The Power of Book and Claim in Aviation Sustainability: An Introduction
Introduction
As concerns over climate impacts intensify and regulatory pressures mount, stakeholders are increasingly turning to innovative solutions to decarbonize aviation operations. Among these solutions, sustainable aviation fuel (SAF) offers a tangible pathway to reducing emissions and mitigating the environmental impact of air travel. Recently, the concept of purchasing via book and claim has gained prominence as an opportunity to access SAF in airports without physical supply. To understand the intricacies of book and claim, it is important to set the stage on the necessity of SAF and understand our current fuel system’s chain of custody models.
Setting the Stage: Why SAF?
Sustainable aviation fuel (SAF) stands as a cornerstone in the aviation industry's efforts for decarbonization, a tool essential for mitigating its environmental footprint. Modeling projections, such as those from Aviation Benefits Beyond Borders, underscore its pivotal role. According to their analysis, the replacement of traditional Jet-A fuel with SAF—assuming a 100% emissions reduction factor—could contribute between 53% to 71% of the necessary emissions cuts, steering the industry toward net-zero emissions by 2050. While emerging technologies like electric aircraft and hydrogen-powered engines hold promise, SAF remains the linchpin solution for our 2050 goals.
Image Description: Graph demonstrating a scenario in which technology improvements are very ambitious. Even with technology, operational, and infrastructure improvements, the gap to meet the 2050 carbon goal must be filled through sustainable aviation fuels (requiring significant amounts of SAF with high emissions reduction factor). Source: Aviation Benefits Beyond Borders, Figure 4: 2050 Aspirational Technology Scenario
SAF's significance extends beyond being a mere interim solution. It uniquely satisfies the high energy density requirements critical for long-distance air travel, a demand that alternatives like electric and hydrogen-powered aircraft will struggle to meet for the short to medium term. In essence, SAF isn't just a temporary fix; it's a foundational element in the aviation sector's decarbonization strategy, expected to remain indispensable well into the foreseeable future.
Setting the Stage: Chain of Custody Models
Understanding how purchasing SAF via book and claim works involves understanding various chain of custody models within the aviation fuel pipeline. Here are the key models:
Segregation
From initial input to final output, the specified characteristics of a product are maintained. Materials or products with certain specified characteristics are kept physically separated and their characteristics are maintained throughout the supply chain. This model ensures that the material or product with specified characteristics is physically separated and clearly identifiable throughout all stages of the production and the trading process.
Mass Balance
Materials or products with specified characteristics are mixed with materials or products without some or all of these characteristics, resulting in a claim on a part of the output, proportional to the input.
Book and Claim
An alternative chain of custody model in which the administrative record flow is not connected to the physical flow of materials or products throughout the supply chain. After production the information on specified characteristics within the supply chain is decoupled from any material or product. Credits are issued when materials or products enter the market. The credits may be traded and sold independently of the physical delivery of materials or products.
Adapted from ISO 22095: Chain of Custody Models
Understanding the Environmental Attributes that make Book and Claim Possible
Through book and claim, SAF is physically put into an airport or fuel pipeline close to production, and an operator elsewhere that doesn’t have physical access to the supply purchases the right to claim the sustainability attributes of the fuel. The purchasing operator only pays the price difference of the SAF to what the SAF was able to be sold at as JetA (the “green premium”). The purchasing operator now has the right to claim the environmental benefits from the SAF even though they did not physically uplift and burn the fuel. Any operator who may have had access to the physical SAF but did not pay for it, will have purchased JetA without any sustainability characteristics.
Image Description: Visual description of how a book and claim accounting system enables end users to benefit from SAF’s environmental attributes without direct access to the physical fuel. Source: 4AIR
Whoever pays the green premium (the difference in the price in SAF compared to the normal JetA) gets the right to claim the environmental attributes of the fuel.
Understanding the mechanics of SAF book and claim requires exploration of the concept of environmental attributes. Drawing parallels with analogous systems like renewable energy credits (RECs) and renewable natural gas (RNG), we glean insights into the functionality of SAF book and claim. These systems enable the integration of renewable energy sources into national grids or distribution networks, allowing users to displace fossil-based energy consumption elsewhere. In the case of these examples, consider the setup: Most large facilities get their energy from large distribution systems, from which it is impossible to track specific electrons or gas molecules from producer to consumer. RECs use book and claim to allow physical renewable energy to go into the national grid and not necessarily physically traced to a home or business. By contracting for specific quantities of renewable energy, paying the premium, and maintaining robust documentation of transactions, users can displace fossil-based electricity or traditional natural gas elsewhere in the national system and substantiate claims of emission reductions.
Closely tracking environmental attributes serves as the linchpin of SAF book and claim. Book and claim allows sustainable fuel to displace fossil JetA elsewhere in the system, and the entity paying for that cost difference, to claim the benefit. Environmental attributes include any information that would identify a sustainable fuel’s impact and how it is environmentally preferable to a traditional fuel.
Why Is Book and Claim Important?
Understanding the importance of SAF book and claim can be summed up through a few different perspectives:
Environmental/Decarbonization Perspective: SAF book and claim is essentially the transfer of environmental attribute certificates, a key strategy endorsed by environmental researchers. Studies underscore the efficacy of market-based measures in driving emissions abatement and fostering global climate ambition. By leveraging book and claim, stakeholders can harness the power of market mechanisms to accelerate decarbonization efforts and achieve ambitious climate goals without requiring new physical supply chains.
Aviation Industry Perspective: For the aviation industry specifically, book and claim is an essential tool for signaling demand, attracting capital, and bridging the gap between upstream and downstream stakeholders. Moreover, book and claim streamlines transportation logistics and price fluctuations, offering price stability and fostering long-term commitment to sustainable practices. Additionally, robust tracking mechanisms are crucial for upstream stakeholders to capitalize on incentives like the Inflation Reduction Act and the Renewable Fuels Standard, essential for driving down the cost of the “green premium” associated with SAF. It also gives “producers access to much larger markets than they might otherwise have” increasing SAF production opportunities and profits (source).
Operator Perspective: For aircraft operators, book and claim offers a pragmatic solution for balancing budgetary constraints with environmental imperatives. By purchasing SAF at the best green premium available and ensuring consistent emission reductions throughout the year, book and claim empowers operators to meet both financial and sustainability goals effectively. It is a reliable, in-sector carbon emissions reduction tool that can accelerate SAF adoption.
Solving Issues Related to Accounting and Tracking
The effective use of SAF book and claim hinges on robust accounting and tracking mechanisms to ensure transparency, accountability, and trust across the supply chain.
Entities like the Council on Sustainable Aviation Fuel Accountability (CoSAFA) play a pivotal role in standardizing methodologies for tracking, accounting, and auditing environmental attribute certificates associated with SAF. By establishing universally recognized safeguards, including immutable tracking IDs, and chain-of-custody tracking, CoSAFA bolsters transparency and integrity throughout the supply chain. Additionally, CoSAFA advocates for the adoption of standardized product transfer documents to encapsulate essential information about SAF batches and corresponding environmental attributes, further enhancing accountability and trust.
Following years of documenting and tracing SAF, 4AIR developed a platform to manage, track, and document Sustainable Aviation Fuel (“SAF”) through the physical and virtual supply chain via book and claim: the Assure SAF Registry. By endorsing standardized methodologies and promoting industry-wide collaboration, the industry can unlock the full potential of SAF through book and claim.
The Future of Book and Claim
As the aviation industry embraces book and claim as a critical mechanism for SAF procurement, several challenges remain. Global acceptance of this chain of custody method remains uncertain, with regulatory frameworks evolving at different paces. The amended EU Emissions Trading System (EU ETS) Directive, for instance, introduces specific requirements for SAF uptake but excludes book and claim purchases from meeting EU ETS obligations. However, the ReFuelEU mandate does allow a ‘lite book and claim’ to be used to fulfill fuel supplier obligations. Independent verification of SAF book and claim transactions is essential to bolstering trust and accountability within the supply chain. Oversight through audited SAF registries offers a transparent mechanism for tracking transactions, enhancing stakeholder confidence, and facilitating more informed decision-making.
As a chain of custody model, book and claim shares many similarities with existing models and can leverage those similarities to encourage adoption by key stakeholders, especially regulators. With appropriate accounting and traceability, book and claim reduces supply chain costs, enhances traceability, and can accelerate the growth and adoption of SAF to decarbonize aviation.