A new certificate system has been launched that will allow corporations and travellers to claim lower emission benefits through covering the price premium of sustainable aviation fuel (SAF). It aims to unlock funding sources and help boost demand for clean jet fuels that ensure reductions in lifecycle carbon emissions. The Sustainable Aviation Fuel Certificate (SAFc) has been developed through the World Economic Forum’s Clean Skies for Tomorrow (WEF CST) initiative under a project co-led by WEF, RMI and PwC Netherlands and involving a wide range of industry partners. The system works within standard book-and-claim processes, which will allow the actual SAF to be delivered to the airport nearest its production plant. The certification is initially designed for corporations with significant air travel and freight carbon footprints but WEF said it can be expanded in due course. A number of large US corporations have recently signed SAF agreements with airlines including American and Alaska.
“Clean Skies for Tomorrow was founded to accelerate the deployment of SAF and aviation’s net zero pathway,” said Pedro Gomez, Head of Shaping the Future of Mobility at WEF. “Consumer demand for sustainable air travel is a critical part of that pathway and SAFc was specifically designed to enable a clear and consistent market demand signal.”
With SAF two to five times the price of convention jet fuel and accounting for only 0.1% of fuel used in aircraft worldwide, the high cost and limited supply deters investment to scale up production and requires a significant demand stimulus, which the SAFc mechanism aims to provide, says WEF. This kind of intervention is particularly critical during the pandemic recovery, it adds, when a financially perilous aviation industry is unable to subsidise increased use of SAF on its own.
“This is the time for innovation in aviation emissions reduction,” said Jules Kortenhorst, CEO of RMI. “SAF provides the most promising solution to reducing aviation emissions yet today, demand for SAF far outstrips supply. WEF and RMI have developed SAFc to enable ambitious corporations to address emissions from flying while sending a strong demand signal and catalysing new SAF production.”
WEF says corporations have already indicated a willingness to pay more for employees’ sustainable travel practices and input from stakeholders in the CST initiative suggests corporate demand alone can cover one-third of the price premium associated with IATA’s 2025 global SAF volume target of 2% of jet fuel consumption, or around 6-7 billion litres. In terms of ticket prices, feedback from many CST’s aviation customer partners indicates a 5-10% increase in airfares would be acceptable provided this delivered a significant and verifiable decrease in emissions, reports WEF.
Some large companies within the CST coalition – including Deloitte, Deutsche Post, DHL Group, Microsoft and BCG – have already signed SAF agreements in respect of corporate travel with airlines including Alaska Airlines and American Airlines (see articles here and here). In May, a group of large American corporations formed the Sustainable Aviation Buyers Alliance to drive investment in SAF (see article)
The SAFc system has been designed with a robust tracking and verification process, assures WEF, as well as a registry to ensure that climate-related claims are legitimate and only claimed by a single party. It says this type of virtual accounting system is already established in renewable electricity markets through energy attribute certificates and guarantees of origin, and has served as a model for the SAFc framework. These mechanisms verify that electricity is generated from an eligible renewable source and have been instrumental in allowing companies to claim the resulting environmental benefits without producing electricity themselves.
Under the SAFc mechanism, fuel producers generate eligible SAF from sustainable feedstocks following standards such as those developed by the ICAO CORSIA scheme. They issue a defined amount of SAFc based on either fuel volume or overall lifecycle emission reductions. Producers can then sell the actual SAF volume as well as the virtual SAF certificates separately. In a volumetric model, SAFc prices could factor in the overall premium of the associated SAF over fossil-based jet fuel after government incentives are incorporated. In a lifecycle assessment (LCA) based model, SAFc prices would be based on overall LCA emission reductions over a standardised baseline of fossil-based jet fuel. SAF buyers or users such as aircraft operators can claim the direct (Scope 1) emissions reduction value of the SAF itself and the buyer of the SAFc, such as a corporation with business travel needs, can retire the certificate and claim the related indirect (Scope 3) emission reductions.
Once the SAF has been certified as sustainable, it can be transacted and ownership transfer is tracked both physically and virtually until claims are retired within a registry.
Over the next year, WEF says the development of the SAFc framework will shift into a next phase that will include additional SAFc pilot transactions and finalisation of a full emissions accounting system. Other developments will ensure compatibility with regional SAF regulations and policies, such as the EU SAF blending mandate and California’s Low Carbon Fuel Standard.
Photo: Deloitte has teamed with American Airlines to offset business travel emissions through SAF