7 factors to consider on your first sustainable aviation fuel offtake

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Laia Barbarà Mir, Lead, Industry Decarbonization, Aviation, World Economic Forum, Rosa Esi Ennison, Project Specialist, Shaping the Future of Mobility, World Economic Forum

• The First Movers Coalition for Aviation commitment has set a target to replace at least 5% of jet fuel member demand with ‘super Sustainable Aviation Fuel (SAF)’ – with at least an 85% emission reduction factor compared to traditional jet fuel – by 2030.
• SAF Offtake Agreements are the key enabler to accelerating the decarbonisation of the aviation sector and the First Movers Coalition for Aviation has published a practitioner’s manual for first-time SAF off-takers.
• Achieving economies of scale for this novel decarbonisation fuel requires a combination of factors, including a strong demand signal from airlines and corporate flyers, policy incentives and finance.

Over the past decade, there has been a notable increase in Sustainable Aviation Fuel (SAF) offtake agreement announcements (figure 1), a trend that reflects positively on this hard-to-abate sector and its efforts to decarbonise. However, to ensure these numbers continue on an upward trajectory and exponentially so, a sector-wide understanding of what it takes to purchase SAF and its environmental attributes is paramount.

Members of the First Movers Coalition for Aviation Commitment have published an Offtake Manual for SAF.Thisdraws on learnings from early offtakers to fill knowledge gaps and shed light on key considerations depending on where in the value chain you sit. This includes watch-outs and recommendations for:

• SAF producers and suppliers

• Airlines and fuel buyers

• Corporate flyers

The First Movers Coalition Aviation sector commitment – supported by airlines, corporate flyers and purchasers of airfares – aims to replace at least 5% of conventional jet fuel demand with SAF. By 2030, this should reduce life-cycle greenhouse gas (GHG) emissions by 85% or more, as compared to conventional jet fuel or zero-carbon emitting propulsion technologies.

7 factors to consider prior to purchasing SAF

1. The price may seem high (because it currently is)

The price of SAF is significantly higher than that of conventional jet fuel because the industry is still in the early stages of production and supply is finite. As demand from airlines and corporate flyers increases, suppliers will be incentivised to invest more in the development of SAF production technologies – an action that will drive economies of scale and decrease the price of SAF. Carbon pricing is another mechanism that can make prices for SAF more favourable, as producers will be more willing to allocate capital towards the production of zero or low-carbon alternatives to fossil fuel. Additionally, revenues from carbon pricing can be used to scale SAF production.

Discover

What is the World Economic Forum doing to reduce aviation’s carbon footprint?

As other sectors proceed to decarbonize, the aviation sector could account for a much higher share of global greenhouse gas emissions by mid-century than its 2%-3% share today.

Sustainable aviation fuels (SAF) can reduce the life-cycle carbon footprint of aviation fuel by up to 80%, but they currently make up less than 0.1% of total aviation fuel consumption. Enabling a shift from fossil fuels to SAFs will require a significant increase in production, which is a costly investment.

The Forum’s Clean Skies for Tomorrow (CST) Coalition is a global initiative driving the transition to sustainable aviation fuels as part of the aviation industry’s ambitious efforts to achieve carbon-neutral flying.

The coalition brings together government leaders, climate experts and CEOs from aviation, energy, finance and other sectors who agree on the urgent need to help the aviation industry reach net-zero carbon emissions by 2050.

The coalition aims to advance the commercial scale of viable production of sustainable low-carbon aviation fuels (bio and synthetic) for broad adoption in the industry by 2030. Initiatives include a mechanism for aggregating demand for carbon-neutral flying, a co-investment vehicle and geographically specific value-chain industry blueprints.

Learn more about the Clean Skies for Tomorrow Coalition’s impact and contact us to find out how you can get involved.

2. Not all SAF are the same

SAF is a drop-in fuel that can be used in place of fossil-based fuels to reduce CO2 emissions. It is produced using a combination of biogenic and non-biogenic feedstock and by employing an array of technological pathways. The resulting variation in SAF calls for the industry to identify which solutions are tailored to their specific demands and emission reduction targets. Given the current supply of SAF is limited in quantity and geographical coverage, using a book and claim mechanism can enable the transparent and efficient purchase of SAF and SAF certificates (SAFc).

3. Physical SAF is not available at all airports (yet)

It has been established that SAF is still limited in supply and it has not reached global commercialisation at the needed scale. Even so, purchasing SAF Scope 3 Credits allows for the uptake of physical fuel in place of conventional jet fuel and reduces emissions from the sector. These purchases send a strong demand signal to fuel producers, stimulating supply and contributing to increased availability over time.

Read more on this in this report – Powering Sustainable Aviation Through Consumer Demand: The Clean Skies for Tomorrow Sustainable Aviation Fuel Certificate (SAFc) Framework

4. Claiming emissions reduction is a multi-step process

SAFc, or environmental attributes of SAF, allow corporates to reduce CO2 emissions from air travel without physically purchasing SAF. Mandatory or voluntary claims for CO2 reduction require SAFc as proof of purchase. Upon defining an annual target for SAF purchases, third-party auditors assess corporate CO2 emissions reductions to produce an impact report. It must be understood that purchasing SAF is a lengthy process due to supply constraints and corporates must consult with their suppliers on the process for issuing certificates and whether the timeframe aligns with internal reporting requirements.

5. CO₂ calculations vary

To tackle emissions caused by burning fossil fuels, airlines and SAF purchasing platforms calculate resulting emissions from a flight and introduce the corresponding volume of SAF to counter these emissions. There may be variations in calculating CO2 and SAF volumes depending on factors, such as SAF blend and aircraft model. For this reason, offtakers must be cautious when claiming CO2 reductions.

6. Emissions accounting and reporting

While physical SAF is accounted for once burned, SAFc can be claimed otherwise and is accounted for under scope 3 category 6 for business travel. Calculations integrate both primary and secondary data, including attributes of feedstock and LCA values. Standardising SAFc accounting and reporting mechanisms is one way to limit errors in calculation. This can be achieved through the adoption of SAF scope 3 credits in International GHG accounting standards.

Read more on this in this report – Sustainable Aviation Fuel Certificate (SAFc) Emissions Accounting and Reporting Guidelines

7. Stakeholder alignment

Finally, as SAF procurement is a complex landscape to navigate, it is important that corporates gain a clear understanding of it and embed the process in their climate strategy. A purpose-driven approach encourages investment in SAF, despite the time commitment and politics associated with engaging multiple stakeholders.

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The First Movers Coalition Aviation commitment members have taken an important step to demonstrate their demand and catalyse action in the sector. These complex efforts, however, need to be complemented by government support and increased access to finance. The right combination of policy and financial incentives will create an ideal environment for suppliers and consumers alike, accelerating the scale-up of SAF.

*We would like to thank the following First Movers Coalition Aviation member companies for their inputs and guidance: American Express Business Travel, Bank of America, Boston Consulting Group, Breakthrough Energy, Deloitte, Deutsche Post DHL Group, PwC, Rio Tinto, Salesforce and United Airlines.