Powering Sustainable Aviation Through Consumer Demand: The Clean Skies for Tomorrow Sustainable Aviation Fuel Certificate (SAFc) Framework ...
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In collaboration with RMI and PwC Netherlands Powering Sustainable Aviation Through Consumer Demand: The Clean Skies for Tomorrow Sustainable Aviation Fuel Certificate (SAFc) Framework INSIGHT REPORT JUNE 2021
Images: Getty images, Pexels
Contents
Preface 3
Foreword 4
Executive summary 5
Introduction 7
1 The case for SAFc 10
1.1 SAF’s essential role in decarbonizing aviation 11
1.2 Corporate interest in addressing Scope 3 emissions 13
1.3 Potential emissions reduction accounting approaches 14
2 The SAFc framework 15
2.1 The Energy Attribute Certificate model 16
2.2 Catalysing SAF demand 18
2.3 Addressing shared responsibility for Scope 3 emissions 18
3 SAFc functionality 19
3.1 The SAFc product 20
3.2 Accounting framework 23
3.3 SAFc traceability 27
3.4 Avoiding Scope 1 and Scope 3 double counting 29
3.5 Functioning within key regulatory frameworks 29
Next steps 33
Conclusion 35
Appendixes 36
Appendix A: Use cases 36
Appendix B: Example SAFc implementation 38
Contributors 39
Endnotes 40
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Powering Sustainable Aviation Through Consumer Demand 2
June 2021 Powering Sustainable Aviation
Through Consumer Demand:
The Clean Skies for Tomorrow
Sustainable Aviation Fuel Certificate
(SAFc) Framework
Preface
Lucas N. Joppa Ned Harvey
Chief Environmental Clean Skies for Tomorrow
Officer, Microsoft Coalition, RMI
Businesses need new approaches to achieve need to get people in the same room. Delivering
climate stability, and there is no time to hesitate. time-sensitive essential goods, such as vaccines,
According to the Intergovernmental Panel on requires aviation’s speed. As we recover from
Climate Change (IPCC) Special Report 17, we have COVID-19, it is critical that we can return to the
until 2030 to make significant emissions reductions, skies and do it sustainably.
and by 2050 we must eliminate all carbon
emissions. In the electricity sector, carbon-free A challenge this big cannot be managed by any
energy is within sight. Wind and solar are already one group alone; it will take participation from all
cost-competitive with conventional fossil fuel power. concerned. Future government policy is critical but
Harder-to-abate industries, such as aviation, face considered insufficient without long-term durable
economic and commercial barriers to reducing demand. Corporate passenger and air cargo
emissions. To address the challenge, Clean Skies customers can step up to this challenge. We agree
for Tomorrow’s Demand Signal working group with the World Resources Institute (WRI)’s A Time
members have forged a promising solution. for Transformative Partnerships, published in 2020,
which calls for fresh climate approaches and related
This is the time for innovation. In the 1990s, products. The Sustainable Aviation Fuel certificate
power from wind and solar cost more than 10 (SAFc) proposed in this white paper provides an
times what it does today. Massive investments example of that new approach and makes it easier
in renewable energy technology, supported for businesses to participate.
by new revenue streams (including the Energy
Attribute Certificate), helped the industry to The private sector can mobilize and help to lead
grow exponentially. Corporate leadership the way. Other critical industries such as trucking,
and financial ingenuity were a major factor in shipping, steel, aluminium and cement face
making renewable electricity competitive. similar challenges to air transport. SAFc provides
a blueprint across sectors, equipping all players
Corporate buyers can also stimulate the use of along the supply chain to contribute actively to the
renewable fuels for aviation. Flying is critical to our solution. With the new SAFc, and future tools like it,
economy. We have new options to communicate we can solve the issue of harder-to-abate emissions
virtually, but to forge meaningful connections we at an unprecedented speed.
Powering Sustainable Aviation Through Consumer Demand 3
Foreword
Christoph Wolff
Joukje Janssen
Clean Skies for
Partner,
Tomorrow Coalition,
PwC Netherlands
World Economic Forum
Aviation already has the technology to address corporate demand alone could cover over a third
carbon emissions in the form of sustainable of the price premium associated with reaching the
aviation fuel (SAF). But even without the economic International Air Transport Association (IATA)’s 2025
disruption of the current COVID-19 pandemic, global SAF volume target – as detailed in this report.
commercial airline market dynamics leave
limited ability for airlines to fully cover SAF’s price The SAFc framework, and this report, is the product
premium. When aircraft operators are unable to of generative ideation and refinement facilitated
carry the full cost of SAF, air transport customers by the World Economic Forum, PwC Netherlands
and corporate travellers in particular have a and RMI, with indispensable input from CST’s
key role and leadership opportunity in reducing working group partners. It is also a testament
the environmental impact of their travel. to air transport’s benefits, demonstrating a clear
commitment from across aviation’s value chain
Instead of buying offsets, the SAFc framework to continue enabling the social and economic
provides customers with the option to invest benefits of the aviation sector while opening up new
directly into SAF and receive recognition for this opportunities to accelerate its decarbonization.
purchase to prove Scope 3 carbon abatement. The
framework, outlined in this report, is the first of its Future pilots will test the approach, and lessons
kind in the sector. learned will be integrated into a finalized framework
with accompanying implementation guidance for
The World Economic Forum’s Clean Skies for release later this year. Already we see examples
Tomorrow (CST) “Demand Signal” working group of successful SAF purchases piloting the SAFc
collaboratively developed the SAF certificate (SAFc) system across CST’s broad coalition, including
concept as a workable solution for customers, Alaska Airlines, American Airlines, Deloitte, DHL
enabling them to take ownership of their emissions Global Forwarding, Microsoft, PwC, SkyNRG and
reduction goals. Corporations, other firms and United Airlines, among others. Ultimately, SAFc also
individuals are able to purchase the SAFc to address requires robust and transparent tracking, verification
aviation emissions from passengers and air cargo. and governance – including through an issuing
body and registry – to provide assurance that the
The Science Based Targets Initiative (SBTi) emissions claims are legitimate and claimed only by
recognizes SAF as an in-sector mitigation option a single party.
for both aircraft operators and their customers.
Voluntary purchases can unlock new revenue As we continue to finalize this innovative
for SAF production, which will accelerate new framework, we look forward to receiving
production capacity. This is especially needed feedback and input from the CST community
during aviation’s recovery from the pandemic. and beyond. Through collaborative innovation,
CST stakeholder input, including a strong consumer demand will be leveraged to power
representation from leading professional services a more sustainable aviation industry.
and technology companies, suggests that
Powering Sustainable Aviation Through Consumer Demand 4
Executive summary
As aviation – one of the world’s most
carbon-intensive industries – rebounds
following COVID-19, initiatives such as
SAFc can support a net-zero pathway.
Rapid decarbonization and energy-source reduction benefits so that the actual fuel can be
transitions are required in every industry to meet delivered to the nearest airport and the climate
the challenge of climate change. Aviation is a benefits can be claimed by the SAFc buyer. Firms
percentage carbon-intensive and “hard to abate” sector and purchase SAFc, which provides a market-based
of global CO2 accounts for ~3% of global CO2 emissions annually. mechanism for managing their aviation-related
emissions from Although air travel and its emissions declined emissions and enables them to be recognized for
aviation precipitously during the COVID-19 pandemic, their mitigation efforts. By covering SAF’s price
aviation traffic is expected to rebound over the premium, the purchase of SAFc also addresses the
coming years and continue to grow in both traffic aviation industry’s supply-and-demand impasse
and emissions as per industry estimates.1 over scaling SAF. The concept was developed in
collaboration with a wide variety of CST’s partners
As significant air transport users in terms of and is building on their input.2
both people and cargo, corporations and other
organizations have a mutually beneficial role to play This concept is now being tested by CST’s
in supporting aviation’s net-zero pathway, while partners, including Alaska Airlines, American
also achieving their own direct and business-travel Airlines, Deloitte, Deutsche Post DHL Group
emissions reduction targets. A mechanism to (DPDHL), Microsoft and SkyNRG; the outcomes
achieve both of these ambitions at the same time of the pilots will inform additional refinement and
is needed. The World Economic Forum’s Clean finalization of the framework.
Skies for Tomorrow (CST) initiative has developed
the sustainable aviation fuel certificate (SAFc) The SAFc framework is modelled on Energy
framework to meet this need. Attribute Certificates (EACs), a well-established
virtual accounting instrument. This was key to
CST is a mechanism for leaders along the aviation accelerating renewable electricity investment,
value chain to facilitate the industry’s transition to when wind and solar energy costs significantly
net-zero emissions by mid-century, with a particular outweighed those of fossil energy. EACs are
focus on scaling global production and the use of instruments that allow firms to make reliable
sustainable aviation fuel (SAF). SAF is recognized as renewable energy usage claims without the need to
the fastest, most viable in-sector decarbonization produce their own electricity.
approach, but SAF is two to five times the price
of conventional jet fuel. Therefore, its widespread SAFc functions as follows: fuel producers generate
adoption suffers from a “chicken-and-egg” eligible SAF from sustainable feedstocks, following
challenge, whereby SAF producers and consumers standards such as those developed by the Carbon
are unable or unwilling to shoulder the initial costs Offset and Reduction Scheme for International
of scaling production. Aviation (CORSIA). They issue a defined amount
of SAFc based on either fuel volume or overall
The SAFc framework is one potential solution to this life-cycle emissions reductions. Producers can
challenge. SAFc is a novel accounting instrument then sell the actual SAF volume as well as the
that decouples SAF fuel from its emissions virtual SAF certificates (SAFc) separately. In a
Powering Sustainable Aviation Through Consumer Demand 5
FIGURE 1 The SAFc framework provides a verifiable emissions reduction value to SAF
SAFc transaction pathway
SAFc facilitates customer
payment in exchange for Scope 1
verified reductions of emissions
emissions through SAF reduction claim
Each volume of SAF would Aircraft
produce a Scope 1 claim operator
for an airline and a Scope
3 claim for the travel $
customer, both being
systemically linked
SAF producer Aviation customers
(passenger + freight)
SAFc applies to both
passengers and freight
Scope 3
emissions
Scope 1 virtual value SAF feedstock reduction claim
supplier
Scope 3 SAFc virtual value
volumetric model, SAFc prices could factor in volumes will need to meet defined stringent
the overall premium of the associated SAF over sustainability requirements. Once the SAF is
fossil-based jet fuel after government incentives certified as sustainable, it can be transacted and
are incorporated, and in a life-cycle assessment ownership transfer is tracked both physically and
(LCA)-based model, SAFc prices would be virtually until claims are retired within a registry.
based on overall LCA emissions reductions over
a standardized baseline of fossil-based jet fuel. The SAFc conceptual standard was designed
SAF buyers/users such as aircraft operators can to comply with existing and expected updated
claim the direct (Scope 1) emissions reduction standards and guidance from the Greenhouse
value of SAF itself and the buyer of the SAFc, Gas Protocol, the Science Based Targets initiative
such as a corporation with business travel needs, (SBTi) and the CORSIA; further development of
can retire the certificate and claim the related the framework will ensure compatibility with other
indirect (Scope 3) emissions reductions. Customer regional SAF regulations and policies, such as a
payments help cover SAF price premiums and European Union SAF blending mandate and US-
unlock new SAF supply. To earn eligibility, SAFc based Low Carbon Fuel Standards (LCFS).
Powering Sustainable Aviation Through Consumer Demand 6
Introduction
Decarbonizing hard-to-abate sectors such
as aviation is a difficult task and requires
both a systemic approach and leadership
from across the value chain.
Decarbonizing hard-to-abate industries such as Two primary levers exist for breaking this “chicken-
aviation is especially challenging and requires a and-egg” challenge: government policy/regulatory
holistic and systemic approach. The International action and the willingness of firms to voluntarily
Air Transport Association (IATA)’s industry decarbonize their operations. Both levers are
decarbonization pathway has been building mainly necessary and address different components;
on the significant operational fuel efficiencies public investment and supportive policies alone
achieved from one generation of aircraft to the are not long-term solutions, and a market-based
next. Both electric propulsion and hydrogen-based solution is necessary to accelerate aviation’s
fuels will also play a role in the future post-2030, decarbonization journey.
but each of these technologies has its limitations in
terms of scope and range and will not be available A large part of the post-pandemic growth in
at scale until well into the 2030s. Given the available demand for air transport will come from business
technologies, sustainable aviation fuels are the travel and freight transportation. At the same time
only viable alternative in the near-medium term – as their air travel needs are poised to increase,
and for long-haul flights, even in the longer term.3 many organizations are setting ambitious targets
Scaling SAF production necessitates overcoming and strategies to reduce their greenhouse gas
a deadlock between supply and demand: SAF (GHG) emissions and achieve net-zero energy
costs will decline as production increases, but goals. For many companies, aviation-related
because SAF producers lack guaranteed market emissions represent the single largest source
signals, they remain unwilling or unable to invest in or even the majority of their indirect (Scope 3)
increased production. GHG emissions.
Powering Sustainable Aviation Through Consumer Demand 7
BOX 1 Understanding GHG emissions under the Greenhouse Gas Protocol (GHGP)
The GHGP defines direct and indirect emissions – Scope 1: all direct GHG emissions
as follows:
– Scope 2: indirect GHG emissions from
– Direct emissions stem from sources owned consumption of purchased electricity,
or controlled by the reporting entity heat or steam
– Indirect emissions are a consequence of the – Scope 3: other indirect emissions, such as the
activities of the reporting entity, but occur at extraction and production of purchased materials
sources owned or controlled by another entity and fuels, transport-related activities in vehicles
not owned or controlled by the reporting entity,
The GHGP further categorizes these direct and electricity-related activities (e.g. transmission and
indirect emissions into three broad scopes: distribution [T&D] losses) not covered in Scope
2, outsourced activities, waste disposal, etc.
FIGURE 2 GHG emission classifications under the GHGP
SF6 N2O PFCS
CO2 CH4 HFCS
Scope 2 Scope 1 Scope 3
Indirect Direct Indirect
Employees’
business
travel
Production of
purchased
materials
Consumption
of purchased Use of products
electricity
Fossil Purchased
fuel activities
Vehicles owned
by contractors
Vehicles owned Waste
by the firm disposal
Powering Sustainable Aviation Through Consumer Demand 8
This situation presents sustainability leaders with accounting protocols consider only direct emissions
a challenge. Whereas companies have proven from aviation fuel burn without incorporating more
ways to reduce their Scope 1 direct emissions and accurate life-cycle emissions, which for SAF include
their Scope 2 emissions from purchased energy, upstream reductions from biogenic feedstocks.
guidance on how to address indirect aviation-
related Scope 3 emissions should be improved. In November 2020, the SBTi recognized SAF in
Established climate accounting frameworks such draft guidance as an in-sector mitigation option for
as those from GHGP and CDP do not currently both aircraft operators and their customers. This
recognize ways to mitigate aviation emissions presents an opportunity for a new SAF-focused
besides simply not flying. Although reduced solution that would help address both the aviation
travel is expected in the medium term due to the sector’s need to scale SAF and firms’ desire to be
pandemic, air travel will continue so it requires a credited for managing their aviation-related Scope 3
sustainable option. Moreover, existing corporate emissions. CST has developed SAFc to fill that role.
FIGURE 3 SAFc provides numerous climate benefits for stakeholders along the aviation value chain
Aircraft operators
– A solution for – SAF prices decrease
climate-conscious through efficiencies and
customers to cost-share economies of scale
SAF premiums
SAF producers
Air transport customers
– A standardized and uniform framework
for virtual SAF transactions – Transparent disclosures verifying social
and environmental criteria
– A new revenue stream from aviation
customers to cover SAF’s price – An emissions solution reportable as a
premium recognized mitigation action
– Strong demand signals to increase – Ability to compare and source
market confidence, enabling new lowest-emissions SAF
production capacity investments
Environmental NGOs
– Verifiable and quantifiable – Uniform reporting,
decarbonization actions feedstock transparency
and emissions savings,
– Emissions accounting based on GHGP
based on comprehensive guidance
life-cycle emissions
Powering Sustainable Aviation Through Consumer Demand 9
1 The case for SAFc
The SAFc framework is designed to speed
the scaling of SAF by unlocking additional
funding while ensuring the highest
sustainability standards.
Powering Sustainable Aviation Through Consumer Demand 10CST developed the SAFc framework based on cross-sectoral community (detailed in Figure 4)
several factors: SAF’s essential role in decarbonizing developed the framework as a market-based
aviation; corporate interest in addressing their mechanism to not only drive faster SAF innovation
Scope 3 emissions; and an evaluation of potential and development but also ensure the highest levels
emissions reduction accounting approaches. of sustainability standards required to successfully
meet the challenge of climate change.
Working within the dedicated “demand signal”
workstream of the overarching CST initiative, the
FIGURE 4 Clean Skies for Tomorrow “demand signal” community
1.1 SAF’s essential role in decarbonizing aviation
SAF is produced from sustainable, renewable low- 3. Aviation value chain – at this time, SAF is the only
carbon feedstocks such as used cooking oils, forestry “in-sector” near-term climate solution, as hydrogen
residues and municipal solid waste. When used to and electric flying will develop at scale over the
power aircraft, SAF can reduce the carbon intensity of next decade and may not cover long haul.
flying by up to 100% on a life-cycle basis, depending
on the feedstock selection and technological pathway. 4. Co-benefits – the production of SAF introduces
Several characteristics make SAF the most viable near- significantly less sulphur and particulate matter
term technology for decarbonizing aviation, including: into the environment than the production of
fossil-based jet fuel. In addition, SAF production
1. Immediate action – according to findings from creates new high-quality jobs.
the Intergovernmental Panel on Climate Change
(IPCC), the most critical time to reduce emissions is A critical barrier to faster scaling of SAF is its price,
between now and 2030 if we are to keep warming which is currently at least double that of fossil-
well below 2˚C.4 Because SAF is compatible with based jet fuel, but will come down, once economies
existing aircraft and fuelling infrastructure, major of scale kick in. The cost of feedstocks currently
changes to aircraft and airports that would delay exceeds the price for finished fossil-based jet fuel.
broad sector use are not needed. Unlike fossil fuels, input feedstocks may require
additional pre-processing before the material can be
2. Scalability – SAF production can grow to cover refined. Also contributing to SAF’s cost premium are
10% of total jet fuel sales by 2030,5 based higher transportation costs, requirements to blend
on sustainable feedstock availability, if the SAF with conventional jet fuel and fees to cover
investment capital can be secured. additional safety testing.
Powering Sustainable Aviation Through Consumer Demand 11FIGURE 5 SAFc enables a SAF-based in-sector emissions reduction market for Scope 3 emissions
as a complement to the current CORSIA offsetting scheme
Corporate air travel carbon management today, according to CORSIA Corporate air travel in-sector solution via SAFc
Target market
Air transport corporate customers
Creates demand
$
Generic carbon offsets do
not affect aviation industry
Science Based
Fragmented Pooled funding
Targets
market of accelerates
Initiative
existing offset aviation-based
Seeks best
providers carbon solution
practice
Offsets are option of last recognition
resort for Greenhouse Gas
Protocol guidance
Existing offset projects Corporation and airline action:
in other sectors: recognized approach generates
reforestation projects, wind growing demand for SAFc
energy, landfill methane
The aviation industry and fuel producers have been CST analysis has confirmed findings from prior
investing in SAF technologies and infrastructure academic research that future SAF production
for nearly 15 years, yet only two commercial SAF efficiencies plus a carbon fee are necessary to
plants are operational worldwide, producing less enable SAF to reach price parity with fossil-based
than 0.01% of jet fuel supply. Because the industry jet fuel. Depending on the conversion technology
is nascent, SAF producers are not yet able to and region, these two factors are not likely to make
benefit from efficiencies of scale or best practices SAF competitive until at least 2040.6 Until price
from existing production facilities, further limiting parity is achieved, another mechanism for covering
the ways to reduce production costs. Air transport the price difference and catalysing the SAF market
is a highly competitive industry with extremely low is needed.
margins; aircraft operators are generally not able to
afford SAF and remain economically competitive.
Powering Sustainable Aviation Through Consumer Demand 121.2 Corporate interest in addressing
Scope 3 emissions
The private sector has an important role to play in for an estimated 20–30% of commercial airline
supporting SAF growth. As firms increasingly look operational costs, depending on the year. Although
for solutions to address Scope 3 emissions in their the amount of corporate voluntary contributions
supply chains, they have expressed willingness to may not be sufficient to cover the substitution of
pay for the emissions reductions provided through SAF for all conventional jet fuel, it does indicate a
SAF. As an anecdotal example, many of CST’s potential source of significant funding for SAFc,
aviation-customer partners indicated that a 5–10% thereby breaking through the “chicken-and-egg”
increase in airfare costs would be acceptable, challenge and kickstarting a virtuous cycle of
provided they reflected a significant decrease in creating supply and economies of scale.
emissions. Conventional fuel currently accounts
FIGURE 6 Corporate willingness to pay around 5–10% of airfare costs towards mitigating emissions can
support significant growth of SAF production7,8
Demand Supply
$243 billion spent on 1.9 million metric tonnes SAF
business airfares annually produced annually (assumes
across all companiesa $1/litre SAF premium)
SBTi companies represent 19 SAF plants needed to meet
17.5% of business airfareb that annual production volumec
$2.5 billion (willingness to
1/3 of IATA’s 2025 SAF production
pay) of SBTi companies’
goal met (5.6 million tonnes)d
airfare spend
Notes:
a
Assumes 17% of global airfare is attributed to business travel and total business travel spending in 2019 was $1.43 trillion
b
Assumes travel spending is proportional to equity valuation of ($15.4 trillion)
c
Assumes 100,000 MT/facility
d
Does not include SAF demand to cover air cargo. The International Air Transport Association (IATA) 2025 goal is for 2%
of demand, or 7 billion litres, to be met through SAF
Powering Sustainable Aviation Through Consumer Demand 131.3 Potential emissions reduction
accounting approaches
To operate To operate effectively in support of the SAF market, 4. Energy Attribute Certificates (EACs): a
effectively in the SAFc mechanism must be based on a sound market-based mechanism for conveying the
support of the SAF accounting methodology. Four emissions reduction environmental attributes of a unit of renewable
market, the SAFc accounting approaches were considered as energy to the buyer. In the case of SAF, the
foundations for the framework: related attribute is the carbon reduction
mechanism must
associated with the use of sustainable
be based on a
1. Standalone disclosure: voluntary feedstocks compared to conventional jet fuel.
sound accounting actions are currently not recognized under
methodology. GHGP including SAF usage, but they can These four approaches were evaluated against six
be reported separately through annual main necessary attributes. First, an approach should
emissions disclosures such as CDP. generate funding to cover SAF’s price premium.
Second, it should eventually be incorporated into
2. Carbon offsets: project-based emissions established international GHG emissions accounting
reductions measured in metric tonnes CO2e standards such as GHGP, so that corporate
(tCO2e) outside a company’s value chain. This participants can secure auditable recognition of
accounting approach follows a published their efforts to reduce emissions. Third, it should
methodology and generates credits that are facilitate production of increased volumes of SAF.
tracked and retired through validated registries. Fourth, it should not require proof of “emissions
Carbon offsets must demonstrate their additionality” with the same level of detail as carbon
“additionality”, or evidence that the emissions offset projects because of the difficulties associated
reductions would not have occurred in the absence with determining intent for each and every flight. Fifth,
of revenue from the sale of the carbon offset. the approach should allow the tracking of SAF as a
physical good to offer additional measurement-based
3. Carbon insets: carbon emissions reductions assurances for traceability of associated emissions
that occur within an organization’s value chain reductions. Finally, it needs to be an in-sector
and can originate from carbon reduction solution supporting net-zero benefits. Using this filter
measures within a supply chain, such as use of approach and given current accounting methodology
renewable fuels or the purchase of renewable practices, the EAC-based model proved most
electricity used by an upstream supplier. promising, as detailed in the next section.
BOX 2 Additionality and SAFc
The term additionality within emissions accounting While SAFc enables increased demand for SAF
refers to a causal assessment of whether the and therefore facilitates reduced GHG emissions
financing of a particular carbon reduction project via air travel, it is outside the scope of the concept
generates a beneficial effect beyond what would to integrate either a standardized or project-
have ensued in other scenarios without the specific determination of emissions additionality.10
financial resources from that project in relationship
to a determined baseline.9
Powering Sustainable Aviation Through Consumer Demand 142 The SAFc framework
The SAFc concept is expected to be
based on an Energy Attribute Certificate
(EAC)-type model for successful emissions
reduction accounting.
Powering Sustainable Aviation Through Consumer Demand 15EACs are a well-established virtual accounting development and pilot modes, it will reach EAC-
instrument in the United States and Canada, like status once it is fully developed and has been
representing the clean energy attributes of incorporated into emissions accounting standards
renewable electricity from sources such as wind such as GHGP.
and solar. Internationally, EACs are comparable to
Guarantees of Origin (GOs) in the European Union Carbon offsetting is used extensively by the
and international renewable energy certificates aviation industry and underpins CORSIA, but
(I-RECs) in countries across Asia, Africa and South while the framework is useful for out-of-sector
America. They are also established mechanisms emissions offsetting, it is not effective for in-sector
through GHGP and CDP for emissions accounting. mitigation efforts – failing all but one of the attribute
requirements within this analysis.
EACs have proven to be effective at accelerating
the transition to renewable energy by creating an Intriguingly, alongside an EAC-based approach,
additional revenue stream for renewable energy insetting also offers significant potential for scaling
suppliers and signalling demand for additional SAF demand and associated Scope 3 reporting
renewable electricity generating capacity. frameworks. An EAC-based framework could be
a mechanism for documenting and transacting
Following evaluation, it is expected that an EAC- insets. The EAC and inset have similar underlying
based model will form a successful emissions emissions calculations and accounting practices.
reduction accounting approach for SAF as They are not necessarily contradictory or mutually
represented in the SAFc concept. EACs meet each exclusive systems. Insetting with a tradable
SAFc will reach of the six criteria and offer an entirely scalable and certificate-based approach may support the scaled
EAC-like status auditable approach, including potential follow- use and development of SAF.
on certificate trading markets to encourage SAF
once it is fully
demand above and beyond immediate use. The Smart Freight Centre and MIT’s Center
developed and has for Transportation & Logistics (SFC-MIT) are
been incorporated Standalone disclosures are not a long-term solution currently developing guidelines for an insetting
into emissions for SAF, due to unanswered questions about both approach for SAF. CST and SFC-MIT are in active
accounting impact measurement and their ability to generate communication to better determine how these
standards such impact funding. Importantly, although SAFc will frameworks can complement each other.
as GHGP. require reporting as a standalone disclosure while in
2.1 The Energy Attribute Certificate model
Ultimately, organizations need a market-based Emissions reduction and inclusion within GHG
instrument to address their air transport-based inventory
emissions. Following extensive stakeholder
consultations and analytical modelling, SAFc SAFc as an EAC creates a product that a company
functioning as an EAC is the current proposed can count in its GHG inventory. This will reduce the
model, borrowing an approach from the electricity gross emissions reported.
utility sector that is already accepted within the
GHGP standard. GHGP’s Scope 2 standard High-level approach and calculation method
includes EAC guidance that can be used to further
develop SAFc implementation methodology. It also Using one of the three calculation methods
provides a methodology for virtual product GHG to calculate air transport GHG emissions (the
accounting and reporting. Following incorporation fuel-based, distance-based and spend-based
of SAFc into internationally recognized standards, methods), SAF volume is then multiplied by a life-
SAFc reporting processes would shift from stand- cycle emissions factor to calculate emissions.
alone disclosures to EACs.
In an analogy to the GHGP standards for
Outlined below are the high-level approach and accounting and reporting on emissions, two EAC
calculation method; the benefits and risks for calculation methods could be used: one based
double counting; and potential solutions. The on the actual carbon intensity of the SAF batch,
longer-term goal of CST is to convince the GHGP and one based on an external emissions factor
authors to incorporate the SAFc, similar to an EAC. (e.g. CORSIA’s average feedstock conversion
To ensure that SAFc is a credible mechanism, carbon reduction). Both of these calculation
without vulnerability to false claims, a central registry methods enable corporations to report SAFc
needs to be established to host retired Scope 3 usage to mitigate their emissions. Additionally,
certificates and their linkage to Scope 1 claims. aligning with the GHGP would require separately
Powering Sustainable Aviation Through Consumer Demand 16FIGURE 7 How SAFc is modelled on an EAC
SAFc as an EAC
Application of SAFc in GHG preparation:
Scope 3 Category 6 Business travel emissions
Conventional
Scope 3 Fuel consumption allocated to Emission factor (industry, conventional Scope 3 Category 6 Business travel
Category 6 company through SAFc (kg fuel) jet fuel) (kg CO2e/kg fuel) emissions (kg CO2e) – industry
preparation
SAF Scope 3 Scope 3 Category 6 Business travel
Category 6 Fuel consumption allocated to Emission factor (SAF, supplier specific)
company through SAFc (kg fuel) (kg CO2e/kg fuel) emissions (kg CO2e) – SAF,
preparation supplier-specific
accounting for and reporting on carbon removals/ standards than of market-based mechanisms’
sequestration, biogenic emissions and non- effectiveness. In the GHGP’s Scope 3 guidance,
biogenic emissions. A GHGP working group reducing consumption of goods or services
is establishing a new reporting approach for or shifting to a lower-emitting supplier are the
carbon removals, bioenergy and land use, only recognized options for managing Scope
with published findings expected in 2022. 3 climate impacts. SAFc will require more time
to earn acceptance and incorporation from
The main drawback of developing SAFc as an emissions accounting frameworks, but will also
EAC is that international emissions accounting support improved definitions within existing
standards rely on detailed guidance that accounting practices. Phase II of the SAFc
excludes market-based mechanisms as an development will ensure close collaboration with
emissions solution, but this is arguably more these entities to ensure verifiable sustainability
a shortcoming of the existing accounting credentials and auditable accounting principles.
Powering Sustainable Aviation Through Consumer Demand 172.2 Catalysing SAF demand
An overview of how EACs work with renewable The SAF buyer can claim the emissions reduction
electricity illustrates the basic concept of the SAFc value of the sustainable fuel itself once consumed
and how it covers SAF’s price premiums and (Scope 1), depending on local regulations. The
catalyses SAF demand. eventual buyer of the SAFc – an air transport
customer such as a corporation for the purposes of
Electricity producers are issued with EACs for the this simplified description – can retire the certificate
renewable electricity they produce that complies and claim the related Scope 3 emissions reductions.
with the defined standards and legislation.
Producers then sell their EACs to businesses Importantly, SAFc helps address the supply-and-
and consumers, often separately from the demand deadlock that is limiting the growth of SAF.
electricity itself. Businesses and consumers, Low demand for SAF results in low investment in
for their part, purchase EACs as a way to increasing SAF production.
reduce their carbon footprint from electricity use
without having to install their own renewable As a market-based GHG mitigation standard for
energy systems. EACs are traded with a book- the aviation sector, SAFc catalyses additional
and-claim system in which only the entity that demand for SAF by generating new funding that
“cancels” the certificate can claim the usage can be used to cover its price premium.
of the renewable energy unit it represents.
This funding in turn creates market demand
SAFc could work in a similar way. The fuel producer signals to drive investment in increasing SAF
SAFc helps generates eligible SAF from sustainable feedstocks production capacity. This is similar to how EACs
address the and is issued with a corresponding number of in the electricity market improved the economics
supply-and- SAFc based on either a volumetric calculation or for renewable electricity developers when wind
demand deadlock an emissions-based calculation. As with EACs, the and solar were more costly than fossil sources. In
that is limiting the producer can then sell the actual SAF produced 2020, renewables were the largest source of newly
growth of SAF. and the virtual SAFc that was issued separately. installed electricity generation capacity.11
2.3 Addressing shared responsibility
for Scope 3 emissions
Within existing GHGP guidance, multiple parties A key innovation incorporated into the SAFc
along the supply chain can have overlapping framework is a mechanism to assign coinciding
individual responsibility for the same GHG emissions. and linked value to Scope 3 and Scope 1
In aviation, these parties include fuel producers, fuel emissions, providing reductions in both emissions
suppliers, aircraft and engine manufacturers, airports categories. This SAFc characteristic is important
and air transport buyers. As an illustrative example, because it provides a way for air transport
an aircraft operator may burn 1 tonne of fossil-based customers and aircraft operators (and eventually
jet fuel, generating more than 3 tonnes of CO2. The other parties in the supply chain) to address their
aircraft operator is responsible for the emissions shared responsibility for Scope 3 emissions. It
within its Scope 1, and the aircraft operator along also enables downstream parties to influence
with all of the other participants in the supply chain emissions reductions by working with their
share responsibility for the Scope 3 emissions for suppliers to address the source of emissions, in
their customers for the same fuel burn. alignment with SBTi guidance for supply chains.
Powering Sustainable Aviation Through Consumer Demand 183 SAFc functionality
To operate effectively and reliably, SAFc
requires robust and transparent sustainability
certifications and a robust governance
system to facilitate ownership and trade.
Powering Sustainable Aviation Through Consumer Demand 19Intergovernmental bodies such as the International – Systems to facilitate ownership and trade of
Civil Aviation Organization (ICAO) have established SAFc (e.g. a registry and governance standards)
minimum sustainability criteria for SAF,12 but there is
currently no governing body or governance system – Markets through which SAFc create value
in place for the creation, trade and retirement of
SAFc. To operate effectively and reliably, a SAFc This report establishes the SAFc mechanism
mechanism must have three core elements: principles and outlines further phases of research,
analysis and pilot projects already underway
– Standards to govern the entire life cycle of within CST on the SAFc mechanism itself as well
a SAFc as related accounting frameworks, traceability
components and governance operations.
3.1 The SAFc product
Essential elements of the SAFc product to be comply with and function within existing and
standardized include its sustainability criteria, its proposed SAF regulations and policies, including
unit of trade and its value streams. Importantly, those related to blending mandates.
all elements of the SAFc product must ultimately
Unit of trade
Although simpler, SAFc requires a common measurement, or unit primary metric allows stakeholders to understand
the volumetric of trade, to enable the parties involved in a SAFc progress towards replacing conventional jet
model does not transaction to communicate with each other and fuel with SAF. Using a mass-based approach
address some to account for both the size of individual company enables SAF producers to easily report liquid
actions and overall aviation sector progress in fuel mass measurement, as mass is a consistent
of the nuances
meeting GHG goals. metric that does not change according to
inherent in SAF, differing regulatory jurisdictions or life-cycle
such as different Using an EAC model, in which renewable electricity analysis methods. Additionally, one metric tonne
SAF feedstocks is calculated in megawatt hours (MWhs), SAFc of fuel represents a specific energy unit that
and production could use either a volumetric-based calculation can be tied to the SAFc, similar to the way in
pathways (mass/volume) or an overall LCA emissions-based which the EAC product is based on MWhs of
themselves having calculation (CO2 carbon equivalency, or CO2e). electricity. It is also easier to transact assets that
significantly are tied to physical goods (e.g. fuel volume).
different emissions Using a volumetric model, as conventional fossil-
footprints. based jet fuel that SAF replaces is measured in However, although simpler, the volumetric model
mass/volume, SAFc could be purchased and does not address some of the nuances inherent
recorded in mass units. Establishing mass as the in SAF, such as different SAF feedstocks and
Powering Sustainable Aviation Through Consumer Demand 20production pathways themselves having significantly CST has not yet determined the most effective and
different emissions footprints. Establishing a SAFc applicable approach to the SAFc unit of trade. While a
valuation based on an LCA emissions-based volumetric approach may be simpler to transact, it is
calculation may add initial complexity but can more a blunt approach and does not enable the assigning
effectively support the long-term scaling of the of higher SAFc values to lower emissions fuels. For
lowest-emissions SAF technologies. example, in using a volumetric approach, 1 tonne of
SAF with 60% emissions reductions over fossil jet
Using an overall emission calculation model, SAFc fuel could have an associated SAFc equal in value to
could be purchased and recorded in CO2e based on the SAFc associated with 1 tonne of SAF with 100%
a predetermined LCA emissions factor. This factor emissions reductions over fossil jet fuel. While an
would vary depending on both the SAF feedstock and LCA emissions-based approach may be the most
technological pathway. It would allow market forces to accurate, a market-based solution is effective only if it
properly reflect the emissions-reduction values of SAF is implementable. Importantly, as both the SAF volume
and drive investments towards more efficient next- and emissions factors are necessary components for
generation SAF such as power-to-liquid (PtL), over comprehensive reporting and emissions assessments,
time encouraging a “race to zero” within the industry. it is likely that both quantifications will be required.
Challenges remain in determining an appropriate Final determination will be made within Phase II of
comparable emissions baseline for conventional SAFc framework development, as informed by pilot
fossil jet fuel, as baselines vary based on regulatory transactions and continued collaboration across the
jurisdiction. But these can be overcome. CST community of partners.
Sustainability criteria
To accelerate aviation’s decarbonization pathway Two independent sustainability certification
and achieve maximum LCA emissions reductions, schemes, the International Sustainability and
SAF must be produced using the most efficient Carbon Certification (ISCC) and the Roundtable on
technological pathways, most sustainable feedstocks Sustainable Biomaterials (RSB), are both recognized
and most socioeconomically responsible guidelines. by ICAO. Both certifying bodies require producers
to minimize emissions impacts in a variety of
CORSIA has established robust SAF sustainability performance categories, referred to within CORSIA
requirements, with further guidance pending. as the 12 themes. These are:
Minimum GHG reduction Local and social
Conservation
target development
Air Water use rights Soil
Land use rights and land
Water Human and labour rights
use
Carbon stock (intensity) Waste and chemicals Food security
Powering Sustainable Aviation Through Consumer Demand 21CST recognizes that corporate air transport sustainability verifications and the impacts from
customers have an additional desire to reduce both direct and indirect land use change, no palm-
their carbon impact. In response, CST and working based materials, for example, would currently be
group stakeholders added the following three eligible for SAFc fuels, including palm fatty acid
requirements for the SAFc product: distillate (PFAD). Palm offers some of the lowest
emissions reduction benefits among the feedstock
1. Carbon intensity: While CORSIA requires candidates,14 and using PFAD for SAF may
eligible SAF to have emissions at least 10% result in more palm oil demand and cultivation
lower than those of fossil-based jet fuel,13 CST to replace its current uses.15 Should the situation
coalition members have indicated a preference change and LCA calculations demonstrate
for at least a 60% LCA emissions reduction that palm-sourced feedstocks can generate
in SAF. The SAF life cycle goes from “well-to- emissions savings above the 60% threshold,
wake” (though in the case of SAF, “well” means this determination may be reconsidered.
sustainable feedstock) and includes transport
from refinery to airport. A SAFc value would 3. Certification consistency: Currently, ISCC
not be applied without meeting a minimum and RSB certification processes differ. Their
threshold, to be finalized in Phase II of the sustainability certification scheme (SCS)
framework development. processes could benefit from harmonizing to
cover the 12 themes as well as calculations
2. Feedstock integrity: CST supports complete of carbon intensity related to indirect land use
transparency in the feedstock process and full change and the potential impact from secondary
supply-chain certification. Due to concerns about effects such as feedstock substitution.
FIGURE 8 RSB and ISCC differ in their sustainability certification schemes and could benefit
from harmonization
Elements RSB ISCC Potential actions for CST
ICAO considered RSB 12 Equivalent requirements
principles for its “themes”. Needs functionality for all between SCS;
CORSIA 12 themes
RSB has methodologies 12 themes quantitative metrics where
for all; some are qualitative possible
Indirect land use change Low ILUC risk biomass ILUC consideration
Not yet available
(ILUC) estimate calculator requirements
Feedstock displacement Methodology for Potential for displacement
Not yet available
evaluation displacement emissions within CST
Feedstock transparency Internal to producer Internal to producer Disclosed to buyer
Estimate based Estimate based
GHG – transport from Process to automate into
on transport mode on transport mode
refinery to airport CST accounting system(s)
and distance and distance
Powering Sustainable Aviation Through Consumer Demand 223.2 Accounting framework
SAFc needs to function within existing voluntary targets, such as SBTi. Both of these initiatives
GHG accounting and reporting standards. GHGP is are stakeholders within the CST Coalition, and
recognized as the authoritative climate accounting full alignment between these systems and the
and reporting industry guidance. SAFc accounting SAFc framework is key to long-term success.
approaches need to be developed so that voluntary Consultations are ongoing to ensure long-term
SAF purchases can be recognized within GHG mutual compatibility between the SAFc framework
accounting and reporting frameworks, such and GHGP and SBTi guidance.
as GHGP, and associated emissions reduction
GHGP application
GHGP outlines five principles applicable to 3. Consistency: Apply consistent measuring,
GHG measurement, accounting and reporting. accounting and reporting methods for emissions
A SAFc accounting framework that adheres related to the purchase and use of SAF (via
to these principles would enable reliable, the SAFc). If methodology changes occur, new
comparable and consistent disclosures by methods must be appropriately disclosed, and
participating companies. The following five a re-baselining exercise may be needed for prior
principles for SAFc are adapted from GHGP:16 year disclosures.
1. Relevance: Ensure the GHG inventory 4. Transparency: Address all relevant emissions
appropriately reflects a company’s disclosures in a factual and coherent manner,
emissions generated through the supported by a clear underlying audit
purchase and use of SAF (via the SAFc) trail. Significant assumptions, estimations
and serves the decision-making needs or judgements must be appropriately
of both internal and external users. disclosed and include information on relevant
methodologies and data sources.
2. Completeness: Account for and report on
all GHG emissions sources and activities 5. Accuracy: GHG emissions resulting from the
within the inventory boundary related to purchase and use of SAF (via the SAFc) should
the purchase and use of SAF (via the be sufficiently accurate to enable users to
SAFc). Where a company has excluded make decisions with reasonable confidence
emitting activities, omitted impacts should as to the integrity of the reported information.
be sufficiently disclosed and justified. Uncertainties related to assumptions,
estimations or judgements should be minimal.
Powering Sustainable Aviation Through Consumer Demand 23These principles require the reporting of GHG report life-cycle fuel emissions for SAF and compare
emissions regardless of scope or industry and that to the life-cycle conventional fossil-based
are intended to ensure the information reported jet fuel. In the past, many reporting entities have
appropriately quantifies the company’s overall limited aviation reporting to only direct emissions
emissions. GHGP guidance is voluntary and not from aircraft, but such a change to consider holistic
subject to legal restrictions. comparisons with true and comparable baselines
would enable a more thorough accounting approach.
Current GHGP Scope 2 guidance covering the
use of EACs for electricity emissions mitigation In practice, only aircraft emissions directly from
can potentially be used to inform a Scope 3 SAFc aircraft engines are technically assigned to the
accounting framework. Although covering different aviation sector; they are not assigned to fuel-related
emissions parameters, both EACs and SAFc upstream life-cycle emissions. National GHG
provide a solution to address the limited options inventories will need to be reconciled for SAF’s
end customers have to purchase emissions- upstream life-cycle reductions to be assigned to
mitigating energy. air transport. Currently, GHGP guidance states
that any removals should to be reported separately
Setting boundaries for Scope 3 GHG categories from Scope 1, 2 and 3. (A GHGP working group
is currently establishing a new reporting approach
GHGP provides guidance on boundaries for for carbon removals, bioenergy and land use, with
emissions reporting, indicating a preference for a published findings expected by 2023.)
“consistent consolidation approach” across Scope
1-3 inventories.17 It also identifies three approaches Leveraging GHGP principles for development
to determine organizational boundaries and to of SAFc’s accounting framework
allocate GHG emissions to the reporting entity:
There is no “ideal fit” for a virtual product such as
– Equity share (based on economic benefits from SAFc within existing GHGP standards. For example,
proportion of ownership) existing GHGP guidance on reporting of combined
life-cycle factors or biogenic emissions separately,
– Financial control outside of the Scope 1, 2 and 3 inventories, would
prevent clear indication of the lower-carbon benefits
– Operational control of SAF when compared to conventional jet fuel. This
is because the reductions do not occur at the point
In addition, the guidance includes minimum of combustion but upstream in the value chain. A
boundaries for reporting on different categories of consolidated emissions factor, comprising a single
Scope 3 emissions. Emissions within the minimum life-cycle factor including both fossil and biogenic
boundaries for Scope 3 include air transport emissions, is necessary to demonstrate life-cycle
passengers and cargo. emissions reductions from SAF.
Companies typically estimate direct aviation Despite this existing lack of clarity, GHGP
emissions based on an allocation of Scope 3 standards are useful to broadly inform a SAFc
emissions relative to their share of aircraft use; accounting approach. For example, the five GHG
only direct emissions are incorporated in Scope 3 accounting and reporting principles detailed above
air transport emissions calculations within GHGP. apply to any emerging GHG measurement or
Although GHGP does not explicitly include the fuel’s method, whereas the guidance on implementing
life-cycle emissions, it does include limited guidance quality criteria for either the Scope 2 location-
to account for biogenic fuels from emissions and market-based emissions or the offset
savings.18 In inputting to the development of the baseline scenarios can be used as reference to
SAFc concept, the World Resources Institute’s ensure quality criteria underpin the SAFc itself.
GHGP authors indicated that it is acceptable to
Powering Sustainable Aviation Through Consumer Demand 24Emissions estimation approach
GHGP’s Technical Guidance for Calculating Scope 2. The distance-based method, which
3 Emissions provides guidance on how to calculate involves determining the mass, distance
indirect emissions from air travel by category, as and mode of each shipment, then
well as guidance regarding acceptable source data. applying the appropriate mass-distance
The calculation methods are:19 emissions factor for the vehicle used
1. The fuel-based method, which involves 3. The spend-based method, which involves
determining the amount of fuel consumed (i.e. determining the amount of money spent on
Scope 1 and Scope 2 emissions of transport each mode of business travel transport and
providers) and applying the appropriate applying secondary emissions factors.
emissions factor for that fuel
FIGURE 9 GHGP’s formula for calculating Scope 3 emissions from business air travel
Current considerations
Most accurate
Emissions factor per fuel type – Data availability from
Mass of fuel consumption Absolute Scope supplier(s)
Depending on the type of fuel:
allocated to organization 3 emissions in – Careful accounting
by its aviation supplier(s) (l) 1. Jet kerosene kgCO2 /kg fuel kg/tonne of CO2 required to avoid double
Fuel-based claiming across Scopes
2. LCA SAF kgCO2 /kg fuel
method 1 and 3
Emissions factor per travel type
SUM per travel type (typically Either:
short, medium and long haul + 1. Primary carrier specified vehicle specific Absolute Scope
economy, premium economy, emissions factor (kgCO2e/vehicle-km or 3 emissions in
business and first) of distance passenger-km) kg/tonne of CO2
Distance-based – Inaccurate Scope 3
travelled (per employee)
method 2. Secondary emissions factor (e.g. ICAO) emissions data as a
(kgCO2e/vehicle-km or passenger-km) result of actual fuel
consumption not being
considered
– Careful accounting
required to avoid
double claiming across
Emissions factor (kgCO2e/litre)
Fuel Scopes 1 and 3
Depending on the type of fuel: Absolute Scope
consumed 3 emissions in
(litres) 1. Jet kerosene kgCO2/kg fuel kg/tonne of CO2
Spend-based
method 2. LCA SAF kgCO2/kg fuel
In addition to the calculation formula, the GHGP fuel-based method to provide primary emissions
distinguishes between two types of data: data, which includes SAF usage, so that firms and
individuals can use the emissions data to address
– Primary data from specific activities within a the balance of the impact and avoid over or
company’s value chain underpaying for SAF.
– Secondary data not from specific activities Reporting emissions reductions in the
within a company’s value chain context of baseline emissions
Primary data could include utility bills and fuel GHG reductions must be quantified relative to
invoices paid by a company. Secondary data could a baseline. In corporate GHG inventories, the
include information provided by an aircraft operator reduction is typically quantified relative to the base
regarding trip distances and fuel burn data. The year. However, it is also possible to quantify GHG
GHGP states that “in general companies should reductions relative to a baseline scenario for the
collect high-quality primary data”. Aircraft operators’ same period, known as project accounting. The
ability to provide fuel consumption data to their GHG Protocol defines emissions reduction as either
customers will vary. Secondary data using distance a reduction in GHG emissions or an increase in the
or travel spend does not include aircraft operator removal or storage of GHGs from the atmosphere,
efficiency information or SAF usage. Therefore, relative to baseline emissions. In this case, the
CST proposes that aircraft operators employ the baseline scenario emissions are the emissions
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