Can Carbon-Offsetting Contribute to SAF Production?

For the reason already discussed and for other reasons – some associated with corporate carelessness or inattention – some companies’ carbon-offsetting schemes have developed a reputation as merely being vehicles for ‘greenwashing’ or ‘virtue-signaling’ public relations efforts by those organizations over the past few years.

However, Larry Schafer of US government affairs firm Playmaker Strategies says his clients World Energy (North America’s first refiner of renewable fuels and sustainable aviation fuel) and the National Air Transportation Association (NATA) think carbon-offsetting programs can potentially contribute “a great deal” toward investment in SAF production.

“The development of implementing ‘Tier 3’ programs into the everyday marketplace has great potential in assisting the advancement of SAF production,” according to Schafer.

Clarifying, Schafer says that while most companies easily understand ‘Tier 1’ and ‘Tier 2’ production and sales arrangements and attributes, they don’t always understand ‘Tier 3’ production attributes.

In this case ‘Tier 1’ means a primary production transaction or arrangement, such as a jet engine manufacturer buying metal from a supplier for use in making engines. A ‘Tier 2’ arrangement would then be the engine manufacturer selling one of its engines to a customer.

However, ‘Tier 3’ is a more indirect production attribute or arrangement, which in this regard would be a customer receiving value from any transaction which offers it a reduced corporate carbon-emissions profile.

The value of the ‘Tier 3’ attribute to a company could come from the reduction in carbon emissions it obtains from buying a new, more efficient jet engine, or just as easily it could arise from the company obtaining carbon-reduction credits from paying into a carbon-offsetting program.

Companies often don’t instinctively grasp the direct commercial and financial benefits that a Tier 3 attribute – in this case subscribing to a carbon-offsetting program – can offer them, even though those benefits can be pronounced, Schafer says.

Mitigating Concerns About Carbon-Offsetting Programs

For corporate carbon-offsetting programs to contribute investment directly into SAF production and/or infrastructure, such programs have another potential perceptual hurdle to overcome, notes Kurt Edwards, Director General of the International Business Aviation Council (IBAC), stemming from a different aspect of market perception of carbon-offsetting programs than the negative aspect of being viewed as greenwashing and virtue-signaling.

In fact, the additional aspect Edwards has in mind is a positive one for carbon-offsetting programs: High-quality programs often, if not usually, involve customers paying for a unit of carbon which has already been reduced.

He argues that it might be much harder to obtain money for SAF investment from carbon-offsetting programs based on carbon reductions which have not already been created – in other words, which are speculative and might not occur – than programs which are based on reductions which have already taken place. “I have a hard time seeing how you can produce money from offsets that haven’t been produced yet,” he says.

So unless Business Aviation operators and users can be certain that the carbon reductions for which they pay in subscribing to offset programs are yet to be created and definitely will be created as a result of their financial investment, then it may be very hard to persuade them to spend money on carbon-offsetting programs, Edwards summarizes.

But ways do exist, and more may yet be found, to mitigate such concerns for the quality of carbon-offsetting programs. One is the existence and work of the Council on Sustainable Aviation Fuels Accountability (CoSAFA), of which IBAC, NBAA, EBAA, GAMA and NATA are all members along with airline associations IATA and Airlines for America.

CoSAFA was set up to develop and offer transparent, accurate, reliable and secure accounting practices to calculate and verify the reduction of carbon in the use of SAF for multiparty transactions, such as book-and-claim programs.

Little imagination is needed to believe that blockchain transaction-security technology is likely to feature in the set of SAF-usage accounting practices which CoSAFA develops – and in other commercial trading-hub mechanisms which could result from SAF consumption being used as the carbon-reduction attribute in book-and-claim programs and other carbon-credit schemes, Albert suggests.

However, he says that even if security and verification mechanisms allow Business Aviation operators to know the carbon-offset programs they subscribe to really do provide the commercially usable carbon-reduction benefits they need operationally, a further challenge could make it difficult for smaller BizAv operators to obtain access to high-quality programs.

This is the likelihood that “big operators [will] distort the market, because they have the financial muscle to spend...on offsets,” says Stephane Albert, Associate Director of Strategic Sustainability for Pratt & Whitney Canada. “They can buy the offsets and may lock up a high percentage of production and distort availability for other segments” of the Business Aviation operating community.

Even if the Business Aviation community is able to navigate its way round this potential challenge, a different problem could present itself in terms of the willingness of the organizations operating the carbon-offsetting programs to reinvest profits in developing the resources and infrastructure required to make SAF fully available to aviation users worldwide, Albert adds.

He predicts such offsetting-program reinvestment in SAF R&D will not generally happen in the US, but organizations in Europe might well take a different view. In any case, “governments will play a decisive role in this,” using incentives (most likely in North America) and taxes (most likely in Europe and elsewhere) to promote both primary investment by the private financial community, and secondary reinvestment by the carbon-reduction industry in SAF resources and production.

BizAv’s Role in the Overall Development of SAF Production

It is clear Business Aviation will play a role in the overall process of developing SAF production, but more a surgically directed one than the critical-mass commercial pressure the airline industry will bring to bear due to its relatively overwhelmingly large consumption of fuel, according to Albert.

“Business Aviation can help the investment by driving innovation, but it hasn’t got the volume” of fuel use to exert major dollar-driven pressure on refiners nor the financial community to compel them to invest vast sums on SAF, he says.

So the BizAv community’s role in helping ensure some of the revenues from carbon-offsetting programs will be reinvested in SAF production and infrastructure will be a subtle, but potentially powerful one as it wields its considerable influence on the world’s political and financial powers to galvanize them into direct action.

Anyone looking for solid evidence of how carbon-offsetting could contribute to the development and production of Sustainable Aviation Fuel should look no further than Rolls-Royce’s SAFinity. Read more about this program via the AvBuyer May digital edition, or read it online by clicking the Page 3 button below.