Tracking Alternative Jet Fuel (2016)

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18 C h a p t e r 3 3.1 Introduction As discussed in Chapter 2, the most common approaches for tracking alternative fuels are physical segregation, mass-balance, and book-and-claim. In addition, hybrid approaches com- bining these mechanisms are possible. For example, a mass-balance approach could be employed up to the point where alternative fuel is blended with conventional jet fuel or delivered to an airport fuel farm. From that point forward, a book-and-claim method could be used. These tracking mechanisms are explained in detail in the following. Note that this chapter covers only the supply chain downstream from the producer of alter- native fuel. The upstream components of alternative fuel production include the cultivation or collection of feedstock, any intermediate processing, and transportation of the resulting material to the location where fuel is produced. The details of the upstream portion of the alternative jet fuel supply chain vary depending on the type of feedstock used. Although important, the main interest of both airports and fuel purchasers in the upstream processes is the knowledge that the sustainability aspects of the alternative fuel have been reviewed and certified for sustainability by a third party. Evidence of certification of the participating operators in the supply chain is publicly available information and does not need to accompany fuel delivery documentation. Evidence of the downstream certification of the sustainability of alternative fuel, on the other hand, does need to be conveyed to the purchaser through documentation associated with each purchase and hence is the focus of this chapter. (The descriptions in this chapter assume that the buyer is purchasing the physical fuel as well as the sustainability attributes associated with it. The researchers have not considered a case in which a buyer is just buying the sustainability credits associated with a fuel without buying the fuel.) 3.2 Detailed Presentation of Tracking Mechanisms 3.2.1 Physical Segregation Overview Physical segregation means that at no point is certified alternative fuel or alternative fuel blend commingled with noncertified fuel.31 Common supply chain equipment such as tanks, rail cars, trucks, barges, and pipelines that are used to transport various liquids can be used with physical segregation as long as sufficient controls are followed to prevent commingling of the alternative fuel with noncertified batches of fuel. In this CoC method, the airport fuel farm would most likely need to keep a separately designated tank for alternative fuel stor- age, or alternative fuel would have to be trucked directly from the blending location to the aircraft wing. Detailed Discussion of Tracking Mechanisms

Detailed Discussion of tracking Mechanisms 19 Figure 8 shows the downstream movement of fuel from the fuel producer to the wing of the aircraft and the corresponding flow of information from the fuel producer to the blender, fuel transporter, fuel farm operator, airport fuel service provider, and the airlines. Gray areas indicate facilities on airport property; boxes with thicker lines indicate new infrastructure. As the figure shows, physical segregation completely isolates blended alternative jet fuel from conventional fuel after the blending step, creating two separate pathways from production to wing. The box second from the left at the bottom represents the alternative jet fuel producer. From this box, the path of the produced fuel and accompanying sustainability information are tracked to the airlines as fuel purchasers and tracked to the airport. After production, neat alternative fuel must be blended before it can complete its journey to the aircraft wing. Blending is shown as taking place at a location between the production facility and the airport fuel farm, although blending may also be undertaken at the production facility or at the fuel farm itself if desired for logistical purposes. However, the blending location does not change the require- ments for physical segregation. Physically segregated blended alternative fuel will be transferred to dedicated tanks at the airport tank farm. From there, the fuel is ready to be delivered to the aircraft via segregated infrastructure such as dedicated refueler trucks. The sustainability information associated with the alternative fuel can follow the same path to the airport as the physical molecules. This can be in the form of a separate document [e.g., a proof of sustainability (PoS) form], or it can be included as part of the documentation associated with the physical fuel. For example, if the fuel is shipped by truck, additional information on the sustain- ability attributes of the fuel can be added to the bill of lading (BOL). Alternatively, sustainability information could be transmitted with invoicing information instead of with the alternative fuel. Figure 8. Downstream portion of the alternative jet fuel supply chain using the physically segregated CoC method.

20 tracking alternative Jet Fuel The fuel farm operator takes receipt of the alternative fuel and any associated documentation, including the PoS form, if available. This information is then forwarded to the airline along with fuel inventory and consumption information. The airport operator may obtain summaries of alternative fuel use directly from the airline or the fuel farm operator. Infrastructure and Functional Elements The main infrastructure and functional elements required to implement this tracking mecha- nism are: 1. Fuel delivery mechanism: The need to keep the fuel segregated at all times favors fuel deliv- eries by truck, rail, and, to some extent, barge. Pipeline delivery of segregated fuel would be more difficult to achieve unless there were dedicated pipeline access to the airport from a refinery or terminal and the ability to physically ship and keep batches of alternative jet fuel separated. 2. Fuel logistics at the airport: Dedicated storage and refueling trucks. 3. Blending location: Dedicated blending tanks with sufficient storage capacity to keep the neat alternative fuel and the blended fuel segregated. 4. Data aggregation and management: Airport fuel-farm operators need to track deliveries of alternative fuel into airport storage and loading of alternative fuel into aircraft. The informa- tion should allow fuel buyers to reconcile the amount of alternative fuel purchased with vol- umes actually loaded into their aircraft. Given appropriate data-sharing agreements between the airport operator and fuel buyers, the fuel farm operator would be in a position to share all or part of this information with the airport operator. Existing fuel tracking and inventory practices, such as those described in Spec 123, could be the basis for developing a data aggre- gation and management system for alternative fuels. 5. Auditing requirements: Auditing by the purchaser of alternative jet fuel may be performed at two levels. First, monthly reconciliation reports may be audited on a periodic basis to confirm that volumes and types of alternative fuels received at the fuel farm match invoiced amounts and that purchased fuel meets the sustainability requirements specified by the purchaser. Second, on a periodic basis, an audit of the producer of alternative fuel may be performed to ensure that the facility selling alternative fuel complies with applicable voluntary certifica- tion and regulatory requirements. This audit may be performed by individual alternative fuel purchasers or by an industry organization representing them. Data Items The main data items that might be necessary for implementing a tracking mechanism based on physical segregation are: 1. Physical supply: For transportation by truck and rail, shippers complete a BOL that provides information required by U.S. DOT for common carriers. This documentation may physically accompany the shipment or may be made available electronically through a transportation provider’s website. For pipeline shipments, meter tickets are typically provided. In addition to this information, the shipment may be accompanied by an RCQ or COA. This documentation may change hands as the product flows through the supply chain and must accompany the fuel as it is received by the fuel farm operator at the airport. The data with these documents may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location, and blending date; – Alternative fuel pathway identifier (ID)32 or production facility name;

Detailed Discussion of tracking Mechanisms 21 – Alternative fuel feedstock type and production process; and – CoC method. These data may be included as part of the quality documents (e.g., RCQ/COA) or in a sepa- rate document. 2. Purchasing: Invoices reflecting the sale of the alternative fuel should be generated by the producer and delivered to the buyer. Invoices do not need to travel with the physical fuel and can be transmitted directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location, and blending date; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; and – Price. Alternatively, a PoS form with the sustainability information listed here can be attached to invoices regularly used for conventional jet fuel. 3. Airport inventory: The fuel farm operator maintains inventory of fuel and alternative fuel by keeping track of fuel deliveries and disbursements. As described previously, fuel deliveries are recorded via BOLs or pipeline meter tickets. Fuel tickets keep track of fuel loaded into individual aircraft. Inventory reports and copies of fuel tickets are routinely forwarded to fuel buyers. Information on fuel disbursement tickets (FDTs) may include: – Date and location; – Aircraft tail number and flight number; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location, and blending date; – Alternative fuel pathway ID or production facility name; and – CoC method. 4. Chain-of-custody information: The producer of the alternative fuel is responsible for com- pleting a PoS form and delivering it to the purchaser of the fuel. The PoS form may accom- pany the physical fuel as it is transported to the airport fuel farm, or it may be sent directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Transportation mode to delivery point; – Batch number of alternative fuel; – Batch number of conventional fuel used for blending; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location, and blending date; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; – Estimated greenhouse gas emissions associated with the alternative fuel (grams of CO2e/MJ and grams of CO2e/gal); 33 – Estimate of life-cycle assessment (LCA) CO2e footprint for the blended fuel; – Sustainability standard to which the alternative fuel complies; – Name of the third-party certification body; – Applicable on-product claim of sustainability; and – If desired, credits associated with the alternative fuel (e.g., RIN numbers).

22 tracking alternative Jet Fuel Roles and Responsibilities The main roles and responsibilities associated with implementing a tracking mechanism based on physical segregation are shown in Table 4. Some fuel farm stakeholders feel that physical tracking of the alternative fuel molecules should cease upon arrival of the fuel at the airport fuel farm. Continued tracking would place consider- able administrative burden on the fuel farm operator in addition to necessitating a dedicated storage tank and a dedicated fuel dispensing truck. Physical segregation of blended alternative Tracking System Element Role Responsibility Associated with Tracking Alternative Fuels Producer of alternative fuel - Produce alternative fuel and ensure that it meets quality and sustainability requirements - Coordinate transportation of alternative fuel to delivery location - Generate and transmit physical supply documents, invoice, and PoS form Blender - Blend neat alternative fuel with conventional Jet A and ensure that alternative fuel blend meets the D7566 specification - Coordinate transportation of blended fuel to next delivery location - Generate and transmit physical supply document for blended fuel - Transmit PoS form associated with alternative fuel Transporter of alternative fuel - Transport alternative fuel - Transmit physical supply documents - May transmit invoice and PoS form associated with alternative fuel Fuel farm operator - Oversee fuel quality control - Manage inventories at airport fuel farm - Receive physical supply documents - May receive invoice and PoS form associated with alternative fuel - Archive physical supply documents and fuel tickets - Maintain fuel farm inventory - Provide inventory reports on a regular basis Into-plane operator - Take fuel from fuel farm and deliver it to the aircraft - Generate fuel tickets associated with fuel loadings into aircraft - Provide copies of fuel tickets to fuel farm operator and fuel buyer Airline - Purchase alternative fuel - Define tracking requirements for alternative fuel - Receive fuel inventory reports from tank farm operator and fuel tickets from into-plane operator and reconcile with invoices - Can generate reports associated with use of alternative fuel and related sustainability information Airport operator - May prepare summaries of alternative fuel usage - Manage communications - May arrange with airlines to share volume of alternative fuel and sustainability information - May record aggregate usage of alternative fuels by all airlines at the airport - May report usage of alternative fuel as part of airport emissions inventories - May inform relevant stakeholders of known environmental benefits from usage of alternative jet fuels at airport Table 4. Summary of main roles and responsibilities for physical segregation.

Detailed Discussion of tracking Mechanisms 23 fuel at the airport fuel farm is not necessary from a safety or quality perspective since the fuel must conform to ASTM D1655 just like 100% conventional fuel, meaning that it is as safe as conventional fuel to be transported, stored, and dispensed using common airport fuel-farm infrastructure and equipment. 3.2.2 Mass-Balance Overview In the mass-balance approach, the fuel producer documents the physical mass (e.g., met- ric tons or volume convertible to mass) of sustainability-certified fuel shipped in a batch. The batch may also contain noncertified fuel whose sustainability characteristics are not tracked.34 Once commingled, the molecular identity of the certified alternative jet fuel is lost, but documentation of the mass of certified fuel present in the batch continues to be tracked through the supply chain. Fuel producers who use the mass-balance CoC method must maintain an accounting balance of certified fuel sold versus certified fuel produced. The balance of alternative fuel input and output can be accounted for over a discrete period or continuously. For example, if the period for balancing is 1 month, a fuel producer that makes 50,000 gallons of certified fuel over the course of a month may only sell 50,000 gallons of certified fuel in that same month. Within the fuel producer’s accounting system, the certified fuel is accounted for separately from any noncertified fuel shipped in the same batch. The mass of certified fuel produced must equal or exceed the mass of certified fuel sold over the balancing period.35 The length of the balancing period is defined in third-party certification program rules. Figure 9 shows the movement of alternative fuel from the producer to the wing of the aircraft and the corresponding flow of information from the fuel producer to the airport fuel service provider, to the fuel purchaser, and to airport management. In the diagram’s lower left corner, the box labeled “3rd Party Alt. Fuel Certification” represents the organization that certifies the upstream portion of the alternative fuel supply chain. The box second from the left at the bottom of the figure represents the alternative jet fuel pro- ducer. After production, neat alternative fuel must be blended before it can complete its journey to the aircraft wing. Blending may take place at the production facility, at another location near the airport, or at the airport tank farm. Figure 9 illustrates a situation where alternative jet fuel is blended after leaving the fuel production site and is then transported to airport storage and dispensing tanks. In the mass-balance approach, the mass (or volume convertible to mass) of sustainability-certified alternative fuel included in any batch is documented. This information accompanies the blended alternative fuel to the airport fuel farm. There are two possible fates for a mass-balance fuel batch once it reaches the airport fuel farm. The first possibility is that the identity of the batch is preserved and the fuel is transferred to a tank or tanks dedicated to alternative fuel dispensing. In this option, it remains possible for the owner of the fuel to take delivery of fuel from a tank from which the mass of alternative jet fuel is known because each addition to the tank is composed of batches of mass-balance fuel that contain a known amount of sustainability-certified alternative jet fuel. In many respects, this CoC method resembles physical segregation because the identity of the fuel is maintained to the fuel farm tank level. In theory, if all batches of mass-balance fuel delivered to the tank were of identical volume and each time contained the same volume of alternative fuel, then the airlines into whose planes the fuel was dispensed could know the exact proportion of alternative fuel that was consumed by each flight. The second possible fate for a mass-balance batch of alternative fuel is that it is treated as any other fuel received by the fuel farm and assigned to shared storage. In this case, the identity of the certified alternative fuel is lost at the point that it enters the common fueling system. The fuel purchaser still

24 tracking alternative Jet Fuel receives information about the mass (or volume convertible to mass) of alternative fuel received at that airport location but is no longer able to follow the molecules into the wings of its aircraft or those of any other aircraft operator receiving fuel from common fuel-farm tanks. The sustainability information associated with the alternative fuel can follow the same path to the airport as the physical molecules. This can be in the form of a separate document (e.g., a PoS form) or it can be included as part of the documentation associated with the physical fuel. For example, if the fuel is shipped by truck, additional information on the sustainability attributes of the fuel can be added to the BOL. If the fuel is shipped by pipeline, transmitting the sustain- ability information may be more challenging since the meter tickets associated with pipeline deliveries use a standardized format that would need to be changed. Alternatively, sustainability information could be transmitted with invoicing information instead of with the alternative fuel. The fuel farm operator takes receipt of the alternative fuel and any associated documentation, including the PoS form. This information is then forwarded to the airlines along with fuel inven- tory and consumption information. The airport operator may obtain summaries of alternative fuel use directly from the airline or the fuel farm operator. Infrastructure and Functional Elements The main infrastructure and functional elements required to implement a mass-balance tracking mechanism are: 1. Fuel delivery mechanism: Unless the option of identity preservation to a final dispensing tank is selected, mass-balance batch shipments may use any fuel delivery mechanism. If identity Figure 9. Downstream portion of the alternative jet fuel supply chain using the mass-balance CoC method.

Detailed Discussion of tracking Mechanisms 25 preservation to a final dispensing tank is desired, the need to keep the fuel segregated until deliv- ery favors fuel deliveries by truck, rail, or barge. Pipeline delivery of segregated fuel would be more difficult to achieve with identity preservation unless there were dedicated pipeline access to the airport from a refinery or terminal and the ability to physically ship and keep batches of alternative jet fuel separated. 2. Fuel logistics at the airport: Use of common tanks and dispensing methods is possible except in the case of identity preservation to the final dispensing tank. In that case, dedicated storage and refueling trucks would be needed. 3. Blending location: Dedicated blending tanks with sufficient storage capacity to keep the neat alternative fuel and the blended fuel segregated. 4. Additional fuel logistics infrastructure: Except where identity preservation is desired, no additional fuel handling, storage, and distribution infrastructure is required. 5. Data aggregation and management: Airport fuel-farm operators need to track deliveries of alternative fuel into airport storage and loading of alternative fuel into aircraft. In the case where the identity of mass-balance fuel batches is preserved to an airport dispensing tank, and the fuel buyer is interested in identity preservation all the way to the wing of the aircraft, into-plane operators should provide fuel tickets representing alternative fuel loaded into indi- vidual aircraft. Given appropriate data-sharing agreements between the airport operator and fuel buyers, the fuel farm operator would be in a position to share all or part of this informa- tion with the airport operator. Existing fuel tracking and inventory practices, such as those described in Spec 123, could be the basis for developing a data aggregation and management system for alternative fuels. 6. Auditing: There are two levels of auditing that could be performed by the purchaser of alter- native jet fuel. First, monthly reconciliation reports should be audited on a periodic basis to confirm that volumes and types of alternative fuels received at the fuel tank farm match invoiced amounts and that purchased fuel meets the sustainability requirements specified by the purchaser. Second, on a periodic basis, an audit of the producer of alternative fuel could be performed to ensure that the facility selling alternative fuel complies with applicable voluntary certification and regulatory requirements. This audit may be performed by individual alter- native fuel purchasers or by an industry organization representing them. Data Items The main data items necessary for implementing a tracking mechanism based on mass- balance are: 1. Physical supply: For transportation by truck and rail, shippers complete a BOL that provides information required by U.S. DOT for common carriers. This documentation may physically accompany the shipment or may be made available electronically through a transportation provider’s website. For pipeline shipments, meter tickets are typically provided. In addition to this information, the shipment may be accompanied by an RCQ or COA. This documentation may change hands as the product flows through the supply chain and must accompany the fuel as it is received by the fuel farm operator at the airport. The data for tracking alternative fuels may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name;

26 tracking alternative Jet Fuel – Alternative fuel feedstock type and production process; and – CoC method. These data may be included as part of the quality documents (e.g., RCQ/COA) or in a separate document. 2. Purchasing: Invoices reflecting the sale of the alternative fuel should be generated by the producer and delivered to the buyer. Invoices do not need to travel with the physical fuel and can be transmitted directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; and – Price. Alternatively, a PoS form with the sustainability information listed here can be attached to invoices regularly used for conventional jet fuel. 3. Airport inventory: The fuel farm operator maintains inventory of conventional and alterna- tive fuel by keeping track of fuel deliveries and fuel disbursements. As described previously, fuel deliveries are recorded via BOLs or pipeline meter tickets. Fuel tickets keep track of fuel loaded into individual aircraft. Inventory reports and copies of fuel tickets are routinely for- warded to fuel buyers. Information on fuel tickets may include: – Date and location; – Aircraft tail number and flight number; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; and – CoC method. 4. Chain-of-custody information: The producer of the alternative fuel is responsible for complet- ing a PoS form and delivering it to the purchaser of the fuel. The PoS form may accompany the physical fuel as it is transported to the airport fuel farm, or it may be sent directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Transportation mode to delivery point; – Batch number of alternative fuel; – Batch number of conventional fuel used for blending; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; – Estimated greenhouse gas emissions associated with the alternative fuel (grams of CO2e/MJ); – Estimate of LCA CO2e footprint for the blended fuel;

Detailed Discussion of tracking Mechanisms 27 – Sustainability standard to which the alternative fuel complies; – Name of the third-party certification body; – Applicable on-product claim of sustainability; and – If desired, credits associated with the alternative fuel (e.g., RIN numbers). Roles and Responsibilities The main roles and responsibilities associated with implementing a tracking mechanism based on mass-balance are shown in Table 5. Tracking System Element Role Responsibility Associated with Tracking Alternative Fuels Producer of alternative fuel - Produce alternative fuel - Generate quality documents (RCQ/COA) - Generate PoS form - Ensure that alternative fuel meets quality and sustainability requirements - Coordinate transportation of alternative fuel to blender - Transmit RCQ/COA to blender - Transmit PoS form and invoice to fuel buyer Blender - Blend neat alternative fuel with conventional Jet A and ensure that alternative fuel blend meets the ASTM D7566 specification - Coordinate transportation of blended fuel to next delivery location - Generate and transmit physical supply document for blended fuel - Transmit PoS form associated with alternative fuel Transporter of alternative fuel - Deliver neat alternative fuel to blender - Deliver blended fuel to airport fuel farm - Meet regulatory requirements for safe transport of alternative fuel - Transmit shipping documentation, COA, and PoS form to fuel buyer Fuel farm operator - Oversee fuel quality control - Manage inventories at airport fuel farm - Record information - Receive alternative fuel shipment and log relevant information - Perform ASTM D1655 quality check on fuel - In case of identity preserved, transfer alternative fuel to specified tank - Provide fuel purchaser with monthly log of delivered alternative fuel and associated sustainability information Into-plane operator - Deliver fuel to aircraft wing - In case of identity preserved, ensure that fuel from segregated tank is transported to the aircraft for loading - Provide fuel ticket to fuel farm operator and fuel buyer Airline - Purchase alternative fuel - Define requirements for alternative fuel - Receive fuel delivery logs from tank farm operator and reconcile with invoices - Provide airport operator summary of information about purchased alternative fuel and its sustainability information Airport operator - May prepare summaries of alternative fuel usage - Manage communications - May arrange with airlines to share volume of alternative fuel and sustainability information - May record aggregate usage of alternative fuels by all airlines at the airport - May report usage of alternative fuel as part of airport emissions inventories - May inform relevant stakeholders of known environmental benefits from usage of alternative jet fuels at airport Table 5. Main roles and responsibilities for mass-balance.

28 tracking alternative Jet Fuel 3.2.3 Book-and-Claim Overview The defining element of the book-and-claim CoC method is the use of credits representing sustainability attributes. “Credit” relates to an accounting unit within a third-party–administered book-and-claim system. Credits in units of one metric ton of neat alternative jet fuel are created when the fuel is produced and are booked with the book-and-claim system administrator. In the book-and-claim system, credits are accounting entries separate from the physical molecules of the underlying neat fuel they represent. Figure 10 illustrates a potential book-and-claim system. It depicts the process from the point that a producer of alternative fuel registers the alternative jet fuel product with the book-and- claim administrator and shows how product credits subsequently flow through to the airlines. The figure demonstrates that the flow of alternative fuel to an airport tank farm and ultimately to the wing of an aircraft is completely separate from the documentation of book-and-claim credits. As in Figure 8 and Figure 9, Figure 10 illustrates a situation where alternative jet fuel is blended after leaving the fuel production site and then is transported to airport storage and dispensing tanks. Information about the transfer of the alternative fuel from common carrier to the airport fuel farm is conveyed on BOLs if shipped by truck or on meter tickets if shipped via pipeline. No sustainability information is required to be sent along with the physical fuel. The book-and-claim system provides the greatest amount of flexibility to the purchaser of alter- native jet fuel. In this system, claims associated with the use of alternative fuel are independent of the physical delivery of fuel sold into the fuel supply chain. Using book-and-claim, a fuel buyer Figure 10. Downstream portion of the alternative jet fuel supply chain using the book-and-claim CoC method.

Detailed Discussion of tracking Mechanisms 29 takes title to all the attributes of alternative fuel but without the obligation to take physical delivery of it. Instead, the fuel produced in this system is commingled with conventional fuel and is treated as such in the supply chain. Infrastructure and Functional Elements The main infrastructure and functional elements that may be required to implement this tracking mechanism are: 1. Fuel delivery mechanism: Alternative fuel shipments under book-and-claim may use any fuel delivery mechanism. 2. Fuel logistics at the airport: Fuel may be stored in common tanks, and all dispensing methods are applicable. 3. Blending location: Dedicated blending tanks with sufficient storage capacity to keep the neat alternative fuel and the blended fuel segregated. 4. Additional fuel logistics infrastructure: No additional fuel handling, storage, or distribution infrastructure is required. 5. Data aggregation and management: The blended alternative fuel is now fully commingled in the supply chain, and it is no longer possible or necessary to track it separately; thus, exist- ing mechanisms for tracking conventional fuel at the airport fuel farm are used. However, a system for tracking the sustainability information associated with the alternative fuel may be needed. These systems are expected to be operated and maintained by the entities performing the certification of the alternative fuel. For example, as mentioned previously, the electricity industry uses book-and-claim for compliance with state-level renewable portfolio standards, with states maintaining a tracking system and database (e.g., WREGIS36). For compliance with the Renewable Fuels Standard, the U.S. EPA maintains the EPA Moderated Transaction System (EMTS) to record all transactions involving RINs. 6. Auditing: The book-and-claim administrator bears primary responsibility for ensuring that sustainability information associated with alternative jet fuel is audited. The actual audits are performed by accredited third-party auditors. One of the purposes of these audits is to ensure that the producer of alternative fuel does not double count fuel production by registering credits for the same fuel that is sold with PoS documentation under another CoC method. Data Items The main data items necessary for implementing a tracking mechanism based on book-and- claim are: 1. Physical supply: No additional documentation from what is currently used for conventional jet fuel is necessary since the alternative fuel is expected to be fully commingled with the conventional fuel. Basic information related to the alternative fuel production, such as manu- facturer and date of last quality certification, is expected to be included in the appropriate documents (e.g., BOLs, pipeline meters, or RCQs/COAs); however, there is no expectation that any sustainability information related to the alternative fuel will be included or transmit- ted along with the physical fuel. 2. Purchasing: Invoices reflecting the sale of the alternative fuel should be generated by the pro- ducer and delivered to the fuel buyer. Invoices are not expected to travel with the physical fuel and can be transmitted directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed;

30 tracking alternative Jet Fuel – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; and – Price. Alternatively, a PoS form with the sustainability information listed here can be attached to invoices regularly used for conventional jet fuel. 3. Airport inventory: No additional documentation from what is currently used for conven- tional jet fuel is necessary because the alternative fuel is expected to be fully commingled with the conventional fuel. 4. Chain-of-custody information: The producer of the alternative fuel is responsible for complet- ing a PoS form and delivering it to the purchaser of the fuel. The PoS form is sent directly to the fuel buyer and does not need to travel with the fuel; thus, it is not expected that the airport fuel- farm operator would have access to this information. The data with the PoS form may include: – Delivery date and location; – Transportation mode to delivery point; – Batch number of alternative fuel; – Batch number of conventional fuel used for blending; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; – Estimated greenhouse gas emissions associated with the alternative fuel (grams of CO2e/MJ); – Estimate of LCA CO2e footprint for the blended fuel; – Sustainability standard to which the alternative fuel complies; – Name of the third-party certification body; – Applicable on-product claim of sustainability; and – If desired, credits associated with the alternative fuel (e.g., RIN numbers). The producer of alternative fuel or the blender is responsible for registering credits equal to the mass of alternative jet fuel produced and sold under the book-and-claim CoC method. Airlines that purchase book-and-claim credits from the producer of alternative fuel or the blender are responsible for reporting their purchases to the book-and-claim administrator within a certain period of time. In addition, airlines may provide summary reports on their annual consumption of alternative fuels and purchase of credits to the public. Roles and Responsibilities The main roles and responsibilities associated with implementing a tracking mechanism based on book-and-claim are shown in Table 6. 3.2.4 Hybrid of Mass-Balance and Book-and-Claim Overview The mass-balance and book-and-claim CoC methods described previously can be deployed not only singly, but also in combination. This is a hybrid approach in which the upstream portion of the supply chain is accounted for using mass-balance. Mass-balance account- ing would also be employed by the neat fuel producer and by all operators until a suitable control point. At the control point, mass-balance accounting ceases and book-and-claim accounting begins. The location of the control point is flexible and should be chosen based on

Detailed Discussion of tracking Mechanisms 31 local conditions. Beyond the control point, sustainability information is not expected to be transmitted further downstream with the alternative jet fuel. The sustainability information and associated credits may be registered with the third-party certification program authority as required by regulation or policy of the chosen framework. These credits, now booked, can be sold or traded to end users of fuel so that they may be claimed. The attraction of the hybrid approach is that it maintains the accounting and traceability advantages of the mass-balance approach throughout most of the supply chain while easing accountability requirements and reducing information gathering and transmitting requirements at and near the point of fuel use. Figure 11 represents the hybrid mass-balance and book-and-claim system. The producer of the alternative fuel is the originator of the physical alternative fuel and receives sustainability Tracking System Element Role Responsibility Associated with Tracking Alternative Fuels Producer of alternative fuel - Produce alternative fuel - Generate quality documents (RCQ/COA) - Register credits - Ensure that alternative fuel meets quality and sustainability requirements - Coordinate transportation of alternative fuel to blender - Transmit RCQ/COA to blender - Transmit registration information to book- and-claim administrator Blender - Blend neat alternative fuel with conventional Jet A and ensure that alternative fuel blend meets the ASTM D7566 specification - Coordinate transportation of blended fuel to next delivery location - Generate and transmit physical supply document for blended fuel - May transmit invoice and PoS form associated with alternative fuel Transporter of alternative fuel - Deliver neat alternative fuel to blender (optional) - Deliver blended fuel to airport fuel farm - Meet regulatory requirements for safe transport of alternative fuel - Transmit shipping documentation and COA to fuel buyer Fuel farm operator - Oversee fuel quality control - Manage inventories at airport fuel farm - Receive fuel shipment and log relevant information (note: at this point, alternative fuel undistinguishable from conventional fuel) - Perform ASTM D1655 quality check on fuel Into-plane operator - Deliver fuel to aircraft wing - Provide fuel delivery ticket to fuel purchaser Airline - Purchase alternative fuel credits - Negotiate credit purchases with producers of alternative fuel - Report credit purchases to the book-and- claim administrator - May publicly report annual summary of purchased alternative fuel credits Airport - Oversee requirements for fuel quality - May prepare summaries of alternative fuel usage - Manage communications - May arrange with airlines to share volume of alternative fuel and sustainability information - May record aggregate usage of alternative fuels by all airlines at the airport - May report usage of alternative fuel as part of airport emissions inventories (note: GHG emissions reporting for use under book-and- claim is still under development) - May inform relevant stakeholders of known environmental benefits from usage of alternative jet fuels at airport Table 6. Main roles and responsibilities for book-and-claim.

32 tracking alternative Jet Fuel information from the third-party certification entity. The fuel and sustainability data are sent along the supply chain until they reach the control point, which is identical to what is done in the mass-balance CoC method. For illustration purposes, the control point in this example is at the point of blending, but it can be elsewhere depending on local conditions. Beyond the control point, Figure 11 demonstrates that the flow of alternative fuel to an airport tank farm and ultimately to the wing of an aircraft is completely separate from the sustainability documentation. In the pure mass-balance CoC method, two variants were possible. The first was a mass- balance approach that documented only the mass of sustainability-certified alternative jet fuel included in any batch. The second variant was the mass-balance approach with identity pre- served, which allowed mass-balance tracking as far down the supply chain as a specific storage tank in a fuel farm. In the hybrid mass-balance/book-and-claim system, only the first method of mass-balance accounting makes sense because the purpose of introducing book-and-claim at the point of fuel usage is to simplify the tracking of alternative fuel molecules from the control point to final dispensing into aircraft. Beyond the control point, the alternative fuel is handled just as conventional jet fuel. Compared to a pure book-and-claim system, the main attribute that the hybrid system offers is the knowledge that given quantities of alternative fuel are delivered to the control point. If the control point were at the airport, then it would be possible to track the alternative fuel molecules to that airport. Using a pure book-and-claim system, it might be difficult to know with certainty the physical fate of any alternative jet fuel batches that have been booked. Figure 11. Downstream portion of the alternative jet fuel supply chain using a hybrid mass-balance and book-and-claim CoC method.

Detailed Discussion of tracking Mechanisms 33 Infrastructure and Functional Elements The main infrastructure and functional elements required to implement this tracking mecha- nism are: 1. Fuel delivery mechanism: Up to the control point, similar conditions as for mass-balance apply; thus, unless the option of identity preservation to the control point is selected, mass- balance batch shipments may use any fuel delivery mechanism. With identity preservation to the control point, the need to keep the fuel segregated at all times favors fuel deliveries by truck, rail, or barge. Pipeline delivery of segregated fuel would be more difficult to achieve with identity preservation unless there were dedicated pipeline access from a refinery or ter- minal to the control point and the ability to physically ship and keep batches of alternative jet fuel separated. Beyond the control point, the fuel would be shipped under book-and-claim rules using any fuel delivery mechanism. 2. Fuel logistics at the airport: Assuming that the control point is upstream of the airport, no modifications to existing infrastructure and handling practices are required. If the control point is at the airport, use of common tanks and dispensing methods is possible, except in the case of identity preservation to the final dispensing tank. In this case, dedicated storage would be needed. 3. Blending location: Dedicated blending tanks with sufficient storage capacity to keep the neat alternative fuel and the blended fuel segregated. 4. Additional fuel logistics infrastructure: Except where identity preservation is desired upstream of the control point, no additional fuel handling, storage, or distribution infra- structure is required. 5. Data aggregation and management: The entity in charge at the control point (e.g., blender or airport fuel farm) would take on the additional responsibilities of becoming a participat- ing operator in an administered book-and-claim system. This status subjects the operator to third-party certification by an approved certification body. Participating operators must submit to an audit in which they demonstrate that they have a management system enabling them to meet applicable sustainability principles and criteria, conduct their operations using a risk management approach, manage inventory in accordance with CoC rules, and conform to all the requirements of the book-and-claim administrator. As with the mass-balance CoC approach, control point operators need to track deliveries of alternative fuel into the facility. This includes information related to physical deliveries as well as PoS. Beyond the control point, the blended alternative fuel is now fully commingled in the supply chain, and it is no longer possible or necessary to track it separately; thus, exist- ing mechanisms for tracking conventional fuel are used. However, a system for tracking the sustainability information associated with the alternative fuel may be needed. These systems are expected to be operated and maintained by the entities performing the certification of the alternative fuel. For example, the U.S. EPA maintains the EMTS to record all transactions involving RINs as part of RFS2. 6. Auditing: Upstream of the control point, the two levels of auditing associated with mass- balance apply: first, monthly reconciliation reports should be audited on a periodic basis to confirm that volumes and types of alternative fuels received at the control point match invoiced amounts and that purchased fuel meets the sustainability requirements specified by the purchaser. Second, on a periodic basis, an audit of the producer of the alternative fuel should be performed to ensure that the facility selling alternative fuel complies with appli- cable voluntary certification and regulatory requirements. This audit may be performed by individual alternative fuel purchasers or by an industry organization representing them. Downstream of the control point, audit requirements for the sustainability information associated with registered alternative jet fuel credits required by the book-and-claim admin- istrator apply. The actual audits are performed by accredited third-party certification bodies.

34 tracking alternative Jet Fuel Data Items The main data elements necessary for implementing a hybrid tracking mechanism based on mass-balance and book-and-claim are: 1. Physical supply: For transportation of the alternative fuel to the control point, the same documentation used for mass-balance applies. The information may be included as part of the quality documents (e.g., RCQ/COA) or in a separate document. This documentation may change hands as the product flows through the supply chain and must accompany the fuel as it is received by the responsible entity at the control point. The data for tracking alternative fuels may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; and – CoC method. Beyond the control point, typical documentation associated with conventional fuel (e.g., BOLs, meter tickets, RCQ/COAs) will accompany the physical fuel, but the sustainability information does not need to be included. 2. Purchasing: As with mass-balance and book-and-claim, invoices reflecting the sale of the alternative fuel should be generated by the producer and delivered to the buyer. Invoices do not need to travel with the physical fuel and can be transmitted directly to the fuel buyer. The data with these documents may include: – Delivery date and location; – Batch number; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; and – Price. Alternatively, a PoS form with the sustainability information listed here can be attached to invoices regularly used for conventional jet fuel. 3. Airport inventory: Unless the control point is at the airport fuel farm, no additional documen- tation from what is currently used for conventional jet fuel is necessary since the alternative fuel is expected to be fully commingled with the conventional fuel. If the control point is at the fuel farm, the fuel farm operator would be in charge of main- taining inventory of both conventional and alternative fuel by keeping track of fuel deliveries and fuel disbursements. As described earlier, fuel deliveries are recorded via BOLs or pipeline meter tickets. Fuel tickets keep track of fuel loaded into individual aircraft. Inventory reports and copies of fuel tickets are routinely forwarded to fuel buyers. Information on fuel tickets may include: – Date and location; – Aircraft tail number and flight number; – Batch number; – Total volume;

Detailed Discussion of tracking Mechanisms 35 – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; and – Alternative fuel feedstock type and production process. 4. Chain-of-custody information: The producer of the alternative fuel is responsible for com- pleting a PoS form and delivering it to the purchaser of the fuel. The PoS form is sent directly to the fuel buyer and does not need to travel with the fuel; thus, it is not expected that the airport fuel-farm operator would have access to this information. The data with the PoS form may include: – Delivery date and location; – Transportation mode to delivery point; – Batch number of alternative fuel; – Batch number of conventional fuel used for blending; – Total volume; – For blends of alternative fuel with conventional fuel: blend ratio, blending location and date, and any other relevant information so that the mass of the alternative fuel component can be computed; – Alternative fuel pathway ID or production facility name; – Alternative fuel feedstock type and production process; – CoC method; – Estimated greenhouse gas emissions associated with the alternative fuel (grams of CO2e/MJ); – Estimate of LCA CO2e footprint for the blended fuel; – Sustainability standard to which the alternative fuel complies; – Name of the third-party certification body; – Applicable on-product claim of sustainability; and – If desired, credits associated with the alternative fuel (e.g., RIN numbers). Note that beyond the control point, credits equal to the mass of alternative jet fuel produced and sold under the book-and-claim CoC method need to be recorded with the appropriate administrator. At the very least, the entity in charge of the control point should be responsible for this. Airlines that purchase book-and-claim credits are responsible for report- ing their purchases to the book-and-claim administrator within a certain period of time. In addition, airlines may provide summary reports to the public on their annual consumption of alternative fuels and purchase of credits. Roles and Responsibilities The main roles and responsibilities associated with implementing a hybrid tracking mecha- nism based on mass-balance and book-and-claim are shown in Table 7.

36 tracking alternative Jet Fuel Tracking System Element Role Responsibility Associated with Tracking Alternative Fuels Producer of alternative fuel - Produce alternative fuel - Generate quality documents (RCQ/COA) - Generate PoS form - Ensure that alternative fuel meets quality and sustainability requirements - Coordinate transportation of alternative fuel to blender - Transmit RCQ/COA to blender - Transmit PoS form and invoice to fuel buyer Blender - Blend neat alternative fuel with conventional Jet A and ensure that alternative fuel blend meets the ASTM D7566 specification - Coordinate transportation of blended fuel to next delivery location - If control point located here, blender would serve as participating operator for book-and- claim framework - Generate and transmit physical supply document for blended fuel - May transmit invoice and PoS form associated with alternative fuel - If blender is the participating operator, transmit registration information to book-and- claim administrator Transporter of alternative fuel - Deliver neat alternative fuel to blender - Deliver blended fuel to airport fuel farm - Meet regulatory requirements for safe transport of alternative fuel - Transmit shipping documentation, COA, and PoS form to fuel farm operator, as appropriate Fuel farm operator - Ensure fuel quality control - Manage fuel farm inventory - If control point located here, fuel farm operator would serve as participating operator for book-and-claim framework - Receive alternative fuel shipment and log relevant information - Perform ASTM D1655 quality check on fuel - If fuel farm operator is the participating operator, transmit registration information to book-and-claim administrator Into-plane operator - Deliver fuel to aircraft wing - Provide fuel delivery ticket to fuel purchaser Airline - Purchase alternative fuel credits - Negotiate credit purchases with producers of alternative fuels - Report credit purchases to the book-and- claim administrator - May publicly report annual summary of purchased alternative fuel credits Airport - May prepare summaries of alternative fuel usage - Manage communications - May arrange with airlines to share volume of alternative fuel and sustainability information - May record aggregate usage of alternative fuels by all airlines at the airport - May report usage of alternative fuel as part of airport emissions inventories (note: GHG emissions reporting for use under book-and- claim is still under development) - May inform relevant stakeholders of known environmental benefits from usage of alternative jet fuels at airport Table 7. Main roles and responsibilities for a hybrid tracking mechanism based on mass-balance and book-and-claim.