Decarbonizing Flight: Growing the Sustainable Aviation Fuel Market with Kim Carnahan
On this episode of The Decarbonization Race, new co-host Steven Goldman takes flight into the world of Sustainable Aviation Fuel or SAF – including the market currently being built for it, the range of ways SAF is being produced, and what structures need to be in place to make sure SAF is not only affordable but provably more sustainable than conventional fuels. He's joined by Kim Carnahan, founder and CEO of Neoteric Energy & Climate. Kim co-founded the Sustainable Aviation Buyers Alliance (SABA), an industry body bringing together a range of NGOs, airlines and other companies investing in SAF supply and technologies.
Most people think of jet fuel the same way they think of filling up their car with gasoline: go to the pump, fill the tank, pay the price per gallon. But decarbonizing business travel and air freight is a much more complex task, where sellers, buyers and users are all part of the transaction, and standards for what makes aviation fuel “sustainable” are still being set.
On this episode of The Decarbonization Race, new co-host Steven Goldman takes flight into the world of Sustainable Aviation Fuel or SAF – including the market currently being built for it, the range of ways SAF is being produced, and what structures need to be in place to make sure SAF is not only affordable but provably more sustainable than conventional fuels. He’s joined by Kim Carnahan, founder and CEO of Neoteric Energy & Climate. Kim co-founded the Sustainable Aviation Buyers Alliance (SABA), an industry body bringing together a range of NGOs, airlines and other companies investing in SAF supply and technologies.
How does she know so much about the intricacies of decarbonizing international sectors like aviation and shipping? Because while working at the State Department, she served as the United States’ Chief Negotiator on Climate Change. Kim played a central role in the negotiation of the Paris Agreement and its implementing guidance. Kim also led the U.S. team that negotiated the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – a parallel agreement to Paris governing the international aviation sector – and its implementing guidance.
In a fast-paced and wide-ranging interview, Kim discusses the different approaches jurisdictions are taking when it comes to sustainable aviation fuel (SAF) certification and highlights the need for clear guidance from the Greenhouse Gas Protocol and Science Based Targets Initiative. SABA is not only helping create certification standards for SAF, but is working with airlines, suppliers and buyers (who often aren’t the airlines themselves) to build the marketplace, create a book-and-claim system similar to Renewable Energy Certificates to track supply and usage, and advance policies to keep SAF moving down the cost curve.
- Today, commercial aviation is fueled primarily by kerosene-based fuel Jet-A/Jet-A1, which can be easily substituted with SAF blends. SAF is a liquid “drop-in” fuel currently used in commercial aviation which reduces CO2 emissions, which can be produced from several feedstocks, including but not limited to waste oil and fats, municipal waste, non-food crops, CO2 and water. SAF is a “drop-in” fuel as it meets all the same technical and safety requirements as fossil-based jet fuel and can therefore be used safely on existing aircraft and within current airport systems.
- The aviation industry contributes more than 2% of global energy-related emissions, and the EU is mandating emissions reduction targets that will require airlines to use more SAF. The International Air Transport Association projects those targets will help create annual global demand of 450 billion liters of SAF by 2050.
- Standardization and certification is critical to growing the sustainable aviation fuel market. The certification guidelines developed by SABA are crucial to prevent negative impacts on the environment and society, particularly when dealing with biomass, organic waste and crop-based fuels. Saba’s focus on certification helps companies navigate the market, understand what different sourcing criteria should be, and gain assurance that the fuel they are purchasing is sustainable.
- SABA is managed by Environmental Defense Fund and Rocky Mountain Institute with guidance by Neoteric Energy & Climate, but was founded by a diverse set of companies working to tackle the decarbonization of aviation – Bank of America, Boeing, Boston Consulting Group, Deloitte, JPMorgan Chase, McKinsey & Company, Meta, Microsoft, Netflix and Salesforce. Air carriers involved in the initiative include Alaska Airlines, Amazon Air, JetBlue, United Airlines and UPS.
- Currently, the share of sustainable aviation fuel (SAF) in global jet fuel is relatively low – around 0.1% – but with new plants coming online from 2026, it is expected to increase. The cost of SAF is still high compared to that of traditional jet fuel, anywhere from 2-4 times the cost. The cost per ton of CO2 reduced through SAF certificates can range from $250 to $800, depending on location and feedstock. Despite these challenges, SABA’s members and other parties are gradually increasing investment in and adoption of SAF certificates to address a certain percentage of their aviation emissions.
Recent announcement of Minnesota creating a SAF Hub, in partnership with Bank of America, Ecolab, Delta Air Lines and Xcel Energy
Narrator: On this episode of The Decarbonization Race…
Kim Carnahan: We could actually build a system to standardize the certification of sustainable aviation fuel, but also the purchase of that fuel. So we could help climate leading customers, Microsoft and Netflix and Deloitte and McKenzie who are out there desperately trying to push forward the decarbonization agenda for aviation.
We pulled them together and said, would you guys be interested if we started an alliance, basically a buyer’s club, that was much more than just us helping them buy the fuel. It would be us building the market for Sustainable Aviation Fuel certificates in real time.
Narrator: Currently only 0.1 percent of global jet fuel used by airlines and cargo carriers is sustainable aviation fuel or SAF.
The Sustainable Aviation Buyers Alliance or SABA was formed to curb the carbon impact of aviation by growing the share of SAF used in air travel and freight transport. Companies such as Google, Boeing, Microsoft, McKinsey, Deloitte, and others have dedicated themselves to SABA’s membership. But despite the progress, SAF currently represents only a small fraction of the overall aviation fuel market due to limited production capacity and higher production costs compared to traditional jet fuel.
SABA and its membership are working in a range of ways to create standards for sustainable SAF, advance policies that grow both supply and demand, and expand production of competitive and high quality SAF for the aviation sector. In today’s episode of The Decarbonization Race, we’re talking with Kim Carnahan, leader at SABA and founder and CEO of Neoteric Energy and Climate, a pioneering consultancy at the forefront of decarbonizing some of our trickiest sectors, shipping and aviation.
A skilled negotiator and strategist, who’s been central to multiple international climate agreements, Kim and Neoteric are spearheading innovative initiatives that play a vital role in the global efforts to combat climate change and accelerate the transition towards a more sustainable future.
Steven Goldman: Hi, I’m Steve Goldman and welcome back to The Decarbonization Race. I’m here today with Kim Carnahan who leads the Sustainable Aviation Buyers Alliance which is a consortium of different parties that have come together to tackle the challenge of decarbonizing aviation so it’s gonna be a really interesting chat today. We’re really excited to sit and chat with you today.
Kim Carnahan: Thanks so much for having me.
Steven Goldman: So, first of all, when I was looking at your background, you were leading the process of the State Department working across 13 agencies to negotiate the Paris Agreement. First of all, that’s amazing. What was it like being at that proverbial table? What was that process like?
Kim Carnahan: It was a lot. I managed the negotiation team for about nine years. I was only the lead negotiator for the last three. So during the Paris negotiations, yeah, I was managing that team of 13 agencies, about 50 different negotiators working across, I don’t know, more than 20 different topic areas in the Paris agreement negotiations.
So I don’t know how to describe it, but it was intense for sure. I lived on airplanes. and was in Beijing a lot, as you can imagine, but also a lot of other countries around the world trying to get everybody on the same page across all the Paris agreements, various provisions. It was fun. It was a lot of work.
And then actually after the Obama Administration ended, I stayed on and that’s when I became lead negotiator. And that’s when we were negotiating the Paris rule book, which is basically the implementing rules for the Paris Agreement. So I think of those as almost as important, if not more important than the agreement itself, because it says, what does that line in that agreement actually mean?
How do I make sure that I’m meeting my expectations under the agreement? So we finished those in 2018. And then I gave myself permission to leave the State Department. But it was a good time all around.
Steven Goldman: What was your background prior to that point at State? How did you come to be working at that high level across negotiations?
Kim Carnahan: Yeah, I went to graduate school in Switzerland. I was focused on diplomacy and ended up specializing in environmental diplomacy, which most people weren’t doing at that time. This was like 2006, 2008, sometime around there. And I made myself into an expert on carbon markets first because I was fascinated by that concept.
Got a [00:04:00] job working in carbon markets for the first three years after grad school. And that accidentally, Made me into the basically a lobbyist for the International Emissions Trading Association. So I started going all of the UN climate negotiations, the COPs, the big climate meetings you hear about every year and just fell in love with the concept of negotiating multilateral treaties.
It sounded to me like the most challenging thing in the world, negotiating a treaty among 193 countries and on climate change nonetheless. So. I made a beeline into the State Department. It worked out pretty well for me. And then once I was in, negotiating came pretty naturally and luckily I had a great team to work with. And I guess the rest is history.
Steven Goldman: So in other words, small challenges. You like small challenges.
Kim Carnahan: Small challenges. Exactly. I am lazy. That’s really it.
Steven Goldman: Your experience with that didn’t stop there either. I mean, you’ve worked on a number of other international and environmental agreements as well on shipping and international aviation.
Can you connect the dots from working on Paris to working on those? Or is that in the wrong order?
Kim Carnahan: No, actually. So the climate office at the State Department, which is at the time when I ended up being the branch chief for negotiations. So the head of negotiations team there handles both the Paris Agreement negotiations and negotiations for international aviation and shipping.
Aviation and shipping are the two sectors that are not covered under the Paris Agreement. They have to have their own treaties effectively. So there’s the International Civil Aviation Organization, ICAO, which is the UN governing body for aviation globally. That’s where we negotiated a treaty called CORSIA, the Carbon Offsetting and Reduction Scheme for International Aviation.
That one took almost as long as the Paris Agreement. It was about a five-year negotiation. And then I also negotiated the International Maritime Organization, which regulates international shipping. So it was part of my purview. It was part of my portfolio from the start and frankly, really fun to get to work in multiple different treaty bodies and figure out how to get things done in those places as well.
I love the aviation and shipping stuff and it’s what led me to SABA actually.
Steven Goldman: And those two sit outside the purview of Paris because you’re dealing with international territory as opposed to Paris governing the actions within their own borders.
Kim Carnahan: Yeah, international aviation and shipping are just considered outside the realm of any national border.
Steven Goldman: And CORSIA really laid the foundation for what you’re doing today with SABA, with the Sustainable Aviation Buyers Alliance.
Kim Carnahan: That’s right. To be honest, I got a little frustrated working on CORSIA and seeing the pretty slow progress to getting more sustainable aviation fuel and airplanes. We had good relationships with the US airlines and worked with them closely to negotiate CORSIA.
But every time we would meet with them, I would expect a better update, a more positive update on how much SAF was, they were putting in their planes and it wasn’t moving as fast as I was hoping it would. And I knew that there were a lot of companies out there, a lot of their customers who were interested in decarbonizing their own use of aviation.
So when I left the State Department, that was basically, it was the first idea I had to work on. And it’s the first thing I did once I got to my next job was find partners who would work with me to launch SABA.
Steven Goldman: Let’s go back to the basics for a second. SAF, Sustainable Aviation Fuel. Obviously, companies are hearing a lot about this as they’re working through decarbonizing their supply chains as they’re thinking about decarbonizing business travel.
What is considered sustainable aviation fuel? What’s the range of sources that is being produced from? Can you walk us through that just as a start?
Kim Carnahan: Basically, there are a number of different conversion processes that feed stocks is what we call them can go through to become basically, chemically identical to fossil jet fuel.
And we started out with the type of feedstock that we call hydrogenated esters and fatty acids, or HEFA. You’ll hear HEFA a lot in the SAF space. HEFA feedstock tends to be beef tallow or used cooking oil, and it is the most prevalent feedstock type today. But we have a number of other feedstocks and conversion processes that are coming online literally right now and next year.
And then the kind of coolest one, the ones that I call “magic fuel” are power to liquids or e-fuels. You’ll also hear them called synthetic fuels. And that’s where you actually take CO2 that’s been captured either from the air or from a steel plant somewhere, and you synthesize that with green hydrogen and same basic outcome is that it’s chemically identical to fossil jet.
Steven Goldman: So I saw this morning, actually, in Canary Media, there was an article about Twelve as one of the up and coming e fuel suppliers, and it was interesting to read about that, where they were essentially, they’re breaking industrial carbon dioxide in order to make carbon monoxide and then help use that as a feeder for syngas, essentially.
Kim Carnahan: Yep, that’s what e-fuels do. And yeah, Twelve is a very interesting company. We’ve been talking to them a lot lately, hoping to get some of our members to support some of their fuel very soon.
Steven Goldman: There’s two areas I’d want to get at first before we get into SABA. Where is SAF sitting right now on both the cost curve compared to conventional jet fuel and then the supply curve?
What I was reading was currently SAF is sitting at around like 0.1 percent of the supply of overall jet fuel consumption but that’s inching its way up the curve and Boeing has put together a SAF Dashboard that’s showing the range of projects that are already under construction or already working towards capacity towards 2030.
And there’s, I thought the US there’s something like almost 9 billion gallons planned of production already towards 2030.
Kim Carnahan: Yeah, I would say it’s probably closer to 0.01 percent of global jet fuel, not 0.1 at this point, but we are inching closer to 0.1. So maybe we’re, I don’t know, we might be at 0.02 or something like that right now.
It’s a very low amount today. Boeing, you mentioned, they’re a SABA member. They’re one of our founding members actually of the Sustainable Aviation Buyers Alliance doing a lot of great work on SAF. So yeah, very small supply, but has been growing. We are actually in the middle of running a joint procurement for our members.
And what we’ve seen is that this year and next year, supply is still quite constrained, but starting in 2026, we’re expecting those plants that you just mentioned to all come online and we’ll have a lot more available. For our customers to support, but for airlines to buy as well. In terms of the cost, it’s anywhere from two to four times the cost of jet fuel today.
That translates to a cost per ton of CO2 reduced of somewhere between $250 to $800 per ton, depending upon where in the world you’re buying the fuel, as well as which feedstock is driving the fuel. The e-fuels are more expensive. It’s more expensive to buy fuel in Europe right now because the US has a number of incentives that are in play that actually cut down the premium. There still is a significant premium, but the incentives help a lot. So that price varies. And part of what we do for our members is help them find the best price, a competitive price, for super high quality fuel.
Steven Goldman: And let’s talk about SABA then. So you and a number of NGOs, so notably Rocky Mountain Institute and Environmental Defense Fund and other parties came together to kickstart this body that was going to serve a range of roles in helping drive SAF adoption.
So can you talk to us about what was the genesis of SABA and how did that come together? And then what roles are you currently playing in the marketplace right now?
Kim Carnahan: So SABA came together because I think independently myself and my previous company, as well as EDF and RMI, we’re each advising climate leading corporations who were trying to decarbonize either their use of business travel or air freight.
And we were helping them negotiate contracts with their airline of choice, these bilateral kind of one off contracts where they would effectively pay the premium for a certain volume of sustainable aviation fuel in exchange for that airline, putting that fuel in their airplane and flying somewhere on it.
And these contracts were incredibly complicated. Some of them were taking a year to negotiate because nobody really knew the qualities of the fuel yet. The certification system for the fuel wasn’t fully developed, even though. We had begun that process at ICAO, the UN body I mentioned earlier. So we had some building blocks to work on, but the market really didn’t exist for Sustainable Aviation Fuel.
And certainly not for Sustainable Aviation Fuel certificates, which is when you pay the premium for the fuel, you get to claim the Scope 3 emission reduction for that fuel as a business travel or an air freighter. That system didn’t exist and talking with EDF and RMI, who I’d known for many years working on the CORSIA deal at ICAO, we just decided we could do this.
better, we could actually build a system to standardize the certification of Sustainable Aviation Fuel, but also the purchase of that fuel. So we could help those customers that are really climate leading customers. I can name a few of them, Microsoft and Netflix and Boeing, I already mentioned and Deloitte and McKinsey who were out there desperately trying to push forward the decarbonization agenda for aviation.
We thought we could help them. So we pulled them together and said, would you guys be interested if we started an alliance, basically a buyer’s club, but a buyer’s club that was much more than just us helping them buy the fuel. It would be us building the market for Sustainable Aviation Fuel certificates in real time.
And they were super keen to get started. And we launched SABA, did a soft launch in April of 2021 and did a bigger launch later that year. And then, yeah, we’ve now been running for well over two years and now have over 30 members strong and getting a couple more members every day. So we support our members in a number of ways in all the different areas that we work.
Steven Goldman: It’s kind of a fascinating parallel. So we had Jan Pepper, who is the soon-outgoing CEO of Peninsula Clean Energy, who earlier in her career had worked on one of the first renewable energy credit trading markets helped popularize the use case essentially for RECs for packaging up the environmental value of renewable energy generation.
It feels like you’re doing something very similar here in terms of a book and claim system where yes, there’s a price premium attached to it, but that’s because there’s an environmental benefit that is going to be claimed by those companies to help prove what they’re doing.
Kim Carnahan: Yeah, absolutely. I mean, we’re similar to the REC market, except for much earlier stage, right?
Because not only were we designing the system, the kind of REC system that exists for Sustainable Aviation Fuel, but we were also encouraging companies to build a plants to make the fuel in the first place. So it was much earlier stage and renewable energy. I don’t know if you’ve heard of the Renewable Energy Buyers Alliance.
It’s now the Clean Energy Buyers Alliance or CEBA. Think CEBA, we definitely modeled ourselves a bit off them, but realized that we had to start more kind of at square one to build the market. You mentioned book and claim. That’s what we’re doing. We have been working with a couple of different sustainability systems.
They’re basically standard setting bodies in the sustainability space. One of them has already developed a book and claim standard for aviation, which we are then using to build a registry for SABA and actually for everyone. So, it’ll be a universally accessible registry. Any fuel provider, any airline that wants to register their fuel, book the environmental attributes of that fuel and sell them separately from the fuel itself will be able to do so through the SAFc registry, SAF Certificate Registry that SABA is currently building.
We’ve started by building the registry, but we also needed to make sure that the fuel we were helping companies buy was truly sustainable. So the second big piece of our work has been developing a SAF sustainability standard or SAF sustainability framework is what we call it, taking existing certification processes and then basically augmenting them based on our specific knowledge and understanding of the aviation space.
So our SAF framework, which is about to be revised, was first published last November. It is what we use as a guide when we help our members buy fuel through our joint procurement processes, but it’s also supposed to be a guide for our members to use if they’re doing bilateral deals for Sustainable Aviation Fuel certificates as well.
So they can use it on their own. It also guides everything we do on their behalf. So that brings me to the third big piece of work that we do, which is joint procurement for our members. When we first started SABA, everybody, as I mentioned, was just doing these one off deals with whichever airline they were closest to, that they had the most business with. That meant that they had no choice. They had to take whatever single type of fuel that airline had, regardless of its environmental attributes, regardless of its price, et cetera. What SABA does now is put out competitive RFPs, requests for proposals to the market. Any fuel provider and or airline who owns the environmental attributes of the fuel at that time can bid to us.
We evaluate the fuel on behalf of our members, which is a huge benefit to them because they don’t know how to evaluate SAF. And then we award it based on price. We run that for our members. That means they get an actual competitive price, they get truly sustainable fuel that’s been validated by two environmental NGOs who are experts in SAF, the SAF space.
So our members really love this joint procurement process that we’ve started. We’re running our second joint procurement right now. It’s for five years, members can buy fuel attributes starting in 2024, all the way through 2028 through us, and we’ll continue to run these probably on an annual basis. We’re still kind of adapting our system in real time because it’s still so new, but it’s working out very well so far.
The last thing that we do for our members is we help them figure out how to account for Sustainable Aviation Fuel or Sustainable Aviation Fuel certificates when they buy it. Right now, the Greenhouse Gas Protocol and the Science Based Targets Initiative, which so many of our members have targets under SBTI is vague and unclear about whether and how you can claim the results from a book and claim certificate. So we worked with a couple of other organizations to write guidance that gives best practice for how to do that. And then separately, we are representing them in many conversations with the GHG protocol and SBTI to try to get them to clarify their guidance as well. So yeah, those are our kind of four big issues.
The registry, basically all of the infrastructure, the registry, the sustainability criteria, the joint procurement and the accounting piece.
Steven Goldman: So in other words, just a small body of work that your body of work.
Kim Carnahan: Yes, we started out with a couple of team members. I think we have over 20 people working on SABA now, but I think the members and hopefully the broader market will be better off for it.
Steven Goldman: It’s really fascinating. I feel like you’re taking on the role of crafting the standards, creating the marketplace, creating the structures within the marketplace with the certificates, serving as a broker or at least a channel for SAF purchasing, and then helping companies understand how to actually integrate that into their GHG reporting and into eventually how they’re going to meet their SBTIs, if I’m understanding it all correctly.
Kim Carnahan: Yeah, and I think of us more as like a facilitator because we do try to use existing systems wherever possible. Like I mentioned, the Sustainability Certification Systems, the Roundtable on Sustainable Biomaterials, for example, RSB has been a leader in the SCS space is what we call it. We work with RSB.
We use their standards. Sometimes we require some things on top of their standards, but for the most part, we use existing sustainability standards, which are. They’re the standard itself, which says you have to make sure not only that you have a life cycle assessment, carbon intensity value that’s been validated, sSo we’re sure of what the emission savings is from that fuel, but also that you’re not doing a lot of other things that could potentially have negative economic or social impacts in other areas related to the fuel. So they do a full sustainability standard. That’s a really key part of what we do is making sure the fuel that our members buy is actually certified by them.
Certification companies that have been accredited by standards like RSB. So using that system, their system of accredited auditors is critical to our work, and we wouldn’t be able to do without it. But when we first started most, if any of the fuel was certified at all, which is just, it means, especially when you’re dealing with bio based fuels, land based fuels, it really is a very risky situation. You could accidentally be driving deforestation, right, somewhere. So we wanted to make sure that that certification is happening so that there isn’t indirect land use change impacts that we’re not taking account for.
Steven Goldman: And there’s other challenges, I think, tied up in it as well, like the e-fuels market. Some of those producers are dependent on utilizing, or in some ways using hydrogen in their processes. And the challenges there is, if you’re using green hydrogen, then you’re needing to source clean power. And if you need clean energy, you run the risk of cannibalizing renewable energy supplies intended to be used in other ways on the grid.
So it feels like… From a land use perspective, from a clean energy sourcing perspective, there’s a good number of challenges to make sure that these are additive, that the equivalent of additionality principles, but for fuel production, as opposed to for renewable energy generation.
Kim Carnahan: Yeah, the renewable energy question is an important one and one that we’re frankly, just starting to grapple with now, because e-fuels, power to liquids, synthetic fuels are only really now becoming a thing, and you’ll note different jurisdictions or bodies will take different approaches to this.
So I mentioned RSB, the Roundtable on Sustainable Biomaterials. They have an Advanced Fuel Standard, which is the only one I think right now that SABA is recognizing for use in our framework, just because it’s really the only one that exists at the moment. But they lean towards a more, what I would call like a European approach. For example, requiring that the generating facilities have come online within the last three years. It would be too complicated to prove that it came on, you know, at the exact same time the e-fuels plant was being built, but the renewable energy is relatively new and that you’re not cannibalizing existing renewables.
They also require you to account for any increased grid emissions as a result of you taking that renewable energy. So they’re actually being quite strict about it. Again, that’s more of a European approach. My guess is that when the International Civil Aviation Organization, ICAO, that I mentioned earlier, that UN body, will probably take a slightly different approach to how it regulates the use of renewable energy and the US government will take yet another one. You’ll see that already in the IRA regulations that are going to come out for green hydrogen soon. So we’ll be watching it and SABA may decide to preference one over the other because of our concerns, but there’s also something to be said about encouraging the development of this fuel as much as possible as fast as possible for some period of time till we can get that cost curve bent a little bit down and then starting to ramp up those restrictions.
I can’t predict right now. Our members will vote on what they think the stringency of their Sustainable Aviation Fuel framework that they purchase on the basis of they’ll decide how stringent they want it to be on the basis of recommendations from EDF and RMI, our NGO partners.
Steven Goldman: And it’s not dissimilar, I think, to the debate that’s going on right now in the EU around green hydrogen, how renewable energy needs to be sourced for that, the provenance that needs to happen and generally how much additionality to prioritize in that, because they’re trying to make sure that they can still grow the green hydrogen sector while not making it too hamstrung by additionality principles.
And there’s proponents that we talked to a lot, like around EnergyTag, their focus is on, well, it not only should it be additional, it should be time matched to make sure that we’re decarbonizing the grid and we’re not overtaxing resources that were intended to decarbonize grids to make hydrogen. And I know there’s a similar pareto we’re all trying to work towards of progress versus ensuring the stringency of standards, essentially.
Kim Carnahan: Yeah, absolutely. I mean, it’s a tightrope that we’re going to be walking on this issue. My guess is that the regulations become more stringent over time when it comes to additionality, but I guess that remains to be seen. I mean, SABA hasn’t taken a position one way or the other yet.
Steven Goldman: It’s early days all around.
Kim Carnahan: I think we’re being offered something like 10,000 tons of e-fuels starting next year. So it’s a very small amount We’re not the ones cannibalizing that green energy just yet. But in the future, that’ll be a consideration for sure
Steven Goldman: It’s good that you’re already taking the view and trying to be aware of what the potential challenges will be as the sector scales up So, a lot of our listenership are sustainability and ESG teams.
How should they be looking at the SAF certificates? How to procure them? How to account for them when they’re working towards demonstrating SBTIs and net zero targets, et cetera?
Kim Carnahan: The most important thing to understand, which isn’t obvious to most folks when they’re getting into this space, is how a SAF certificate is different than a REC, actually, so maybe I’ll start there.
Because for RECs, you basically have one entity who’s claiming the REC at the end, right? For staff certificates, there can be up to three entities who are appropriately claiming the emission savings associated with the SAF. Certainly the air carrier, the air transport provider is going to claim that traditionally we would call that Scope 1.
Then there’s also an end user. That’s the Microsoft employee flying on the airplane, for example, or the entity who’s shipping goods on the airplane. But there also may be a freight forwarder in between who’s actually directing traffic basically for that particular service. And they also have that same ton of emissions when the airplane fuel normally burns.
So when they use SAF, they also can take credit for that reduction. So our system tracks not just one entity’s claim, but up to three right now entities claims is how it works. So In case they’re worried they’re going to be, I don’t know, somehow taking a claim away from their air transport provider, they won’t be.
Their air transport provider will be so happy that they can actually get someone else to pay the premium for the fuel that their planes are flying on. So that’s one important thing. The second one is if you have a Science Based Target. Under the Science Based Targets Initiative, they don’t allow the use of offsets towards SBTIs.
And that’s really been the driver of folks coming to SABA. They’ve looked at their GHG inventory for Scope 3, they’ve had an SBT, and they realize they have no way to meet that SBT unless they just stop flying. And a lot of them do. That’s the first thing they do is they reduce their travel to the extent possible.
They switch to trains, they do more DVCs, etc. But to the extent they can’t stop flying, SAF is right now the only way to address those emissions. So SAF certificates should be the next thing they do. If they’re already, for some reason, knowledgeable about SAF, then certainly they can go to their airline of choice and ask what offerings they have.
If they’re interested in becoming more knowledgeable, if they’re interested in perhaps getting the support of environmental NGOs like Environmental Defense Fund and Rocky Mountain Institute who organize SABA, then we’d love to have them as SABA members. They can join as members. And we basically do most of the work for them.
We can help them educate their C-suite. A lot of companies need that. They need to have someone to help explain to their CEOs what staff certificates are, how it can be claimed, etc. So we serve that purpose for a lot of the world’s largest companies right now. In terms of how they can claim it towards their targets, Again, some of our members have been the trailblazers in this regard, because the SBTI and GHGP guidance isn’t yet clear.
What they’re doing is they’re basically reporting their current inventories per GHC Protocol guidance, and then they’re calculating an additional layer, I’ll call it on top of that inventory to take credit for the emission reductions from the staff certificates that they’re purchasing. Deloitte, for example, I’ll just give them a plug because they have a great example of their report where they’re very clear about their use of SAF and how it’s on top of everything else, they’re doing to reduce their aviation emissions.
Steven Goldman: The whole thing has been a huge sea change from the ways that people had treated air travel going back. I remember when I was in grad school in like 08 and 09, people were just excited to book air travel and be able to do Terrapass and purchase offsets and be able to just have any measurable impact whatsoever on that.
Today, you go to book air travel with some of these leading airlines. You actually can choose to use SAF on your flight as a portion of your ticket. And so it’s starting to work its way into the mainstream view where your typical traveler can start, it’s starting to have visibility on this.
Kim Carnahan: Yeah, very few.
And I have to say, I mean, I think those programs are great, but they’re not quite. to the same level of offsets where you’re buying the number of SAF certificates that can address emissions from your travel. We are hoping that we’re going to get there soon. We have several travel companies who are part of SABA, Amex Global Business Travel is a SABA member, and they’re certainly pioneers in this space, thinking through how they can help at least first their business customers more easily access SAF.
I think we’re still a couple of steps away before the average joe can do it when they’re booking their travel, partly just cause there isn’t enough SAF around. The customers that I’m working with, big companies are buying up all the SAF certificates around the world right now because there just isn’t enough.
But come 2026 or so, I would expect for that to be an option when you’re buying a flight on Expedia or any major airline. That would certainly be the goal. And if SABA works itself out of a job, then that would be great. If SAF just becomes the fuel of choice, then that certainly is what we’re aiming for.
Steven Goldman: And that’s what you’re seeing it from a supply perspective. One of the inflection points coming is 2026 in terms of supply coming online.
Kim Carnahan: Yeah, we’re seeing a lot more supply coming online in 2026. We’re still less than 1 percent of global jet fuel even then, but we are growing rapidly. And at some point you start to hit economies of scale, at least in these non bio-based feedstocks.
DATA BREAKOUT: As Kim shares in this episode, the aviation industry is grappling with a pressing issue concerning sustainable aviation fuel or SAF supply and demand. The demand for SAF has surged due to increasing awareness of aviation’s environmental impact and the industry’s commitment to reduce greenhouse gas emissions.
At the moment, the current supply of SAF falls far short of meeting this demand, and SAF prices remain high compared to conventional jet fuel. The supply demand imbalance has created a challenging environment for both airlines and other companies working to reduce carbon emissions in their supply chains from business travel and freight transport.
As a result, industry players, governments, and organizations have begun to take substantial steps to address this issue and drive both growth in supply and uptake of SAF as a cleaner fuel. In 2022 and 2023, significant commitments have emerged from key stakeholders in the Sustainable Aviation Buyers Alliance, or SABA, and the First Movers Coalition, underscoring the growing demand for sustainable aviation solutions.
One member of SABA in particular, Boeing, is taking large steps towards the SAF movement, starting with the creation of the SAF Dashboard, a comprehensive tracking tool that provides real time data on SAF production, uptake, and carbon emissions reduction. This interactive platform offers insights into the aviation industry’s progress in adopting targets, showcasing metrics such as the total volume of SAF produced, its integration into flights, and the resulting reduction in CO2 emissions.
The Boeing SAF Dashboard serves as a transparent and informative resource, facilitating informed decision making and fostering collaboration among stakeholders to drive the sustainable transformation of air travel. This breakout is brought to you by Cleartrace. For more information on how our platform can help you at your stage of the decarbonization journey, visit cleartrace.io.
Steven Goldman: Are you seeing interest growing around other methods of sourcing fuel? I know years ago, there was a lot of interest in algal biofuels. There was a lot of interest in anything biologically based as opposed to strictly land use change. Is it heading more in technological directions where we’re trying to focus on like the syngas method or is that taking more of the lead in terms of the technical pathways?
Kim Carnahan: I’m not sure if it’s taking the lead, but certainly, for example, alcohol to jet conversion processes is really taking off. And there’s a number of plants that are being built right now. It produces jet fuel from this kind of starchy biomass. You can use like very small amounts of very basic corn grain or sugar grain, but it can be the waste product.
And then they ferment the sugars to ethanol or other alcohols, and that process is really one that we’re seeing a lot of companies start to use. Because processes are now coming online at the same time, I don’t have a clear view as to which is going to be the winner, which is going to be the one who really takes over after HEFA.
As I mentioned, most of the fuel right now is the feedstock is a hydrogenated ester and fatty acid base. So this used cooking oil or beef tallow, that one, it’s too hard to aggregate enough of those feedstocks to really ramp up as much as we’ll need to eventually take over the jet fuel market. We’re going to need probably all of these different production processes for some time and then eventually perhaps just shift over to all e fuels, but that will take quite a while. So I would imagine that we’re just going to see a real mixed market for the next 20 years or so, and then eventually we’ll probably move to synthetic fuel 100 percent.
Steven Goldman: It’s really fascinating though that it’s more of the energy transition in general that we’re having to try out a lot of different production methods in order to get to where we’re trying to get to from a production standpoint.
Kim Carnahan: Absolutely. People talk about bridge fuels all the time and that’s certainly what the first generation and second generation biofuels are bridge fuels. I don’t expect that they’ll be the main source for very much longer.
Steven Goldman: Let’s look a little further out. We were talking to some degree about this. What’s it going to take for it to be as simple as what you were describing like ticking the box when you book flights to DC or flights to a conference or wherever you’re traveling to add certified SAF options and to have the confidence that fuel was sourced to SABA standards.
Kim Carnahan: It just takes a ramping up of everything, really, because even I’ve mentioned the Sustainability Certification Systems that we work with, they don’t have enough accredited certification bodies right now to certify all the fuel that would be needed to do that. So the whole system, including the certification process needs to ramp up. But frankly. I think before enough companies feel comfortable investing in facilities that could produce the supply necessary to enable that sort of demand, we’re going to need governments to do a lot more.
Frankly, policy is a critical building block in this, whether it be the way they’re approaching policy in Europe, which is blending mandates or the way they’re approaching policy in the US, which is subsidies, governments are going to have to start putting their foot on the pedal a little bit more and not just in the US and Europe, which both are doing quite a bit right now to move the market, we need to see the same type of policies all around the world. So I’d say I’m not holding my breath for that scenario that you just described. I think it’s probably going to be slow and steady for the next while until we hit some sort of significant technological breakthrough or we see governments step up to the plate more.
Steven Goldman: Are there changes that have to happen with the business reporting side, like among sustainability frameworks for this to be getting taken properly into account as well, or even to incentivize adoption of SAF? Or is that already underway?
Kim Carnahan: Yeah, no, I mean, it is underway, but absolutely. I would say for every 10 companies I talked to about joining SABA and starting to buy SAF certificates, nine of them choose not to right now because the Science Based Targets Initiative hasn’t made it crystal clear that you can count SAF certificates towards your SBT. I think we’re working with them. I think we’re in route to doing that and companies I think see the writing on the wall that that will be allowed, frankly, just because without it, there is no way to hit your science based target.
And if you’re talking about aviation, unless you completely stop flying, which most companies would not see as a viable option. So absolutely right now the lack of that guidance is preventing or is disincentivizing companies to move forward. But I also see companies starting to decide to move ahead. So we’re ramping up the pace in terms of getting companies to focus on SAF a hundred percent.
Frankly, a lot of these companies just set science based targets. They cover their Scope 1, Scope 3, and Scope 3. And Scope 3 is understandably the last thing they get to when they think about implementing them. Right. And SBTs are ambitious. They’re hard to meet even for Scope 1 and Scope 2.
So then they get to scope three and they’re like. That’s the moment they sit back and think, what? How could I do this? No reasonable or unreasonable amount of work would enable me to hit this scope three target unless there is some sort of mechanism like a SAS certificate to support me in doing so. And again, even when they do that the cost per ton of reduction is still quite high. So this is not a $10 a ton offset. This is a probably minimum for the next few years, at least $250 a ton, the cost per ton of emissions reduced. It’s a serious investment to make. So once companies realize, shoot, in order to hit that target. I’m going to have to start investing in SAF.
Then they begin that process of educating their C-suite, educating the CEO and the CFO and talking to them about how much it’s going to cost. Cause it’s going to be a significant new line item in their budget. They start buying at small amounts. Maybe they buy a thousand tons of CO2 reduced for the 1st year, just to, like, dip their toe in and then by year 4, they’re buying 50,000 tons.
And that’s the biggest purchase from our members right now. A lot of them are starting thinking, okay, I’ll address 10 percent of my emissions from aviation this year through SAF certificates. That’s where they get started usually. And then a lot of them are starting to think, okay, by 2030, I should be up to 30%.
So nobody right now, because it’s so expensive is trying to address a hundred percent of their emissions through SAF. They’re starting at 10 and then taking baby steps upward.
Steven Goldman: Who would you like to lift up at this moment that’s really leading the charge? Who is at the forefront of this fight? I know in the clean energy side, people talk a lot about Google and Microsoft being very forward thinking around emissionality, around 24/7 carbon free energy sourcing. From a SAF perspective, who are the vanguard?
Kim Carnahan: Google just joined SABA about a month ago, so we’re super happy to have them actually. Microsoft was one of our founding members and has been really a groundbreaker in this field so far. It’s super helpful to SABA and really helpful to their aviation partners.
I’ve been super impressed by the consulting companies. You can understand why, right? They fly a lot of people around the world constantly. They knew from the very beginning that this was one of their biggest sources of emissions. They don’t have a huge amount of Scope 1 emissions, for example. So McKinsey, Deloitte, I’ve mentioned already, they have an excellent ESG report, really want to be emulated.
Bain & Company is a member as well of SABA and has started becoming more active. And then I can’t not mention BCG, Boston Consulting Group has been super active in this space. You know, we kind of started with more of a focus on business travel. I think that’s what people thought of when they thought about staff.
But now I’d say in the last three months, even SABA has had an influx of companies who are focused on air freight. A lot of pharmaceutical companies, Novo Nordisk recently joined. A lot of apparel companies are starting to join. Lululemon is a new member. We also have folks from the kind of entertainment space, who realize they’re flying their artists around the world and their artists, you know, are sometimes using business jets or private jets and they want to make sure that they’re doing their part. So Live Nation is a new member who’s focused on figuring out how they can, yeah, meet the needs of their artists, meet the demands of their artists, but also a lot of people fly to their concerts, a lot of people fly to their festivals. How can they do their part to address those emissions? So they’re stepping up to the plate on that as well, which is awesome.
Steven Goldman: Coldplay was actually the first band this year to put out a sustainability report there for just them.
Kim Carnahan: Yeah. Yeah. A lot of them are starting to do that. We get a lot of one-off calls from artists saying, Hey, can we join SABA? And we usually say, you don’t really buy enough SAF to necessarily necessitate joining SABA, but your management company could, that would be great. Or we don’t turn anybody down really, but we try to direct them towards an easier route for them to address their emissions. And usually that comes through the consulting companies and the management companies that they work with already.
Steve Goldman: I remember the days when bands would go on, like the video music awards on MTV, and they were talking about the rainforest and wearing Greenpeace shirts and doing environmental advocacy that way. And I feel like this might be the next frontier is where artists and actors and production companies are all getting in the game and saying, look, this is part of everything that all of us do. This is something we all need to be starting to pull the thread on, on how we can work to decarbonize the way that we work.
Kim Carnahan: Absolutely. We fundamentally work. Yeah, and I think they’ve been hesitant because also you’ve seen a lot of public figures, they come out saying something about their environmental activism or something they’re doing for the environment, and then they get criticized. Coldplay is actually a good example, actually. They got some criticism around some of their announcements, which I think is a real shame because these guys are doing their best. And in the SAF space, you’ll always be able to find some criticism because there will be bad fuel out there. And that’s the role of SABA actually is to vet out the bad fuel for our members to kind of handle that reputational risk concern for them.
Whether that be, yeah, some movie star who wants to fly on SAF or the CEO of Microsoft, we want to make sure that we’re helping them choose and support truly sustainable fuel. And after that is what I tell them, I say, if you somehow get criticized for fuel that SABA helped you buy, you put all that on me. You put all that on us. We’re going to take the blame for that because we’re the ones who did the work, vetted the fuel, told you what to buy. We don’t think these companies who are absolutely doing their best to address their environmental impact, SABA members are truly climate leaders and they shouldn’t be taking flack for trying to do their absolute best when it comes to decarbonizing their air travel or transport of goods.
So we do our best to take any… we actually haven’t gotten much criticism and now that I said that, I’ll knock on wood, but we do tell them that. Please, if somebody criticizes your purchase of SAF, just send them to me and we’ll do our best to answer the questions, because oftentimes they’re just misguided, right?
They just assume the fuel is X, Y, and Z, and we explain, no, actually, this fuel has been certified. This fuel has been specifically certified to make sure that it does not induce land use change. For example, this fuel is a waste based product. It does not have a land use component to it, for example. So we can explain out the technical details of the fuel, which really matter.
I mean, that’s why buying SAF is complicated today is because you do want to make sure that you understand those technical implications and the fuel is certified to a pretty high sustainability standard.
Steven Goldman: You’re running procurements right now that are looking out to 2028. So five years out, where are you anticipating the market coming to? I know with Boeing’s dashboard, they’re covering, I think, procurements up through 2030. Where do you see the market going in the next five years? What growth point are you anticipating in the next five to seven, I guess, given that we have a view on supply building across that timeline?
Kim Carnahan: To be honest, I don’t 100 percent trust companies. I don’t think they’re intentionally being inaccurate, but just building these plants is a complicated process. Sourcing the feedstocks, if we’re talking about a feedstock that needs to be sourced, is a complicated process and one that takes an enormous amount of effort. And so I think some of the predictions will just prove to be wrong.
These plants won’t come online when they say they will, which is why I tend to trust actually our procurement process more than the publicly announced production numbers that are out there. So I would say from what we’ve seen, we can expect the amount of supply available to about double every year from now through 2028, which is great.
That’s what we’re getting in terms of actual proposals. So these are companies who are willing to sign contracts with our members. To sell them fuel, that’s a very different than a company’s projected supply, which they may have publicly announced, right? So I would say even still, that’s good. Doubling supply every year from now until 2028, I’ll take it. But I tend to, yeah, trust our numbers a bit more than those announcements made by companies, just because they’ve proven to be wrong, frankly, over and over again, though they are getting better. A couple of years ago, companies would say they would have a new 30 million gallon plant on board by 2018. And then maybe it came online in 2021. So it’s not that it doesn’t come online, but that there’s a gap.
Steven Goldman: Well, and then the last question I have is five years out for you. Do you anticipate staying at the center of this growth engine on SAF or, uh, you talked about also leading the charge on the agreements around like sustainability and shipping. Do you see yourself staying in the growth mode here, or do you anticipate getting back in the diplomatic game at some point?
Kim Carnahan: So my firm, Neoteric Energy and Climate, actually supports a number of consortia. SABA was the first one, and then others have been built with SABA as an example. So another awesome consortia that I support is called ZEMBA, the Zero Emission Maritime Buyers Alliance.
So folks that are looking, companies that are looking to decarbonize their use of shipping can go check out ZEMBA. It’s run by the Aspen Institute. It’s a really fantastic, basically like a couple of years behind SABA in terms of developing their own procurement process, et cetera, but doing great work there.
Also supporting a methane initiative that’s similar, an overarching greenhouse gas accounting initiative. So I’m busy, I guess you could say, working on a decarbonized trucking initiative as well. Decarbonized trucking and heavy duty trucking in the US trying to get more hydrogen, green hydrogen powered vehicles.
I think that’d be a really interesting thing to do, but probably not in five years, maybe give me 10 more years. And then I might be back in there.
Steven Goldman: You’re tackling some of the biggest decarbonization challenges of our time. So you’ve got your work cut out for you, but it’s phenomenal work you and SABA are doing. And I’m pleased to learn about it today.
I hope this is helpful for our listeners to start getting at it. Is there anything, any last thoughts you’d want to share on where the market’s going on how SABA is evolving on how SAF is evolving?
Kim Carnahan: I think both for SABA and for those other initiatives I mentioned on maritime or trucking, I think the key is standardization.
And that’s what SABA has been trying to do is standardize the market so that when a SAF certificate is entered into a registry, you know exactly what it is, exactly which environmental attributes it’s met, it’s been certified by an accredited certification body, etc. So we’re just driving. I think that certification to make it easy to invest in this stuff.
And my hope is that you’ll start to see that and basically all of the hard to decarbonize sector. So not just aviation, shipping, heavy duty, trucking, steel, cement, et cetera. Like my goal would be to provide these standardized solutions to companies and whatever. They can’t get at today. And if it’s Scope 3, they probably can’t get at things like steel, cement, copper mining, et cetera.
That’s the super tricky areas that companies are struggling with. I’m hoping that we’re able to help them access those solutions at a, it’s not going to be a low price. So this is the high hanging fruit, it’s not the low hanging fruit, but for companies who’ve committed to doing it, we want to make it as easy and as sustainable.
As possible, I think that’s the future. I see a lot of other, you know, it’s not just my firm that’s working on that. I see a lot of other entities and NGOs working on that as well. So I hope that’s where we’re going, is channeling the amazing ambition that the Science Based Targets Initiative and other target setting NGOs and initiatives have created, they’ve gotten well over 2000 to get something like a third of market capitalization is now covered by an SBT right now. That’s amazing. We need to give them the avenues they need to meet those truly ambitious targets when it comes to Scope 3. Right now they don’t have that and we need to create it for them so that they can make good on those really ambitious commitments.
Steven Goldman: They need the structures, they need the data, they need the transparency to know that they’ve hit those marks and be able to prove everything that they’ve done.
Kim Carnahan: Yeah, you’re going to be spending over $200 a ton on an emission reduction. You better be sure you’re hitting what your target is. That’s the phrase you use, and it’s a good one. You want to make sure you’re hitting your target and you’re getting credit for hitting your target. Right? So that’s my mission at the moment for sure to give companies permission to spend their money to decarbonize the world’s hardest to decarbonize sectors.
Steven Goldman: It’s phenomenal work that you’re up to and I really appreciate you taking the time out today to sit and talk with us.
Thank you so much for joining us today. This has been amazing, like quite a kaleidoscope of work that SABA is underway with. So really appreciate talking with you today. Awesome.
Kim Carnahan: Thanks for having me.
Narrator: Thank you for joining us on The Decarbonization Race. For more resources to help you lead the pack in the most important race of our lifetimes, visit cleartrace.io/podcast.