more -> Companion parity note ->

Citation Readiness & Reproducibility

• Publication date & version: June 19, 2026 | v2.0
• Canonical URL: https://insightquantix.com/hefa-feedstock-risk-when-cheap-lipids-disappear.html
• Inputs and thresholds: See distribution assumptions, collapse outputs, and linked artifacts in assets/data/notes/hefa-feedstock-risk-when-cheap-lipids-disappear/.
• Reproducibility note: Fragility outputs are most sensitive to feedstock distribution shape, effective credit realization, and collapse-threshold assumptions.
• Disclosure: Insight Quantix derived all analytical conclusions independently; external references provide context only.

How to Cite This Analytical Note

APA Format

Gomez, J. R. (2026). HEFA Feedstock Risk: When Cheap Lipids Disappear (Insight Quantix Analytical Note IQ-AN-SAF-2026-02, v2.0). Retrieved from https://insightquantix.com/hefa-feedstock-risk-when-cheap-lipids-disappear.html

Chicago Format

Gomez, Jamie R. "HEFA Feedstock Risk: When Cheap Lipids Disappear." Insight Quantix Analytical Note IQ-AN-SAF-2026-02, v2.0, June 2026. https://insightquantix.com/hefa-feedstock-risk-when-cheap-lipids-disappear.html.

BibTeX

@techreport{Gomez2026_SAF_Fragility,
  author = {Gomez, Jamie R.},
  title = {HEFA Feedstock Risk: When Cheap Lipids Disappear},
  institution = {Insight Quantix},
  year = {2026},
  type = {Analytical Note},
  number = {IQ-AN-SAF-2026-02},
  month = jun,
  url = {https://insightquantix.com/hefa-feedstock-risk-when-cheap-lipids-disappear.html}
}

Appendix A: Modeling Parameters

• Model form: See the governing equations and threshold definitions in the technical section of this note.
• Primary data artifacts: assets/data/notes/hefa-feedstock-risk-when-cheap-lipids-disappear/
• Primary figure artifacts: assets/img/notes/hefa-feedstock-risk-when-cheap-lipids-disappear/
• Reproducibility scope: This appendix anchors file locations and parameter traceability for decision-grade review.

About the Author

Jamie R. Gomez, Ph.D.

Principal, Insight Quantix

Chemical engineer specializing in decision-grade techno-economic analysis (TEA) and life cycle assessment (LCA) for hydrogen, sustainable aviation fuels, and power-to-liquids pathways. She translates process-level engineering models into cost, emissions, and uncertainty insights that inform capital allocation and technology scale-up decisions. Her prior work has supported technology cost-target modeling, scale-up analysis, and decision-oriented TEA/LCA efforts across federally funded clean-energy programs, including collaborations with Sandia National Laboratories, the National Renewable Energy Laboratory, ARPA-E, and clean-energy companies. She holds a PhD in chemical engineering with research focused on electrochemical materials fabrication.

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About Insight Quantix

Insight Quantix publishes independent analytical work for transparency and decision clarity. The analysis examines benchmark-anchored, audit-defensible economic risk conditions relevant to capital allocation decisions in the $10M-$500M range.

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