Viewpoint: How SAF Makes Bizav Green & Affordable

Climate change is a topic of much debate by governments and industry alike. Views are largely split along political lines in the U.S. Under the current administration, regulations to slow global warming are being supplanted. Nonetheless, many companies across virtually all industries, from airline operators to global service corporations, remain committed to reducing their carbon footprint. 

Companies with direct means of production, such as factories, generally have multiple options to reduce their carbon footprint. But what of consulting firms, banks, and technology companies whose carbon footprint isn’t directly tied to their everyday activities? How are emissions generated by these types of corporations and how can they reduce their emissions?

The primary source of emissions for “corporates” is business travel; further, approximately 90% of travel emissions come from air travel. But most corporations do not own airplanes or directly influence the carbon intensity of the fuel that goes in them, leaving them with limited options for achieving their carbon reduction goals. 

A leading solution for these firms is to buy scope 3 emissions credits, commonly referred to as SAF certificates or “SAFc.” SAFc is an emerging product that corporations are leveraging to reduce their carbon footprints. For business aviation, the emergence of SAFc offers a rare opportunity to lower their carbon footprints without pushing operating costs through the roof. Innovative business aviation operators see this opportunity and are quickly capitalizing on it. 

3 Products In 1

Sustainable Aviation Fuel, or SAF, comes from non-fossil feedstocks that are converted to fuel through a technology pathway which ultimately has a lower carbon footprint than conventional jet fuel production and use. Examples of these pathways include production of SAF from used cooking oil (UCO) and animal tallow via the well-established Hydroprocessed Esters and Fatty Acids (HEFA) process, and emerging routes such as volatile fatty acids-to-synthetic paraffinic kerosene (VFA-SPK), Alcohol-to-Jet (ATJ) and Power-to-Liquids (PtL). Each of these processes yields a jet fuel with a lower carbon footprint than conventional jet fuel.

Scope 1 emissions are the emissions from the direct activities of a company. For aviation operators, the burning of jet fuel constitutes a scope 1 emission. A business traveler, such as a consultant flying to a customer meeting, riding on an aircraft burning that jet fuel also accrues emissions, but they are classified as scope 3 emissions. Scope 3 emissions are based on the indirect activities of a company, such as business travel. When SAF is used instead of conventional jet fuel, the difference in carbon intensities equates to the abatement of scope 1 emissions for the aviation operator and abatement of scope 3 emissions for the traveler. This has value. 

The carbon abatement achieved with SAF can be packaged into separate products: scope 1 emissions abatement and scope 3 emissions abatement, or SAFc. These credits can be sold into voluntary markets to “inset,” or lower, the carbon footprint for the buyer. In essence, SAF is 3 products in 1: a physical fuel, a scope 1 emissions credit for aviation operators, and a scope 3 emissions credit for travelers. While the physical fuel is sold at commodity price, the abatement value is sold in voluntary markets for additional value. This additional value helps to offset the increased cost of producing SAF.

A Unique Tool 

Global companies are under the microscope for their environmental impact, typically measured in terms of carbon intensity. By purchasing scope 3 emissions credits via SAFc on the voluntary market, corporations can claim the “green benefit” of the abated carbon from using SAF rather than high-carbon intensity jet fuel. This, in turn, reduces their scope 3 emissions and the overall carbon footprint of their business, enabling them to meet their sustainability targets. 

With few other options to lower their carbon footprints, many corporations have the desire and the ability to pay the “green premium” that often hinders green product adoption. To date, many global corporations have engaged in SAF transactions to lower their scope 3 emissions, including Deloitte, Microsoft, and JP Morgan Chase, among others. A recent survey by the Rocky Mountain Institute (RMI) found that the average “willingness to pay” by corporations for SAFc is approximately $300/ton of CO2 abated. There is clear market demand for the value this product brings. 

A Value For Business Aviation 

It is well established that fuel is one of the largest operating expenses for airlines. In countries across the globe, fuel contributes 20-30% of the total cost of operations. Hence, airlines are challenged to accept any increase in fuel prices. Today, SAF is more costly to produce than conventional jet fuel from fossil sources. Options to reduce the net cost of SAF will be most welcome by airlines seeking to lower their carbon footprint. 

Recall that a gallon of SAF can be viewed as 3 products in 1. The operator can burn the physical fuel to operate their aircraft, retain the scope 1 credit, and monetize the scope 3 credit to corporate travelers who are showing a strong willingness to pay. Some SAF technologies, including VFA-SPK, are able to offer physical fuel and scope 1 abatement close to cost parity with Jet-A coupled with competitively priced scope 3 abatement. 

The aviation operator can then “separate” the scope 3 benefit, via SAFc and sell the certificate to corporate travelers. Doing so effectively brings the operator’s SAF fuel price to near parity with Jet-A. For the business aviation operator, engagement in SAF yields fuel that is sustainable without increasing costs, two concepts rarely found together.

A Win-Win

For business aviation, the purchase of SAF creates the opportunity to reduce carbon footprint without increasing net fuel price. Who knows, as SAFc demand grows, it may serve to reduce net fuel costs. 

Business aviation is uniquely placed for the decoupling of physical fuel and sustainability benefit. Operators are concerned with controlling cost and corporate travelers are concerned with carbon footprint. Innovative business aviation companies are recognizing that SAF satisfies both. 

 David Austgen is CEO of BioVeritas.