Why do we not consider Sustainable Aviation Fuel as a exogenous factor?

The aviation industry faces a formidable challenge in aligning with the Paris Agreement's climate objectives. The inherent energy-to-weight requirements of flight render current battery technology insufficient for electrification, particularly for long-haul routes. Consequently, Sustainable Aviation Fuels (SAF) have emerged as a proposed solution to decarbonize air travel. The European Union, for instance, has outlined a roadmap aiming for a specific percentage of SAF blending by 2050.

However, at Viable Pathway, we do not classify SAF adoption as an external trend in our emissions modelling. This decision stems from the limited availability and higher costs of SAF compared to conventional kerosene. Currently, airlines offering SAF options often charge a premium to customers willing to pay for reduced emissions, a practice reminiscent of purchasing renewable electricity.

In emissions accounting, particularly under the Greenhouse Gas (GHG) Protocol, there's a distinction between location-based and market-based reporting. Location-based reporting calculates emissions based on the average emission intensity of the power grid in a specific area, reflecting the actual energy mix consumed. In contrast, market-based reporting accounts for emissions based on the specific energy purchases an organization makes, such as renewable energy certificates or power purchase agreements. This method allows companies to claim lower emissions by investing in renewable energy, even if the physical electricity consumed is from mixed sources.

The SAF model shares similarities with this market-based approach. When corporations, like McKinsey, purchase SAF to mitigate their emissions, they are effectively engaging in an accounting exercise rather than facilitating a direct, widespread substitution of jet fuel. Given the current SAF market dynamics, it would contravene GHG accounting principles for firms not investing in SAF to account for these emission reductions. This would be analogous to reporting zero emissions for market-based electricity without securing Guarantees of Origin or committing to power purchase agreements.

Therefore, within Viable Pathway's framework, the adoption of SAF is categorized as an internal action that firms can undertake to reduce their emissions. The only exogenous improvements we consider for aviation are the anticipated efficiency gains from advancements in engine technology and aerodynamics. This approach ensures that emission reductions are attributed accurately and transparently, maintaining the integrity of our modelling and supporting firms in making informed decisions on their path to net-zero.