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Accounting methods for biojet fuel
Final report
ECOFYS Germany GmbH | Am Karlsbad 11 | 10785 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E [email protected] | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Accounting methods for biojet fuel Final report
By: Gemma Toop, Maarten Cuijpers, Bram Borkent, Matthias Spöttle
Date: 19 December 2014
Project number: BIEDE14313
© Ecofys 2014 by order of: International Air Transport Association (IATA)
ECOFYS Germany GmbH | Am Karlsbad 11 | 10785 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E [email protected] | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Acknowledgments
The authors would like to thank the following persons for their valuable contributions to this project:
Leigh Hudson (British Airways), Emma Harvey and Jonathan Pardoe (Virgin Atlantic), Mike Farmery
(independent consultant), Eline Schapers and Susanne Dekker (SkyNRG), Alex Menotti (Airlines for
America), Greg Kozak, Angela Foster-Rice and Mihir Thakkar (United Airlines), Lydia Pforte, Jan
Pechstein and Lukas Rohleder (aireg e.V.), Susan Pond (AISAF), Deborah O’Connell (CSIRO), Flyn
van Ewijk (Qantas), and Virpi Kroger (Neste Oil).
Furthermore the authors like to thank the experts from IATA for their assis tance with the report:
Dr. Thomas Roetger, Robert Boyd, Michael Schneider, Michel Adam, Jon Godson and Haldane Dodd
(ATAG).
ECOFYS Germany GmbH | Am Karlsbad 11 | 10785 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E [email protected] | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Foreword
In 2014, over 3 billion passengers will have boarded an aircraft somewhere on the planet. There are
many factors that drive aviation demand, from holidays to business or visiting friends and relatives,
not to mention the need for the speedy transportation of perishable and high value goods to which
we have grown so accustomed. And demand for aviation is not slowing. In fact, it is forecast that
passenger demand will increase globally by approximately 5% per annum in the medium term. While
this translates into a tremendous economic opportunity, it also exposes the rising challenge of
growing in a sustainable manner.
IATA member airlines cover around 85% of all commercial flight operations. They have committed to
ambitious climate change targets including carbon neutral growth from 2020 and a halving of CO2
emissions from the sector by 2050. While technological advances will play a role in this, sustainable
aviation fuels have a crucial role to play in helping to completely de-couple emissions from growth. As
both the technology and the economics of sustainable aviation fuel improve, we hope that the scale
of use will increase considerably in future years. Without standards, the integrity of any product or
system is weakened. Necessarily, many governments or regional bodies have established localised
metrics of how to measure their sustainability claims. The technical certification concerning aviation
fuel quality, is designed and administered globally and with many airlines flying to numerous different
countries and regions each day, there simply cannot be any variance in fuel performance. As the
industry develops and scales up it will be important to have harmonised accounting rules to ensure
that airlines can demonstrate their sustainability, prove their contribution to renewable energy goals
and quantify and allocate greenhouse gas emissions savings in a transparent and consistent way that
also ensures that claims from a specific batch of biojet fuel are not made more than once.
Furthermore, we believe that this report will make a valuable contribution to the success of the
ongoing work taking place at ICAO on the development of a global Market Based Measure (MBM) for
aviation.
I commend this detailed and thoughtful analysis from Ecofys, produced with the assistance of IATA’s
own experts. They have tackled a complex and challenging topic and provided some clear ideas to be
developed on the path towards designing an accounting system for biojet fuel that could be
implemented by airlines.
Michael Gill
Director, Aviation Environment
IATA
ECOFYS Germany GmbH | Am Karlsbad 11 | 10785 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E [email protected] | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Abbreviations
ACARS Automatic Computerised Aircraft Reporting System
ACI Airports Council International
AFTF ICAO Alternative Fuels Task Force
ASTM American Society for Testing and Materials - international standards organisation for airline
fuel quality specifications
ATJ Alcohol to Jet
CAEP ICAO Committee on Aviation Environmental Protection
CANSO Civil Air Navigation Services Organisation
CDP Carbon Disclosure Project
CoA Certificate of Analysis
CO2 Carbon dioxide
DSHC Direct sugar to hydrocarbons
EC European Commission
EPA Environmental Protection Agency (US)
EU ETS European Emissions Trading Scheme
FFC Fuel Facility Corporation
FT Fisher-Tropsch
GHG Greenhouse Gas
GMTF ICAO Global Market Based Measure Technical Task Force
HEFA Hydroprocessed Esters and Fatty Acids
HPO Hydrogenated Pyrolysis Oil
IATA International Air Transport Association
IBAC International Business Aviation Council
ICAO International Civil Aviation Organization
ICCAIA International Coordinating Council of Aerospace Industry Associations
ISP Independent Service Provider
ITAKA Initiative Towards sustAinable Kerosene for Aviation
JUHI Joint User Hydrant Installation
MBM Market Based Measure
MRV Monitoring, Reporting and Verification
RCQ Refinery Certificate of Quality
RED Renewable Energy Directive (EU)
RFS2 Renewable Fuel Standard (US)
RIN Renewable Identification Number – tradable unit in RFS2
RTC Recertification Test Certificate
RTFO Renewable Transport Fuel Obligation (UK)
RTK Revenue tonne kilometre
UCO Used Cooking Oil
ECOFYS Germany GmbH | Am Karlsbad 11 | 10785 Berlin | T +49 (0)30 29773579-0 | F +49 (0)30 29773579-99 | E [email protected] | I www.ecofys.com
Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Table of contents
Executive Summary 1
1 Introduction 4
1.1 Policy context 4
1.2 Drivers to report biojet fuel and GHG emissions 5
1.3 Aim of the report 8
2 Biojet supply chains 9 2.1 Biomass feedstock and biojet fuel production 10
2.2 Blending & certification 12
2.3 Transport & distribution 13
2.4 Use 14
3 Proposed chain of custody approach 15
3.1 Introduction to chain of custody approaches 15
3.1.1 Book and claim 16 3.1.2 Mass balance 17
3.1.3 Physical segregation 19
3.1.4 Identity preservation 20
3.2 Comparison of book and claim and mass balance approaches 21
4 Design choices for biojet fuel accounting methods 24
4.1 Design of the proposed Global Market Based Measure 24 4.2 Chain of custody approach 25
4.3 Overview of design choices for the accounting system 27
4.3.1 Control point 28
4.3.2 Airport or airline level accounting 29
4.3.3 Central registry or verification at the fuel system level 32
4.3.4 Limit on percentage of biojet fuel reported 33
4.3.5 Treatment of upstream GHG emissions 36
4.3.6 Timeframe 38
5 Policy recommendations and next steps 41
Appendix A: Characteristics of selected legislative accounting methods 44
A.1 EU Emissions Trading Scheme 44
A.2 EU Renewable Energy Directive 47
A.3 US Renewable Identification Number (RIN) system 50
BIEDE14313 1
Executive Summary
The aviation industry is developing and piloting the use of biojet fuel blends as a key means to
reduce emissions from the sector. Biojet fuels produced via the Fischer-Tropsch (FT) process, via the
hydroprocessing of oils and fats (HEFA), or via the direct sugar to hydrocarbons (DSHC) route, can all
be certified to the international ASTM jet fuel technical specifications when blended up to a certain
percentage with fossil jet fuel.
Today biojet fuels are produced batchwise in bespoke supply chains and delivered in dedicated
consignments, so reporting the physical use of biojet fuel is straightforward for airlines. However the
ultimate aim of the aviation industry is that the ‘drop-in’ nature of biojet fuels will allow the fuels to
be fully integrated into the conventional jet fuel storage and distribution systems, and therefore be
used by all aircraft refuelling from those systems with no barriers. At that point it will no longer be
possible, or desirable even if it were theoretically possible, for airlines to physically test individual fuel
loads before uplift to calculate their physical biojet fuel content.
In response to the increasing initiatives and drivers for airlines to report their emissions, and in
particular spurred by the Member State directive to the International Civil Aviation Organization
(ICAO) to develop a global Market Based Measure (MBM) to be voted for approval in 2016, to cover
emissions from the sector, IATA has identified the need to develop proposals for biojet fuel
accounting methodologies for the aviation industry. A separation has to be made between the
physical use of biojet fuel and how the use of the fuel is administered. The rules need to be
transparent, consistent, practical, with a minimum of additional administrative burden, and should
have flexibility to feed into different regulations around the world.
The goal of this report is to assess design choices for (regulatory or voluntary) accounting systems
for biojet fuels that could be implemented by airlines. The design choices take into account the
properties of drop-in fuels and of the aviation fuel supply logistics. Representatives from several
airlines provided input to the development of these design choices, which were also presented at a
stakeholder workshop hosted by IATA in June 2014 to gather feedback on the initial set of options.
Key recommendations are set out below. For some of the options, the most appropriate design
choice will depend on the final design for the proposed global MBM. Design choices are therefore
presented throughout this report with their relative advantages and disadvantages, and implications,
to enable flexibility in the approach, depending on the choices made at ICAO level.
Ecofys recommends a hybrid chain of custody approach, including elements from a mass balance
as well as a book and claim system, to account for the use of biojet fuel in the aviation sector. We
recommend that the airline industry uses the existing mass balance chain of custody rules that are in
operation for the road biofuel supply chain from the feedstock production up to a defined ‘control
point’. From that control point onwards a book and claim system using sustainable biojet fuel
BIEDE14313 2
certificates would allow airlines to claim their use of biojet fuel in a robust way. The ‘control point’
should be the blending and certification point. The blending point can be at different points in
different supply chains and different parties in the supply chain might own the fuel at the blending
point, but this point is nevertheless the most appropriate point, as it defines the moment that the
final biojet fuel is made and it is known that it will enter commercial aviation.
The proposed global MBM that is under development at ICAO could potentially exempt smaller and/or
less developed countries, and could therefore have a geographical constraint. The information from
which airport or fuel system the fuel was uplifted and for which routes (for some airlines measured at
individual flight level) is already recorded by airlines, and could therefore be integrated into a biojet
fuel accounting system. However the option of airline level accounting offers maximum flexibility for
airlines. Ecofys recommends that reporting under a proposed global MBM is required at an airline
level and that an accounting system is designed at an airline level basis and it is therefore left to
airlines to choose how and where they apply their biojet fuel usage (with some potential limitations).
However this option requires a centralised global fuel registry. If this is not deemed to be feasible,
then the accounting system may need to be designed at the airport level to ensure the robustness of
the system is not compromised.
Ecofys recommends that the option of a global central registry for issuance and transfer of
sustainable biojet fuel certificates is further explored to identify the likely costs, the key challenges
and their possible solutions. While a more thorough cost-benefit assessment of this option is
warranted, this option may offer the most robust solution and may save costs in the longer term.
This biojet fuel registry might be separate from a global registry for greenhouse gas (GHG) emissions
depending on the ultimate design of the proposed global MBM.
Ecofys recommends to IATA that a reporting limit for biojet fuel should be based on the ASTM
technical specifications of biojet fuel, so 50% for HEFA and FT and 10% for DSHC fuel. This is in line
with current fuel handling practices and will likely provide sufficient potential for airlines to report
biojet fuel for the foreseeable future. On the other hand, the main accounting barriers identified to
allowing reporting of up to 100% biojet fuel use are that fuel purchase records would need to
demonstrate both the physical biojet fuel used and the administrative biojet fuel purchased to ensure
that the blend keeps within the technical limits, and that there could be possible concerns about
public perception and communication if high blends are reported that could not physically have been
used. This option could be further explored and developed, if flexibility in reporting for airlines is
considered to be a leading objective.
Different biojet fuel routes deliver different GHG emission reductions. The system could use
conservative default values as a basis for the GHG accounting, with the opportunity to substitute
these with actual GHG calculations from the specific supply chain, to incentivise use of biojet fuels
with higher GHG savings. A global MBM could be designed in such a way to give additional incentives
to biojet fuels with higher GHG savings, potentially offsetting any additional costs to do more detailed
GHG calculations.
BIEDE14313 3
Timeframes for the validity of certificates within supply chains should be chosen to be in line with
the existing road transport biofuel supply chains and the voluntary schemes that they use. Within the
system of sustainable biojet fuel certificates, there is no strong accounting reason to set a maximum
timeframe within which fuel suppliers have to transfer their sustainable biojet fuel certificates, as long
as the control point and verification of the system is robust. However, situations should be avoided
where the physical fuel use and the emissions claim are many years apart. Ecofys therefore
recommends that as a minimum, biojet fuel certificates are marked with the date (at least the year)
that they are created, to track whether unexpected situations are occurring in the market. The time
limit on airlines using a certificate that proves the purchase of biojet fuel should be chosen at an
appropriate level, configured to the potential global MBM reporting period. Lessons should be learnt
from existing biofuel and carbon markets.
In the next steps, IATA should continue to proactively engage with ICAO on the design of the global
MBM. The recommendations presented in this report may support these discussions, particularly
among the members of the GMTF and AFTF. The European Emissions Trading Scheme (EU ETS)
provides an opportunity to test some of these ideas in practice and it will be important to remain
engaged with the European Commission as the monitoring, reporting and verification guidance is
further developed for aviation in the EU ETS. In addition it will be important to engage with biojet fuel
pilot projects and test flights in other parts of the world to put the accounting methodology and
options into practice to see how well it works and what issues arise. Specifically engaging pipeline
and fuelling system owners and operators, as well as airlines and fuel suppliers, will also be important
in the next steps to understand the key challenges they foresee of integrating biojet fuel into the
existing infrastructure and fuel inventory accounting systems, and to be able to identify solutions.
Ensuring consistent, practical and robust accounting systems will be a crucial step to secure the
integrity of the evolving biojet fuel market and to ensure the success of a global MBM for aviation.
BIEDE14313 4
1 Introduction
1.1 Policy context
The aviation sector is currently responsible for around 2% of man-made global greenhouse gas
(GHG) emissions, which is a relatively small share when compared to other modes of transport such
as road transport. However, aviation is the fastest growing transport mode and is projected to grow
by around 4 to 5% annually up to 2050, although emissions growth is expected to be significantly
less, thanks to continuous fuel efficiency improvement.
Recognising growing global demand for air transport and hence its potential future impact on the
environment, the aviation industry declared it will work towards sustainable development. In 2009
the International Air Transport Association (IATA), together with the other global aviation industry
associations1, committed to a set of ambitious targets to proactively contribute to a sustainable
development and to reduce carbon emissions from aviation: In the short term, fuel efficiency shall be
improved by 1.5% on average per year until 2020. From 2020 onwards global net carbon emissions
are to be stabilised, despite increasing air traffic volume (carbon-neutral growth). The long-term goal
is to reduce net CO2 emissions by 50% by 2050, compared to 2005 levels. Significant efficiency
improvements in technology, operations and infrastructure continue to be implemented, as in the
past. However, to achieve the targeted carbon reductions in aviation in the long term, a shift towards
low-carbon fuels is also necessary. Plant oil derived aviation biofuel could reduce the carbon footprint
of the industry by up to 80% (EurActiv, 2012). This, however, is only feasible if biofuels for aviation
are produced in a sustainable manner and in line with respective regulations.
The aviation and biofuel industries are working hard to develop the fuels and prove the technical
feasibility of flying on biojet fuel. Currently single test flights and small numbers of commercial flights
are fuelled with a bespoke batch of biojet fuel, making it relatively straightforward to demonstrate
the sustainability and GHG emissions saving from that flight. However, as the industry develops and
scales up, it will be important to have harmonised accounting rules to ensure that airlines can
demonstrate their sustainability, prove their contribution to renewable energy goals and quantify and
allocate GHG emissions savings in a transparent and consistent way that also ensures credibility of
the system, preventing any opportunities for multiple claims from a specific batch of biojet..
The ‘drop-in’ nature of biojet fuel will allow it to be blended into the conventional airport fuel system
and distributed to all aircraft refuelling at that airport. It will not be possible, or desirable even if it
were theoretically possible, for airlines to physically test individual fuel loads to calculate their biojet
fuel content and the associated GHG saving. Therefore rules have to be used to allocate fuel to
different airlines, flying to different countries, which might have different legislations in place.
1 A irports Council International (ACI), Civil Air Navigation Services Organisation (CANSO), International Business Aviation Council (IBAC) and
International Coordinating Council of A erospace Industry Associations (ICCAIA)
BIEDE14313 5
Significant lessons can be transferred from the existing road transport biofuel market, which is
already tackling some of these challenges, but the airline industry has a uniquely international nature
and must learn the lessons and adapt the solutions to best fit the industry structure.
In Europe, monitoring, reporting and verification guidelines have been developed separately for the
aviation sector and for stationary installations (e.g. power plants) under the EU Emissions Trading
Scheme (EU ETS). Any biojet fuels that are used within the European aviation sector that will count
towards emissions reductions under the EU ETS and/or towards the European Renewable Energy
Directive (RED) renewable transport fuel target have to comply with mandatory sustainability criteria.
Compliance has to be demonstrated by passing information about the sustainability of the biomass
used to make the fuel through the supply chain. That information has to be passed through the chain
using so-called mass balance chain of custody rules set out in European legislation (see also chapter
3). These rules offer a good starting point in Europe for how to account for biojet fuel use, but rules
for the industry will need to be applicable globally or regionally, especially as ICAO works towards
developing a global MBM for the aviation industry.
In October 2013, the 38th ICAO General Assembly agreed to develop a global MBM for the aviation
sector by the next ICAO General Assembly in 2016. The goal is to implement a system by 2020 which
would enable the international aviation industry to reach carbon neutrality in their emissions growth
from 2020. Many questions are still to be answered with respect to how the global MBM will operate
in practice and significant work is now underway to design the details of the scheme.
In response to the increasing initiatives and drivers for airlines to report their emissions, and in
particular spurred by the commitment from ICAO to now develop a global scheme to cover emissions
from the sector, IATA identified the need to develop proposals for biojet fuel accounting
methodologies for the aviation industry. The rules need to be transparent, consistent, practical, with
a minimum of additional administrative burden, and should have flexibility to feed into different
regulations around the world. This report aims to support IATA and the wider aviation industry in this
goal.
1.2 Drivers to report biojet fuel and GHG emissions
Fuel use is the largest component of an airline’s operational cost and airlines are therefore well used
to recording and tracking their fuel use. In general airlines have good information on their total fuel
purchase, and can therefore make good calculations on their fuel consumption. Integrating reporting
on biojet fuel use, and on the GHG savings of that biojet fuel, into this fuel recording system in an
efficient and robust manner is a challenge by virtue of the fact that the biojet fuel component and its
GHG savings cannot be physically measured. There is therefore a need for clear and consistent
allocation rules between airlines.
BIEDE14313 6
There are a number of drivers and regulatory mechanisms requiring airlines to record and track their
biojet fuel use and GHG emissions, an overview of which is shown in Table 1. International sector
ambitions and market based measures, as well as voluntary reporting, apply to the airlines
themselves. Biofuel mandates, in place in several regions in the world, tend to apply to the fuel
suppliers rather than the airlines directly, although airlines will naturally rely on information from
their fuel suppliers to be able to record and report their biojet fuel use and associated GHG
emissions. Each type of driver might have different aims and objectives from the perspective of the
aviation industry and will have different rules and regulations and actors involved. It is therefore
important to understand the range of applications before the design choices for the accounting
method are developed to ensure that the proposed accounting method can be widely and coherently
used.
Table 1: Key reporting drivers and regulatory mechanisms for airlines to record biojet fuel use and GHG emissions
Application type Examples and explanation
International sector
ambitions
IATA GHG targets - At IATA’s annual general meeting in June 2009,
targets for emissions reduction were agreed upon. These collective
targets have been endorsed by the whole aviation industry and
submitted to ICAO at its 37th Assembly in 2010. The goals commit
to stop the growth of net emissions resulting from international
aviation from 2020 and to halve emissions by 2050 compared to
2005 levels. Biofuels is expected to deliver a large contribution to
achieving these targets.
Market Based Measures
ICAO Global Market Based Measure – A Global Market Based
Measure Technical Task Force (GMTF) has been formed within
ICAO’s Committee on Aviation Environmental Protection (CAEP) to
oversee development of the details of the global MBM. This Task
Force aims to develop the structure of the global MBM, to be
presented at the next ICAO General Assembly in 2016, for
implementation from 2020. CAEP will undertake technical work to
inform the detailed development of the scheme.
EU Emissions Trading Scheme – Biojet fuel is counted as zero-
emissions under the EU ETS. To be regarded as biofuel, the
sustainability requirements of the RED are applicable. Furthermore
the biojet fuel reported may not exceed the total fuel usage of an
airline for their flights departing from a specific airport that is within
the EU ETS, to avoid that airlines can get substantial exemptions
from the EU ETS by using biojet fuel mainly on routes not subject to
the EU ETS.
Biofuel mandates
EU Renewable Energy Directive - The RED sets a 10% target for the
use of renewable energy in transport by 2020. It is measured
against the use of fuel in road transport (denominator), but can be
BIEDE14313 7
Application type Examples and explanation
fulfilled by any renewable energy in any form of transport
(numerator), thus including air transport.
EU Fuel Quality Directive - The FQD sets a 6% target of GHG
emission reduction from all energy used in transport for 2020
compared with 2010. The RED and the FQD have harmonised
requirements regarding biofuel sustainability. Similarly, for biofuels
to be zero emissions rated in the EU ETS they will also have to
demonstrate that they meet these RED sustainability criteria.
US Renewable Fuel Standard - Congress established the RFS in
2005 which set annual targets for biofuel blending into gasoline up
to 2008. In 2007 the RFS was amended (RFS2) to include other
biofuel types and set annual volume targets up to 2022, as well as
minimum GHG savings compared to conventional fuels. The USA
uses tradable certificates called Renewable Identification Numbers
(RINs) to facilitate demonstrating compliance with the RFS2. RINs
can also be traded with obligated parties. Although jet fuel is not
mandated under the RFS2, RINs can be generated for biojet fuel
provided the fuel meets the correct definition of renewable fuel.2
Voluntary carbon
footprinting and
reporting methodologies
Company Reporting – Airlines are increasingly reporting their
sustainability performance on a voluntary basis, including their
carbon footprints. Organisational footprinting guidelines contain
specific requirements for the use of biofuels.
Carbon Disclosure Project – The CDP is a voluntary database in
which large companies report their GHG emissions. A number of
large international airlines annually report their GHG emission to
the CDP.
The GHG Protocol is the most widely used international accounting
tool for companies to understand, quantify, and manage their GHG
emissions. The GHG Protocol is a partnership between the World
Resources Institute and the World Business Council for Sustainable
Development and provides an accounting framework for many
industries.
From an airline’s perspective, currently the only legislative driver for reporting biojet fuel use is the
EU ETS, which at the moment applies to intra-European flights only.
2 More information on the RED and the RFS2 is provided in Appendix A and in: Ecofys, Assessment of sustainability s tandards for biojet fuel,
2014.
BIEDE14313 8
Biojet fuel can also be used to count towards the biofuel mandates in the EU under the RED and in
the US as part of the RFS2, in which case accounting rules would apply to the fuel supplier. However
biojet fuel use towards these mandates has been very limited, as they have so far been fulfilled
primarily in the road transport sector, so the systems are relatively untested in relation to biojet fuel.
In the EU, the Netherlands is the only country to have actively implemented the provision for biojet
fuel to count towards the RED target in their national legislation. Nevertheless lessons can be learned
from the key characteristics of the accounting methods required for road transport biofuels under
these three legislative drivers.
IATA already asks its members to report their total fuel consumption including biofuel use. IATA is
currently working on more detailed rules to report biofuel consumption. Other key (voluntary)
initiatives that require airlines to report on fuel use and GHG emissions are the Carbon Disclosure
Project, to whom for instance British Airways, Air France-KLM and Qantas report their emissions, and
organisational footprinting standards such as the GHG Protocol which is used by companies worldwide
to report on their GHG emissions.
1.3 Aim of the report
The goal of this report is to assess design choices for (regulatory or voluntary) accounting systems
for biojet fuels that could be implemented by airlines. The design choices take into account the
properties of drop-in fuels and of the aviation fuel supply logistics. The choices strive to be practical
and relatively simple to implement in existing day-to-day operations of the aviation industry, with a
minimum of additional administrative burden, having the required flexibility to feed into different
regulations around the world and following as much as possible the regulatory systems that have
already been implemented in the biofuel supply chain. Representatives from several airlines provided
input to the development of these design choices, which were also presented at a stakeholder
workshop hosted by IATA in June 2014 to gather feedback on the initial set of options.
The purpose of this report is to equip IATA with a framework of design choices which can be taken
further and contribute to the design of future accounting rules for the sector, particularly with the
development of the proposed global MBM at the ICAO level in mind. For some of the options, the
most appropriate design choice will depend on the final design of the global MBM. Design choices are
therefore presented with their relative advantages and disadvantages, and implications, to enable
flexibility in the approach, depending on the choices made at ICAO level. This report also provides
background information for IATA of relevance to the development of the proposals. Chapter 2
describes the characteristics of typical biojet fuel supply chains, today and in the future. An
introduction to traceability or so-called ‘chain of custody’ approaches is given in chapter 3, followed
by chapter 4 which describes the detailed accounting methodology options. These sections together
build the basis for the recommendations in chapter 5.
BIEDE14313 9
2 Biojet supply chains
In this chapter the structure of biojet fuel supply chains globally is described and analysed. The
structure of the current supply chain for the (test and commercial) biojet fuel flights that have taken
place around the world is described as well as how the biojet fuel supply chain could be linked to the
fossil jet fuel supply chain in the future.
Since 2008, when Virgin Atlantic was the first airline to fly on a 20% biojet fuel blend in one of the
engines of their Boeing 747, several major global airlines have performed test flights on biojet fuel.
Since the certification of biojet fuels in 2011 (see section 2.2), twenty one airlines have performed
over 1600 commercial flights powered by biojet fuel blends; some of them, including KLM and
Lufthansa, have even run longer series of commercial flights on biojet fuel over several months.3 The
nature of the biojet fuel supply chain has evolved since the first single test flights, and it is expected
to evolve further as biojet fuel volumes increase, as different companies carve out their roles in the
supply chains, and the biojet fuel industry becomes more mainstream. Some aspects of biojet fuel
supply chains are likely to become more closely coupled to the fossil jet fuel supply chain, whilst
other aspects may evolve to form new commercial structures more suited to the unique
characteristics of biojet fuel supply chains.
The biojet fuel supply chain always consists of the same basic elements including biomass feedstock
production (or sourcing in the case of waste materials), biojet fuel production, blending and
certification, transport and distribution, and use. Furthermore, certain quality documentation,
sustainability information and financial and operational data travel through the supply chain. The
building blocks of the supply chain and the information flows therein are illustrated in Figure 1 and
the elements in the Figure are described in further detail throughout chapter 2.
3 http://www.ecofys.com/en/publication/biofuels-for-aviation/
BIEDE14313 10
Figure 1: Biojet fuel supply chain and information f lows
2.1 Biomass feedstock and biojet fuel production
Feedstock production is done either by companies that operate dedicated biomass plantations or by
companies collecting and processing wastes such as used cooking oil (UCO) from restaurant and
other sources. These companies can sell their products directly to the biofuel producers, or via
feedstock collectors or wholesalers.
Waste feedstocks are popular for the production of biojet fuels as they provide the combination of
limited sustainability risks and relative affordability. UCO and other waste streams from the food
industry can come from a variety of sources, for instance from food processors and restaurants. The
fragmented first step of the supply chain requires appropriate systems to be put in place to ensure
that information on the origin of the material can be traced back from the later phases of the supply
chain in a way which is robust and accurate, but also proportionate to the sustainability risks posed
by such waste materials.
The international ASTM D75664 standard provides the technical specifications for biojet fuel produced
either through the gasification of biomass combined with the Fischer-Tropsch (FT) process, or
produced via the hydroprocessing of oils and fats (HEFA) or the direct sugar to hydrocarbons (DSHC)
process. Other biojet fuel conversion routes exist, including Alcohol-to-Jet (ATJ) and hydrogenated
pyrolysis oil (HPO), but these alternatives have not (yet) been ASTM approved for use in aviation.
4 A merican Society for Testing and Materials - international s tandards organisation for airline fuel quality specifications
BIEDE14313 11
ATJ is expected to become ASTM certified in 2015, enabling a fourth possible route of biomass to jet
fuel conversion. In Table 2 an overview of conversion routes and feedstock inputs is presented.
Table 2: Biojet fuel production routes and feedstocks
Biojet fuel production route Type of feedstock ASTM Certified
Hydroprocessed Esters and Fatty Acids
(HEFA)
Vegetable oils
Waste streams from food industry
Vegetable oil refining by-products
Algal oil
Yes
Fischer-Tropsch (FT)
Woody (lignocellulosic) biomass
Municipal waste
Agricultural waste
Forestry waste
Yes
Direct Sugar to Hydrocarbon (DSHC)
Any fermentable sugar
Aiming for cellulosic biomass and
by-product streams, e.g. bagasse
Yes (but max. blend of 10%,
certified in June 2014)
Alcohol to Jet (ATJ) Sugars
Starches No (expected in 2015)
Hydrogenated Pyrolysis Oil (HPO)
Woody (lignocellulosic) biomass
Municipal waste
Agricultural waste
Forestry waste
No
Biojet fuel is produced by a small number of companies, primarily in Europe and the US. Biojet fuels
are currently produced batchwise, as the demand is not yet sufficient to justify continuous
production. The HEFA biojet fuel production route is currently the most popular, using a variety of
feedstock types as input for the conversion process. Some examples are:
The biojet fuel used by Lufthansa for their series of flights in 2011 originated from Camelina
(80%), Jatropha (15%) and Animal Fats (5%) and was produced by Neste Oil.
The biojet fuel used by KLM in 2013 for their weekly flights from New York to Amsterdam
originated from UCO and was produced by Dynamic Fuels in the United States.
Biojet fuels from the FT process are not yet produced on a commercial scale. In the GreenSky London
partnership, British Airways and biofuel producer Solena have announced plans to build a plant that
will process 575,000 tonnes of post-recycled municipal waste to 120,000 tonnes of liquid fuel (50,000
tonnes biojet fuel) using the FT process from 2017 onwards.
It might be expected that biojet fuel producers will seek more vertical integration in their business
models to have additional control over the supply chains. For the end user (airlines) the use of
biofuels produced from unsustainable feedstock holds a high risk of negative publicity. ‘Tolling
agreements’ – in which the biojet fuel buyer acquires and delivers the feedstock to the biofuel
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producer – are one of the options upstream. Some supply chain parties may also wish to gain more
control over the downstream activities. In general also more unconventional and innovative supply
chain roles may also be expected to emerge to fit the distinct characteristics of the biojet fuel supply
chain. SkyNRG for example, as a biojet fuel supplier, is involved in the sourcing of feedstock as well
as being a supplier of biojet fuel to airlines, thereby effectively covering multiple building blocks of
the supply chain.
2.2 Blending & certification
After production, the biojet fuel quality is tested according to the ASTM D7566 specification. If the
quality of the biojet fuel meets the specification a Certificate of Analysis is issued by an independent
testing company. The certified biojet fuel is blended up to a maximum percentage by volume (50%
for HEFA and FT, 10% for DSHC) with fossil ASTM D1655 certified Jet A1 fuel.5 The blending can in
principle be done at any point in the supply chain, be it at the biojet fuel refinery, a petroleum
refinery or at a separate facility. The blending point is considered to be the point of manufacture of
the final jet fuel. The final blended fuel is tested to the requirements of the ASTM D7566 standard
and is then recertified without further conditions as standard ASTM D1655 fossil jet fuel. From this
point onwards, the biojet fuel blend can be handled as regular Jet A1 fuel (see also Figure 1).
Technical documents demonstrating fuel quality must accompany the product to its destination. The
most common of these documents are listed here:6
Refinery Certificate of Quality (RCQ) - the definitive original document describing the
quality of an aviation fuel product. It contains the results of measurements, made by the
product originator’s laboratory, of all the properties listed in the latest issue of the relevant
specification. It also provides information regarding additives, including both the type and
amount of any such additives. Furthermore, it includes details relating to the identity of the
originating refinery and traceability of the product is described. RCQs must always be dated
and signed by an authorized signatory.
Certificate of Analysis (CoA) - may be issued by independent inspectors and/or
laboratories that are certified and accredited, and contains the results of measurements made
of all the properties included in the latest issue of the relevant specification. It cannot,
however, include details of the additives added previously. It shall include details of the
originating refiner and the traceability of the product described. It must be dated and signed
by an authorized signatory.
5 The 50% blend limit for HEFA and FT is currently in place as a precautionary measure enabling the industry to start using sustainable jet
fuels , while additional assessments are undertaken on the need to maintain required levels of aromatic content in fuels. In the future higher
blending percentages might be permitted to be certified. The blend limit for DSHC fuel is fixed at 10%, as DSHC consists of a s ingle molecule
with 15 carbon atoms (farnesane), whereas conventional jet fuel, as well as other biojet fuel types, are a mix of hydrocarbons of different
carbon chain lengths. A strongly modified carbon chain length distribution could alter the properties of the blend, hence the lower limit
currently for DSHC. 6 IATA (2012) IATA Guidance Material for Biojet Fuel Management
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Recertification Test Certificate (RTC) - demonstrates that recertification testing has been
carried out to verify that the quality of the aviation fuel concerned has not changed and
remains within the specification limits, for example, after transportation in ocean tankers or
multiproduct pipelines, etc. Where aviation product is transferred to an installation under
circumstances which could potentially result in contamination, then before further use or
transfer, recertification is necessary. The RTC must be dated and signed by an authorized
representative of the laboratory carrying out the testing. The results of all recertification tests
are checked to confirm that the specification limits are met, and no significant changes have
occurred in any of the properties.
The above documents are all transferred to the last party that is responsible for the quality of the
fuel, i.e. the party that supplies the fuel at the airport.
2.3 Transport & distribution
Currently, transport of biojet fuels is done in batches as the volumes are limited. Dedicated transport
chains are constructed that keep the biojet fuel or biojet fuel blend separate from the conventional
jet fuel transport supply chain. For instance, the biojet fuel blend for the Lufthansa test flights was
produced in Finland and transported by truck to Hamburg, where it was stored separately from the
fossil jet fuel in dedicated fuel containers at the airport.
Effectively, therefore, today’s biojet fuel supply chains are kept physically segregated from
conventional fossil jet supply chains. However, as the industry scales up, building up a parallel supply
infrastructure for biojet fuel would require prohibitive costs. Furthermore it is not considered
necessary as, once the biojet fuel blend has received ASTM D1655 certification after blending, there
are no technical limitations for transporting and distributing the fuel in the conventional
infrastructure. This means that the biojet fuel blend could be transported via e.g. the existing pipeline
infrastructure alongside conventional jet fuels. Furthermore there are no technical limitations to
blending the biojet fuel into fuel storage tanks in ports or airports.
The ultimate aim of the aviation industry is that the ‘drop-in’ nature of biojet fuel will allow it to be
blended into the conventional airport fuel systems and distributed to all aircraft refuelling from those
systems with no barriers. At that point it will no longer be possible, or desirable even if it were
theoretically possible, to physically test individual fuel loads before uplift to calculate their physical
biojet fuel content. Therefore some sort of decoupling has to be made between the physical presence
of biojet fuel molecules and how the use of the fuel is administered, to ensure that biojet fuel use can
be allocated to different airlines for reporting purposes on a consistent, robust and transparent basis.
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2.4 Use
Currently, biojet fuel distribution at the airport is a custom-made solution for a limited number of test
or demonstration flights. The conventional fuel distribution infrastructure is generally not used and
the biojet fuel is delivered into the wing using dedicated trucks. However, the ultimate aim of the
aviation industry is to fully integrate biojet fuel into conventional fuel transport, storage, distribution
and use.
The ongoing ITAKA (Initiative Towards sustAinable Kerosene for Aviation) project is expected to
support the development of aviation biofuels by improving the readiness of existing technology and
infrastructures. This will be achieved through a collaborative project of industry partners with the EC.
The project will develop a full value-chain in Europe to produce sustainable drop-in kerosene
containing up to 50% HEFA at a scale large enough to allow testing of its use in existing logistics
systems and in normal flight operations in the EU. The project plans to use the hydrant system at
Schiphol airport, in Amsterdam, the Netherlands, for the distribution of the biojet fuel. In June 2014,
Karlstad Airport in Sweden became the first airport worldwide to introduce a permanent, dedicated
biojet fuel storage tank, in an initiative led by Statoil and SkyNRG. Airports generally have one or
multiple large storage tanks for the storage of jet fuel. One or more companies can provide refuelling
services at the airport. Refuelling can be done by dedicated refuelling trucks (bowser trucks) or using
mobile hydrant dispensers that link the aircraft to the airport’s Joint User Hydrant Installation (JUHI).
In general fuel purchasing and distribution can take many different forms. In some cases airline fuel
purchasing departments source the fuel required at their main “home” airport themselves. Visiting
airlines tend to have a direct relation with oil companies supplying the fuel at the airport. Fuel
purchase contracts will have different commercial conditions and may have different durations or be
for different volumes, and airlines may purchase a proportion of their fuel directly on the spot
market. In the case of biojet fuel it might be expected that in the early years airlines will have
dedicated contracts with a biojet fuel producer or supplier to supply a certain volume of biojet fuel. In
the longer term, however, as the price of biojet fuel approaches fossil fuel, contracts might be
expected to evolve to form the mix of different contract types seen in the fossil fuel purchasing world.
In some cases a single oil company is responsible for the distribution network at the airport and the
quality of the fuel. In other cases a separate company or a consortium of oil companies is responsible
for fuel distribution. Oil companies selling jet fuel to airlines can also hire an intermediary or an
Independent Service Provider (ISP) to perform the actual fuelling service into the aircraft.
Airlines can buy and sell fuel to other airlines. Fuel transactions from one airline to another are the
exception rather than the rule, but larger airlines typically have holding tanks (enough storage for
few days) at their home airports. In some cases it can be profitable for them to hold onto fuel in
these tanks rather than taking the spot price. The distribution stage of the supply chain creates one
of the crucial challenges for a biojet fuel accounting system. A robust and appropriate system needs
to be designed to ensure that only one airline can claim each unit of biojet fuel use.
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3 Proposed chain of custody approach
This chapter gives an introduction to different traceability or so-called ‘chain of custody’ options which
are used to link sustainability claims from the origin of the supply chain – where the feedstock is
produced – to the final party making the claim.
3.1 Introduction to chain of custody approaches
In this context, the term ‘chain of custody’ refers to the method by which a connection is made
between information7 that relates to the production of raw materials and any claims that are made
relating to the final product. The chain of custody normally includes all the stages in a supply chain
from the feedstock cultivation to the consumption of the biomass-based fuel.
Different chain of custody approaches can be distinguished that vary in their flexibility and in the final
‘claims’ that can be made (Figure 2). Within each approach there are design choices that can be
made. The following sections describe the key characteristics that define each of the chain of custody
approaches.
Figure 2: Dif ferent chain of custody approaches
7 In this section information refers to any information or data relating to the biomaterial or biojet fuel. This could be, for example,
information on feedstock, country of origin, environmental or social c riteria compliance, which voluntary sustainability scheme (if any) the
biomaterial is certified to, and any information relating to the GHG emission intensity of the biojet fuel. More information specifically on
sus tainability information tracked along the supply chain is provided in the Ecofys report “Assessment of sustainability s tandards for biojet
fuel.”
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3.1.1 Book and claim
A book and claim approach enables trade in the physical product to be completely decoupled from the
trade in information (or certificates). For the volume of biofuel that is claimed to be used, it can be
claimed that sufficient material with those characteristics has been added to the market (taking into
account relevant conversion factors). In other words, the end user cannot claim to have used the
biofuel.
Book and claim systems are offered by several biofuel voluntary schemes (although not for EU RED
compliance). Such systems are also commonly used to make claims about renewable electricity use,
for which it is not possible to trace the ‘green electrons’.
Key characteristics:
Transfer of sustainable volume credits/certificates from producer to end user via a (electronic)
central registry or trading platform;
Provides the lowest level of traceability.
Figure 3: Illustrative book and claim approach.
Key considerations in designing a book and claim system include:
What is the tradable unit?
Which parties in the supply chain can trade those units?
Are external parties also able to trade in those units?
How can ‘double claiming’ be avoided? Is there a need for a central registry or database?
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3.1.2 Mass balance
A mass balance approach can take various precise forms, but in essence products with different
characteristics can be physically mixed, but are kept administratively segregated. It allows mixing of
products with different characteristics at each point in the supply chain, whilst ensuring that at each
step in the chain, companies do not sell or produce more products with specific characteristics than
they sourced (taking into account relevant conversion factors). There cannot be trade in e.g.
sustainability information between parties without trading physical products, nor between the same
two parties (as is possible in a book and claim system). Each actor in the supply chain must keep
track of the amount of product with certain characteristics it sources and sells. If there is a break in
the chain, no claim can be made on the end product.
Mass balance systems are used in the road transport biofuel sector. They are required in the EU for
RED compliance and hence are implemented by all the EC-recognised voluntary schemes. Wood
sector certification schemes – FSC and PEFC – also offer mass balance as their main approach.
Key characteristics:
Administrative segregation only, no requirement for physical segregation;
Each party keeps track of the characteristics of their inputs and outputs, and cannot sell more than
they sourced.
Figure 4: Illustrative mass balance approach
Key considerations in designing a mass balance system include:
At what ‘level’ do parties have to balance their input and output records? E.g. Should the mass
balance be kept at a whole company level, at the level of a site or at the individual storage tank
level?8
8 Note that at one end of the scale where the mass balance system is kept at an international company wide scale, it shares characteristics
with a book and claim system, whereas at the other extreme where mass balance records are kept at an individual s torage tank level, the
system has a lot in common with physical segregation systems.
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Over what time period the mass balance should be ensured? E.g. annual, quarterly, monthly or
continuous.
Is a deficit for balancing-up during the time period allowed?
Is ‘borrowing’ or ‘banking’ allowed over consecutive time periods?
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3.1.3 Physical segregation
As the name physical segregation suggests, physical separation of different product streams (e.g.
certified material from non-certified material) is required throughout the supply chain. This chain of
custody approach delivers consignments that physically contain 100% of the specific product stream,
but they can be from a variety of sources. It does not therefore aim per se to provide traceability
back to the source of the feedstock (e.g. a specific farm or plantation). Physical separation can either
be by location (e.g. separate storage or distribution channels) or by time (e.g. batchwise processing
or delivery).
The US RFS2 system requires that RFS compliant fuel is segregated from non-RFS compliant fuel,
which is not as challenging as full physical segregation of all source streams. In general physical
segregation is more commonly used for supply chains where the product is solid and not so
commonly mixed, e.g. certain types of high value wood, or food supply chains. Physical segregation
is, by definition, used in batchwise production of biojet fuel today, although it will not be practical as
the industry scales up and regularly uses the common airport supply logistics. This report does not
therefore focus on key design choices for physical segregation.
Key characteristics:
Physical segregation required;
Delivers consignments that physically contain 100% certified material from a variety of sources.
Figure 5: Illustrative physical segregation approach
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3.1.4 Identity preservation
This chain of custody approach delivers consignments that physically contain 100% of the specified
product stream from single identifiable sources (identity preservation). Physical separation of
different product streams is required. This approach is easier for shorter and direct supply chains and
is more commonly used with, for example, food supply chains.
Key characteristics:
Physical segregation required;
Delivers consignments that physically contain 100% certified material from a single identifiable
source.
Figure 6: Illustrative identity preservation approach
The identity preservation approach is very challenging for commodities , such as feedstocks or fuels,
and not considered necessary or desirable for aviation biofuels. This report does not therefore focus
on key design choices for identity preservation.
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3.2 Comparison of book and claim and mass balance approaches
Typically physical segregation and identity preservation are seen as the most stringent chain of
custody forms. In practice today, biojet fuel test flights effectively operate with a physical
segregation chain of custody approach, as bespoke batches of fuel are delivered to test flights via
dedicated supply chains. However this chain of custody approach is not considered feasible or
necessary for a scaled-up biojet supply chain in the future.
This report will therefore focus on the book and claim and mass balance chain of custody approaches.
Advantages and disadvantages are compared alongside each other in Table 3, as well as examples of
existing applications of each approach.
Table 3: Advantages and disadvantages of chain of custody approaches
Book and claim Mass balance Advantages Simple implementation (no changes in
supply chain required) Offers maximum flexibility to claim the
benefits from biojet fuel that has been put into the fuelling system anywhere in the world
Any financial incentive for supplying biojet or for being certified can go more directly to the party producing the tradable units and is not spread through all parties in the supply chain
Simple implementation (no changes in supply chain required)
Inclusive approach as all supply chain parties are involved
Closer conceptual (physical) link between what is being claimed and what is physically supplied
Enables any required supply-chain specific data, such as GHG data, to be collected and passed along the chain
In line with existing rules in EU RED and EU ETS
Disadvantages Not permitted in EU RED or EU ETS Question on public perception Not all supply chain parties need
necessarily be involved, so claim could be made about certified products while maintaining some bad sustainability practices within the supply chain
No guarantee that products physically contain raw materials with the characteristics being claimed
Harder to calculate actual GHG savings if intermediate parties in supply chain are not involved
No full assurance of origin Many control points compared to book
and claim Still no guarantee that products
physically contain raw materials with the characteristics being claimed
Implications Harder to get political and societal acceptance
Not an available chain of custody option for most biofuels voluntary schemes
Requires a central database, registry or trading platform to control all claims
All supply chain parties need to keep mass balance records, otherwise there is a break in the chain
Used in the European road biofuel sector
Compatibility with most biofuel voluntary schemes
Examples RSPO, RTRS and Bonsucro (but not for EU road biofuel)
Green electricity End user “claims” for several biofuel
systems, e.g. RTFCs, RINs, Dutch biotickets
RED and EU ETS Most biofuels voluntary schemes FSC and PEFC offer two variants9 for
forestry
9 FSC refers to the two approaches as ‘percentage system’ and ‘c redit system’. The c redit system is more similar to the approach used in
road biofuels.
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Mass balance is the approach required by the European Commission for biofuels in the RED and the
EU ETS (see Appendix A, sections A.1 and A.2), as this is perceived to strike a balance between
stringency and practicality. For this reason it is also the approach that has been adopted by all
biofuels voluntary schemes recognised by the Commission.
The Renewable Fuel Standard (RFS2) allows a mass balance approach to be taken within the US, but
requires a physical segregation approach for fuels produced outside the US (see Appendix A, section
A.3). Note that in practice segregating RFS and non-RFS fuel may not be as difficult as it sounds as it
is simply a requirement to segregate RFS-compliant fuel from non-RFS-compliant fuel and fossil fuel.
Fuel qualifies as RFS-compliant if it is made from any of the feedstocks on the list, so there is no
need to segregate different types of RFS fuel (e.g. different feedstocks). In practice RINs are
generated by the producer or importer, which is quite early in the chain, so fuel would tend to be in
reasonably homogeneous streams until that point. From that point, fuel can be blended and RIN
trade is decoupled from the physical fuel.
Despite all schemes operating mass balance systems for RED compliance, several of the voluntary
schemes recognised by the European Commission have also developed book and claim systems that
can be used by non-EU biofuel participants. The Roundtable on Sustainable Palm Oil (RSPO), which
was developed before the RED was drafted, was the first to offer participants the option to use a book
and claim approach. The Round Table on Responsible Soy (RTRS) and Bonsucro (focusing on sugar
cane) have both launched book and claim systems more recently. According to RTRS, in 2013, 90%
of certified soy production went through their book and claim system10, indicating the popularity of
the approach for end users in particular. Under these systems, certificate buyers are generally the
end users, so for example retailers, supermarkets, and food and feed producers. A book and claim
approach can have a lower perceived stringency by some stakeholders, although it offers a strong
first step towards providing a greater driver for sustainability in supply chains as the end users are
driven by their customers to demonstrate that their products contribute to sustainable supply chains.
It can also offer a pragmatic option in instances where it is not possible to identify the physical
product in the outputs, such as for green gas or electricity which is added to the overall grid network.
The key advantage of a book and claim system is that it would offer maximum flexibility to airlines .
Airlines could, for example, invest in and claim the climate benefits from a biofuel project in a
location where the physical fuel would be used by another airline. The popularity of a book and claim
system for end users is clearly demonstrated by the statistics on book and claim use under RTRS.
However the key disadvantage is that this kind of flexible approach can be more challenging to
communicate – you cannot claim that the end product physically contains biojet fuel, but rather that
you have purchased biojet fuel – and it is not currently an accepted approach under the RED, EU ETS
or RFS2. Book and claim is often perceived as only a first step towards providing more traceability in
the supply chain.
10 P ersonal communication Jimena Frojan, RTRS, April 2014
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For biojet fuel supply chains a mass balance system may be most interesting as it is currently used in
all major biofuels voluntary schemes and is required in the RED and EU ETS, and in the US for
domestically produced fuel. A mass balance supply chain strikes a balance between traceability and
flexibility, and enables any required information to be passed down the supply chain. However biofuel
mandates such as the RED and the RFS2 apply to fuel suppliers, rather than to airlines. A key
characteristic of a mass balance supply chain is that all parties in the chain need to keep mass
balance records to maintain the links in the supply chain at every step. The main challenge for
airlines with this approach would be the downstream – fuel distribution and use – part of the supply
chain. The downstream part of the supply chain can be complex, involving several changes of
ownership, trading and blending with fossil fuel etc. Maintaining such links at this stage of the supply
chain may be challenging. Biojet fuel will, in the future, also enter the conventional fossil fuel
distribution system, at which point it will no longer be physically distinguishable.
Airlines have expressed that they would like flexibility to uplift physical fuel where it is needed and to
report biojet use where it is most beneficial from a legislative perspective . Therefore using a mass
balance approach in the feedstock production and biojet fuel production parts of the chain – in line
with the current road transport biofuel supply chains – and introducing elements of a book and claim
system approach at the downstream end of the supply chain may be a desirable option.
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4 Design choices for biojet fuel accounting
methods
In this chapter the design choices for an accounting system are discussed. Where possible Ecofys has
made a recommendation for the most appropriate design choice, based on the existing legislation and
the stakeholder consultations with airlines and fuel suppliers. We start with a short introduction to the
proposed global MBM currently under development by ICAO, as many of the design choices for the
accounting system will depend on the final design of the global MBM.
4.1 Design of the proposed Global Market Based Measure
The design of the proposed global MBM for aviation GHG emissions that is currently being developed
by the Global Market Based Measure Technical Task Force (GMTF) of ICAO will have an impact on the
approach to accounting of biofuels. ICAO will develop a proposal for the global MBM by 2016, with the
aim of implementing it by 2020.
The design of the accounting system must be compatible with the requirements of the MBM, but at
this point in time the detailed design of the global MBM is not fully defined. We can nevertheless
indicate some important MBM design choices that will have an influence on the method for the
accounting of biojet fuels, so that the accounting system options proposed here offer sufficient
flexibility to link to the final design of the global MBM. Furthermore it is advisable to specifically
discuss these questions with members of the ICAO task force to ensure that the design of the global
MBM does not hamper the uptake of biojet fuel in commercial aviation. Key MBM design choices that
will impact the design of the accounting method are:
(1) Geographical scope
The geographical scope of the MBM is a key factor. Flights to and from which countries are included
in or excluded from the reporting obligation is one of the design choices under consideration. It could
be that flights to and from certain (small and/or developing) countries will be exempted from the
measure by a de minimis rule or similar clause.
(2) Inclusion of GHG emissions other than CO2
The scope of the emissions included could be limited to CO2, the most significant contributor from
fossil fuel combustion to climate change, but might also be extended to emissions of other gases that
have similar climate forcing effects such as NOX emissions.
(3) Sustainability requirements for biojet fuel
The production of (biojet) fuel causes upstream emissions, including emissions from feedstock
production, transport, refining and other processes in the earlier parts of the supply chain before the
BIEDE14313 25
fuel is loaded into the wing. These emissions could be excluded from the carbon performance of the
biofuel within the proposed MBM, in which case biofuel would be counted as zero GHG emissions (as
is currently practiced in the EU ETS), or they could be included in the emissions report of the airlines
to the MBM.
(4) Linkage of MBM for aviation to other systems
The global MBM will create a market for emission allowances that can be traded between airlines. The
aviation sector MBM could be linked to other emissions trading systems, such as the non-aviation
sectors of the EU ETS or the Carbon Development Mechanism (CDM) mechanism to allow emission
reduction credits from outside the aviation industry to be purchased and counted towards an airline ’s
own emission reduction obligations within the aviation MBM. Linking could be either one way or two
way, i.e. it could also be agreed to permit other emissions trading systems to purchase allowances
from the aviation MBM.
In the following sections the key design choices for the accounting system are discussed. Where
possible these are linked to the global MBM design choices indicated above. Where more design
choices are possible we will indicate the preferred option based on the information from stakeholders
and a literature study.
4.2 Chain of custody approach
As discussed in section 3.2, road transport biofuel supply chains generally operate using mass
balanced based chain of custody approaches. Within the EU especially, and therefore in many of the
existing voluntary sustainability schemes, detailed design rules are already defined for the chain of
custody and are being implemented in practice. The aviation industry can look to these design rules
and should make as much use as possible of the rules that are already in place and operating well in
the market. This will be especially relevant for the biofuel production part of the supply chain that
could have significant overlap – in terms of feedstocks and producers – with the current road
transport biofuel industry.
A key difference between the regulatory situation for biofuels in road transport and in aviation is that
the airline industry, as the end user of biojet fuel, will be the party required under certain
regulations, such as the EU ETS and the future ICAO global MBM, to record and report the biojet fuel
they use (red arrow in Figure 7). Biojet fuel use will be important to know in order to calculate an
airline’s emissions to be reported under the global MBM (blue arrow in Figure 7). The fact that airlines
are the end users of the fuel and the party responsible for reporting is unlike the road transport
biofuel industry for which the end users – car or truck drivers, for example – are not required to
report their emissions, and the obligations are placed instead on the fuel suppliers. The same is valid
for biojet fuel under the US RFS2.
If the chain of custody method from the road biofuels sector is followed, this means that a mass
balance system is operated until a control point, which should be defined to ensure that it guarantees
BIEDE14313 26
that a certain amount of sustainable biojet fuel has been entered into the aviation sector fuelling
system. However, the mass balance system does not yet allocate the use of the biojet fuel to a
certain airline. To be able to do this, the verification of the biojet fuel quantity at the control point
should be coupled to a system that allows airlines to robustly claim the use of biojet fuel.
Ecofys recommends a book and claim system can be used by airlines from the control point onwards.
At the control point (see 4.3.1) sustainable biojet fuel ‘certificates’11 are generated by the fuel
supplier in line with the amount of biojet fuel that is supplied. These certificates or tickets relate to a
volume of biojet fuel. They can then be sold directly from the fuel suppliers to the airlines, uncoupled
from the actual delivery of the biojet fuel to that specific airline. The assumption that underlies this
certificate based trading is that whenever biojet fuel reaches the control point, it will be used in the
aviation sector somewhere, thus reducing the GHG emissions of the sector as a whole. The company
(airline) that can claim the emission reductions is the company that has bought the sustainable biojet
fuel certificates.
The system could be set up so that airlines can trade sustainable biojet fuel certificates amongst each
other. An argument for having this tradable set up could be price differences for biojet fuel in
different parts of the world. For instance, in countries were feedstock prices are lower, the biojet may
also be less costly than in other parts of the world. An airline might therefore want to buy certificates
from such biojet fuel from other airlines to offset their own emissions. This market for biojet fuel
certificates could increase the flexibility of the accounting system for biojet fuels, however Ecofys
does not recommend it. It is possible that the global MBM will include a market for tradable GHG
certificates. If there is a market for GHG emissions in the global MBM, which is currently under
development, this should provide an appropriate platform to trade ‘environmentally friendly flying’
with other airlines. Additionally creating a market for biojet fuel volume certificates in parallel to a
GHG emission market would increase the complexity and therefore the risk of mistakes and double
claiming.
11 The term ‘certificates’ is a generic term, used to refer to a volume of biojet fuel that is proven to be sustainable. The ‘certificates’ or
‘tickets’ can be transferred directly from fuel suppliers to airlines in a book and claim type system to demonstrate the transfer of a volume of
biojet fuel. The term ‘certificates’ here is not intended to refer specifically to a certificate from a voluntary sustainabil ity scheme, such as
RSB or ISCC, which might be used to demonstrate the sustainability of the biojet fuel.
BIEDE14313 27
Figure 7: Hybrid mass balance / book and claim accounting system
Recommendation – Ecofys recommends a hybrid chain of custody approach, including elements
from a mass balance and a book and claim system, to account for the use of biojet fuel in the
aviation sector. We recommend that the airline industry uses the existing mass balance chain of
custody rules in operation for the road biofuel supply chain as much as possible until a defined
‘control point’. From that control point onwards a book and claim system using sustainable biojet fuel
certificates will allow airlines to claim the use of biojet fuel. Airlines should not be able to trade
sustainable biojet fuel certificates, if the MBM already provides an appropriate platform to trade
sustainability performance (i.e. GHG emission allowances) with other airlines.
4.3 Overview of design choices for the accounting system
The following sub-sections cover the detailed design choices that will need to be defined for a robust
biojet fuel accounting system for airlines. All design choices described below build upon the
assumption that a hybrid mass balance / book and cla im system described in section 4.2 is used for
biojet fuel accounting. The key design choices for the accounting system that will be described in the
section include:
Choice of a robust control point;
Airport or airline level reporting;
Verification through a central registry or at the fuel inventory level;
Limit on percentage of biojet reported;
Treatment of upstream GHG emissions;
Timeframe.
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4.3.1 Control point
A ‘control point’ needs to be defined that refers to a point in the chain where the total fuel going to
the aviation sector can be identified. This is also the point in the chain that compliance with any
sustainability criteria is demonstrated. It should be a well-defined point which is consistent across all
supply chains, to ensure that all biojet fuel going into the aviation sector is captured within the
system. It should also be an appropriate point in the supply chain to verify any sustainability or GHG
claims made about the biojet fuel.
Under the RED, the European Commission recommends that the requirement to demonstrate
compliance with the sustainability criteria is placed at the fuel duty point (for road biofuel), as fuel
volumes that cross this point are robustly monitored and recorded for tax purposes. This obligation is
therefore usually with fossil fuel suppliers, although the fuel duty point varie s slightly between
Member States, so the party who owns the fuel when it crosses the duty point can sometimes be a
fuel producer, a refiner, blender, or importer, for example. This point, at which the reports on the
biofuel use, and its associated sustainability and GHG characteristics are verified, is referred to as the
control point of the supply chain. Therefore for airlines an appropriate point in the supply chain of
biojet fuel has to be defined for the purposes of consistent reporting on biojet fuel use, and its
associated sustainability and GHG characteristics.
As international jet fuel is not subject to fuel duty12, there is no established equivalent to the fuel
duty point in jet fuel supply chains. Furthermore airlines will have to report their emissions from
activities in different countries, which means that the point at which the claims are verified will have
to be recognised internationally. The importance of the control point is to choose a point in the chain
where the total fuel going to the aviation sector can be identified. Logically this should be the point of
blending and certification (see Figure 1), at which point the biojet fuel has been blended with fossil
fuel as a final ASTM D1655 certified fuel that fully meets the technical specifications and thus it can
be assumed that this fuel will be used in the commercial aviation sector. As indicated in section 2.2,
this point is considered to be the point at which the fuel is created for quality certification. Similar to
the road transport chain, it could be possible that different parties would own the fuel at the blending
and certification point in the chain, depending on the particular supply chain.
Any requirements for the sustainability and GHG emissions of the biojet fuel should be controlled at
this blending and certification point. One important implication of this is that any GHG emissions
resulting from actions later in the supply chain after the control point would need to be included by
using a standardised ‘default’ factor as it would no longer be possible to use actual GHG emissions
(as that future part of the supply chain is not yet known). This is also done in the RED GHG
methodology where a default factor is applied for the final distribution and retail of biofuel. The
earlier in the supply chain the control point is placed, the more emissions would have to be included
in this default factor.
12 In some cases tax is paid for fuel used in domestic flights (e.g. in Australia and some s tates in the US), but generally no tax is paid on
aviation fuel.
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Jet fuel supply chains can become quite complex during the fuel delivery and use part of the supply
chain. It is possible for the fuel to change ownership several times between its production and its
final use, with the potential involvement of traders and airlines who might trade fuel on paper without
having any impact on the GHG impact. Therefore, the later in the supply chain the control point is
placed, the more complex the mass balance chain of custody approach might be for several steps in
the chain.
Recommendation – The accounting system should be a hybrid chain of custody system with mass
balance up to the blending and certification point and book and claim between the fuel suppliers and
the airlines afterwards. The blending point can be at different points in different supply chains and
different parties in the supply chain might own the fuel at the blending point, depending on the
specific supply chain. This point defines the moment that the final biojet fuel is made and it is known
that it will enter commercial aviation.
4.3.2 Airport or airline level accounting
The proposed global MBM (or another emission reporting purpose) might have a “geographical
constraint”, which rules emissions from flights from or to certain countries in or out of the scope of
reporting. An example is the current design of the EU ETS, in which only intra-European flights are
included in the scope of the reporting. A future global MBM might include all global (commercial)
flights or it might exempt flights in certain countries from the scope of the reporting because of their
limited contribution to emissions from the aviation sector as a whole (see also MBM design choice (1)
in section 4.1).
Airlines naturally operate across different airports and across different countries, so if there is any
geographical constraint on the reporting, airlines will find that some of their operations are in and
some are out. Therefore the geographical scope of the reporting purpose has an effect on the level at
which the recording of biojet fuel consumption must be done to ensure that all airlines are accounting
for biojet fuel consumption consistently within the global MBM.
Accounting could be done on an airline level, which would mean keeping track of the biojet fuel use
for an airline as a whole, or at an airport level, which would mean airlines should keep track of the
biojet fuel use from each airport that they fly from (Figure 8)13. Note that there is a difference
between how an airline needs to record (account) their biojet fuel use and how they report it under a
global MBM. Airlines may need to record their fuel use at the flight route level at each airport, to
ensure that they are properly accounting fuel that is within the scope of the system, but they may
only be required to report at an overall airline level.
13 This also implies that any independent verification of an airline report would be done at an airport fuel system level (section 4.3.2)
BIEDE14313 30
In some cases fuel is delivered to more than one airport from a single fuelling system or pipeline, for
example Geneva airport (Switzerland) and Lyon airport (France) share a pipeline. In this case it may
not be possible to distinguish the (biojet) fuel use at an individual airport. For these cases, a further
option of fuel system level accounting might be a more appropriate option, should airline level
reporting not be favoured.
It is assumed that airline reporting under a global MBM system would be subject to some kind of
independent verification (see section 4.3.3). The independent verifier that provides the verification of
the claimed emission reductions resulting from the biojet fuel use will need to check the claim either
at the airline, airport, or fuelling system level, depending on the design choice made.
It would be beneficial to the implementation of the accounting system to have the fuel purchasing
and invoicing structure of the airline claiming the biojet fuel use as the leading argument for
accounting at an airport or fuel system level, to avoid unnecessary changes to airline fuel purchasing
structures and bookkeeping practices. Note, again, that it may be appropriate for the proposed global
MBM to only require reporting at an overall airline level, even if fuel use records are accounted for at
an airport level.
Figure 8 shows the options and implications for the level of biojet fuel accounting.
Figure 8: Accounting system design
1. No geographical constraint, airline level accounting - If the system has no geographical
constraints and the reporting obligation is put on airlines, then it is not necessary to know at
BIEDE14313 31
which airport the biojet fuel was bought, as long as it was bought by the airline claiming the
biojet fuel use. In a system with no geographical constraints the accounting can be done on
an airline level, thus based on fuel purchasing records of a company as a whole.
2. No geographical constraint, airport level accounting – If there are no geographical
constraints it is not necessary to know at which airport the biojet fuel was bought. For other
reasons however, such as the rigour of the verification, accounting and reporting could be
done on an airport level. The accounting should in this case include a check that the amount
of biofuel use claimed from an individual airport does not exceed what could have been used
by the airline from that specific airport (see section 4.3.4).
3. Geographical constraint, airport flight route level accounting - If a system has a
geographical constraint, it is necessary to check whether the claimed biojet fuel use by an
airline does not exceed what could have realistically been used by that airline on routes that
are within the scope of the global MBM from individual airports. This check will have to be
done at the airport flight route or fuelling system flight route level, by matching the fuel use
of an airline for the specific routes from an airport that are in the scope of the reporting
purpose with the biojet fuel bought from those same airports, and checking the feasibility of
the emission reduction claim.
4. Geographical constraint, airline level accounting (not possible) – Accounting biojet
fuel use on an airline level in a geographically constrained system is not possible, as it will
not offer the possibility to check against the operational data of that airline to ensure that all
airlines are only recording the biojet fuel use that is within the geographical scope of the
system.
The EU ETS currently requires airport (aerodrome) level reporting. Similarly, the RED requires mass
balance records to be kept at a site level throughout the supply chain, where site is defined as “a
geographic location with precise boundaries within which products can be mixed” (Appendix A,
section A.2). This would be the equivalent to an airport level, although it could be argued that a
pipeline or a fuelling system still meets this definition.
Note that there is a direct link between the level that biojet fuel is accounted and how verification of
that fuel would have to work (see section 4.3.3). If accounting is at an airline level – and therefore at
a global level – a global biojet fuel registry would be required to ensure that the same fuel is not
claimed by different airlines operating from different airports. This would give maximum flexibility to
airlines. However if biojet fuel is accounted at the more local, airport level, then verification can also
be conducted at an airport level and there would be less need for a global biojet fuel registry.
Recommendation - The global MBM that is under development at ICAO could potentially exempt
smaller and/or less developed countries, and could therefore have a geographical constraint. The
information from which airport or fuel system the fuel was uplifted and for which routes (indeed for
individual flights) is already recorded by many airlines, and could therefore be integrated into a biojet
fuel accounting system. Ecofys recommends that reporting under a proposed global MBM is required
at an airline level and that an accounting system is designed at an airline level as this is likely to be
the most logistically efficient option for airlines and gives maximum flexibility in biojet fuel reporting.
BIEDE14313 32
However if there is any geographical constraint in the global MBM, or if a global fuel registry is not
deemed to be feasible, then the accounting system may need to be designed at the airport level to
ensure the robustness of the system is not compromised.
Box 1: Illustrative example of airline vs airport f light route level accounting
FlyBio - Airline vs airport flight route level accounting
FlyBio operates a daily flight from New York (US) to Amsterdam (NL) and from New York to Dar es
Salam (TZ). Both flights are powered by biojet fuel. Tanzania, as a developing country, is excluded
from the MBM. The result would be:
In an airline level accounting system FlyBio can claim emissions reductions from all their
biojet fuel use.
In an airport flight route level accounting system FlyBio can claim the amount of
emissions reductions that could have been used for the New York to Amsterdam flights
only.
4.3.3 Central registry or verification at the fuel system level
In section 4.2 Ecofys recommends setting up a system in which sustainable biojet fuel certificates are
created by a fuel supplier when a final batch of biojet fuel that meets the technical specifications is
created, i.e. blended. These certificates can then be sold directly to airlines that want to green their
operations, separately from the physical delivery of the biojet fuel. A verification system must be
designed to ensure that 1) the biojet fuel batch (or parts of it) has a unique identification reference
which can only be claimed once 2) no more biojet fuel certificates are sold than biojet fuel was
delivered to the fuel system, and 3) only biojet fuel that meets the sustainability criteria as required
by the aviation industry can generate sustainable biojet fuel certificates.
Two alternatives exist to control the creation and trade in biojet fuel certificates:
1. Verification through a central registry
The central registry option would require ICAO, or another appropriate and independent international
aviation body such as IATA, to set up an international centralised database system in which fuel
suppliers can input batches of biojet fuel when these are “created” at the control point (=blending
point). The database system then creates a number of biojet fuel certificates for the owner of the fuel
at the blending point, which can be transferred to airlines that want to buy biojet fuel. Once the fuel
company transfers its certificates to an airline, its stock of biojet fuel certificates in the database is
depleted by the amount that it has transferred. The advantage of using a central registry is that it is
robust from the perspective of preventing double claiming, and provides a centralised overview of all
biojet fuel consumption worldwide. It could therefore be used alongside airline level accounting,
giving maximum flexibility for airlines (see section 4.3.2). A disadvantage is that the development of
such a system could be costly and there may be data confidentiality issues that would need to be
addressed. The allocation of costs of a central registry would have to be coordinated at an
international level.
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2. Verification at the airport fuel system level.
Another option would be to do independent verification at the airport fuel system level. In this case
the fuel supplier at the airport can generate sustainable biojet fuel certificates without having to
notify a central database of the production of biojet fuel. When a certain volume of biojet fuel enters
the fuel system at the airport fuel system level the certificates for that volume are created and can
be sold to airlines. The fuel system operator at the airport will need to undergo a regular verification
to check whether the accounting rules have been applied in the correct way and that fuel suppliers
have not sold more certificates to airlines than they are entitled to. In addition airline data would
need to be verified to ensure that they are not recording more biojet fuel than they have been
transferred, in line with their fuel purchase records. An advantage of this system is that it is easier to
set up in the early phases of biojet fuel market development where only a few airports will generate
certificates by putting biojet fuel in their systems. It could also be performed in line with existing fuel
quality checks that are performed by fuel suppliers and with verification of fuel and GHG data at
airlines. A disadvantage is that the system is less robust from the perspective of identifying fuel that
is transferred to more than one airline. Simply verifying at the airline level would not identify biojet
fuel that was also transferred to another airline at the same airport, so some verification has to be
performed at the fuel supplier level. Any inconsistencies identified at a fuel supplier level could cause
implications for a number of airlines, which could be challenging to resolve. This option also provides
less of a centralised overview about biojet fuel consumption worldwide than an international central
registry. The costs for verification at an airport fuel system level would likely be paid by the fuel
suppliers and the individual airlines and airports using/supplying biojet fuel.
Recommendation – Ecofys recommends that the option of a global central registry is further
explored to identify the likely costs, the key challenges and their possible solutions. This option would
offer the most robust solution and may save costs in the longer term, but further work is needed to
identify its feasibility.
4.3.4 Limit on percentage of biojet fuel reported
Biojet fuel from HEFA or FT can currently be used up to a 50% blend with fossil jet fuel in civil
aviation, to be ASTM D1655 certified, and DSHC up to a 10% blend with fossil jet fuel. Biojet fuel is
generally sold to airlines today in a blended form. In the future it might be possible to buy only the
biojet fuel component of the blend, and it is also expected that the use of blends above 50% of biojet
fuel might become permitted under ASTM.
When biojet fuel is handled through the existing fuelling infrastructure, the physical volume of biojet
fuel component that is actually put into the aircraft might be different from the contractual or
administrative biojet fuel blend percentage that was bought. As the biojet fuel is mixed with fossil
fuel in the conventional fuelling system, the actual percentage blend physically used by individual
flights will not be known. A design choice has to be made concerning whether there should be a
BIEDE14313 34
maximum blend of biojet fuel that airlines can claim to have used, and if so, how high this limit
should be.
It must be noted that this design choice does not exist in the road transport biofuel sector, as the end
user (vehicle owner) does not have any biofuel reporting obligation. Therefore, in the road transport
sector, it is not relevant to determine how much biofuel was physically or administratively used by
the various end users, although car manufacturers do specify technical limits to the amount of bio
component that can be used in their engines.
For the biojet fuel accounting system, three design options exist:
1. No limit on the percentage of biojet – Airlines are able to claim up to 100% biojet fuel,
although they are (at this moment) technically not allowed to physically use 100% biojet fuel
in the aircraft. Fuel suppliers would still be responsible for ensuring that the physical fuel
used meets the current technical specifications. If fuel purchase records are used as a key
form of evidence to report biojet use, then this option will require a change to the current fuel
purchasing practices so that an airline is able to purchase only the bio-part of a certain batch
of biojet fuel blend. This change in the purchasing practices might be tricky as it currently
acts as a guarantee that the ASTM blending limits are not exceeded. This is unlikely to be a
significant issue in the short term as overall use of biojet fuel is low, so blending limits are
not close to being met. In the longer term though this could create a challenge for fuel
suppliers to ensure that all fuel physically meets the blending limits. However, if this
approach is adopted, no changes would be needed in the future if the fuel quality standards
are amended to allow pure biojet fuel to be used in the aircraft.
This is the most flexible approach, allowing airlines to fully green their operations and
not be limited to a maximum use of biojet fuel. Furthermore, not putting a limit on
the maximum amount of biojet fuel claimed does not create a potential barrier for the
introduction of 100% biojet fuel use in the future.
From a public perception perspective there could be reasons to limit the maximum
biojet fuel claimed to the technical barrier (50% for HEFA and FT and 10% for DSHC)
to avoid a risk of perceived “green washing” if airlines report 100% biojet fuel use,
but it is known that it is only technically allowable to physically fly on a lower blend.
2. Limit on the percentage of biojet in line with the fuel quality specifications – Airlines
are able to claim up to 50% blend of HEFA and FT or a 10% blend of DSHC fuel, in line with
the ASTM 1655 specifications, or a higher percentage in future if the ASTM D1655
specifications are updated. (It would also be possible to set a limit of 50% reporting for all
biojet fuel, meaning that more DSHC could be reported than could physically have been used.
For DSHC, this option would in effect be more like option 1. However we do not see
significant advantages in this sub-option, and it may cause confusion to have a limit for
HEFA/FT which is in line with the technical specifications and a limit for DSHC which is not.)
This option offers reduced flexibility compared to no limit, allowing airlines to replace
at most half of their fossil fuel consumption with biojet fuel consumption.
BIEDE14313 35
The advantage is that this approach will be most compatible with the current fuel
handling practices where the blending of the biojet fuel component is done before the
fuel is purchased by the airline. From a public perception perspective and from a
physical fuel specifications perspective, airlines do not risk claiming more biojet fuel
than could have been used.
3. Typical use limit – Airlines can report up to a typical use limit of biojet fuel from a certain
airport (e.g. 5%). This option is closely linked to the physical consumption of biojet fuel.
This option allows communication that is closest to the physical use of biojet fuel.
However, the option allows the lowest level of flexibility in the claims made and
approaches reporting of the physical fuel use, which is very cumbersome and
therefore not desired by airlines. A typical use limit would also have to be chosen.
There is little basis for this number as the typical use will vary greatly from situation
to situation and is expected to evolve rapidly over the coming years. The number
chosen therefore risks being arbitrary.
The EU ETS currently sets a maximum of 50% biojet fuel reporting. This is not likely to present
problems in the short term as volumes are small. The RED does not set such a limit, although as it
applies to fuel suppliers rather than end users it is less relevant here as fuel suppliers are able to
physically sell pre-blended biofuel.
Recommendation - Ecofys recommends to IATA that the reporting limit of biojet fuel should either
be based on the technical specifications or there should be no limit imposed. A limit on the biojet fuel
claimed in line with the ASTM fuel quality specifications is the ‘less contentious ’ option. It is in line
with current fuel handling practices, reduces the risks of negative public perception and will likely
provide sufficient mitigation potential for airlines for the foreseeable future. On the other hand, the
main accounting barriers identified to allowing reporting of up to 100% biojet fuel use are that fuel
purchase records would need to demonstrate both the physical biojet fuel used and the
administrative biojet fuel purchased to ensure that the blend keeps within the technical limits, and
there could be possible concerns about public perception and communication. If both of these barriers
can be overcome, this option would increase the flexibility for airlines which may help to stimulate
the biojet fuel market. Flexibility was a key wish expressed by airlines we spoke to in the course of
this project. Volumes of biojet fuel used today are also small, so neither of these barriers are likely to
cause significant issues in the short term.
Box 2: Illustrative example of limits on the percentage biojet fuel reported
FlyBio – No limit vs limit based on technical specifications
FlyBio operates a daily flight from New York (US) to Berlin (DE) and from New York to Rio de
Janeiro (BR). Both flights use 50% HEFA biojet fuel.
With no limit on biojet reporting, FlyBio could report 100% biojet fuel use on their flights
to Rio de Janeiro, and no biojet fuel use on the flight from New York to Berlin.
With a limit based on the technical specifications, FlyBio would report 50% biojet fuel
use on both their flights to Berlin and to Rio. Note that for this example, FlyBio could still
BIEDE14313 36
claim to have purchased an equivalent amount of fuel to cover their flights to Rio de
Janeiro.
4.3.5 Treatment of upstream GHG emissions
The upstream emissions of biojet fuel are the GHG emissions that occur from the cultivation and
collection of biomass feedstock (e.g. fertilizer use, diesel use, emissions associated with direct land-
use change etc), from processing of the biomass and production of biofuel and the transport and
distribution of the biofuel.14 The approach to reporting of upstream GHG emissions from biojet fuel in
the reporting obligation will have an effect on the level of detail of the data that an airline purchasing
biojet fuel needs to collect. Different methods in dealing with upstream emissions are applied in the
EU ETS, and the RFS and RED systems that could also be applied to the biojet fuel accounting and
GHG reporting system (see also MBM design choices (2) and (3) in section 4.1).
1. Include upstream emissions through detailed GHG balance of biofuel – All supply
chain stakeholders will need to record and pass on detailed information on energy use and
inputs throughout all steps of the supply chain. This allows all supply routes to deliver highly
detailed information to the airlines on the GHG performance of their products.
Applied as an optional route in the EU RED, allowing the fuel suppliers to claim a
better GHG performance than indicated by the conservative default values in the RED
legislation (see option 2).
The advantage of this option is that it incentivises biojet fuel and supply chains with
better GHG savings and allows airlines to accurately report on the actual emission
reductions achieved with the use of specific batches of biojet fuel.
This method is however highly detailed and could be more costly to the fuel provider,
both to collect the data, to do the calculations and to robustly verify the calculations.
This cost would likely be passed on to airlines in the price of the biojet fuel, although
it is unlikely to be a prohibitive cost, especially once GHG data collection and
calculation systems are set up within the business. Depending on the design of the
global MBM, it could also be possible to claim higher incentives by reporting higher
GHG emission savings. If this is the case, then this additional effort might be offset
by additional incentives.
2. Include upstream emissions through default emission factors – Based on the different
production routes and feedstocks, default GHG emission factors for biojet fuel can be
developed. The default values can always be used or they can be used whenever no detailed
GHG balance of the biofuel (option 1) is available.
Applied in the EU RED and the US RFS system. In the EU RED fuel suppliers are
allowed to report default values based on simply knowing the feedstock that the fuel
14 For further information see Ecofys (2014) Assessment of sustainability standards for biofuel fuel, report to IATA.
BIEDE14313 37
was produced from. The default values are set conservatively to give an incentive for
fuel suppliers to do actual value calculations and so claim a better GHG performance
through doing a detailed GHG balance on their supply chain (option 1). Under the RFS
system the US Environmental Protection Agency (EPA) calculates default values for
different biofuel production chains. These calculations are used to define the list of
which fuels are eligible for counting against the RFS volume target as well as for
support by individual US States and which not. The work of the Alternative Fuels Task
Force (AFTF) of ICAO could be used to determine default emission values for biojet
fuels produced from different feedstocks.
The advantage of this approach is that it takes into account the upstream emissions
in a way which is simple for fuel suppliers to implement. Combining a default value
approach with the option to report more detailed GHG emissions still enables fuel
suppliers with detailed insights into their supply chain to be rewarded.
The disadvantage is that it reduces the incentive for individual supply chains and
producers to improve their GHG emission performance, and there is no insight as to
whether some supply chains actually have worse emissions in practice than the
default value.
3. Exclusion of upstream emissions – If the biojet fuel meets the sustainability criteria for
biojet fuel as required by the reporting scheme, the use of biojet fuel is reported as having no
GHG emissions.
This method is applied in the EU ETS. When the biojet fuel meets the sustainability
criteria of the RED, the biojet fuel use can be counted as causing no emissions.
This is a relatively simple approach, while still ensuring the sustainability of the
biofuel. Upstream emissions of fossil fuels are also typically not taken into account for
GHG reporting thereby making a fairer comparison to fossil fuels.
However the disadvantage is that it does not include upstream emissions, which gives
no benefit to the better performing biojet fuel supply chains and might lead to a risk
of negative public perception.
Note that under a global MBM a distinction could be made between the GHG emissions from biojet
fuel reported by airlines and the number of allowances or tradable units that airlines can claim due to
that biojet fuel use. For example in the EU ETS, biofuels are allowed to be counted as zero emissions
for the purposes of GHG allowances, as long as they first demonstrate that they meet the minimum
GHG threshold under the RED. This approach ensures that biofuels achieve at least a minimum GHG
saving without the added complexity of reporting and the number of allowances being based on the
actual calculated GHG emissions. Airlines recognise that not counting the upstream emissions of
biofuels under the EU ETS gives an extra incentive to drive forward the use of biofuels in the sho rt
term. The current low price of allowances, however, results in the EU ETS alone providing a relatively
low driver for biofuel currently.
In another example, the UK Renewable Transport Fuel Obligation (RTFO) is a volume-based biofuel
obligation where one Renewable Transport Fuel Certificate is awarded for every one litre of biofuel
BIEDE14313 38
placed on the market. However fuel suppliers are able to report the actual GHG saving associated
with the volume of biofuel.
Recommendation - Ecofys advises fuel suppliers and airlines to track information on at least the
origin, the feedstock, and the biofuel conversion process of all biojet fuel used to enable at least basic
GHG calculations or default values to be used. Ecofys recommends that an approach based on
conservative default values is developed as a basis for airline GHG accounting, with the opportunity
to substitute these with actual GHG calculations, to incentivise biojet fuel producers to produce biojet
fuels with higher GHG savings.
4.3.6 Timeframe
There are several distinct elements of the accounting system for which defining rules on an
appropriate timeframe is relevant.
Timeframe of the mass balance system (before the control point)
The core principle of a mass balance system is that over time the sum of the outputs from a point in
the supply chain has to have the same characteristics as the sum of the inputs for that point in the
supply chain. Within the mass balance part of the system, it is helpful to define consistent rules on,
for example: the timeframe over which the mass balance input and output records need to be
balanced, whether or not any deficit in the amount of biojet fuel is allowed during that time period,
and whether ‘banking’ or ‘borrowing’ are allowed between periods. In other words, to what extent
does the physical stock of biojet fuel need to relate to the administrative stock of biojet fuel over
time.
The European Commission guidance for the RED allows either a continuous or fixed period of time.
The Commission Communication states15: “The balance in the system can be continuous in time, in
which case a ‘deficit’, i.e. that at any point in time more sustainable material has been withdrawn
than has been added, is required not to occur. Alternatively the balance could be achieved over an
appropriate period of time and regularly verified. In both cases it is necessary for appropriate
arrangements to be in place to ensure that the balance is respected.”
In practice therefore voluntary schemes recognised by the EC operate a variety of approaches,
although the most widely used schemes opt for requiring that the balance is maintained as a
minimum every 3 months to ensure that deficits are not allowed to build up over a whole year.
Continuous monitoring of a mass balance can be burdensome, and can be difficult for certain parts of
the supply chain, especially farmers who find it hard to keep detailed up-to-the-minute records
during harvest periods. However a continuous mass balance ensures that biojet fuel can only be sold
15 C OM 2010/C 160/01 Communication on voluntary schemes and default values in the EU biofuels and bioliquids sustainability scheme,
section 2.2.3: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:C:2010:160:FULL&from=EN
BIEDE14313 39
administratively once it is received, and avoids any risk of over selling of biojet fuel or of the
associated sustainability information.
A discrete timeframe for the mass balance allows more flexibility. Within this, longer periods of time
allow even more flexibility, but they can make it more difficult for verifiers to reconcile different mass
balance systems in the supply chain, for example if different supply chain parties are operating over
different time frames. In practice many businesses will have the capacity to operate monthly mass
balances, in line with their financial accounting.
Recommendation – If a hybrid chain of custody approach is taken (see section 4.2), then the mass
balance part of the chain is the responsibility of fuel suppliers . Much of this part of the supply chain
might be expected to be certified to existing voluntary schemes. It is recommended that the airline
industry defines flexible rules that are as much as possible in line with the current supply chain
operation and current voluntary schemes. In this case it may mean allowing any mass balance
approach used under an EC-recognised voluntary scheme.
Timeframe for the validity of the biojet fuel certificate (after the control point)
A sustainable biojet fuel certificate is generated when a batch of ASTM D1655 certified biojet fuel
blend is produced. The physical batch may be stored for a period of time, before being used, but the
assumption is that eventually the batch will be used in aviation and will therefore lead to a GHG
emission reduction compared to using fossil fuel. It will need to be decided whether there should be a
maximum timeframe within which a fuel supplier needs to transfer their biojet fuel certificates to
airlines (red box in Figure 7).
If the biojet fuel blend is physically stored for a very long time, but the biojet fuel certificate is
already transferred to an airline, a discrepancy could come to exist between the moment when the
emission reduction is claimed and the moment when the biojet fuel is actually used. Similarly, a
sustainable biojet fuel certificate might be created when a batch of biojet fuel is produced and used
and only bought by an airline a number of years after it was created. In this case the emission
reduction could be claimed years after the biojet fuel was uplifted into a plane. Both of these
situations could result in a strange situation from a public perception perspective. However, they
should not cause an issue for the robustness of the accounting system, as long as the control point is
set at a point at which it is certain that the fuel passing this point will be used in commercial aviation
(see section 4.3.1), and as long as the verification of the system is robust (see section 4.3.3).
The main reason to set a maximum validity of biojet fuel certificates would be to identify when the
biojet fuel was produced. This might be useful if, for example, there were policy changes in the global
MBM that affected the future treatment of biojet fuel, which required the system to be able to identify
biojet fuel that was produced and supplied at different points in time. However these changes could
equally be applied to when the certificates are redeemed, rather than when they are generated. If a
maximum validity for such certificates is set, there is a potential risk of causing fluctuations in the
price associated with those certificates as their expiry date approaches.
BIEDE14313 40
Recommendation – There is no strong accounting reason to set a maximum timeframe within which
fuel suppliers have to transfer their biojet fuel certificates, as long as the control point and
verification of the system is robust. However, situations should be avoided where the physical fuel
use and the emissions claim are many years apart. Ecofys therefore recommends that as a minimum
biojet fuel certificates are marked with the date (at least the year) that they are created, to track
whether unexpected situations are occurring in the market.
Timeframe for the airline to ‘redeem’ the biojet fuel certificate for emissions reporting
For the book and claim part of the system, once a batch of biojet fuel reaches the control point, a
sustainable biojet fuel certificate would be generated. These certificates will be transferred to airlines
when they purchase biojet fuel. It will need to be decided whether there should be a time limit for
airlines to redeem those certificates for their emissions reporting. This will also be impacted by the
previous decision, as to whether biojet fuel certificates should have a ‘vintage’.
Unlike for fuel suppliers who may store the biojet fuel after it has been produced, it is assumed that
once an airline has been transferred biojet fuel certificates they would want to use them towards their
emissions reporting in the current reporting period.
The relevant timeframe for airlines to monitor, report and verify their biojet fuel consumption and
emissions should be in line with what is required by any reporting obligations. Rules on any potential
trading of emissions certificates are expected to be defined under the proposed global MBM.
For the proposed global MBM the reporting and verification period may potentially be annual. Data on
biojet fuel use will need to be monitored on an ongoing basis and ideally be integrated into the
existing fuel purchasing and monitoring systems. If the global MBM sets a limit on the maximum
biojet fuel that can be claimed and/or on the geographical scope of which biojet fuel can be claimed,
then this data will need to be monitored on an ongoing basis and regularly checked by the internal
systems at the airline. These checks will see if the reported biojet fuel consumption matches the
activities of the airline. Formal independent verification of the data is likely to only be required on an
annual basis, in line with annual reporting.
Recommendation - The time limit on airlines using a certificate that proves the purchase of biojet
fuel should be chosen at an appropriate level, in line with the proposed global MBM reporting
period. Lessons should be learnt from existing biofuel and carbon markets. It is likely that once
airlines purchase biojet fuel, they will want to redeem it within the current period of the global MBM,
so a certificate for the use of biojet fuel in year 20xx could thus be used for the emissions reporting
of the airline in that same year. To provide some flexibility for airlines, rules could be defined on the
number or proportion of certificates that can be carried forward to count towards emission reduction
targets in future years, depending on the design of the global MBM.
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5 Policy recommendations and next steps
This chapter brings together the key recommendations on the design of the accounting method and
sets out next steps that IATA could take to develop a widely accepted accounting system.
In chapter 4 the accounting choices for the biojet fuel accounting system have been described in
detail. For some of the accounting system design features the final choice will depend on the design
and successful implementation of the proposed global MBM, while for other features the design of the
MBM is not likely to have a significant impact. Table 4 provides an overview of the accounting system
design choices described in chapter 4 and the recommendation of Ecofys.
Table 4: Overview of biojet fuel accounting system design choices
Topic Design options Ecofys recommendation
Chain of custody approach
Book and claim Mass balance
(Hybrid system) Mass balance from the start of the
supply chain to the control point Book and claim, using sustainable
biojet fuel certificates, from the control point to the airline
Control point Defined point in the biojet fuel supply chain
Blending and certification point
Airport or airline level accounting
Airline level accounting Airport (or fuel system) level
accounting
Airline level reporting to ICAO Airline level accounting if a central
registry is feasible, otherwise airport (or fuel system) level accounting
Central registry or verification at the fuel system level
Central registry Verification at the airport / fuel
system level
Option of a global central registry should be further explored and costs and benefits compared to verification
Limit on the percentage of biojet fuel reported
No limit Limit on the % biojet in line with the
fuel quality specifications Typical use limit
Limit based on fuel quality specifications, but barriers to no limit should be further explored if flexibility is the main objective
Treatment of upstream GHG emissions
Include upstream emissions through detailed GHG balance of biofuel
Include upstream emissions through default emission factors
Exclusion of upstream emissions
Mandatory inclusion of upstream emissions through default emission factors (with option for more detailed GHG calculations for those airlines who wish to)
Timeframe for different levels of the accounting system Mass balance
system Validity of the
biojet fuel certificate
Validity of the emission reduction claim
Any timeframe is possible for all levels of the accounting system
Mass balance – apply flexible rules as much as possible in line with the current supply chain operation and current voluntary schemes
Validity of the biojet fuel certificate for the fuel supplier - from an accounting perspective there is no need for a maximum timeframe, from a public perception perspective there might be a reason to set a maximum timeframe for the validity
Validity of the emission reduction claim for the airline - timeframe in
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Topic Design options Ecofys recommendation
line with global MBM accounting period
During the next steps of the design of the accounting methodology, there will be a number of key
stakeholders who should be involved and engaged. Important government stakeholders who would
have a key role in steering and agreeing on the accounting approach include:
ICAO Committee on Aviation Environmental Protection (CAEP) would play a crucial role,
especially in relation to the relationships to the global MBM;
European Commission16 and key Member States with a special interest in aviation such as the
Netherlands. The European Commission especially has experience in developing the
monitoring, reporting and verification guidelines for the EU ETS. The Commission already
publishes detailed guidance relating to aviation. Key points within this guidance will need to
be further elaborated as experience is gained from the inclusion of aviation in the scheme and
especially now that only the intra-European flights are included within the scope. The
European Commission also has experience in setting up and running the central registry
system for the EU ETS, from which key lessons could be learned;
US Environmental Protection Agency, with experience on the development of the RFS2;
Standardisation bodies may also have a role to play in international standard setting. In
particular ASTM should be consulted in relation to its existing chain of custody rules.
Other key stakeholders from industry would include airlines, airports and airport fuel system
operators and pipeline operators, and fossil and biojet fuel suppliers, especially those actively
developing and trialling the use of biojet fuel.
It will also be important to engage sustainability certification schemes and take on board any
practical lessons from operating chain of custody systems, especially RSB, RSPO, Bonsucro and RTRS
on the development and operation of book and claim systems.
NGOs will also have an interest in the progress of the accounting methodology, especially in the
claims that can be made under the different chain of custody approaches. They should be kept
informed; however the detailed methodology may be more for airline fuelling and fuel purchasing
experts to focus on. NGOs will wish to ensure that any system developed is implemented in a robust
and practical way.
IATA should continue to proactively engage with ICAO on the design of the global MBM and present
and discuss the recommendations presented in this report with the members of the GMTF and the
AFTF. Other more specific next steps include:
16 C urrently DG CLIMA leads on the EU ETS, DG MOVE on aviation and DG ENER on biofuels, including biojet fuels for aviation. However a
new C ommission is being formed at the time of writing. The DGs, their responsibilities and the Commissioners responsible may change
under this new Commission that is currently being put in place.
BIEDE14313 43
Engaging with the European Commission as the monitoring, reporting and verification
guidance is further developed for aviation in the EU ETS. Several key accounting choices will
need to be thought through in the context of the EU ETS.
Engaging with biojet fuel pilots and tests to put the accounting methodology and options into
practice to see how well it works and what issues arise. In Europe, SkyNRG, through the
ongoing ITAKA project plans to use the hydrant system for the first time to supply biojet fuel
at Schiphol Airport. United Airlines are also actively planning to supply biojet fuel through the
existing infrastructure at Los Angeles airport in the US.
Engaging with pipeline and fuelling system owners and operators to understand the key
challenges they foresee of integrating biojet fuel into the existing infrastructure and fuel
inventory accounting systems.
Engaging with ICAO alternative fuels task force to determine default GHG emission factor for
biojet fuels from different feedstocks.
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Appendix A: Characteristics of selected legislative
accounting methods
This appendix describes key details of the accounting systems already in place in the EU and the US
which both have detailed legislation in place to promote the use of biofuels. The EU ETS is unique in
the sense that it is the only legislation of its kind implemented today which applies specifically to
airlines, the end users of biojet fuel. The EU RED and the US RFS2 both incentivise biofuel, but from
the perspective of fuel suppliers.
A.1 EU Emissions Trading Scheme
From January 2012 the aviation sector is included in the EU ETS. Intra-EU flights are now included in
the scheme and airlines have to monitor and verify their annual emissions associated with intra -
European flights to enable them to surrender sufficient European Union Allowances (EUAs) to cover
their emissions.
Two guidance documents are of relevance to biojet fuel use within the EU ETS:
1. Guidance on Monitoring and Reporting Regulation – General guidance for Aircraft Operators,
MRR guidance document no. 2, version 16 July 2012; and
2. Guidance on Biomass issues in the EU ETS, MRR Guidance document no. 3, version 17
October 2012.
The guidance documents were drafted by the Directorate-General for Climate Action (DG CLIMA) of
the EU. Key concerns in developing the guidance were prevention of fraud and double claiming of
emissions reductions, and how to deal with the situation that one airline buys fuel and sells it onto
other airlines.
Biofuels used within the EU ETS count as zero GHG emissions, but in order to be zero-rated it must
first be demonstrated that they comply with the GHG and sustainability requirements of the RED.
Note that this means that all biofuels are zero-rated as long as they achieve at least the RED
minimum GHG saving threshold of 35% GHG saving compared to fossil fuel, even if in reality it can
be demonstrated that different biofuel streams have different GHG savings.
Flights to or from outside the EU: In November 2012 the international sector’s inclusion in the EU ETS
was put on hold for one year for flights to and from outside the EU. The so-called “Stop the Clock”
amendment is intended to give ICAO an opportunity to reach an internationally accepted solution to
deal with carbon emissions from aviation. Following ICAO’s commitment in October 2013 to develop a
global MBM for the aviation sector, stop the clock has been extended to 2016, meaning that until that
time only intra-EU flights continue to have to surrender allowances under the EU ETS.
BIEDE14313 45
Table 5: Key characteristics EU ETS accounting method
Requirement Explanation
Preferred accounting
methodology
Mass balance approach (or stricter, i.e. physical segregation or
identity preservation would be permitted, but book and claim is
not)
Data detail Emissions are determined by the amount of fuel consumed
(tonne of fuel) and the corresponding emission factor. i.e. biojet
fuel meeting the RED sustainability criteria counts as zero GHG
emissions, biojet fuel that does not meet the criteria should be
regarded as fossil fuel.
Per flight approach: Emissions should be calculated for each
individual flight (but reported in aggregated form by aircraft
operator and per annum). The aircraft operator is also coupled
to an administering Member State (see geographic
requirements).
o Attribution of biofuels to flights occurs by assigning fuel
uplift always to the flight following that uplift and by
assuming that the fuel remaining in the tank is fossil fuel.
o For mixed biofuels, the emission factor is determined by the
biomass fraction. The biomass fraction is to be determined
by laboratory analysis or if this leads to unreasonably high
costs by a purchase records based system, to be approved
by the competent authority.
Simplified approach: Emissions are calculated using an
estimated amount of biomass content based on purchase
records.17
o This approach can only be applied if an aircraft operator can
obtain reasonable assurance that the biofuel purchased can
be traced back to its origin. Criteria must be met for the
transparency and verifiability as laid down in either:
a voluntary sustainability scheme approved by the
Commission under the RED, or
ensured by appropriate national systems, or
by other appropriate evidence18 provided by the fuel
supplier(s) to the aircraft operator.
Aircraft operators are responsible to set up an appropriate data
flow and control procedure which ensures that only quantities of
17 A detailed explanation of this approach is provided by Guidance Document ‘Biomass issues in the EU ETS’, MRR G uidance document No. 3,
final version of 17 October 2012, section 6 .2. Online available at:
http://ec.europa.eu/clima/policies/ets/monitoring/docs/gd3_biomass_issues_en.pdf 18 This evidence includes: 1) evidence on meeting the RED sustainability criteria for each consignment of biofuel, provided by t he fuel
supplier; 2) evidence that the total amount of biomass sold does not exceed the amount of biomass purchased; 3) joint record keeping
between several supplier sharing facilities; 4) a transparent record system for the accounting of biofuels, ensuring that no double counting
occurs; 5) centralized verification of the supplier (or even the suppliers, in case of shared facilities)
BIEDE14313 46
Requirement Explanation
biofuels used for EU ETS flights are taken into account. It shall
ensure:
o Only biofuels meeting the RED sustainability criteria are
taken into account;
o Traceable and verifiable evidence about physical sales of
biofuels to third parties;
o No double counting.
Next to the annual emissions report aircraft operators provide a
corroborated calculation with specific checks on the prevention
of double counting or double claiming.
All relevant purchase records are kept in a transparent and
traceable system (database) for at least 10 years.
Timing Data records are related to purchasing records
Emissions are reported to competent authorities annually
Geographic requirements Currently only intra-European flights are covered by the EU ETS.
Accounting is done per aircraft operator to a single,
administering Member State. E.g. KLM reports to the Dutch
Emissions Authority for all its flights covered by the EU ETS, also
for European flights not taking off or landing in the Netherlands.
Monitoring and reporting has to be on a per airport basis for
each airline.
There is no guidance on how to deal with the European regional
airspace approach, as this approach is not yet legislatively
binding. [Note any such guidance on this topic will be important
for IATA to note as it may provide precedent in relation to how
to deal with a geographically restricted scheme. The pipeline
which is shared between Geneva and Lyon airports provides an
existing example of a pipeline which serves an airport within the
scope of the EU ETS and an airport outside the EU ETS.]
Sustainability Sustainability criteria established by the RED are to be applied to
biofuels (see section A.2).
Biofuels meeting the RED sustainability criteria are zero-rated
(i.e. no life-cycle emissions are taken into account). Otherwise
they are assumed as a fossil source stream.
Evidence of compliance of the consumed biofuels with the RED
sustainability criteria should be based on either 1) voluntary
sustainability schemes recognised by the EC (preferred
approach), or 2) Member States’ national systems for
implementing the RED, or 3) appropriate evidence provided by
the fuel supplier.
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Requirement Explanation
Data transfer Administering Member States determine from whom the aircraft
operator can obtain evidence of compliance with the
sustainability criteria (i.e. the producer, supplier or user).
Burden of proof is by default on the user of the biojet fuel, but
the aircraft operator will usually have to rely on data provided by
third parties.
Data is reported to competent authorities in the form of an
annual emissions report, including corroborating calculations
showing that no double counting occurs.
‘Control point’ The requirement to report is with the aircraft operator.
Enforcement/validation Verification of the reported biojet fuel is required for the aircraft
operator in order to submit the annual emissions report.
o Verification is done at “reasonable level of assurance”, which
means a high but not absolute level of assurance, expressed
positively in the verification opinion.
o Data quality is tier 2: the maximum uncertainty permitted in
relation to data is =< 2.5%
Centralised “up-stream” verification is possible: The biofuel
supplier (or the suppliers sharing facilities) should ensure
verification of their records at least once per year by an
accredited verifier.
Competent authorities perform spot checks and cross-checks on
the already verified emissions reports.
Verifiers must be accredited EU ETS verifiers according to the
Accreditation and Verification Regulation.
Other Tradable emissions units are called European Union Allowances
(EUAs) and are traded via a centralised ‘European Union
Transaction Log’ (formerly called CITL)
A.2 EU Renewable Energy Directive
The EU Renewable Energy Directive (RED) came into force in 2010. It sets a target across the EU as
a whole of 20% renewable energy (including the electricity, heat and transport sectors) in 2020. The
overall target is differentiated by Member State, but all EU Member States have a minimum target of
10% renewable energy in the transport sector. Any biofuel counting towards the target must meet
mandatory GHG and sustainability criteria.
The 10% renewable transport target is defined as a percentage of road fuel in the EU. Jet fuel is
therefore not included in the calculation of the 10% target, but biojet fuel that meets the mandatory
BIEDE14313 48
sustainability criteria can count towards the achievement of the target. At present, however, this has
only been implemented in the Netherlands.
In general, detailed implementation of the RED is at Member State level.
Table 6: Key characteristics RED accounting method
Requirement Explanation
Preferred accounting
methodology
Mass balance approach (or stricter)
Data detail Data reported per consignment varies per Member State and by
voluntary scheme. In general, the following information is
requested per consignment:
o Biofuel type
o Feedstock
o GHG performance
o Country of feedstock origin
o Name of any voluntary scheme used
Information on feedstock and in some cases origin is required to
be able to report a default GHG value. Reporting actual GHG
calculations requires either detailed information on all inputs
throughout the supply chain to be tracked or it requires
individual supply chain parties to calculate the cumulative GHG
intensity of the fuel to their point in the chain.
Timing Rules vary between individual Member States and voluntary
schemes. Typically the mass balance period has to be balanced
as a minimum every three months.
Data reporting to Member State authorities is annually as a
minimum, although some allow or require reporting more often.
Geographic requirements Sustainability requirements apply to all biofuels consumed in the
EU, regardless of where they are produced.
The mass balance accounting system requires individual parties
to balance their outputs and inputs at the level of a ‘site’. Site is
defined as “a geographic location with precise boundaries within
which products can be mixed.”
Sustainability Minimum sustainability requirements are include in Article 17 of
the RED and relate to direct land-use and a minimum GHG
saving:
o Biofuels may not be made from materials cultivated on land
that, on (or after in the case of biodiversity) 1 January 2008,
was highly biodiverse (primary forest, protected area or
highly biodiverse grassland), high carbon stock (wetlands,
two categories of forest) or peatlands.
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Requirement Explanation
o Biofuels must meet a minimum GHG saving of 35%
compared to the fossil equivalent. This threshold increases
to 50% from 2017 and 60% from 2018 for biofuel
installations that started production on or after 1 January
2017. Any emissions associated with a permitted direct land-
use change must be included.
Lifecycle GHG emissions can be reported as either ‘default’ or
‘actual’ values. Default emissions saving values are provided for
a range of common biofuel supply chains and can be reported
under certain conditions. Biojet fuel is, however, not one of the
example chains. Default values are set at a conservative level to
provide an incentive to report actual values. Actual values can
always be calculated (even if a default value is given) using the
methodology provided in Annex V of the RED.
Emissions associated with indirect land-use change (ILUC) are
not currently included in the calculation methodology. The
possible inclusion of methods to tackle ILUC is currently under
discussion at the EU level. Various options are being discussed
such as capping first generation, land-using biofuels, or
including ILUC emission factors.
Evidence of compliance with the RED sustainability criteria
should be based on either
1) Voluntary sustainability scheme recognised by the EC, or
2) Compliance with a Member States national system for
implementing the RED, or
3) Supply in accordance with a bilateral agreement concluded
between the EC and a third country (no such agreements
have been concluded to date).
Voluntary schemes are emerging as the preferred approach by
economic operators and some Member States in fact only
currently allow the use of voluntary schemes. At the time of
writing, 17 voluntary schemes have been recognised by the
EC19.
Data transfer Data is reported to individual Member States.
Member States define the format that data must be submitted.
The German government developed the ‘NABISY’ database.
Although its use is only mandatory for biofuels consumed in
Germany, many economic operators are using the system.
19 http://ec.europa.eu/energy/renewables/biofuels/sustainability_schemes_en.htm. For further details see Ecofys report to IATA
“A ssessment of sustainability s tandards for biojet fuel”.
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Requirement Explanation
‘Control point’ The requirement to report compliance with the sustainability
criteria is recommended by the Commission to be at the fuel
duty point (for road biofuel). In practice therefore this obligation
is with the fossil fuel supplier (although the duty point varies
slightly between some Member States, so can also be with a
refiner, blender, or importer for example).
Enforcement/validation Under Article 18(3) of the RED Member States must ensure that
economic operators “submit reliable information” and “arrange
for an adequate standard of independent auditing of the
information submitted”
It is recommended that Member States require information to be
reported at least annually and to have it independently verified
to a limited assurance level, according to ISAE 3000.
The verification requirements set by voluntary sustainability
schemes are assessed by the EC before a scheme is recognised.
Key EC requirements for a voluntary scheme to be recognised
include:
An independent audit before a participant can make any
claims under the scheme;
Annual retrospective auditing of a sample of claims made
under the scheme;
Auditors must be independent of the activity being audited,
free from conflict of interest, and have relevant and specific
qualifications and experience;
Audits must be conducted to a limited assurance level,
according to ISAE 3000.
A.3 US Renewable Identification Number (RIN) system
The Renewable Identification Number (RIN) system was developed by the US Environmental
Protection Agency (EPA) to facilitate compliance with the RFS. A RIN is a 38-character numeric code
that corresponds to a volume of renewable fuel produced in or imported into the US.20 RINs remain
with the renewable fuel through the distribution system and ownership changes. RIN transaction data
is registered in the EPA Moderated Transaction System (EMTS).
Obligated parties are required to meet their prorated share of the RFS mandates by accumulating
RINs, either through fuel blending or by purchasing RINs from others.
20 The code refers to aspects such as year batch was produced, company ID, facility ID, equivalence value for fuel and renewable type code.
BIEDE14313 51
Foreign producers who plan to generate RINs must register and conduct a third-party engineering
review pursuant to section 80.1450. Additionally, such foreign producers must meet the requirements
in section 80.1466 prior to generating any RINs for their fuel. The requirements in section 80.1466
include requirements such as posting a bond, committing to allow EPA inspections of the foreign
production facility, and segregating the renewable fuel for which RINs are generated from non-
renewable fuel and other renewable fuel that is not being imported into the US.21
Jet fuel production or importation is not subject to the Renewable Fuel Standards. However,
producers or importers of renewable jet fuel can generate RINs equivalent to the volume of biojet
fuel supplied if their fuel meets the definition of eligible renewable fuel. Airlines themselves would not
see the RIN certificates as these are claimed by the fuel producer, but airlines could benefit from the
value of the RINs. The only traceability in the USA that an airline has is their order of jet fuel.
Table 7: Key characteristics RIN accounting method under the RFS2
Requirement Explanation
Preferred accounting
methodology
A mass balance type approach is accepted within the US, but
physical segregation is required for fuels when they are outside
US borders:
o The RFS2 places no restrictions on the mixing of
biofuel produced in different facilities, w ith different
feedstocks, or through different processes, provided
that the origin is within the US.
o Imported batches of biofuel, however, need to be
kept physically segregated from fossil batches until
they are imported in to the US in order to comply
with the RFS2 and receive RINs. Once the RINs have
been generated then mixing of biofuel can occur.
o Note that in practice segregating RFS and non-RFS
fuel may not be as difficult as it sounds as it is
simply a requirement to segregate RFS-compliant
fuel from non-RFS-compliant fuel and fossil fuel. Fuel
qualifies as RFS-compliant if it is made from one of
the feedstocks on the list, so there is no need to
segregate different types of RFS fuel (e.g. different
feedstocks). In practice RINs are generated by the
producer or importer, which is quite early in the
chain, so fuel would tend to be in reasonably
homogeneous streams until that point. From that
point, fuel can be blended and RINs trade is
decoupled from the physical fuel.
21 http://fuelsprograms.supportportal.com/link/portal/23002/23005/Article/21410/What-are-the-requirements-for-a-foreign-producer-who-
wishes-to-generate-RINs-for-the-renewable-fuel-they-produce
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Requirement Explanation
Data detail Three main types of report are required:
o Annual compliance report for RVO (Renewable
Volume Obligation – i.e. obligated parties, Refiners
and Importers).
o Annual Production Outlook report for all producers
(including outside US). Covers expected fuel
production for following year.
o Quarterly report for all RIN generators.
Timing RFS year is a calendar year. Both annual and quarterly reports
are required (see above)
Geographic requirements Different record keeping requirements are in place for fuel
produced in the US (and Canada) and fuel produced outside (see
below).
Sustainability A number of options are available under the RFS2, the most
relevant one being the “aggregate compliance approach”. This
provides a record keeping exemption for biofuel produced from
planted crop or crop residue from existing US agricultural land,
provided that the 2007 baseline amount of US agricultural land
has not been exceeded.
The approach is also open to countries outside of the US, and in
March 2011 the EPA approved the use of this approach in
Canada.
Other compliance options primarily rely on record keeping and
reporting to the EPA to demonstrate that the land from which
the feedstock was obtained was cleared prior to 19 December
2007 and that the land was actively managed on that date.
Voluntary schemes (termed “agricultural product certification
programs”) could potentially be used to demonstrate compliance
under the RFS2, although to date no schemes have been
assessed by the EPA.
Data transfer Compliance with the RFS2 is reported to the EPA
Data is reported in the form of an electronic self-declaration
made via the MTS (moderator transaction system) online
system.
‘Control point’ Producers or importers of renewable jet fuel generate RINs to
represent that their fuel meets the definition of eligible
renewable fuel.
Enforcement/validation Independent verification is required for two aspects: fuel
segregation and attest engagements (including engineering
review). No list of approved auditors, but auditors have to be
independent from the company.
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