Corporate Travel Propels Boom in Sustainable Aviation Fuel

by Jamie Freed (Reuters) 'Book and claim' system borrowed from electricity sector; SAF uses feedstocks like cooking oils to cut emissions; Boom in SAF needed to meet industry's emissions targets -- A growing number of companies are making bulk purchases of sustainable aviation fuel (SAF) to reduce their carbon footprints, encouraging mass production of the cleaner energy that airlines need to meet their emissions targets.

Airlines, travel agents and fuel producers are now offering corporate customers the opportunity to buy SAF not linked to individual flights, as companies go beyond cheaper carbon offset options like planting trees to reduce the environmental burden of flying.

The industry move toward a "book and claim" accounting system like that used in the renewable electricity sector allows for greater flexibility given the relative scarcity of SAF, which uses feedstocks like cooking oils to reduce emissions by up to 80% from conventional fuel but is available only at limited airports globally.

In a recent deal announced by Qantas Airways (QAN.AX), five companies will pay a premium to reduce their emissions by contributing to the cost of the airline using SAF supplied by BP (BP.L) at London's Heathrow Airport.

Participant Boston Consulting Group (BCG), which is also buying SAF through United Airlines (UAL.O) and fuel suppliers SkyNRG and Neste (NESTE.HE), said it was looking to help scale the SAF market to meet internal targets.

Australia Post, another Qantas partner, said it would use the credits to reduce its emissions from air freight at a time when SAF is not available in Australia.

A growing number of carriers, including United, Lufthansa (LHAG.DE), Cathay Pacific Airways (0293.HK), Air France KLM (AIRF.PA) and Japan's ANA Holdings (9202.T), have similar programmes.

Buying SAF is more costly than purchasing emissions offsets but experts say it can play a key role in reducing travel emissions alongside switches to video-conferencing and cleaner alternatives like rail.

Companies are paying a "green premium" when they purchase SAF given it costs around three to five times more than conventional jet fuel, said Sami Jauhiainen, vice president APAC at Neste's renewable aviation business, the world's largest, which offers a corporate buying programme.

"They contract with us, they pay for the cost premium of sustainable aviation fuel over the conventional jet fuel, and then enable us to deliver sustainable aviation fuel for our partner airlines to consume," he said. "And then we can support the end customer with relevant reporting and documentation that they need to recognise the benefits."

Companies are able to contract directly with airlines, travel agencies like American Express Global Business Travel (Amex GBT) (GBTG.N) and fuel providers like Neste as they look to claim SAF credits and avoid pitfalls like double claiming.

Double claiming issues will become increasingly acute as more countries mandate a certain percentage of SAF blended in all aviation fuel, according to a World Economic Forum (WEF) white paper on SAF accounting and reporting guidelines released in October. France already has a 1% requirement, while the European Union will mandate 2% from 2025.

Amex GBT worked with Shell (SHEL.L) and Accenture (ACN.F) to create a block chain-based platform to ensure that certificates purchased by corporate customers are non-fungible in the biggest pilot of book and claim to date. READ MORE