Microsoft backs SAF for Scope 3 business travel emissions in agreements with IAG and FEG

In what they describe as the largest and longest Scope 3 sustainable aviation fuel deal to date between an airline and a corporate partner, International Airlines Group (IAG) and Microsoft have extended their 2023 co-funded SAF purchase agreement by five years. Under the new terms, Microsoft will co-fund an additional 39,000 tonnes of SAF that will help reduce lifecycle carbon emissions by around 113,000 tonnes. The SAF will be produced in the UK by Phillips 66 and in the United States at LanzaJet’s commercial-scale alcohol-to-jet Freedom Pines Fuels facility. Under a separate agreement, Dublin-headquartered Future Energy Global (FEG) will supply Microsoft with Scope 3 certificates derived from airline purchases of SAF. As defined by the Greenhouse Gas Protocol, emissions from a flight fall under an airline’s direct responsibility (Scope 1) but a company, in this case Microsoft, is responsible for its staff’s share of business flight emissions (Scope 3).

Scope 3 encompasses lifecycle carbon emissions that are therefore not produced by the company itself but is indirectly responsible for up and down its value chain. By partnering with its corporate customers, airline group IAG is able to purchase more SAF and reduce its Scope 1 direct emissions. Corporate customers in turn benefit from lowering their Scope 3 emissions from the industry commensurate to a proportion of their business travel.

Microsoft is also co-funding SAF that is used by IAG’s airlines to ship data centre components globally, in partnership with Microsoft’s freight forwarders.

“Long-term agreements help encourage much-needed funding in SAF production, something that IAG is championing through our investment in global SAF projects such as LanzaJet,” commented Jonathon Counsell, Group Sustainability Officer at IAG, which has a goal of using 10% SAF by 2030.

Responded Julia Fidler, Microsoft’s Environmental Sustainability Fuel and Materials Decarbonization Lead: “We are taking our collaboration with IAG further, extending our SAF purchase agreement to bring Microsoft closer to our goal of being carbon negative by 2030, while ensuring a multi-year commitment to help drive greater SAF production. We are pleased to work alongside IAG on efforts to increase demand and make SAF more widely available through our shared long-term purchase agreement.”

The SAF used as part of the agreement will be produced from used cooking oil and food waste at Phillips 66’s Humberside refinery, and from bioethanol at LanzaJet’s Freedom Pines Fuels facility. The $1 billion Microsoft Climate Innovation Fund has previously invested in LanzaJet and its facility is earmarked to supply SAF to British Airways, one of the airlines in the IAG portfolio.

By the end of 2024, IAG says 1.9% of its total fuel usage for the year was SAF and total expenditure, including future commitments for SAF offtakes, exceeded $3.5 billion.

Future Energy Global works with airlines to source SAF and develop markets in SAF certificates, or credits. It is providing Microsoft with three tranches of SAF-derived Scope 3 credits, developed in conjunction with airline partners such as Cathay Pacific.

“We appreciate Future Energy Global’s expertise and diligence in providing SAF certificates and their work in development of the wider eco-system required to scale SAF,” said Katie Ross, Director, Carbon Reduction Strategy & Market Development, Microsoft.

Natasha Mann, CEO of Future Energy Global, said her company was “proud to have designed a Scope 3 certificate transaction for Microsoft.”

She added: “We were founded with the aim of scaling SAF production by building a collaborative ecosystem involving all aviation stakeholders. When Microsoft acquires SAF Scope 3 certificates like these, it’s sending a strong demand signal for SAF.”

Meanwhile, New York-based carbon management firm Carbon Direct, in collaboration with Microsoft, has announced the release of new science-based criteria and standards to guide high-quality marine carbon dioxide removal (mCDR) project development and carbon credit purchases.

“With rapid technological progress and increased investment, marine carbon dioxide removal has the potential to deliver durable, large-scale CO2 removal – potentially billions of tonnes per year in the coming decades,” said Brian Marrs, Senior Director, Energy Markets at Microsoft.

The new mCDR criteria come in response to advancement in the technical readiness of select mCDR technologies and recent market activity, said the two partners.

“mCDR is at a pivotal moment,” commented Dr Matthew Potts, Chief Science Officer at Carbon Direct. “Achieving high-quality outcomes requires rigorous monitoring, transparency and scientific integrity to ensure safe and effective deployment.”

In February, sustainable aviation investment company SkiesFifty announced an agreement to purchase 200,000 carbon credits over four years in mCDR company Gigablue, which is aiming to permanently remove a gigaton of carbon dioxide by 2035.

Photo: LanzaJet’s Freedom Pines Fuels facility

Christopher Surgenor

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