Companies across the world are taking action to curb their greenhouse gas emissions. For many companies, business travel represents a significant share of total emissions, ranging from ~10% in the manufacturing industry to over 50% in consulting and other sectors. Corporates aim to fly less to reduce their business travel emissions, but recognize they cannot eliminate flying entirely. For the remaining flights, companies looking to fly more sustainably can use sustainable aviation fuel (SAF). Today, only a small number of companies invest in purchasing SAF. Key barriers to SAF investments are budget restrictions and uncertainty on how to include SAF in emission accounting and reporting.  

At the same time, corporate demand for SAF is essential to attract the investments required to scale SAF capacity. Deloitte and SkyNRG teamed up to share how corporates looking to reduce their business travel emissions through SAF and how they can work with the uncertainties of today’s accounting and reporting guidelines.

How do corporate GHG accounting standards deal with SAF today? 

Most SAF is purchased by corporates through a “book and claim” system. SAF is ‘booked’ into a fuel system, while the benefits are ‘claimed’ elsewhere. This system allows companies to decouple the benefits of SAF from the physical fuel and purchase and claim them towards their sustainability targets. Book and claim systems can make SAF more widespread and supply chains more sustainable, as even small amounts can be purchased all over the world, while SAF can be delivered close to the production location, thereby reducing transport emissions. However, unfortunately standards today do not always provide full clarity on how corporates can report these SAF benefits. 

Greenhouse Gas Protocol (GHGP) is the most widely accepted GHG accounting and reporting methodology for corporates. GHGP makes corporate accounting easier by making use of emission factors based on physical flows, such as liters of fuel burned. Electricity-related emissions are an exception to this rule: companies can reduce these through contractual certificates as proof of their renewable electricity purchase, so-called “market-based measures”. This seems to be the most logical path forward for SAF as well, but there is no conclusive guidance in place yet.  

What are the consequences of the lack of guidance in existing accounting standards? 

Due to this lack in clarity in accounting and reporting guidance, some corporates are more hesitant to invest in SAF. To enable corporates to become a stronger driver for SAF deployment, we need clear GHGP accounting rules in combination with guidance from the Science Based Targets Initiative (SBTi) on reporting SAF purchases towards GHG targets. More clarity would enable more long-term offtakes and larger deal sizes for SAF certificates, which creates further de-risking of SAF facilities, allowing a next wave of SAF facilities to be developed.  

In the meantime, other standards have emerged to provide guidance to SAF buyers, producers and traders on how to report emission reduction claims related to SAF. This includes the RSB (Roundtable on Sustainable Biomaterials) Book and Claim Standard, the SABA (Sustainable Aviation Buyers Alliance) Sustainability Framework for SAF and the CSK (Clean Skies for Tomorrow) & WEF (World Economic Forum) white paper”. Until direction on SAF accounting from GHGP is established, these standards provide guidance on topics like prevention of double counting and additionality. Increasing levels of SAF are being purchased using guidance from these standards and they are generally seen as the industry consensus on SAF reporting, as they were co-developed by a wide range of stakeholders, including academia and NGOs, and have been years in the making. 

How do we expect these standards to develop in the future?  

SBTi and GHGP have recently opened up stakeholder consultation regarding market-based measures and environmental attributes. The outcome of the SBTi process is likely to influence decisions in the GHGP process on the use of traded environmental attributes in GHG accounting, including SAFc (SAF certificates). However, it is expected to take until at least 2025 for GHGP to come out with updated guidance, so the results from the SBTi initiatives could be seen as interim guidance until a final decision from GHGP on market-based measures is finalized. 

What significantly helps SAFc is that the need for market-based measures is not unique to SAF to allow the sector to scale. This issue is common to all energy carriers that are shipped in comingled pipeline infrastructure, such as hydrogen, biomethane and CO₂. Without a workable solution that is supported by the sectors producing and using these commodities, the legitimacy of GHG Protocol would be impacted, resulting in companies steering away from it and adopting other standards that suit their reporting needs. Given the support for and widespread use of market-based measures, it is likely that this will continue to be allowed. The question is under which conditions this will be allowed. Discussion and diverging opinions are likely to center around the following questions:  

• How strict will additionality criteria be? I.e., can SAFc be combined with support from regulatory incentives? 
• What will the chain-of-custody requirements be? E.g., does Scope 1 SAFc have to be retired before Scope 3?  
• What mechanisms will be in place to prevent double counting? E.g., will it require uploading the SAFc to a registry approved by GHG Protocol? 
  

What can corporates do today?  

Corporates counting on SAF to reduce their business travel emissions today or in the future have a decision to make. They can hold off SAF investments until SBTi and GHG Protocol provide more clarity, or they enter the SAF market navigating its uncertainties as best as possible. 

The good news is that there are already standards and registries out there that have spent years building consensus, like those developed by RSB, SABA and Smart Freight Center. These standards already today represent sector consensus around topics like additionality, double counting and chain-of-custody requirements, and it is likely that future standards will build on this.  

Corporate SAF buyers around the world are seeing these signals and are already reporting the environmental benefits associated with SAF purchases. They pioneer the SAF market to lead in sustainability today and in the future, committing to long-term offtakes that help to scale the SAF market and limit their exposure to future SAF volume shortages. With mandates being enforced around the world, this shortage is likely to persist or further increase, which further highlights the importance of locking in volumes in the near term. 

In practice, companies typically use dual reporting within their carbon footprint for emissions related to air travel (to compare air travel emissions with and without SAF), as they already do for electricity (electricity emissions with and without certificates). 

A common denominator in all the reporting practices of corporates that SkyNRG and Deloitte interact with is that they discuss SAF reporting closely with their auditors. This prevents unwanted surprises. 

Credible and robust SAF accounting and reporting is of the essence, as it communicates the value of SAF to corporates and their stakeholders. Doing this right has never been as important as now because the SAF challenge before us is huge. And while regulatory markets will play a major role in unlocking more SAF volume, corporates are a necessary and additional driver for SAF de-risking and deployment. The sector can be thankful to now have some guidance in place that gives direction on where SAF accounting and reporting is headed, while close alignment with auditors mitigates risk of not getting emission reports approved. Starting on your SAF journey may seem daunting, but others have walked the path before you. With the right knowledge partners and SAF suppliers, you too can become a SAF leader and demonstrate leadership through your reporting