Tracking Alternative Jet Fuel (2016)

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1 C h a p t e r 1 1.1 Introduction For decades, the aviation industry has relied on petroleum-derived jet fuel to power aircraft. Today, the aviation industry wants to reduce its reliance on petroleum-based fuel with alternative jet fuels made from renewable sources. There are multiple benefits to be realized by nurturing an alternative jet fuel industry:1,2,3,4 • Supply diversity, • Improved supply reliability and security, • Enhanced national energy security, • Jet fuel price volatility reduction, • Regional economic benefits, • Air quality benefits, and • Net life-cycle greenhouse gas (GHG) emissions reductions. To enable the introduction of alternative jet fuel, the aviation industry is promoting the devel- opment of drop-in alternative fuels (i.e., those that can be used in existing aircraft and their supporting infrastructure). To date, ASTM International has approved a number of alternative jet fuel pathways for use as drop-in fuels for aircraft.5 Alternative fuel from these pathways must first be blended with conventional fuel in order to meet the requirements in ASTM D7566, Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons speci- fication. (The blending requirement may be relaxed in future pathway approvals.) Once certi- fied to D7566, the blended fuel is considered to meet the specification for conventional jet fuel (ASTM D1655, Standard Specification for Aviation Turbine Fuels) and can enter the existing fuel-handling infrastructure and equipment. In the United States, the aviation industry has been working through the Commercial Avia- tion Alternative Fuels Initiative (CAAFI) to align the interests and resources of multiple govern- ment and private stakeholders, including several U.S. government agencies, airports, airlines, and original equipment manufacturers (OEMs). The U.S. Department of Defense (U.S. DoD) has also been a strong supporter of alternative jet fuels and has been collaborating with CAAFI on a number of key initiatives. In 2016, airlines began to purchase and receive commercial quantities of alternative jet fuel. In Europe, Oslo Gardermoen airport started to distribute alternative fuel through its fuel hydrant system.6 At Los Angeles International Airport (LAX), United Airlines started receiving alter- native jet fuel from AltAir, an alternative jet fuel producer in California.7 In addition, United Airlines and Southwest Airlines as well as FedEx Express have signed purchase agreements with Fulcrum BioEnergy and Red Rock Biofuels, respectively, for the near-term supply of alternative jet fuel in the United States.8,9 Introduction and Motivation

2 tracking alternative Jet Fuel To prepare for the routine use of alternative jet fuel, airports and other stakeholders may need to make plans to track and account for the new fuels as they move from the production source through the supply chain to the airports where they will be received and loaded into aircraft. Beyond airports, airlines, general aviation, and fixed-base operators (FBOs), there are numer- ous, diverse organizations that have an interest or stake in alternative jet fuels. These include biofuel feedstock suppliers; fuel producers and fuel transporters; governments at the local, state, and national level; and nongovernmental organizations that are focused on environmental or public policy. Because these fuels are designed to be drop-in and will be able to share the same infrastructure as conventional jet fuel, the tracking needs to consider both the mechanisms already in place for conventional jet fuel and the particular attributes of alternative jet fuel. 1.2 Objective The objective of this guidebook is to help airports and other interested stakeholders: • Proactively identify potential reasons for tracking alternative jet fuel; • Compare the different types of tracking mechanisms; and • Evaluate the advantages and disadvantages, impediments to implementation, and potential impacts of the different mechanisms for tracking alternative jet fuel through the supply chain. A logical point for tracking alternative fuels may be the airport because this is the point where the supply chains of both alternative and conventional fuels have to converge before the fuel is loaded into the aircraft. In addition, airport fuel farms already have quality control and account- ing mechanisms for conventional jet fuel that can be leveraged to enable tracking of alternative jet fuel in a manner that is consistent with current practices, would minimize additional work- load, and has the potential to be effectively implemented. While this guidance and associated toolkit are focused on the airport, this material is also intended to be useful to additional stakeholders along the supply chain. In particular, airlines, producers, and third-party providers who are considering the implementation of tracking mechanisms for alternative jet fuel may benefit from this information. 1.3 Reasons for Tracking Alternative Jet Fuels Establishing tracking mechanisms for alternative jet fuels will enhance the ability of all stake- holders to more fully realize the potential benefits of their introduction. These reasons can be classified in at least three categories: 1. Technical, such as for quality control purposes to ensure that the fuel containing alterna- tive components meets the required specification. Alternative jet fuels must meet rigorous standards set by standard-setting organizations such as ASTM International and the U.K. Ministry of Defence Standards (Def Stan). Fuel producers and fuel handlers need to conform to the accepted specifications and ensure that when their fuel is blended and transported to an airport, it qualifies as a drop-in fuel. Tracking the use of alternative fuels can support quality assurance and quality control practices. 2. Regulatory, such as for compliance with policies or regulations associated with the use of alternative fuels at the local, national, or international level. For example, because alternative jet fuels may be an important mechanism for reducing life-cycle carbon dioxide (CO2) and have the potential to reduce local air quality emissions, it might be important for interested airports and other stakeholders to be able to track the quantity, source, and composition of alternative jet fuels passing through their tank farms. Compliance with regulations needs to be based on quantitative data from an accurate, consistent, and transparent tracking system.

Introduction and Motivation 3 3. Commercial, such as for ensuring that specified amounts of alternative jet fuel are being delivered as agreed in purchase contracts and for verification purposes related to corporate social responsibility (CSR), sustainability, and other voluntary reporting. To make legitimate claims about alternative jet fuel use on sustainability reports or marketing documentation, it may be necessary to track the use of these fuels. 1.4 Conventional and Alternative Jet Fuel Tracking Current industry practice for tracking conventional jet fuel is to confirm that the fuel meets the relevant safety specification (e.g., ASTM D1655) and to measure the volume of fuel, adjusted for temperature. In the United States, fuel transfer accounting and financial transfers are based on fuel volume, measured in gallons. [Occasionally, a container’s volume is unknown; therefore, it is necessary to measure fuel mass in pounds (or tons), which is then converted to volume using fuel density.] This system meets the industry’s needs, is simple to administer, and provides transparency in commercial transactions. Tracking alternative jet fuel should be done on a similar basis to minimize the need to change current practices and limit any added administrative burden. However, tracking sustainability attributes such as life-cycle GHG reduction benefits and potential local air quality benefits asso- ciated with unique batches of alternative jet fuel is an important and potentially complicated addition to the system. Because alternative jet fuels are designed to be drop-in, once they enter the existing jet fuel handling and distribution infrastructure, they lose their physical distinctive- ness, and the sustainability attributes of the fuel may be ensured through an administrative paper trail or tracking system. A tracking system for alternative jet fuel may require information about the origin of the fuel to confirm its environmental benefits and sustainability attributes. It may also need to be flexible enough to accommodate several regulatory and tracking systems for diverse fuel sup- ply chains that may be developed and used in other countries. Only with precise and verifiable data can industry stakeholders ensure that they are receiving economic value, obtaining reliable performance, and meeting essential safety requirements while achieving their emission reduc- tion targets. In many cases, fuel farm operators or FBOs are under no obligation to provide detailed fuel throughput information to fuel consortiums or airlines on an ongoing basis. They instead may provide only a total volume of fuel received and used over a period of time. When this is the case, flexibility in the system is limited, and airports interested in tracking the composition of fuel (to claim emission reduction credits, for example) would have to rely on fuel-handling entities further up the supply chain to supply this information. 1.5 Tracking Alternative Jet Fuel Along the Supply Chain Evaluating the sustainability of alternative fuel requires an understanding of the feedstock used in its production. Because the fuels can be blended at different points along the supply chain, it is essential that each link in the supply chain be considered when developing a tracking system for alternative jet fuel. For the purposes of this project, the researchers have identified the following stakeholders along the supply chain that have an interest in and play a key role in this process of alternative jet fuel tracking: • Feedstock suppliers and processors: Feedstock suppliers and processors may be able to gain a sustainability premium by manufacturing products that maximize life-cycle CO2 reductions and other social, economic, and environmental benefits. Information about

4 tracking alternative Jet Fuel these sustainability characteristics is carried forward along the supply chain to the fuel pro- ducer and the end user. • Fuel producers: Beyond ensuring the technical quality of their fuel, producers want to ensure that their customers and other stakeholders can claim the most benefits from using alternative fuels through accurate accounting of product movement and use. • Fuel handlers, including FBOs, fuel farms, and into-plane operators: Fuel handlers play a key role in the transportation, storage, and distribution of alternative jet fuels. In addi- tion to producers, fuel handlers are very likely to operate facilities where neat alternative fuel is blended with conventional jet fuel to produce alternative jet fuel that meets the relevant specification. Fuel handlers must ensure that other fuel products are not mixed with the neat alternative jet fuel. They would then be responsible for blending the fuel with conventional jet fuel to produce a certified drop-in fuel. Blending to proper proportions and appropriate accounting will require effective quality assurance and quality control procedures. • Airports: While airports themselves are rarely directly involved in the fuel-handling process, they are the last inventory and accounting control point prior to fuel reaching the aircraft. As such, airports are interested in ensuring that alternative fuels passing through the airport fuel storage facilities meet required safety specifications and fuel quality standards before they are dispensed to aircraft. In addition, there is some evidence that alternative jet fuels may slightly improve fuel efficiency compared to conventional jet fuel,10 which may slightly reduce an airport’s local air emissions and measures of criteria pollutants. To verify and quantify this potential impact, it may be necessary to track the use of alternative fuels. There may also be a desire to track airlines’ use of alternative jet fuel as part of airports’ sustainability or CO2 management programs. [Note that under current GHG accounting structures, only fuel pro- ducers report the fuel quantities produced, and only aircraft operators are responsible for aircraft fuel use (Scope 1 for aircraft operators). Also, under the Airport Carbon Accreditation (ACA) program, as noted in Appendix A (Section 2.1), ACA Level 3 and 3+ airports (those reporting Scope 3 emissions) only report emissions in the landing/take-off (LTO), which is approximately 25% or less of total jet fuel related emissions.] • Fuel users: Airlines, aircraft owners, and the U.S. military operate the aircraft that consume jet fuel and, consequently, are the entities that purchase essentially all jet fuel, which often is one of their largest operating expenses. Accurately tracking fuel consumption is criti- cal for their operations. Also necessary for safe operations is ensuring that the fuel meets specification and acceptance criteria. It is important to have consistent accounting rules so that fuel users can confirm their life-cycle CO2 emissions savings in a transparent and consistent way that also ensures the credibility of the system. Current jet fuel accounting practices enable them to meet these needs for conventional fuels. However, introducing alternative fuels into this system means that fuel users may also have to track additional fuel specifications and sustainability certifications. Effectively doing this will ensure that the alternative fuel components are consistent with their commitments for sustainability targets as well as demonstrate compliance with current or future regulatory requirements and internal sustainability goals. • Local, state, and federal governments: All levels of government have indicated interest in promoting alternative jet fuel development as a means to reduce emissions, stimulate employ- ment, and effectively use available resources. They also have a stake in the environmental impact of aircraft emissions. Tracking systems for alternative jet fuel may be an important means for tracking fuel use by type and ensuring that the varied goals of governmental entities are being met reliably. • Nongovernmental organizations (NGOs): NGOs have an interest in ensuring that airlines, airports, and the aviation industry live up to commitments for emissions reductions and other sustainability attributes. Their interests require quantitative measurements and the reporting of fuel volumes and life-cycle CO2 reduction potential of the alternative fuel component.

Introduction and Motivation 5 • International parties: The International Civil Aviation Organization (ICAO), Airports Council International (ACI), and the International Air Transport Association (IATA) are some of the focal points for the aviation industry’s goals and commitments to sustainability and reduction of life-cycle CO2 emissions. Being able to track total alternative jet fuel use is essential for monitoring progress toward achieving these goals. Table 1 summarizes the reasons stakeholders along the supply chain have for quantifying and tracking alternative jet fuel. Table 1. Stakeholder matrix for alternative jet fuel tracking. Stakeholder Purpose Interests Technical Regulatory Commercial Feedstock suppliers and processors Contract verification, inventory, sustainability certification and reporting Fuel producers Contract verification, inventory, quality, sustainability certification and reporting Fuel handlers, including FBOs, fuel farms, and into- plane operators Contract verification, inventory, quality Airports Regulatory, quality, sustainability certification and reporting Fuel users (e.g., airlines, general aviation, military) Contract verification, quality, sustainability certification and reporting, regulatory Local, state, and federal governments Regulatory, public policy Nongovernmental organizations Community impacts, public policy, sustainability International parties Regulatory, public policy