Book-and-claim Crucial to SAF Expansion

Sustainable aviation fuel (SAF) is widely considered to be the solution with the greatest potential to help the aviation industry reach its goals of decarbonization, and the introduction of industry book-and-claim programs is the tool that is going to greatly advance its production and adoption.

While the global supply of SAF this year is expected to triple 2023’s total, reaching 400 million gallons of unblended SAF, it still only accounts for less than half a percent of the amount of jet fuel consumed. That number is expected to grow exponentially as more production facilities come online and new production pathways are approved.

In the U.S., the fuel is available primarily on the West Coast due to California’s Low Carbon Fuel Standard (LCFS), which aims to reduce the carbon intensity of fuels burned in the state and incentivize—through taxes and credits—the production and distribution of low life cycle carbon emission fuels.

LCFS, which has also been enacted in Oregon and Washington, provides credit to offset the production cost of SAF and also provides a rebate or discount to the consumer. SAF is now available to business aviation customers at approximately 30 locations in the U.S., and a similar amount in the rest of the world, mainly in Europe.

To airports near the SAF production facilities, the renewable fuel can be easily transported—even by pipeline, in the case of Los Angeles International Airport and San Francisco International Airport. The fuel can be moved by tanker truck, ship, or rail. But, beyond a certain distance, the costs of transport and resulting environmental penalties begin to weigh upon the price and benefits of the fuel, eroding them.

For SAF, its carbon emissions savings over conventional jet fuel are calculated on a life cycle scale, including transportation to the end user. If it is trucked hundreds of miles, those subsequent emissions must also be factored into the equation.

“There are airports where the distribution points are close to the producers that have the right tax incentives or the right subsidies in place—California with the LCFS is a great example—and so there are certain airports where it just makes sense to put the fuel. You are going to get the cheapest cost per gallon, and you really want to maximize the amount of fuel that you can put there because it would be the best economics for a book-and-claim program,” said Kennedy Ricci, president of industry sustainability solutions provider 4Air. "If we tried to truck it to Teterboro, you are probably going to pay double or triple the amount that you pay for putting that fuel in in California."

With the physical fuel sequestered in a geographic area, and with an industry customer base around the country, book-and-claim programs were instituted. These programs enable operators to pay a “green” surcharge to obtain the environmental benefits and carbon reduction credits anywhere, without the actual fuel being pumped into their aircraft.

“That’s how the process needs to work,” said Beatrice Batty, Signature Aviation’s director of fuel planning and risk. “You have to be able to separate the physical molecules from the carbon attributes and of course the premium for it to be able to create that SAF book-and-claim credit, but the gallon [of SAF] has to be put into the aviation system to be burned. That is how it is accomplished.” She added that the green surcharge or price delta for SAF blend is currently around $1.50 a gallon above the cost of conventional jet-A, due to the higher production costs associated with the refining of neat (pure) SAF.

Signature is the largest SAF retailer in the business aviation sector, having sold more than 35 million gallons of blended SAF since 2020.

“We saw the need [for book-and-claim] very early on,” Batty explained to AIN. “When we started looking at how [to] get SAF to our customers, we realized that because of the very immature production landscape and that it was only focused in California—yet there is so much demand elsewhere—we recognized that book-and-claim was going to be a necessity to help get adoption and a greater flow of product into the marketplace. We will need book-and-claim until we get a more large-scale production landscape throughout the world, but especially in the United States.”

With the industry’s focus on sustainability, the reduction of carbon emissions, and its goal of reaching net zero by 2050, the ability to keep accurate records of SAF usage for reporting purposes is crucial to an operator’s environmental, social, and governance plans.

“SAF is different from jet fuel in that where it comes from determines how sustainable it is,” said Ricci. “The blend of the fuel [and] the feedstock of the fuel determines what you can actually claim from using it. It’s not all created equal. You need robust documentation showing which batch you used, what blend it was, and if you purchased it [so] you can actually claim those benefits.”

The backbone of book-and-claim is a strong ledger system, which tracks the volumes of fuel and prevents double booking of the carbon emissions reduction claims. “We are audited every single year on all of our transactions,” said Batty. “There are some customers that want every single piece of detail and for us to prove all of that—and we do. They have it independently audited as well to prove that they can make the claim that they do, so we are very confident in that processing program.”

To provide further confidence in the system, groups such as the Council on Sustainable Fuels Accountability (CoSAFA) are working to provide standardization, paving the way for worldwide acceptance of the process.

“We are supporting and providing the publicly available, neutral, generally accepted accounting principle similar to the GAAP [generally accepted accounting principles] as you see in the financial markets the way public disclosures are done,” said CoSAFA executive director Madison Carroll.

Carroll stated that presently there are at least 10 fuel programs offering book-and-claim—each of which had to develop its own bookkeeping methodology—a number that she expects to continue to rise until consolidations begin to take hold. “We are trying to standardize the way SAF transactions work,” she added.

Doing that involves the use of a product transfer document that records the chain of custody of the fuel and contains information about the SAF attribute. The document tracks both the fuel and the attribute.

“So a customer knows what they are purchasing, what market it has already been used for, and what market it is still eligible to be used for. All of that is done through a unique identification code that we have developed,” Carroll noted in an interview with AIN. “If all fuel is tracked by the same code, then you can create operability between registries to know if that batch of fuel has been registered anywhere else.”

Skeptical Europe

While book-and-claim is now an accepted process in the U.S., the European Union has taken more of a wait-and-see approach, with a report slated for July pushed back until later in the year. “The hesitation is wanting to really push to get SAF at all airports to push production and also ensuring that there is robust tracking of it in order to ensure there is no fraud,” Carroll added.

Ricci said 4Air has seen growing acceptance for the process. “At the end of the day, people prefer to have physical fuel, but we don’t have the availability for that today,” he said. “Book-and-claim hopefully by 2050 is a mechanism we won’t need with widespread SAF distribution and the ability to use it at any airport. But until then, it is a key mechanism to help in the early stages.”

Batty noted that Signature’s sales of SAF are growing month over month and “every gallon of SAF we are bringing in we are selling, and a large percentage of that is book-and-claim.” While the fuel is available at the point of purchase at many of its West Coast FBOs, the majority of its sales happen at a level above the pilots and flight crews. “We would talk to the pilots and they would say, 'I’m not authorized to make that decision,'” she said. “Our experience is the decision is made at a different point. It’s made by a sustainability program manager; it’s made by the C-suite who made a dedicated effort to reduce carbon footprint. So consequently, we’re having more of a system network-wide conversation.”

She added that while Signature has a global footprint, it must evolve its programs to be applicable to all its regions and has therefore not extended its book-and-claim program to its European locations given the EU’s hesitation in approving the process.

“What we do as an industry, I think, is going to be a critical part of moving the needle to get a global industrywide acceptance of book-and-claim,” concluded Batty. “As an industry, we are going to have to align around a particular standard and then the registries will evolve as they see fit.”