May 18, 2024

Know your SAF

Gary Noakes delves into the complex world of sustainable aviation fuel to help corporates make the right choice

Like olive oil and organic meat, how and where sustainable aviation fuel (SAF) is produced is something corporate buyers need to be familiar with.

It can be confusing and frustrating; some types of SAF are more sustainable than others and there are SAF contracts where corporates will buy fuel but won’t actually take delivery.

The European Federation for Transport and Environment’s SAF Sustainability Guide is a good starting point for any buyer wanting to delve in. Its first advice is to examine provenance. There are two types of SAF – e-fuels synthesised from hydrogen combined with carbon, currently available in miniscule amounts, and the more common biofuel derived from biomass.

E-fuels are the Holy Grail, with the potential to be “close to CO2-neutral”, but there is no scheme which offers these yet. It is less enthusiastic about crop biofuels, because they compete with food production needs.

“Waste-based biofuels (for example, those from used cooking oil, animal fats, or forest residues) are more sustainable, but they suffer from limited availability, competing uses in other industries, and fraud risks,” it says.

“On any scale, the golden rule of business travel expenditure – always obtain a receipt  – applies to SAF purchases”

Despite its scarcity, there is growing interest in SAF among corporates. Chris Truss, Reed & Mackay’s Global Sustainability Director, says: “Many of our clients want a 50% reduction (in their carbon footprint) by 2030; that’s not going to be delivered by airlines, so SAF is the only visible short-term option for decarbonisation. Unless you really take bums off seats, it’s going to be very difficult, so that’s where SAF comes in.”

Knowing how to purchase the right type of SAF means doing some homework. The report warns emission reductions can vary wildly, in some cases “higher than the fossil fuels they seek to replace”. The effect on water usage, biodiversity, land use and indigenous rights also need to be factored in, the report says.

It adds: “Crop-based biofuels are by far the least sustainable type of SAF. These biofuels can in fact be a cure worse than the disease when the indirect land use change effects are taken into consideration, especially for virgin vegetable oils. When existing agricultural land is turned over to biofuel production, agriculture has to expand elsewhere to meet the existing and growing demand for crops for food and animal feed.”

The UK excludes crop-based fuels from its SAF definition, whereas the US promotes them with tax credits. Also frowned on by EFTE are soy, palm and soap stock derivatives, which have uses in other industries. Consequently, most SAF in Europe is generated from used cooking oils (UCOs) and animal fats.

Animal fats are another cause for concern for the report, being used for heat and power production by the oleochemicals (oil-based) and pet food industries. These have similar displacement issues, especially with oleochemicals, where palm oil is the nearest substitute.

EFTE is less critical of fuels from municipal waste, straw and forestry residue – known as advanced biofuels, but says these have limited scalability and competing uses, adding: “There will never be nearly enough advanced biofuels to meet the sectorʼs demand.”

Short supply

John Harvey is founder of TravelCarbon, a consultancy that helps corporates with sustainability policies. Harvey began his venture after dissatisfaction with carbon offsetting, the industry’s initial response to climate change.

“While purchasing offsetting credits is easy, SAF is a different matter, because there isn’t enough to go around. Only two major companies currently produce fuel – Neste, based in Finland, and California’s World Energy,” he says.

“Others are accelerating production, including Total Energies, Repsol, CESPA, Eni Lanzajet and Gevo, but are not yet geared up enough for corporate client direct sales.”

Production stats illustrate this; global requirement for jet fuel is around 300 million tonnes a year, whereas total global SAF production is currently only 300,000–600,000 tonnes. Neste currently produces 100,000 tonnes of HEFA (Hydro-processed Esters and Fatty Acids) fuel from vegetable oils, waste oils or fats in Finland. It also has a one million tonne refinery in Singapore, to be followed this year with a 400,000 tonne facility in Rotterdam.

Other forms of SAF are needed, says Harvey. “The volume of SAF required to meet 2050 targets will not come from HEFA alone.”

In the current scramble to develop new plants, many SAF purchasing schemes are appeals for funds. With these, Harvey urges caution: “Ask if the company is producing real SAF or are they just wanting investment in their plant. There’s a lot of marketing spin to be aware of. Ask if it’s a real plant or just a green field site.”

Footing the bill

There also arises the question of whether corporates should contribute to developing SAF and how much airlines and governments should support it. 

“Should corporates be signalling demand? Yes. Should they put their dollars or pounds into future SAF? I don’t know. But the risk is a corporate could be pulled into a project they think will reduce their emissions but won’t do so until real fuel is produced and consumed,” Harvey says.

When it comes to purchasing SAF, corporates normally pay the SAF price premium – the cost of SAF including feedstock price, production, logistics and certification minus the price of conventional kerosene and any government subsidy.

Cost is a clear barrier, with SAF prices “from 1.5 to six times higher”. The report says: “During 2022, the average SAF price estimate was around €2,300 per tonne… around 2.5 times higher than the price of conventional jet fuel.”

“Ask if the company is producing real SAF or are they just wanting investment in their plant. There’s a lot of marketing spin to be aware of”

For those businesses that adopt it, SAF means they can reduce Scope 3 emissions. Buyers should be aware that as most airports cannot supply SAF, many purchases are ‘Book and Claim’ schemes involving the environmental attribute of SAF through a Scope 3 credit, like purchasing renewable electricity. This means fuel does not go into the actual aircraft but into the system at an airport close to the SAF refinery.

Another option is “offtaking”, using an airline’s scheme where corporates “purchase” SAF during booking. Lufthansa launched Business Green Fares in 2023, but the report warns: “It should be noted that only 20% of the fares are used to reduce emissions by purchasing SAF, while the remaining 80% of flight emissions are offset by funding climate protection projects, the effectiveness of which is highly questionable.”

Corporates can also go direct to fuel suppliers, typically paying for an annual amount of fuel physically delivered to an airport, which qualifies for Scope 3 credits. The drawback, the report says, is only two schemes exist: Neste’s My SAF for Business, and Sky NRGʼs Board Now.

Forming a consortia for joint procurement is another tactic and one that offers economies of scale. United Airlines’ Sustainable Flight Fund is the biggest, boasting over $200 million in investments from 22 airline and corporate partners and over $450,000 in contributions from 115,000 customers to fund SAF start-ups. The latter can pay $1, $3.50 or $7 when booking.

Proof of purchase

On any scale, the golden rule of business travel expenditure – always obtain a receipt – applies to SAF purchases.

Truss at Reed & Mackay cites one corporate which paid several thousand dollars for SAF without any proof of what it had purchased and warns of pitfalls.

“My desire is that this doesn’t turn into the Wild West,” he says.

“Carbon offset has become sneered upon because of bad actors cutting corners, that’s why documentation is important.

“As long as the SAF credit or credit for future production has credible documentation there’s nothing wrong. The mechanism you buy through is really important.

“Do you own the emission reduction you are purchasing? What corporates need is the credit for the investment to be quantified so they can use it for reporting. It’s vital to do your homework because it’s your reputation at stake.”

Top tips

  • Consider whether the meeting justifies the flight. Transport & Environment’s Travel Smart campaign recommends reducing business air travel emissions by 50% of 2019 levels by 2025. Don’t be tempted to use SAF purchases to continue high frequency flying
  • Make sure your decision-makers know the benefits and drawbacks of different SAF types. There is a tendency to assume it’s all the same.
  • Look out for greenwashing; request maximum transparency from airlines and suppliers when purchasing SAF, and ask about its source. Caution is needed to avoid reputational risks to your business. Always be transparent about what type of SAF you’re investing in.
  • Once you’re clear about a supplier’s credentials, take the lead and include a realistic target for each travel arrangement, such as paying for the equivalent of 10% SAF on each flight.
  • Don’t buy crop-based biofuels unless absolutely necessary; they are not truly sustainable long-term. Do buy e-kerosene where available.
  • Consider transportation of the fuel where the arrangement is a direct supply; importing SAF entails greenhouse gas emissions.
  • Recognise that while the SAF premium is usually communicated per gallon or litre, the price per metric tonne of CO2 avoided offers a more meaningful sustainability measure.
  • Corporates with bigger budgets could consider being an ‘angel investor’, helping start-ups in the SAF field to crank up production. In terms of social responsibility, this is a big win.
  • Remember it’s easier to check that SAF complies with EU standards if it is produced in Europe, which has the most stringent sustainability criteria.
  • Bear in mind your supply’s transparency and traceability. Ask if it involves land use change (indirect or direct), avoid palm oil, and make sure to minimise energy and water impact.