Business travel is one of the biggest sources of carbon emissions in the corporate world. The business software vendor Salesforce, for instance, generated 146,000 metric tons of carbon emissions — roughly equal to the annual emissions of 18,000 US homes — just by flying its employees around the world to client meetings and conferences in 2019.
For comparison, that’s about 60% as much carbon as all of Salesforce’s data centers generated that year hosting cloud computing services for over 150,000 clients.
Salesforce has vowed to cut its carbon emissions to zero by 2040. To reach that goal, the company will have to find a more climate-friendly form of business travel. That’s why Salesforce is one of dozens of companies experimenting with buying sustainable aviation fuel (SAF) certificates, which are designed to give business travelers a way to book carbon-neutral flights. The World Economic Forum (WEF) has backed the concept, and is designing an accounting framework that would allow airlines to sell SAF certificates to their biggest corporate clients.
If it works, proponents say the scheme could help companies cut their carbon emissions, jumpstart the market for lower-carbon jet fuels, and create a pathway to decarbonize the airline industry by 2050.
The World Economic Forum’s SAF certificate framework
SAF is a category of jet fuels that releases between 50% and 80% less carbon than standard petroleum-based jet fuel. Right now, SAF accounts for less than 0.1% of the fuel used in commercial flights because it’s more expensive than standard jet fuel and supply is very limited. But if there were an economic incentive for manufacturers to produce more SAF and for airlines to buy more of it, the aviation industry could cut its carbon emissions considerably.
To create that economic incentive, the WEF — along with airlines and some of their largest business travel customers — are designing a system they’ve dubbed “SAF certificates.” Under the proposed system, companies like Salesforce could buy SAF certificates from airlines to offset the carbon emissions generated by their employees’ business travel. Airlines would use the money they make from selling these certificates to buy a certain amount of SAF instead of traditional jet fuel. By replacing a set amount of jet fuel with lower-carbon SAF, the airline would reduce its carbon emissions by a clear, measurable amount.
If the program is designed well — with transparency, oversight, and clear accounting — a company like Salesforce could buy SAF certificates and meaningfully reduce its business travel emissions to zero.
Airlines and their biggest corporate travel clients have been testing out the concept since 2021. Last year, 11 companies including Boston Consulting Group, Nike, and HP bought enough SAF certificates from United Airlines to subsidize the purchase of about 3.4 million gallons of SAF (about 0.1% of United’s fuel consumption). In February, JetBlue announced four companies including Salesforce will buy enough SAF certificates to subsidize 325,000 gallons of SAF (0.05% of JetBlue’s 2021 fuel consumption).
The WEF has used data from some of these early transactions to design an accounting system for tracking how much each SAF certificate sale helps reduce carbon emissions. The organization plans to publish its accounting rules in September and test them out with a new round of experimental SAF certificate sales later this year. The WEF aims to establish a global SAF certificate market, which meets the standards of environmental watchdogs like the Science Based Targets Initiative (SBTI) and the Greenhouse Gas Protocol (GHGP), by 2024.
What are sustainable aviation fuels?
Many types of fuel can count as SAF, including biofuels made from corn, algae, used cooking oil, municipal trash, sewage, and other forms of waste, or synthetic fuels like liquid hydrogen created using renewable electricity. The key requirement is that all these fuels must emit at least 50% less carbon than petroleum-based jet fuel.
For now, most SAF is biofuel made from used cooking oil, which can reduce greenhouse gas emissions by as much as 84% compared to conventional jet fuel. But there simply isn’t enough cooking oil in the world to meet the airline industry’s fuel consumption, according to Mike McCurdy, an engineer who heads the energy advisory department at consulting firm ICF. McCurdy estimates there’s enough readily available kitchen grease out there to produce 3 to 5 billion gallons of fuel a year, split between SAF and biodiesel for trucks. Commercial airlines, by comparison, used 95 billion gallons of jet fuel in 2019.
Meeting the airline industry’s fuel needs through SAF will require fuel producers to refine the process for converting woodchips, crops, and household food waste into biofuels. But those fuel sources will require years of research and construction to scale up and become cost competitive. For instance, one of the earliest alcohol-to-jet-fuel facilities, operated by the alternative fuel startup LanzaJet, aims to produce just 10 million gallons of SAF per year from corn ethanol when it opens at the end of 2022.
The SAF market’s chicken-and-egg problem
The SAF market needs billions of dollars in investment to scale up production to replace conventional jet fuel. But the market is stuck at an impasse. Airlines are reluctant to buy SAF because it typically costs about twice as much as conventional jet fuel. And manufacturers are reluctant to produce more SAF, because airlines don’t want to buy it.
SAF certificates offer a way to break the impasse and start a virtuous cycle. If business travelers were to subsidize the extra cost of buying lower-carbon fuels, airlines would be willing to use them. Greater demand from airlines should incentivize manufacturers to produce more SAF. As manufacturing scales up, costs would fall, and eventually, SAF could become cost competitive with petroleum-based jet fuel, according to Eliot Lees, vice president for clean transportation at ICF.
“The challenge is priming the pump and getting this new renewable jet fuel into the fleet as quickly as possible,” said Lees. “If you wait for the market to do it, it’s going to be a challenge to meet the emissions target that both the federal government is pushing and the industry is trying to achieve.”
“If you wait for the market to do it, it’s going to be a challenge to meet the emissions target that both the federal government is pushing and the industry is trying to achieve.”
“Priming the pump” starts with a handful of companies that collectively fly millions of employees around the world each year. Bank of America, Boston Consulting Group, Boeing, Deloitte, JPMorgan Chase, McKinsey, Microsoft, Netflix, and Salesforce are the founding members of the Sustainable Aviation Buyers Alliance (SABA), a group of corporate business travel giants committed to buying SAF certificates to push airlines and fuel manufacturers to ramp up SAF production and use. “Because there is significant concentration in demand for flying, especially around corporate travelers, we believe we can send a very strong signal to the market and help create the market for SAF,” said Tarek Helmi, who leads Deloitte’s work on sustainable energy.
Recent spikes in oil prices have brought SAF and conventional jet fuel closer to cost parity: The average US price of SAF is $8.33 per gallon, compared to $7.33 per gallon for conventional jet fuel. But even small price premiums for SAF can be a big barrier for airlines, according to Lees. “Aviation is a highly competitive industry with very small margins that there’s significant pressure to maintain, and jet fuel makes up 30% of airlines’ costs,” he said. Paying an extra dollar a gallon for fuel would eat into airlines’ margins at a moment when even the biggest firms are struggling to break even.
The SAF certificate accounting challenge
Before the WEF can help establish a trusted, global market for SAF certificates, it will need to create a transparent carbon accounting system. The certificates won’t have any value unless the businesses that buy them have can prove they are truly reducing carbon emissions as much as they say they are. Otherwise, companies that buy SAF certificates will face the same accusations of greenwashing that plague the carbon offset market.
The best way to create that trust is through a clear, consistent accounting system that wins the endorsement of recognized authorities on corporate carbon cutting schemes. Getting those organizations’ buy-in is crucial for convincing companies to spend money on SAF certificates, according to Andrew Chen, who heads the aviation decarbonization team at the Rocky Mountain Institute, an environmental consulting group that helped found SABA and is working with the WEF to design the SAF certificate accounting system it plans to publish in September.
“The Science Based Targets Initiative and the Greenhouse Gas Protocol are going to look at that suite of documents and say, ‘Is this legit? Have they really thought through all of this? Do they have an accurate accounting approach?’” said Chen. If SBTI and GHGP aren’t satisfied, companies will have a hard time justifying SAF certificate purchases.
So far, the groups have been cautiously supportive of the WEF’s efforts. SBTI endorsed the sale of SAF certificates to business travelers as a way to cut carbon emissions in August 2021. But the organization noted “the practicalities of corporate SAF procurement and accounting are currently poorly defined in the market” and stressed the need for more standard accounting practices before it could throw its full weight behind any SAF certificate scheme.
First, airlines need to demonstrate that they used their certificate money to buy additional SAF on top of whatever quantity of SAF they were already legally required to buy. The EU, for instance, is considering a rule that would require airlines to buy jet fuel blended with at least 2% SAF by 2025. Airlines would have to buy that legally mandated amount of SAF first, and then buy even more to fulfill their SAF certificate commitments.
Second, airlines need to create clear, consistent pricing for certificates across the industry. In early SAF transactions, prices have ranged widely. Deloitte published a report detailing its experience buying SAF certificates from American Airlines, Delta, and United Airlines between February and April 2021. The consulting firm wrote that it paid an average of $130 per metric ton of carbon emissions avoided — but the prices ranged by more than $90 a ton between airlines, and none of the airlines offered clear breakdowns explaining how they set their prices.
“We paid what we believe to be the price premium for sustainable aviation fuel over conventional jet fuel, but it’s certainly not a transparent market yet,” said Lisa Newman-Wise, Deloitte’s climate chief of staff.
How can the airline industry reach zero emissions by 2050?
Ultimately, SAF alone won’t get the airline industry to cut its carbon emissions to zero. Even if airlines replaced every drop of jet fuel they use with SAF, they’d only reduce their emissions by 50% to 80%. To reach net zero, airlines will have to replace their existing fleets of jet-fuel-burning planes with new models that can run on electric batteries or hydrogen fuel cells.
But those airplanes haven’t been invented yet. It will take decades for established planemakers like Boeing and Airbus or startups like ZeroAvia to develop a new generation of zero-emissions jets that can carry hundreds of passengers long distances. In the meantime, airlines will keep buying conventional planes that burn jet fuel, and those planes will stay in the sky for an operating life of up to 30 years.
SAF offers a way to bring down the airline industry’s emissions now, as a bridge between the current generation of heavily carbon-emitting planes — which contribute more than 2% of all global greenhouse emissions — and that future generation of yet-to-be-invented zero-emission planes.
“This is what has to happen if we want to enjoy the benefits of an economy that is connected by aviation in the future, and one that doesn’t create unacceptable climate impacts,” said Chen.