Tracking Alternative Jet Fuel (2016)

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47 A p p e n d i x A A.1 Sustainability Certification and Chain of Custody, Regulatory A.1.1 U.S. Renewable Fuel Standard In legislation originally enacted in 2005, the U.S. Congress established the Renewable Fuel Standard. It established an accounting mechanism for the production and use of alternative fuels made from renewable biomass. Amendments passed in 2007 updated the RFS’s require- ments, and it is now often referred to as the “RFS2.” The RFS2 has volumetric mandates for the use of renewable fuels in road transportation (shown in Figure 15). These fuels are required to meet reductions in life-cycle37 GHG emissions when compared to conventional petroleum fuel (shown in Table 9). Many alternative jet fuels would potentially qualify for compliance with the RFS2’s mandates, depending on the fuels’ feedstock and life-cycle GHG emissions. The mandate for renewable fuel production is referred to as the Renewable Volume Obliga- tion, and there is an RVO for each category of fuel in the RFS (Figure 15 and Table 9). The RVO for each year is determined based on statute and the EPA’s evaluation of the market. All gallons of renewable biomass fuel produced are assigned Renewable Identification Numbers at the pro- duction facility. Alternative jet fuel is not mandated under the RFS2, but many types of alterna- tive jet fuel are eligible to receive RINs. The EPA developed a software system for managing RIN transactions for compliance with the RFS2 called the EPA Moderated Transaction System. Each gallon of fuel generates an RIN in EMTS, and those are usually bundled into batches. This can be described as a book-and-claim system because once the alternative fuel leaves the production facility, the RINs associated with produced gallons may be conveyed with the fuel or be sepa- rately sold. RINs are financial instruments designed to facilitate compliance with the RFS2, but they do not communicate the environmental attributes of a fuel or represent a greenhouse gas reduction credit. The EPA does not certify or validate RINs, but a voluntary third-party quality assurance program now exists for RINs to reduce the legal risk that improperly generated or fraudulent RINs are used for compliance.38 The value of a RIN depends in part on its D code, which determines its ability to be retired for compliance with an RVO. For an alternative fuel to comply with the RFS2, the fuel must come through an EPA-approved pathway from feedstock to refinery. The production facility self-certifies that its feedstock and processes conform to an EPA-approved pathway. Once the fuel is in finished form (no longer a “feedstock” or “intermediate”), the fuel molecules cease being tracked for compliance pur- poses. RINs are generated by the fuel producer using the EMTS and are then sold to petroleum refiners or fuel importers along with the alternative fuel volume or separately from the fuel. The EMTS acts as a marketplace and tracking mechanism for compliance. Petroleum refiners and fuel importers are the “obligated parties” under the RFS2, who then retire RINs to comply with the RFS2’s RVOs. Fuel blenders are not explicitly obligated parties under the RFS2. After RINs Summary of Sustainability Frameworks and Chain-of-Custody Requirements

48 Tracking Alternative Jet Fuel are retired by the obligated parties, the CoC requirements do not extend to the fuel retailer (air- port fuel farm) or to the fuel user (airplane). For road fuel—as of this report overwhelmingly corn ethanol and soy biodiesel—fuel blenders, transporters, and vendors continue to track the alternative fuel for quality purposes, product differentiation, and blend wall limitations. The RVOs of the RFS, without intervention by Congress to amend, supersede, or revoke the law, are left solely to the EPA’s discretionary authority after 2022.39 The structure and requirements for U.S. biofuels policy after 2022 remain unclear and contentious. A.1.2 Clean Air Act Regulations on GHGs Clean Air Act (CAA) regulations on aircraft GHG emissions may eventually necessitate CoC tracking mechanisms for life-cycle GHG accounting of aviation fuels. As of the time of this Category Eligible Feedstock Required Life-Cycle GHG Reductions RIN Advanced biofuel: unspecified Any renewable biomass except corn starch 50% compared to petroleum baseline D code 5 Advanced biofuel: biomass-based diesel Any renewable biomass except corn starch 50% compared to petroleum diesel baseline D code 4 Advanced biofuel: cellulosic Cellulose, hemicellulose, or lignin 60% compared to petroleum baseline D code 3, or D code 7 Renewable fuel (conventional biofuel) Any renewable biomass including corn starch 20% compared to 2005 petroleum baseline, or from grandfathered ethanol facilities D code 6 Table 9. RFS2 fuels. Source: U.S. Environmental Protection Agency, Office of Transportation and Air Quality, April 2010. National Renewable Fuel Standard Program – Overview, https://www.epa.gov/sites/production/files/2015-09/ documents/rfs2-workshop-overview.pdf. Figure 15. Production mandates for alternative fuels under the RFS2 regulation.

Summary of Sustainability Frameworks and Chain-of-Custody Requirements 49 report’s writing, the CAA aircraft regulation40 is not final, and compliance strategies are still speculative. While the current Advanced Notice of Proposed Rulemaking does not yet mention alternative fuels as a means of reducing GHG emissions, it is possible that this will be added at a future time when the GHG benefits of using alternative fuels are more widely understood. A.1.3 United States Department of Defense U.S. national defense authorizations have included provisions that statutorily require the U.S. DoD to include sustainability criteria—particularly life-cycle GHG values—in its procurement of alternative jet fuels.41,42 The U.S. DoD acquires alternative fuels for strategic reasons. It has its own CoC regulations for aviation fuel in addition to slightly different quality requirements than those prescribed for commercial aviation in ASTM D1655 and ASTM D7566. The DoD has provided important assistance to producers of alternative fuels who may not yet make a cost- competitive product for commercial aviation purposes. The department is generating demand for alternative jet fuel as one of the world’s largest buyers of the fuel. U.S. DoD fuel CoC require- ments may be relevant for commercial airports co-located with military bases or having the National Guard as a tenant. A.1.4 U.S. State of California California has laws pertaining to the CoC of alternative fuels to ensure that sustainability requirements are met. These requirements include improvements to the life-cycle GHG foot- prints of alternative fuel when compared to petroleum fuel. The California Low Carbon Fuel Standard (LCFS) currently excludes fuels used in aircraft;43 however, the aviation industry is working toward having aviation alternative fuels be eligible to generate credits under the LCFS. A.1.5 EU Renewable Energy Directive The EU RED imposes a mass-balance CoC method for the alternative fuel supply chain, including aviation fuel. Any EU RED acceptable voluntary sustainability certification program must include requirements for mass-balance CoC; book-and-claim is not acceptable for EU RED compliance. EU RED does not mandate less carbon-intensive aviation fuel. Instead, reduc- tions in GHG emissions are regulated through the extension of the EU Emissions Trading Sys- tem to the aviation sector. However, emissions reductions in road transportation fuel do apply to ground service equipment used at airports.44 A.2 Sustainability Certification and Chain of Custody, Voluntary The certification programs described in the following have been discussed in more detail in previous reports.45,46,47,48 Critical to the long-term success of any of these sustainability certifica- tion programs is their legitimacy in the eyes of relevant stakeholders.49 Most voluntary programs for sustainability certification require that a PoS document be generated by the fuel producer and then transmitted to the buyer/end user. A proof of sustainability includes an estimate of the life-cycle GHG emissions intensity of the fuel, which some fuel producers consider propri- etary.50 While the following are possible voluntary programs with CoC requirements applying to alternative jet fuels and their feedstocks, only a few of these programs currently are being used to certify jet fuel being dispensed at U.S. airports. This is primarily due to the early stage of com- mercialization of alternative jet fuels. The list of programs is not comprehensive and includes only the programs that are most commonly associated with aviation.

50 Tracking Alternative Jet Fuel A.2.1 Airport Carbon Accreditation51 ACI-NA’s Airport Carbon Accreditation52 program bears an indirect relationship to the deployment of alternative jet fuel at airports. At Level 1, the ACA program certifies airports that have implemented a carbon management policy and reported their airport-specific GHG emissions. ACA Level 2 builds on Level 1 by requiring that an airport establish goals for GHG emission reductions in a carbon management plan. At Levels 3 and 3+, airports are required to quantify, as indirect emissions, the GHG emissions of aircraft during the LTO cycle up to or below an altitude of 3,000 ft.53 The airport reports these aircraft emissions in its GHG inventory as “indirect emissions.” Altering the life-cycle GHG footprint of the fuel used in the LTO cycle may affect the airport’s GHG inventory. At a busy airport, the quantity of indirect aircraft emis- sions from the combustion of petroleum-based fuels could easily dwarf in absolute numbers the airport’s own direct and energy indirect emissions. At Levels 3 and 3+ in the ACA program, airports commit to work with tenants and air carriers on strategies to reduce airport emissions. The introduction of alternative jet fuel at an airport may reduce aircraft LTO emissions below the 3,000-ft ceiling and could help an airport meet its targets for overall GHG emission reductions. Thus the ACA program may provide an incentive for airports to work with air carriers and fuel suppliers to facilitate access to alternative jet fuels and to track the usage and sustainability characteristics of those fuels. A.2.2 Bonsucro54 Bonsucro is an international multi-stakeholder organization established in 2008 to develop and maintain a standard for sustainable production of sugarcane—an important tropical feedstock for biofuels used in the EU, Brazil, and California. The Bonsucro standard applies to the pro- duction and processing of sugarcane and sugarcane products, which can be labor-intensive and compete for land with sensitive ecosystems such as rainforests. Aviation fuel producer Amyris’ sugarcane feedstock for its farnesene additive conforms to both the Bonsucro and RSB standards.55 Bonsucro allows for mass-balance, physically segregated, and book-and-claim CoC methods. A.2.3 ISO 1306556 The International Organization for Standardization (ISO), an independent nongovernmental membership organization and the largest developer of voluntary international standards,57 in 2015 published ISO 13065, Sustainability Criteria for Bioenergy. This standard provides a frame- work for considering environmental, social, and economic aspects that can be used to evaluate and compare bioenergy production and products, supply chains, and applications. It is not clear whether the standard will be used for certification purposes. A.2.4 International Sustainability and Carbon Certification58 The ISCC program began in 2006 as a project of the German Federal Ministry of Food, Agri- culture, and Consumer Protection. Its bioenergy program was developed to comply with the EU RED but has since expanded, with voluntary certification offerings workable in any jurisdiction. Its criteria can be applied to a multitude of feedstocks for alternative jet fuel and include specific certification criteria based on the stage of the supply chain and final product. The ISCC standard can use a mass-balance or physically segregated CoC method, but it does not allow book-and- claim. ISCC users are primarily European, but the program now operates as an international multi-stakeholder system and includes feedstock cultivators, processors, traders, end users, and representatives of environmental and social organizations. Participants in the ISCC process depend on it to fulfill the legal requirements for CoC regard- ing production, processing, utilization, traceability, and GHG emissions of sustainable biomass.

Summary of Sustainability Frameworks and Chain-of-Custody Requirements 51 Although there are more than 9,000 facilities with certificates under ISCC, most of them are involved in the supply chain of European road fuels, and there do not appear to be any producers of aviation fuel listed as certificate holders.59 A.2.5 Roundtable on Sustainable Biomaterials60 The RSB is a nongovernmental, global, multi-stakeholder coalition that promotes the sustain- ability of biomaterials and publishes a set of standards to which alternative jet fuels may be certi- fied sustainable. RSB standards can apply to many forms of biomass whose processed materials are incorporated into many different products, including fuels. The RSB certification system is based on 12 principles encompassing environmental, social, and economic criteria and indica- tors. RSB certification operates globally and includes organizations from all phases of the alterna- tive jet fuel chain of production.61 The RSB framework currently allows for physically segregated and mass-balance CoC approaches. An RSB book-and-claim approach is under development. The Sustainable Aviation Fuel Users Group (SAFUG)62 has cited RSB as an exemplary source for certification and associated CoC requirements. SAFUG is made up of 28 airlines and five related companies.63 Member airlines, which are based in North America, Europe, the Middle East, Asia, and Oceania, are committed to the “development, certification, and commercial use of environmentally and socially sustainable aviation fuel.”64 As examples of RSB certification, Amyris has received RSB certification for its Brazilian opera- tions.65 Amyris’ farnesene fuel additive can be blended up to 10% with petroleum Jet A under ASTM D7566. U.S. fuel producer AltAir Fuels is currently seeking RSB certification for its opera- tions supplying fuel to LAX airport under a contract with United Airlines.66 Airline KLM has used a RSB-certified alternative fuel in the United States made by Dynamic Fuels, LLC from used cooking oil feedstock.67 The fuel was loaded into flights at New York’s JFK Airport bound for Amsterdam Schiphol.68 SkyNRG currently supplies an RSB-certified used-cooking-oil-based fuel to KLM’s operations at Schiphol Amsterdam Airport,69 and all users of the common fuel supply at Oslo Airport Gardermoen70 and Karlstad Airport.71 As of the time of this report’s writ- ing, five entities involved in the production of jet fuel have been certified by RSB.72 A.2.6 Roundtable on Responsible Soy73 Applicable on a worldwide level, the Roundtable on Responsible Soy (RTRS) standard for responsible soy production is designed to ensure that soy production is environmentally correct, socially appropriate, and economically feasible. Concerns exist about land-use change to grow soy, which is a feedstock for biodiesel and a potential feedstock for alternative jet fuel. The RTRS standard is designed to guard against deforestation of the rainforest to grow soy, particularly in South America. The RTRS allows for physical segregation and mass-balance CoC methods.74 A.2.7 Roundtable on Sustainable Palm Oil75 Started in 2004, the Roundtable on Sustainable Palm Oil (RSPO) has developed standards for the production of palm oil and CoC certification. Palm oil production has grown significantly for use in food and fuel since the 1990s. Palm oil plantations in Southeast Asia use land that would otherwise be rainforests and habitat for orangutans; as result, there is a demand for palm oil that does not come from deforested lands. Fuel producer Neste Oil planned to supply alter- native jet fuel made from palm oil to airline FinnAir in 2011 but discontinued the initiative over sustainability concerns.76 Airline Garuda Indonesia planned to start blending palm-oil–derived jet fuel with conventional Jet A in 2016.77 The RSPO certifies physically separated supply chain operators to its standard but also has programs that allow for book-and-claim and mass-balance CoC methods.78