This installment of our education series helps fuel providers understand how to serve the demand pool of voluntary sustainable aviation fuel buyers, while addressing common questions.
Corporate end-users of aviation services can help to scale the production of SAF by paying the “green premium”[1] for a physical quantity of SAF in return for the environmental attributes associated with that SAF. These environmental attributes include claims towards emissions reductions compared to the use of fossil jet fuel and are delivered in the form of SAF certificates (SAFc), through a book and claim system. Learn more about this from our recent LinkedIn post.
By buying SAFc, SABA members and other corporate customers can support SAF production and provide another revenue stream for SAF providers to recover the production cost of SAF.
Traditionally, SAF providers would look to sign an offtake agreement for SAF – bundled with its environmental attributes – with a physical offtaker, oftentimes a commercial airline, recovering the full production cost. However, it is possible for SAF providers to sign offtake agreements directly with corporate customers, with agreements structured in several ways. An illustrative, non-exhaustive list of potential approaches to such offtake agreements is provided below:
SABA has facilitated numerous offtake agreements for SAFc by SABA members through SABA-managed procurement processes, supporting high-integrity SAF that meets SABA’s stringent sustainability requirements. SABA’s most recent Request for Proposals (RFP) resulted in the combined offtake of SAFc representing up to over 50 million gallons of SAF and over $200 million in investment. A mix of deals were represented within this RFP with some offtake agreements entered into between SABA corporate members and airlines, and others between SABA members directly with fuel providers. Fuel providers will be eligible to participate in SABA’s future RFPs scheduled for 2025.
To learn more about how fuel providers can support the voluntary SAF market and access corporate demand for SAFc, fuel providers can contact SABA to join our fuel provider consultative group.
Participants in the fuel provider consultative group receive regular updates on upcoming SAFc procurement processes as well revisions to SABA’s Sustainability Framework. Additionally, fuel providers can create accounts in the SAFc Registry, review the SAFc Registry’s requirements issue, and transfer SAFc to support future SAFc transactions.
[1] The “green premium” for SAF is considered to be the cost of production of SAF, minus the cost of fossil jet fuel and any eligible subsidies or incentives claimed along the value chain.
[2] The bundled sale of Scope 1 and Scope 3 SAFc to a corporate end customer with no applicable Scope 1 emissions in their inventory can create a “stranded (or orphaned) Scope 1 SAFc”, which would be inconsistent with greenhouse gas accounting best practices. To avoid the creation of a stranded Scope 1 SAFc, the customer receiving the bundled Scope 1 and Scope 3 SAF certificate would need to sell or allocate the Scope 1 attribute to a commercial airline or other air transport provider before making a Scope 3 claim.
[3] The SAFc Registry, SABA’s preferred registry, allows the unbundling and separate transfer of Scope 1 and Scope 3 SAFc.
