Maximizing Sustainable Aviation Fuel Opportunities | ENGIE Impact

Maximizing Sustainable Aviation Fuel Opportunities

Article | Read Time 4 MIN
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Andre De Fontaine Director, Sustainability Solutions - Americas
Marisa Donnelly Director, Sustainability Solutions - Americas
Kevin Zheng Manager, Sustainability Solutions - Americas
Kristen Mertens Manager, Strategy & Implementation - Americas
Decarbonization
Sustainable Aviation Fuel
Clean Energy

Managing and reducing the carbon impact of air travel has been a significant hurdle for many organizations, especially those businesses heavily reliant on face-to-face meetings with clients and with employees in far-flung locations. Even the most environmentally conscious companies may have felt constrained as they are only one component of a complex global aviation ecosystem, having limited ability to influence fuel and technology investments made by air carriers.

Recently, more tools and partnerships have become available to support any company — large or small — looking to take more positive climate action around flying. The emergence of sustainable aviation fuel (SAF) and supporting certificates (SAFc), as well as alliances dedicated to bringing together the buying power of companies across sectors, means addressing the carbon impact of air travel in a meaningful way is becoming more achievable.

Decarbonizing Aviation Fuels

The aviation sector is commonly, and correctly, considered one of the most difficult to decarbonize. Electrification is currently impractical for all but the shortest flights, whereas direct hydrogen fueling is expensive and would require new aircraft to accommodate the fuel. Biobased drop-in SAF — which can be used, or “dropped in,” with existing infrastructure — is the best near-term option to decarbonize air travel, with fuels on the market today cutting lifecycle carbon emissions by up to 80%.

Unfortunately, the availability of these fuels is low and prices are high – two to four times the cost of conventional jet fuel, even after capturing public subsidies. With airlines already dealing with thin margins, the additional cost associated with SAF and the subsequent impact on ticket prices makes it a difficult investment.

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SAF certificates are an elegant solution to this problem. In a book and claim model, pioneered by organizations such as the Sustainable Aviation Buyers Alliance (SABA), corporations can purchase SAF certificates to address their Scope 3 greenhouse gas emissions. In a typical transaction, an airline will purchase SAF from a fuel provider and then sell the certificates to a corporate traveler, at a price generally equivalent to the SAF premium (as compared to conventional jet fuel). The company gets a Scope 3 reduction certificate, and the airline receives the necessary funding for investing in more sustainable fuels and credit for their own Scope 1 reductions. Environmental attribute certificates aren’t a new decarbonization tool — they’ve been used for years to grow the renewable electricity market — but their application in the aviation sector is just getting started and holds great promise in catalyzing the nascent SAF market.

For instance, ENGIE Impact recently supported SABA by designing and executing the first collective procurement process for SAF certificates — helping to streamline and maximize the purchasing power of individual companies. Whether as part of collective efforts or individual, companies of all stripes can benefit from integrating SAF solutions into their decarbonization strategy.

Making Sense of an Evolving Market

While the SAF world is still evolving, there are many key factors every organization should take into account when aiming to integrate SAF certificates into their decarbonization strategies.

1. It Pays to Shop Around

SAF is not a commoditized product; carbon intensity can vary, even across fuels with the same underlying production processes. Prices, too, are neither stable nor predictable. Across transactions that ENGIE Impact has helped broker to date, we have seen SAF certificate prices vary by a factor of 10 for fuels with similar sustainability characteristics. Companies need to spend time shopping around and get multiple quotes to find a solution that best fits their needs and budgets.

2. SAF Technologies are Advancing Rapidly

Fuels available in the market today may be superseded on cost and environmental performance metrics over the next several years. This will impact how a company will want to phase their SAFc investments over time and the duration of any long-term deals they may choose to strike.

3. New Ways of Buying and Selling

SAFc are emerging. One-off, one-year deals with airlines currently dominate the market, but opportunities to purchase certificates directly from fuel providers will also grow. Forward-thinking companies are also beginning to structure longer-term SAFc deals with airline partners, sometimes in the context of existing travel contracts. As companies look at new ways of purchasing SAFc, they need to also keep in mind the evolving GHG accounting frameworks to ensure the certificates they buy represent true emissions reductions (e.g. avoid double counting) and can credibly count toward their carbon reduction goals.

4. There is No Perfect Fuel

All forms of energy production pose at least some environmental tradeoffs, and SAF is no exception. These trade-offs can be managed, however, if they are appropriately anticipated and understood. Companies should leverage third-party certifications, understand the basic science behind feedstock choices and lifecycle assessment methodologies, and maintain awareness of policy and regulatory frameworks at the local, national and global levels.

The Future of Aviation Fuels

By utilizing SAF certificates, whether as an individual organization or as part of a collective effort, companies can manage Scope 3 emissions while signaling to both airlines and fuel providers that customers are serious about the need for SAF — helping to advance the technology, reduce the costs, and expand education on the topic.

While SAF certificates are a helpful tool in tackling carbon emissions, they are most effective when nested within a broader Scope 3 and business travel reduction strategy. Companies should start by quantifying their total business travel emissions and then evaluate SAFc purchases relative to other opportunities to reduce emissions, such as reducing trips or shifting to less intensive travel modes. Proper collaboration among airlines, fuel providers, governments, corporations and others will put the whole sector on the best trajectory for the collective decarbonization journey.

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