Aviation is a vital industry that connects people and goods around the world, generating an estimated US $4. 1 trillion in annual turnover and contributing to about 3. 9% of global GDP. However, with this great convenience comes a cost – aviation also accounts for over 2% of global emissions. As the demand for air travel continues to grow, it is crucial to find sustainable solutions for the aviation industry.
One promising solution is sustainable aviation fuel (SAF), a biofuel made from renewable sources such as agricultural waste fats, oils, greases, and certain cover crops. SAF has the potential to reduce lifecycle emissions by up to 80%, making it the fastest path to decarbonizing flight.
But the challenge lies in scaling this solution. While SAF is a drop-in fuel that can be used in existing aircraft engines and infrastructure without modifications, it is currently two to three times more expensive to produce than fossil jet fuel. This is due to the high costs of feedstocks and new infrastructure. As airlines operate on thin margins, it is difficult for them to pay for a premium product like SAF. This has slowed down the necessary investments to achieve economies of scale and bring down prices. Currently, SAF only accounts for about 0. 3% of all aviation fuel and is available at a fraction of the world’s airports.
However, there is hope in the form of new market tools and financial mechanisms. These tools are crucial in bridging the gap between limited supply and growing demand for SAF. Two tools, in particular, have played a significant role in expanding SAF demand and scaling the industry: SAF certificates (SAFc) and Book and Claim.
SAFc allows companies to support sustainable aviation fuel even if they do not physically use the fuel. This is done by purchasing and claiming the emissions reduction value of SAF against their own aviation emissions. This model helps to scale demand and investments in SAF, even before widespread physical distribution is available.
Book and Claim, on the other hand, is a tracking system that keeps track of both the physical fuel and its environmental attributes, similar to how a bank tracks currency transactions. This system ensures transparency and allows multiple customers to share the cost premium, further expanding the market and lowering the price for everyone.
These tools were originally developed by the World Economic Forum and Rocky Mountain Institute, two organizations focused on market-based solutions to mitigate climate change. By involving corporations with strong balance sheets and the ability to commit to longer-term contracts, these tools have demonstrated durable demand, giving investors the confidence to finance new projects and ultimately growing supply.
World Energy, a leading sustainable aviation fuel provider, recognized the potential of these measures and partnered with first movers such as Microsoft, DHL, and Boston Consulting Group on long-term SAFc contracts. These partnerships focused on ensuring the integrity of SAF emissions reductions with a trustworthy ecosystem of standard setters, auditors, and digital registries. To date, World Energy’s SAFc contracts alone have reduced over 2.