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The right question is, Gebolys said, “is there a market for decarbonizing flight? The answer is yes, and the only way to provide that is through SAF.”
“It’s not a mystery that airlines alone won’t carry the SAF industry,” Gebolys said. “Airlines don’t fly for their own benefit or decarbonize for themselves. It was always going to be the people and things they carry who would pay the way.”
It comes down to who is ultimately responsible for creating carbon emissions – and for reducing them.
Carbon emissions generated by a company directly, such as jet exhaust from an airline’s flights, are called Scope 1 emissions.
That same jet fuel exhaust, however, is considered Scope 3 emissions for the companies and people who used those flights and who generated the demand for the flights to exist in the first place.
“Scope 3 emissions are driving the economic bus here,” Gebolys said, and “the progress is [happening] on Scope 3 decarbonization.”
Large companies generate Scope 3 emissions through their various activities – creating products, shipping them, having offices full of employees who work in them and commute to them. Even emissions from the cement and steel rebar used to make an office building are extensive.
When companies set “net-zero emissions” or “carbon-negative” goals, they are working towards mitigating some of the environmental impacts of their activities.
“The estimates are that the steel industry alone generates seven to nine percent of all carbon emissions,” Gebolys said, highlighting that the issue of decarbonization extends into every area of life and industry.
“For a large company that wants to decarbonize,” Gebolys said, such as a manufacturer who ships products and sends employees on airline flights, for example, “the fundamental market problem is that they don’t use jet fuel directly”, so they can’t directly use SAF.
World Energy doesn’t sell SAF, then: it sells decarbonization.
“The attributes of decarbonization go to the [corporate] buyer, decoupled from the fuel,” Gebolys said. The SAF is sold separately as jet fuel, stripped of its environmental attributes.
SAF-enabled carbon credits, also known as “insets” because they are in-sector reductions, allow companies to purchase the decarbonization value of SAF without having to purchase fuel themselves.
“For entities that want to drive authentic decarbonization, the insets approach will go far beyond aviation,” Gebolys said, “it will go through virtually everything.”
In the example of steel, the main creation of carbon emissions occurs through the reduction of ore into usable steel, which is still mostly done through the burning of coal. Decarbonizing that industry will depend on displacing the use of coal, Gebolys said, mostly likely with clean hydrogen, in the same way that SAF is displacing fossil jet fuel.
In this way Gebolys expects the SAF industry, including World Energy’s insetting model for selling the product and the environmental credits separately, to be a model for decarbonization throughout the wider economy.
Voluntary Scope 3 carbon credits are still very expensive – orders of magnitude more costly than Scope 1 carbon credits, which are required in some industries. For example, in the aviation industry, Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is an agreement among 126 countries to reduce Scope 1 airline emissions and freeze them at 2019 levels. CORSIA Scope 1 credits cost a fraction as much as SAF-generated Scope 3 credits.
The demand for Scope 3 credits is strong even at the higher prices, Gebolys says, but at lower prices it becomes “massive.” As SAF production scales up, Scope 3 carbon credits will become more affordable and demand for them will rise, Gebolys says, creating a “virtuous cycle” that reinforces SAF production.
With the new presidential administration’s view on clean energy and fuels, along with tightening economic conditions, some companies are pushing back on environmental goals. This issue has affected World Energy directly, as their operating partner Air Products has had a “strategic shift” in goals and is moving away from a number of energy transition projects, Gebolys said – including ending their partnership with World Energy.
During the transition, World Energy is not producing SAF. The exact timeline for being back in production is unknown, but World Energy is working diligently toward that result, Gebolys said. Gebolys remains optimistic about his own company and about the industry overall.
The SAF industry in the US “can and will survive this” temporary change in priorities, Gebolys said. “Any industry that is only as good as the current election cycle isn’t going to be around for very long.
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