Pioneering early SAF transactions

Organizations increasingly account for and report on Scope 1, 2, and 3 emissions, in addition to actively working to reduce the emissions themselves. When airlines burn jet fuel, the emissions that result are their direct operational, or Scope 1, emissions. For airline passengers and air freight customers, these same emissions are considered Scope 3 (or indirect supply chain) emissions. When airlines replace conventional jet fuel with SAF in their aircraft, airlines can claim the emissions reductions associated with that switch within their Scope 1 disclosure, and customers can claim them as part of their Scope 3 disclosure. Emissions reductions from SAF are evaluated through a life cycle assessment (LCA), in which the emissions at every stage of the SAF supply chain, from feedstock production to fuel burn in an aircraft, are calculated and compared to an equivalent life cycle of conventional jet fuel.

The two most common calculation methods are known as “well-to-wake” and “tank-to-wake” (see figure 1). The well-to-wake method includes emissions from the production of feedstock to the exhaust of the aircraft. This method includes both upstream supply chain and direct emissions within the SAF life cycle. The tank-to-wake method only includes emissions from the combustion of fuel and does not include upstream emissions from feedstock and SAF production and distribution. For voluntary SAF purchases, the well-to-wake method is preferred in disclosure for both airlines and corporate buyers, as it captures the full emissions impact of SAF as compared with conventional jet fuel. This is the method we used.

In our pilots, each airline used a different methodology to calculate emissions benefits. Deloitte recommends that future SAFc guidance provide a standard method for airlines and their customers to calculate emissions reductions associated with a batch of SAF. Beyond life cycle emissions reductions, SAF feedstocks should also be responsibly produced and obtained upstream of the fuel production itself to be able to claim that the fuel is truly sustainable. To ensure that feedstocks are sustainable, it’s critical to understand how and where they are produced.

It’s also critical that SAF transactions and their outcomes are structured in a standardized way that enable the market to scale efficiently and credibly. Standardization and transparency of claims (and the data that underlie them) is important as it allows buyers to compare fuel attributes on an equivalent basis and sends a clear signal for the highest integrity SAF through SAFc purchases.

As expected in a nascent market, SAF prices range widely. In our pilot transactions, we paid a price premium of at least twice the price of conventional jet fuel. Over time, however, the cost is expected to decrease as producers learn by doing and the industry scales up production. We paid an average of $130 per metric ton of CO2e avoided (with a well-to-wake methodology), and this cost ranged by more than $90 per metric ton avoided. This significant range indicates that the nascent SAF market has ample room to mature and equilibrate across similar types of SAF production.

In all three pilot transactions, we received a predetermined SAF cost from the airlines, without a clear price breakdown relative to conventional jet fuel. In order for Deloitte and other corporations to substantiate emission reduction progress associated with the use of SAF, we need future SAFc purchases to enable credible Scope 3 emissions reduction claims and disclosures that specifically count toward business travel emissions accounting.

Even when the physical fuel associated with an SAFc purchase is not burned by an aircraft that a corporate employee is traveling on, the company would need to be able to report lower-emissions-intensity business travel as a result of its SAFc purchases. This is why a book-and-claim system that enables the physical fuel volume to be delivered to any airport (and for anyone to pay for and own the environmental attributes) is a critical element to SAF as a solution for reducing emissions from business travel. Additionally, a standardized set of contract terms that clearly articulate which emissions reductions airlines and corporate buyers can each hold and use, and in which circumstances, will make this process much more efficient, lower-risk, and less legally intensive for future SAFc transactions.

Another key consideration is whether our SAF pilots directly enabled new SAF production, as opposed to contributing toSAF that would have been purchased without our organization’s actions. Deloitte did not include a specific additionality requirement for the pilot transactions, but our purchases did facilitate new SAF delivery, and we see the value in enabling new SAF supply through SAFc transactions.

Finally, it is critical that, once the SAFc system is developed, these certificates and their associated claims are visible to the public in a transparent database or registry. The SAFc is claimed or “retired” on a registry that recognizes the final user of the emissions reduction claim. This public repository can serve as an auditable record to underlie corporate sustainability reporting, as well as voluntary and regulated disclosures. This infrastructure also can safeguard the market against the risk of double-counting emissions benefits.