Decarbonizing Cement and Concrete: Are Their Emissions Set in Stone?

Key Takeaways

• CORSIA, the program intended to address international aviation emissions, is currently the world’s largest international compliance carbon market, with approximately 200 million tonnes of eligible emissions units (EEUs) expected to be retired for Phase 1 (2024-2026) compliance. 
• Airlines have already begun retiring significant volumes of credits (clean cookstoves and jurisdictional REDD+) toward their Phase 1 obligations ahead of the January 2028 compliance deadline, signaling that the industry is treating CORSIA as a binding policy mandate.
• In addition to the four already approved, a record 25 carbon standards have applied for eligibility to supply credits under Phase 2 (2027–2035), pointing to a diversifying pipeline of credits.
• Legal enforcement of CORSIA at the national level remains uneven. A handful of jurisdictions, including the EU, Japan, Brazil, New Zealand, and Canada, have established compliance regimes, but it is unclear whether other major aviation markets will implement domestic enforcement requirements by 2027.
• As CORSIA matures alongside other compliance and voluntary frameworks, strategic engagement increasingly depends on understanding where eligibility overlaps and where the most value can be found.

Introduction to CORSIA 

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) was established and is managed by the International Civil Aviation Organization (ICAO)—a specialized agency of the UN—and provides a compliance mechanism to reduce emissions from international aviation that do not fall within a single country’s contributions to the Paris Agreement. For years, CORSIA generated more commentary than activity—airlines weren’t required to offset a single tonne of CO₂ emissions (tCO₂) during the pilot phase (2021–2023). That is changing; in early 2026, Singapore Airlines and Japan Airlines retired significant volumes of carbon credits against their Phase 1 (2024–2026) obligations. Increasing authorization announcements showcase the eligible supply steadily entering the market, and 25 carbon standards have applied for Phase 2 (2027–2035) eligibility. As CORSIA becomes an active compliance market, this article explains how the program works, what is driving the current trends, and what to watch as Phase 1 draws to a close.

Who is Covered by CORSIA Phase 1 and Phase 2?

Because emissions from international aviation are not tied to any individual nation, the International Civil Aviation Organization (ICAO) adopted CORSIA in 2016 to complement the Paris Agreement framework and address these emissions. CORSIA applies to international airlines operating flights registered between participating countries. 

• During Phase 1, offsetting obligations apply only to routes between the 130 countries that have voluntarily opted in. 
• From Phase 2, participation becomes mandatory for all 193 ICAO member states, except for those below the aviation activity threshold or classified as Least Developed Countries, Small Island Developing States,  or Landlocked Developing Countries—although they can voluntarily participate. 

Several major aviation markets, including China, that are not participating in Phase 1 will be required to do so from 2027. 

Offsetting Obligations

Airlines are required to offset the portion of their emissions that exceeds the program’s baseline on routes subject to offsetting. The key input is the annual Sectoral Growth Factor (SGF), which reflects how much annual emissions on covered routes have grown above the baseline (set at 85% of 2019 emissions). In simple terms, each airline's offsetting obligation is calculated by multiplying its CORSIA-regulated emissions by the SGF.

For example, an airline that emits 1 million tCO₂ on covered routes in a year when the SGF is 10%, would have an offsetting obligation of 100,000 tCO₂. An airline that emits 500,000 tCO₂ in the same year would have an obligation of 50,000 tCO₂. The actual 2024 SGF was 15.4%, exceeding the baseline and triggering offsetting obligations for the first time since the COVID-induced reduction in international aviation activity. 

Beginning in 2033, CORSIA’s offsetting formula combined the SGF with an individual component that accounts for each airline's own emissions growth. The individual weighting starts at 15% in 2033 (with an SGF weighting of 85%) and rises to 45% by 2035 (SGF 55%). This progressively ties each airline’s obligations to its own emissions trajectory rather than sector-wide trends alone.

Airlines can also reduce their obligations by reporting the use of CORSIA Eligible Fuel (CEF). In order to qualify as CEF, Sustainable Aviation Fuel (SAF) must meet ICAO’s certification criteria. Offsetting remains a lower-cost option than sustainable fuel procurement, and CORSIA obligations are currently not influential drivers of CEF/SAF uptake compared to supply mandates, such as ReFuelEU Aviation. However, these dynamics will evolve as CORSIA matures and SAF prices continue to fall. 

CORSIA Eligible Carbon Credits: Phase 1 and Phase 2 

To determine the eligibility of carbon crediting standards and credits issued under those standards, ICAO's Technical Advisory Body (TAB) reviews applications and recommends approval to the ICAO Council, subject to restrictions on methodologies, vintages, and more granular project elements. Currently, no standard is approved without exclusions. Credits eligible for use under CORSIA are known as Eligible Emissions Units (EEUs).

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TAB broadly excludes some project types across standards, including large-scale grid-connected renewable energy projects and most project-level REDD+ activities. The exclusions reflect TAB's assessments of baselines, safeguards, and quantification gaps. However, these assessments are not static; ICAO updates its determinations as the evidence base improves. For example, in 2025, TAB approved certain direct air capture (DAC) and biochar pathways for the first time.

A record 25 carbon standards—certifying projects from emissions avoidance to engineered carbon dioxide removal (CDR)—have applied for Phase 2 eligibility in the 2026 assessment cycle, reflecting the scale of the opportunity. The International Air Transportation Association (IATA) projected a demand of 170–236 million EEUs for Phase 1 alone; developers are eager to serve this growing market. Assessment results are expected in October 2026.

Article 6 and Corresponding Adjustments

The biggest bottleneck for eligible supply has been requirements relating to Article 6.2 of the Paris Agreement. CORSIA requires that EEUs carry a host country Letter of Authorization (LoA) confirming that the host country will not count the underlying mitigation toward its Nationally Determined Contribution (NDC). This prevents double counting between CORSIA and national emission inventories, but it also means eligible supply depends on host country authorization, not just meeting methodological requirements. Authorized credits are called Internationally Transferred Mitigation Outcomes (ITMOs). 

To manage the risk that a host country fails to apply the promised corresponding adjustment, projects must secure legally enforceable insurance policies that either provide replacement EEUs or funds to secure them. Several providers have been approved to insure EEUs registered by Gold Standard and Verra. 

Insurance requirements do not apply when the host country has already confirmed the corresponding adjustments in its mandatory Paris Agreement reporting. For example, in March 2026, Madagascar submitted a Biennial Transparency Report (BTR) and annual information report that reflect the application of corresponding adjustments to CORSIA-eligible clean cookstoves credits listed on the Verra registry. According to Verra, BTR accounting is the “highest level of assurance” that ITMOs will not be double counted. 

The Enforcement Challenge

With the authorization bottleneck loosening, market attention is turning to demand. Critically, ICAO has no direct enforcement power; for CORSIA to work, participating countries must pass laws requiring airlines to comply with its requirements. Under CORSIA rules, airlines must retire their Phase 1 EEUs by January 2028, but most are not yet subject to legal sanctions for failing to comply. Where regulations do exist, it remains unclear whether penalties will be stringent enough to matter, or whether they will be enforced at all.

Where legal enforcement of offsetting requirements does exist, it varies by design. For example, in Brazil, failure to comply attracts a penalty of BRL 50/tCO₂ (US$10/tCO₂) and an administrative fine. Meanwhile, the Canadian Aviation Regulations impose administrative fines capped at CAD 25,000 (US$18,000) per infraction, but there is no specific fine for each tCO₂ not offset. However, the absence of a statutory penalty framework does not necessarily mean compliance will not be enforced. For example, New Zealand manages CORSIA participation through an administrative Memorandum of Understanding with Air New Zealand, rather than a dedicated legal regime (though this will change from 2027). Similar informal arrangements may be more common than the legislative record suggests.

According to 2024 data, US-based airlines account for around 15% of CORSIA-covered emissions. However, there is no indication that the federal government will implement CORSIA penalties under the current administration. It is unclear how non-compliance by a major economy will impact market confidence or enforcement by other governments, but uncertainty about US participation in multilateral climate programs is not new. 

What to Watch

• Global enforcement: As Phase 2 approaches, the prospects for CORSIA enforcement in key aviation markets will become clearer. China, which has not participated in the voluntary phase and has raised objections to CORSIA’s design on grounds of fairness, presents an uncertain picture for domestic transposition. The UK government has consulted on a draft legal amendment that would penalise non-compliance for UK airlines at £100/tCO₂ (US$130/tCO₂), but has not published updates since February 2025. 

• EU Emissions Trading Scheme (ETS) update: In July 2026, the European Commission proposed to expand the ETS to address emissions from flights departing the European Economic Area (EEA) to destinations within 5,000 km. To avoid double charging emissions also regulated under CORSIA, the Commission proposed to deduct CORSIA costs from airlines’ ETS obligations. While the Commission flagged concern about the stringency of CORSIA eligibility criteria, the proposed rules would not impact demand for Phase 1 EEUs. Still, it is worth watching for future restrictions on which credits EU airlines can use for CORSIA, whether in Phase 1 or 2. 

• Supply financing vehicles: The LEAF Coalition—which purchases credits verified under the CORSIA-eligible ART TREES standard—has signed over US$1.5 billion worth of purchase agreements with host countries. The Forest Carbon Partnership Facility (FCPF) and BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL), both CORSIA-approved for Phase 1 in early 2026, have built jurisdictional REDD+ pipelines across dozens of countries. As projects mature, it will be worth watching how issued credits are marketed across compliance and voluntary channels.

Strategic Considerations

Avoided emissions credits dominate early CORSIA supply—and consequently demand—principally from avoided deforestation and clean cooking projects. As there is no regulatory premium for higher-cost CDR, this is not surprising. But as the market matures and supply diversifies, airlines are likely to begin differentiating on geography, co-benefits, and environmental performance. Corporate interest is growing in projects that abate non-CO₂ superpollutants, due to their outsized near-term climate impact. As many of these projects are based in countries actively issuing LoAs, this may soon translate into a supply of superpollutant EEUs. Some airlines are reluctant to procure aggressively now, anticipating the upcoming availability of higher-quality credits.

Credits that hold value across multiple frameworks could carry a strategic premium. A credit also eligible for Singapore's carbon tax, Switzerland's CO₂ Act, or SBTi claims may offer more durable demand than one tied to a single use case. While specific requirements vary significantly, we are beginning to see convergence around broad principles, such as the need for Article 6 authorization for credits used in compliance markets tied to NDCs. Procurement and project development strategies could begin to favour credits that confer wider market optionality. 

The precondition for all of this is policy stability. Longer-term offtake agreements, portfolio strategies, and meaningful investment in project development depend on confidence that CORSIA rules will hold. Efforts to soften emissions regulations in response to energy price shocks are now testing this confidence, from proposed changes to soften the EU ETS to Singapore's deferral of its SAF levy. Tracking price signals, enforcement developments, and authorization trends will be essential for identifying firm demand and where the opportunities lie.

Conclusion

Effective engagement with CORSIA requires more than developing quality projects. It means understanding methodological eligibility requirements, navigating Article 6.2 authorization processes, tracking a network of overlapping national regulations, and staying ahead of a rapidly evolving market landscape. Relae (formerly Carbon Direct) brings together policy, market, and scientific expertise to help clients on all of these fronts.

Frequently Asked Questions

Which carbon credits can airlines use for CORSIA compliance?

CORSIA Eligible Emissions Units (EEUs) must be issued by crediting standards approved by ICAO's Technical Advisory Body. Every approved standard currently has exclusions on certain methodologies and project types, so eligibility is granular rather than blanket. EEUs must also have a host country Letter of Authorization confirming a corresponding adjustment under Article 6.2 of the Paris Agreement.

Is CORSIA actually enforceable?

In all phases, CORSIA obligations are legally binding when a country writes them into domestic law. Countries participating in Phase 1 are expected to do this, but not all have, and enforcement remains uncertain in several key aviation markets (e.g., the United States). Even where enforcement exists, penalty regimes vary significantly in stringency and design. 

How does the July 2026 EU ETS proposal affect CORSIA?

The European Commission's proposal to expand ETS coverage to more flights does not reduce demand for CORSIA credits. While it would lead to overlap between flights covered under CORSIA and the ETS, as proposed, airlines could have CORSIA costs effectively deducted from their ETS allowance obligations. However, the Commission has signalled continued scrutiny of CORSIA's effectiveness, which could shape future limits on the credits EU airlines are allowed to use.

Key Takeaways

• The Greenhouse Gas (GHG) Protocol’s Actions and Market Instruments (AMI) proposal would formally recognize market-based instruments across emissions scopes for the first time, within Statement 2.
• The proposal substantially expands opportunities for companies to report lower emissions from purchasing market-based instruments for low-carbon fuels (LCF), such as book-and-claim environmental attribute certificates (EACs) for sustainable aviation fuel (SAF) and renewable natural gas (RNG).
• Companies purchasing or already holding market-based instruments for SAF, RNG, and other low-carbon fuels should begin mapping those instruments to the AMI’s proposed reporting structure now, before the standard is finalized.

The Current Reporting Problem With Low-Carbon Fuels

A low-carbon fuel is defined as a fuel whose lifecycle greenhouse gas (GHG) emissions are lower than those of a relevant, use-case-specific fossil fuel baseline. Most LCFs used today are created from biogenic sources like agricultural residues, used cooking oil, or landfill gas, and their use often results in reduced GHG emissions due to the fact that the CO₂ they release during use is biogenic and not fossil.

Consumers of LCFs face a reportability problem. Many buyers track LCF purchases through market-based instruments such as book-and-claim and mass balance EACs. These instruments unbundle environmental claims from physical molecules to facilitate investment in LCFs when direct provision of the molecule is infeasible. However, the current GHG Protocol only permits the use of market-based tools for electricity-based emissions. 

Currently, companies cannot recognize the emissions benefit of an LCF purchase unless they physically receive and combust the fuel. Given that sustainable aviation fuel, renewable natural gas, and other LCFs typically flow into shared pipeline and distribution infrastructure rather than being delivered to buyers as distinct physical molecules, direct delivery is often not achievable in practice. This limitation constrains demand growth in the voluntary market.

The value of LCFs to voluntary buyers is the sustainability claim attached to the molecule, not the molecule itself. Without a credible reporting framework for market-based instruments, buyers struggle to justify LCF procurement. Producers, in turn, may face a market where buyer reluctance limits commercial opportunities for scale-up. Non-reportability inhibits one of the few available levers to incentivize voluntary investment in climate solutions.

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How Does the AMI Proposal Address Non-Reportability?

The Actions and Market Instruments (AMI) proposal introduces a four-statement reporting framework, with all four statements relevant to elements of LCFs. Together, these statements give organizations across the LCF value chain a standardized way to account for LCF procurements in their sustainability reports, whether those procurements are physical or through market-based instruments.

• Statement 1 covers the physical GHG inventory and is the traditional GHG Protocol inventory as it exists today. Companies that physically receive and combust LCFs recognize the lower GHG emissions here.
• Statement 2 proposes a market-based GHG inventory for all emissions scopes. For the first time, this will allow companies to report the carbon intensities of book-and-claim and mass balance EACs for LCFs within a GHG Protocol-aligned inventory. This is a shift from the current framework, which relegates market-based instruments for LCFs and other products, along with carbon credits, to a supplemental section outside of the core emissions inventory. By bringing these purchases into the inventory itself, Statement 2 puts market-based LCF claims on a more equal footing with the emissions companies already report.
• Statement 3 covers beyond value chain interventions as well as GHG emissions reductions/avoidance reported relative to a baseline counterfactual (e.g., the domain of carbon credits). Avoided methane emissions upstream from RNG use is one LCF-relevant example that might live here. 
• Statement 4 captures non-GHG indicators and could include things such as the quantity of an LCF procured or produced. This rounds out the story an organization tells about how LCFs fit within their operations and value chain.

How the AMI Proposal Applies to Specific Fuel Types

Two important LCFs are impacted by the current GHG Protocol guidance and offer an example of the significance of the AMI proposal. 

1. SAF is a biobased or synthetic drop-in substitute for conventional jet fuel. 
2. RNG, generally produced from organic wastes, is a drop-in substitute for conventional natural gas. 

Both are typically delivered through existing infrastructure. SAF is typically blended into a common fuel supply. RNG is often injected into the broader gas network. The buyer typically does not have a direct physical link to the molecule’s consumption, but rather an indirect claim on molecules injected into a common system.

Current GHG Protocol guidance disallows using and reporting market-based LCF emissions factors within corporate scope inventories. If finalized as proposed, the AMI proposal’s Statement 2 would open the aperture for companies to report the lower emissions from purchasing SAF or RNG market-based instruments. Here’s how that might work.

SAF: Reporting Across the Value Chain

When an airline physically receives and burns SAF in its aircraft, the lower combustion emissions are reflected in its Statement 1, scope 1 emissions inventory. This is reported the same way as conventional jet fuel.

The picture changes when airlines use market-based instruments. Many airlines purchase scope 1 SAF certificates that are decoupled from the physical fuel and tracked via book-and-claim or mass balance EACs. Under the AMI proposal, the lower emissions factors of these instrument purchases would be reflected in an airline’s Statement 2, scope 1 emissions inventory.

Corporate buyers face a parallel situation. Companies that purchase scope 3 EACs from SAF suppliers or through airline programs to address employee travel would reflect these lower emissions factors in their Statement 2, scope 3, category 6 emissions. Legitimate Statement 2 claims provide additional incentive for corporate climate action to address travel emissions.

RNG: Reporting Across the Value Chain

As with SAF, an organization that physically receives and combusts RNG can reflect the lower emissions in its Statement 1, scope 1 emissions inventory. 

More often, RNG is injected into the shared gas network and claimed by users through book-and-claim or mass balance certificates rather than physical delivery. Statement 2 introduces a reporting opportunity for RNG EAC purchasers to report lower scope 1 emissions. Lower emissions from RNG consumption could also be passed through as reduced scope 3 emissions for consumers of products associated with RNG consumption.

RNG carries an additional nuance. Some RNG projects may also claim to have avoided methane emissions (e.g., dairy manure methane emissions avoided by way of diversion to RNG). This type of methane avoidance attribute, typically tracked in the realm of carbon credits, would have a home within Statement 3, subject to additional disclosure requirements. Companies evaluating RNG certificates should understand which claims belong in which statement.

Application to Other LCFs and Market-Based Instruments

While SAF and RNG are two of the more prominent examples, the AMI proposal is relevant to all LCFs including renewable diesel and marine fuels. The emissions associated with market-based instrument purchases for these fuels would belong in Statement 2.

The proposed framework may also cover market-based instruments aimed at lower emissions conventional fuels, e.g., natural gas production that has taken measures to reduce fugitive methane emissions far below industry averages. Companies purchasing certificates of this type would theoretically report the reduced upstream natural gas emissions rates in Statement 2, scope 3, category 3.

Three Steps Companies Can Take Now to Prepare 

The AMI proposal is still in development. A public request for information on the initial white paper recently closed. A draft standard is in development, with a formal public consultation planned in Q3 2027. Companies that act early will be better positioned when the standard takes effect. Steps will vary depending on where in the fuels value chain an organization sits, but could include:

1. Map exposure. Identify where the organization sits in the LCFs value chain and what fuels it is currently procuring and consuming. This will help to better understand where the largest fuels-related emissions hot spots are in the current GHG inventory.
2. Record current instruments and assess quality. Catalog the instruments the company is currently producing or procuring. Understand where these instruments may sit within the AMI’s proposed four-statement framework and assess their quality against emerging eligibility criteria.
3. Engage with the process. The GHG Protocol is still defining eligibility and quality criteria for LCF instruments. Organizations can monitor interim developments from the AMI Technical Working Group. Companies with active programs have a real stake in how those criteria are written.

Frequently Asked Questions

How would the AMI proposal change the way low-carbon fuels get reported?

The core shift is the introduction of Statement 2, a new market-based GHG inventory. For the first time, companies would be able to report the lower emissions from purchasing market-based LCF instruments, including book-and-claim and mass balance EACs, within a GHG Protocol-aligned inventory. This applies to all LCFs, including SAF and RNG, and can be reflected in scope 1 or scope 3 inventories depending on where the organization sits in the LCF value chain.

Is the AMI proposal finalized, and what should companies do now?

No, the proposal is still in development. A public request for information on the initial white paper recently closed. A draft standard is in development, with a formal public consultation planned in Q3 2027. In the meantime, companies holding SAF, RNG, or other LCF instruments should map their exposure across the value chain, catalog existing instruments against the proposed four-statement framework, assess quality against emerging eligibility criteria, and monitor GHG Protocol AMI updates.

‍What should a company look for when evaluating a SAF or RNG certificate?

Buyers should confirm which claim a certificate actually conveys and where it would sit in the AMI’s proposed framework. For example, a lower-emissions carbon intensity claim belongs in Statement 2 whereas an avoided-methane claim falls under Statement 3. Buyers should also assess the instrument against the AMI's emerging eligibility and quality criteria to reduce the risk that a purchase won't qualify under the final standard. Relae (formerly Carbon Direct) has published a comprehensive set of criteria for high-quality low-carbon fuels that buyers can use as a starting point, until AMI’s eligibility and quality criteria are finalized.

Key Takeaways

• SAF and e-SAF mandates are reshaping the aviation fuel market. The EU and UK impose steep non-compliance penalties, turning regulatory requirements into a strategic lever for those who act early.
• Non-compliance is costly. Penalties run roughly 3 times the cost of compliance in the EU and from about 2 to 13 times in the UK, making long-term planning essential to mitigate risk.
• e-SAF producers have a unique opportunity. Mandates and penalties are shifting the economics of aviation fuel, making e-SAF more attractive despite historically high production costs.

How SAF Compliance Stacks Up

Airlines and fuel suppliers operating in Europe and the UK face growing economic uncertainty due to stringent mandates requiring the adoption of sustainable aviation fuels (SAF) with carve-outs for SAF produced from renewable hydrogen, also known as Power-to-Liquids (PtL) or e-SAF.¹ These mandates, aimed at reducing aviation emissions, carry steep penalties (up to 13 times the cost of compliance) for fuel suppliers who fail to meet required quotas. While this creates cost uncertainty for airlines and passengers, it opens a strategic opportunity for e-SAF producers. These producers are challenged by high production costs relative to other SAF on the market and a limited set of buyers that can afford the premium on a voluntary basis.

This piece explores the cost implications for aviation being shaped by these EU and UK SAF mandates and outlines how airlines and suppliers can respond strategically to minimize risk and maximize opportunities. By understanding these dynamics, industry stakeholders can turn regulatory compliance into a source of competitive advantage. 

Understanding SAF Mandates in the EU and UK

The EU Commission’s ReFuelEU Aviation regulation, part of the European Green Deal, sets binding targets for aviation sustainability. Beginning in 2025, ReFuelEU mandated that aviation fuel suppliers offer a minimum percentage of SAF and e-SAF at EU airports. By 2030, suppliers must blend at least 6% SAF, including 1.2% e-SAF. To discourage tankering practices (carrying excess fuel for return trips, increasing emissions), ReFuelEU Aviation requires airline operators to refuel at least 90% of their annual aviation fuel needs at a given EU airport before departure. 

In parallel, the UK Department for Transport (DfT) mandates a higher SAF blend of 10% by 2030 and places greater emphasis on reducing reliance on hydrogenated esters and fatty acids (HEFA) SAF fuels, which face eventual limitations on feedstock supply. HEFA’s allowable share will decline annually from 100% in 2025 to 42% in 2040. The UK also includes a sub-mandate specifically for PtL SAF.

The Real Cost of Falling Behind on SAF Mandates

The financial impact of these mandates is significant. Each year, the European Union Aviation Safety Agency (EASA) publishes regulatory reference prices for SAF, e-SAF, and conventional jet fuel (CJF) that anchor non-compliance penalties in the EU, most recently the 2025 Aviation Fuels Reference Prices for ReFuelEU Aviation. Using these reference prices for current-year costs and projected production costs or prices for SAF, e-SAF, and CJF from 2030–2050, the following analysis compares EU and UK compliance versus non-compliance penalties, converting all figures to US$/gallon.²

The price gap between SAF and fossil jet fuels remains wide. In 2025, SAF is approximately three times the price of CJF, while e-SAF is nearly twelve times more expensive. Projections indicate this price gap narrows by 2030, but far more for SAF than for e-SAF. The projected price of SAF in 2030 is US$5.46/gallon, more than double the estimated US$2.41/gallon for CJF. The price difference is even greater for e-SAF: with no traded e-SAF market yet, projected 2030 prices span US$5.70/gallon to US$33.00/gallon, with a central estimate around US$18/gallon, or roughly seven times the price of CJF.

Estimated Jet Fuel Prices 2025-2050 (US$/Gallon)

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Source: European Union Aviation Safety Agency. 2025 Aviation Fuels Reference Prices for ReFuelEU Aviation. (link); UK Department for Transport. SAF Mandate: Final-stage Cost Benefit Analysis. (link); EUROCONTROL. Aviation Outlook 2050: Main Report. (link)

The mandates carry strict penalties for non-compliance. Penalties for non-compliance in the EU are set at a minimum of two times the price difference between SAF and CJF per gallon of unmet obligation. Additionally, fuel suppliers must supply any unmet fuel obligations in subsequent reporting periods, which pushes the cost of non-compliance in the EU to three times the cost of compliance.

In the UK, penalties work differently: fuel suppliers must pay a fixed buy-out price per megajoule (MJ) of unmet obligation, which translates to US$24.64/gallon of unmet SAF obligation and US$26.08/gallon of unmet e-SAF obligation.³ Because the buy-out is fixed while compliance costs vary, UK penalties range from about 2 times the cost of compliance for e-SAF to 13 times for SAF in later years. The intent is clear: regulators are serious about pushing aviation towards sustainable fuels.

Cost-Comparison of Compliance vs Non-Compliance (US$/Gallon)

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Note: The cost of compliance under both mandates is calculated as the price premium of SAF/e-SAF over CJF per ton, using region-specific SAF prices: the EU SAF price reflects HEFA-based supply (ReFuelEU imposes no HEFA cap), while the UK SAF price is a weighted average of HEFA and higher-cost advanced pathways based on the UK's declining HEFA cap. The e-SAF (PtL) price is the same in both regions. 

Cost-Comparison of Complicance vs Non-Compliance (US$/Gallon)

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e-SAF Has a Policy-Driven Market Opportunity 

These price differentials present risk and opportunity. Airlines and fuel suppliers that fall short of compliance will face steep penalties. Those who comply strategically, can mitigate those risks and benefit from financial incentives that help offset higher fuel costs.

Incentive structures support SAF and e-SAF production. For example, the EU’s Emissions Trading System (ETS) has allocated allowances to offset SAF costs, especially for renewable fuels of non-biological origin (or e-SAF). Similarly, the UK offers tradable certificates and has now legislated a Revenue Certainty Mechanism (Sustainable Aviation Fuel Act 2026) that will guarantee SAF producers a set strike price through contracts-for-difference-style agreements, funded by a levy on fuel suppliers, with the first allocation round expected in 2027. The UK’s ETS also provides an indirect incentive as SAF use by airlines lowers compliance costs through reducing required allowances. 

Strategic Recommendations for Airlines and Suppliers

To navigate this shifting landscape, airlines and fuel suppliers must think strategically about procurement and compliance, potentially including:

• Proactive procurement: Airlines and fuel suppliers should prioritize securing long-term contracts with SAF and e-SAF producers. Early engagement can help ensure access to limited supply and stable pricing.
• Leverage incentive programs: Actively participate in available incentive schemes, such as the EU ETS and UK tradable certificates, to minimize compliance costs.
• Invest in e-SAF production: Consider strategic investments or partnerships in e-SAF production to align sustainability goals with regulatory requirements and financial incentives.
• Plan for volatility: Develop robust risk mitigation plans, using flexible procurement strategies and financial instruments to buffer against supply chain disruptions and price swings.

Turning Mandates into Market Momentum

As 2030 approaches, the pressure on airlines and fuel suppliers to comply with SAF mandates will intensify. Those who proactively respond to and embrace the mandates can transform regulatory requirements into strategic opportunities. Rather than viewing mandates as burdens, forward-looking stakeholders can use them to drive sustainable innovation and long-term resilience.

The EU and UK mandates for SAF and e-SAF represent an emerging shift in aviation fuel markets. Stakeholders that act now, by engaging with incentives and investing in sustainable fuel solutions, will emerge as industry leaders. Now is the time for airlines, fuel suppliers, and e-SAF producers to act decisively, transforming regulatory compliance from a costly obligation into a clear competitive advantage.

Frequently Asked Questions 

What happens if an airline or fuel supplier misses its SAF mandate quota?
Fuel suppliers—the obligated parties—pay a penalty on every unmet tonne: in the EU, twice the price gap between SAF and jet fuel, plus supplying the shortfall in a later period; in the UK, a fixed buy-out price (£0.137/MJ for SAF, £0.145/MJ for e-SAF). Combined, non-compliance runs roughly 3 times the cost of complying in the EU and from about 2 to 13 times in the UK.

What is e-SAF, and how is it different from other SAF?
e-SAF, also called Power-to-Liquid (PtL) fuel, is made from renewable or low-carbon electricity, hydrogen, and captured CO₂ rather than biomass feedstocks. It costs more to produce than conventional SAF today, but both the EU (from 2030) and UK (from 2028) mandates carve out a specific, growing sub-quota for it.

What is the UK's Revenue Certainty Mechanism?
It is a UK government scheme, modeled on the Contracts for Difference structure used in the power sector, that guarantees SAF producers a set strike price for up to 10 years, funded by a levy on aviation fuel suppliers. It became law through the Sustainable Aviation Fuel Act 2026, and the first contract allocation round is expected in 2027.

Is the EU considering changes to its SAF mandate timeline?
The EU has scheduled a formal review of ReFuelEU Aviation for 2027, following calls from airline groups to delay the 2030 e-SAF sub-target. No delay has been adopted, and the European Commission has said it remains "fully committed" to both the SAF and e-SAF mandates and that the 2027 review will evaluate the regulation rather than revise it.

Can corporate buyers still claim SAF benefits from fuel used to meet these mandates?
No, mandated volumes are claimed in the compliance market, so to avoid additionality concerns, voluntary corporate scope 3 claims (typically made through SAF certificates and book-and-claim) must come from supply beyond what the mandates require. As mandate demand grows, the pool available to voluntary buyers tightens, which is why early procurement locks in both supply and price.

Key Takeaways

• Concrete and steel contribute 13% of global CO2 emissions. These materials represent substantial scope 3 emissions for companies that are building new infrastructure, including data centers.
• Low-emission alternatives and production technologies are nascent and not yet widely deployed.
• Environmental attribute certificates (EACs) are an innovative solution that can stimulate manufacturing of sustainable commodity materials and overcome market barriers to direct physical procurement.
• Relae (formerly Carbon Direct) and Microsoft developed criteria to guide Microsoft’s high-quality EAC procurement, accelerate decarbonization, and catalyze market expansion for decarbonized materials across supply chains. 
• These criteria cover seven key areas: qualifying conditions, social harms and benefits, environmental harms and benefits, additionality and baselines, catalytic impact, verifiability, and leakage.

A Vision for Low-Carbon Concrete and Steel

Concrete and steel are essential for modern construction, but are carbon-intensive. Combined, they account for approximately 13% of global carbon dioxide (CO2) emissions. ​As the demand for data centers and infrastructure development continues to grow, so do the embodied emissions from concrete and steel. There is an urgent need to decarbonize these sectors so that construction of new facilities remains consistent with climate commitments.​

However, the markets for low-carbon concrete and steel are still in their infancy. Market barriers such as low production volumes, contracting complexity, geographic concentration of supplies, and long-distance transportation limit buyers’ ability to directly procure low-carbon building materials. As buyers and sellers overcome these barriers, the market for low-carbon building materials will mature, giving producers the confidence to invest in new manufacturing facilities and giving buyers access to decarbonized materials directly in their supply chain.

Environmental attribute certificates (EACs) represent the sustainability attributes of a material commodity, unbundled and transacted separately from the physical commodity. EACs are transacted at a price that reflects the additional cost of sustainably producing the material. While barriers to direct procurement of low-carbon materials persist, EACs can serve as a powerful tool to signal demand for low-carbon concrete and steel, catalyze market expansion, and accelerate decarbonization.

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Microsoft’s Approach to Emissions from Building Materials ​

To address embodied emissions and help achieve its ambitious 2030 carbon-negative goal, Microsoft aims to deeply reduce its scope 3 emissions, including from building materials, by more than half compared to a 2020 baseline. In 2023, scope 3 emissions made up over 96% of Microsoft’s total greenhouse gas footprint. To meet its 2030 target, Microsoft is focusing on addressing supply-chain emissions related to data center construction and the embodied carbon of the commodity materials used to build them. Microsoft is already working to decarbonize its building material supply chain using the following three tactics:

• Reduce the need for concrete and steel through innovative building design or the use of lower-carbon alternatives, such as sustainably sourced mass timber.
• Directly engage with suppliers to procure low-carbon alternatives to conventional concrete and steel.‍
• Invest in and help pilot new low-carbon production pathways.

EACs represent a fourth approach to decarbonization that can both reduce emissions and catalyze industry growth. Taken together with Microsoft’s design, procurement, and investment tactics, these actions underpin a comprehensive strategy for long-term decarbonization of the built environment.

High-Quality EACs Support Decarbonization

EACs offer a virtual, market-driven solution to decarbonize the built environment by allowing companies to support low-carbon material production when physical supply chain barriers impede direct procurement. ​EACs for concrete and steel function similarly to other market-based decarbonization mechanisms such as sustainable aviation fuel (SAF) certificates in the aviation sector and renewable energy certificates (RECs) in the energy sector.

These mechanisms work by decoupling the environmental benefits of low-carbon production from the physical materials themselves. EACs allow companies to claim the environmental benefits of physical low-carbon concrete or steel production, even if they do not directly or physically source those materials. EACs provide a verified claim that a purchaser has procured a product with lower emissions, enabling companies to meet climate targets and demonstrate their commitment to sustainability.

Due to their virtual nature, which limits physical oversight of the supply chain, EACs also exacerbate risks such as double counting, greenwashing, fraud, social harms, and environmental harms. Therefore, adhering to transparent, rigorous criteria is foundational to mitigating these risks.

New Criteria to Guide Procurement of High-Quality EACs

To support the integrity and effectiveness of EACs in these sectors, Relae and Microsoft have co-developed Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors. These robust criteria serve as a public resource for companies seeking credible and impactful EAC procurement pathways for low-carbon concrete and steel.

The criteria address seven key areas:

1. Qualifying conditions: EACs must complement, not displace, direct procurement and represent significant emissions reductions. ​
2. Social harms and benefits: EACs must not further social harms and should promote community engagement and social benefits such as meaningful workforce development opportunities and community climate resilience.
3. Environmental harms and benefits: EACs must not perpetuate environmental harm, but instead should mitigate risks and, ideally, provide additional environmental benefits.
4. Additionality and baselines: Projects funded by EACs must drive real, meaningful emissions reductions ​in terms of financial, regulatory, and common practice additionality.
5. Catalytic impact: Prioritize transformative technologies with sector-wide decarbonization potential. ​
6. Verifiability: Set a high bar for documentation, transparency, and independent auditing. ​
7. Leakage: Address risks of emissions displacement to support net-positive outcomes. ​

These criteria provide a robust framework for companies and stakeholders to evaluate and implement commodity EACs effectively, supporting impactful change. ​They balance rigor with flexibility and acknowledge the nascent state of the markets for low-carbon concrete and steel. Sectoral decarbonization will advance over time, shifting the thresholds for what is considered significant, additional, and catalytic in EAC transactions. This science-driven framework can adapt to advancements in policy, industry practices, and technological readiness, ensuring EACs remain a relevant and impactful tool for years to come. ​

Sector-Specific Insights

In addition to providing overarching criteria and guidance on procuring EACs for the built environment, Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors also provides insights into the unique challenges and opportunities of decarbonizing concrete and steel.

Decarbonizing Concrete

EACs can support innovative decarbonization strategies for concrete, such as producing alternatives to clinker and cement, adopting supplementary cementitious materials (SCMs), and reducing emissions from cement kilns through electrification or integrating carbon capture and storage (CCS). ​Performance-based standards and evolving building codes may also unlock new opportunities for low-carbon concrete. ​

The Global Cement and Concrete Association (GCCA) publishes a rating system, Low Carbon Concrete (or Cement) Ratings, which defines eight separate low-carbon grades (AA through G). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the material’s compressive strength. When developing these criteria, Microsoft considered grades AA through D to be eligible for consideration in its EAC procurements.

Decarbonizing Steel

EACs can support transformative technologies for decarbonizing steel, like direct reduced iron (DRI) with electric arc furnaces (EAF) powered by green or blue hydrogen. This support can enable the steel sector to move beyond incremental improvements and focus on capital-intensive solutions that have the potential to reshape the industry. ​

ResponsibleSteel, an independent standards and certification organization with membership that is broadly representative of the steel industry, publishes decarbonization progress levels, with four separate grades (PL1–PL4). These grades correspond to the depth of decarbonization and are based on a sliding scale related to the fraction of recycled scrap use in the steel manufacturing process. When developing these criteria, Microsoft included levels PL2 through PL4 for consideration in its EAC procurements.

A Blueprint for EAC Market Development ​

Relae and Microsoft crafted Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors as a public resource that can help shape the future of the commodity EAC market. ​

These criteria are designed to:

• Communicate intent: Communicate Microsoft's intent to support the decarbonization and scaling of physical commodity supply chains where they have been previously limited.‍
• Guide decision-making: Serve as a public guide for Microsoft's decision-making process, explaining the rationale behind pursuing or declining specific EAC pathways.‍
• Set high-integrity standards: Maintain high integrity for EACs at an early stage, ensuring they are used to enable future physical procurement by supporting market development.‍
• Stimulate partnership opportunities: Encourage potential partnerships and purchasing pipelines by clearly describing criteria for high-quality EACs.‍
• Publicly share detailed thinking: Build on previous work and publicly share detailed thinking, aiming to stimulate market development and guide procurement decisions.

Practical Recommendations for Implementing EACs

Whether you are a supplier, buyer, policymaker, or sustainability advocate, these new criteria offer actionable insights to help you navigate the complexities of EACs in the built environment. ​From setting significance thresholds to ensuring verifiability to avoiding double counting, the criteria provide clear guidance to maximize the impact of EAC-supported projects.

Beyond the technical aspects of EACs, these criteria aim to address their broader social and environmental implications. The criteria focus on the importance of community engagement, transparency, and equitable distribution of benefits in EAC project planning, ensuring that decarbonization efforts contribute to a more sustainable and just economy. ​The criteria are backed by extensive research, stakeholder consultations, and industry expertise.

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Frequently Asked Questions

What is an environmental attribute certificate (EAC), and how does it differ from buying low-carbon concrete or steel directly? 

An environmental attribute certificate represents the sustainability attributes of a commodity material such as concrete or steel, unbundled from the physical material and transacted separately from it. Direct procurement means a buyer purchases low-carbon concrete or steel and takes physical delivery of it for a specific project. An EAC purchase instead allows a buyer to fund and claim the environmental benefit of sustainably produced materials that are sold as typical commodities, and apply that benefit against conventional commodities in their own supply chain. EACs are priced to reflect the additional cost of producing the material sustainably, which sends a demand signal to producers. This makes EACs useful where market barriers—limited production volumes, geographic concentration of supply, or long-distance transportation—prevent buyers from sourcing low-carbon materials directly.

How do EACs for concrete and steel compare to renewable energy certificates (RECs) or sustainable aviation fuel (SAF) certificates?

Environmental attribute certificates for concrete and steel share a structure with renewable energy certificates and sustainable aviation fuel certificates: each decouples the environmental benefit of low-carbon production from the physical product, letting a buyer fund and claim that benefit without taking physical delivery. There are two key differences. First, conventional RECs represent electricity with a zero-emissions footprint, while every tonne of concrete or steel behind an EAC still carries embodied emissions — the certificate demonstrates reduction against a baseline, not a zero-emission product. Second, REC and SAF markets are established, while EACs for concrete and steel are nascent. Both differences are why rigorous criteria matter: quantifying the reduction credibly is harder, and the virtual structure carries risks of double counting, greenwashing, and fraud.

Will EACs let companies claim emissions reductions without actually reducing their built environment climate footprint?

An EAC purchase does not change the materials in a buyer's own buildings; it funds lower-emission production elsewhere in the market. Credible EAC frameworks therefore require that certificates complement rather than displace direct procurement, that they represent significant reductions against a defensible baseline, and that the funded project would not have proceeded without EAC revenue. The criteria published by Relae and Microsoft enable buyers to address these requirements directly in their procurement processes - addressing the climate and reputational risks of low-quality certificates. Used this way, EACs become an additional tool to address emissions from the built environment, supplementing design changes, direct procurement, and investment in new production pathways.

Who should use these criteria?

Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors, co-developed by Relae and Microsoft, is a public resource intended for four audiences. Buyers pursuing scope 3 reductions can use it to evaluate whether a given certificate represents a credible, additional emissions reduction. Suppliers and project developers can use it to understand what purchasers of high-quality certificates look for before bringing a project to market. Policymakers and standards bodies can draw on it while shaping rules for an emerging market. Sustainability practitioners and advocates can use it as a reference point for assessing claims made about low-carbon concrete and steel. The criteria are designed to evolve as these sectors decarbonize, and users may adapt them to meet their own levels of capability and ambition. 

Key Takeaways

• Buyers have been navigating the low-carbon fuels (LCF) market without a map.  The LCF market is expanding rapidly, but standards, definitions, and quality claims vary widely across regions, certification schemes, and regulatory systems, leaving voluntary buyers without a holistic framework for evaluating what they procure.
• Certifications cover some of the picture, not all of it. Existing certification schemes provide valuable assurance but vary in scope and rigor, and few, if any, were designed specifically with voluntary market buyers in mind. 
• The 2026 criteria give buyers a legible quality framework. The 2026 Criteria for High-Quality Low Carbon Fuels bring together key sustainability considerations across six principles, including social and environmental integrity, carbon accounting, additionality, feedstock sourcing, and leakage, giving buyers and producers a legible, living framework to navigate procurement decisions with confidence.

Verifying Quality Is Challenging in the Current Low-Carbon Fuels Market

For airlines, logistics companies, and large corporations with hard-to-abate transportation emissions, low-carbon fuels (LCFs) have become an important part of the decarbonization toolkit. Yet it remains difficult for procurement teams to answer a fundamental question: what does high-quality procurement actually look like? 

Standards, definitions, and sustainability claims vary widely across regions, certification bodies, and regulatory programs. The result is a market where quality is difficult to verify, certifications are difficult to compare, and the gap between a fuel's claims and its actual sustainability profile can be hard to close. Sustainable production will be especially critical as the market scales, because low-carbon fuel systems are deeply embedded in land, agriculture, forestry, and communities. 

The 2026 Criteria for High-Quality Low Carbon Fuels are designed to close this gap, giving voluntary buyers a consistent framework to evaluate the quality of what they procure and identify where additional diligence is still needed.

What Is a Low-Carbon Fuel?

For the purposes of the criteria, a low-carbon fuel, or LCF, is defined as a fuel or energy source whose lifecycle greenhouse gas (GHG) emissions are lower than those of a relevant, use-case-specific fossil fuel alternative. In this case, we are referring to the physical biofuel and its associated environmental attributes. 

While LCFs may be produced through biological, synthetic, or other non-fossil pathways, the 2026 edition focuses on biofuels for transportation, which currently represent the majority of LCF production and use. 

Understanding the Complex LCF Regulatory and Certification Landscape

The LCF market sits at the intersection of multiple regulatory and voluntary markets. In the US, this includes compliance programs such as the Renewable Fuel Standard (RFS) and state-level Low Carbon Fuel Standards (LCFS). Europe, the United Kingdom, Canada, and many other nations host comparable programs, often with specialized regulatory regimes for various transport sectors, e.g., aviation or maritime. 

These regulatory markets coincide with and often intersect voluntary markets, which contain a multitude of standards and certifications. For producers, this creates a complex landscape of market options. For buyers, it creates a signal problem: a fuel may carry one or more certifications, comply with one or more regulatory programs, and still leave meaningful sustainability questions unaddressed.

Several organizations, including the Roundtable on Sustainable Biomaterials (RSB) and the International Sustainability and Carbon Certification (ISCC), have developed widely used standards for LCFs. These certifications assess supply chains from feedstock to end use and provide important baseline assurance. 

However, they were developed with different primary audiences in mind and can vary in scope and rigor. Few existing schemes were designed to serve as a comprehensive sustainability reference for voluntary market buyers evaluating what a given fuel's certification covers and where gaps may still exist.

Simplifying High-Quality Procurement for Voluntary Buyers 

The 2026 Criteria for High-Quality Low Carbon Fuels are not designed to replace or compete with existing certification schemes. Rather, they consolidate key sustainability considerations from across the landscape of existing frameworks into a single, legible reference built specifically for voluntary market decision-makers.

The criteria apply across the full LCF supply chain, covering not only fuel producers but also fuel blenders, aggregators, and certificate traders. This LCF systems view encompasses the full set of production, certification, and procurement arrangements through which LCFs are generated and claimed. This reflects the reality that sustainability outcomes in this market are shaped by many actors, not just at the point of production.

The criteria distinguish between requirements that must be met (minimum thresholds for quality and integrity) and considerations that should be addressed, reflecting best practices and aspirational standards. This distinction is intentional: the criteria set a floor while leaving room for market participants to demonstrate quality in ways appropriate to their specific context. 

The criteria are organized around six core principles that together define what high-quality LCF production and procurement looks like. 

Six Principles for Procuring High-Quality Low-Carbon Fuels

1. Social harms, benefits, and environmental justice: preventing new harms to communities, reducing existing ones, and ensuring equitable distribution of benefits
2. Environmental harms and benefits: minimizing impacts on air, soil, water, and biodiversity
3. Carbon accounting: accurately quantifying lifecycle GHG emissions using credible methodologies and tracking environmental attributes to prevent double-counting
4. Additionality: demonstrating that voluntary market support enables outcomes that would not otherwise occur
5. Feedstock sourcing: ensuring responsible and equitable sourcing practices and requiring end-to-end chain-of-custody documentation traceable to the point of generation
6. Leakage: assessing and mitigating activity-shifting and market leakage associated with the LCF system

Where a fuel's existing certification or regulatory program adherence already addresses one or more of these core principles, that coverage should be disclosed to the buyer by the producer. Buyers can then use the criteria to identify where certification coverage aligns with quality expectations, and where supplemental diligence is needed.

A Living Framework for a Market in Motion  

The LCF market will continue to evolve as policy frameworks are shifting, certification systems are maturing, and new production pathways are emerging. The 2026 edition reflects the current state of the LCF market and is intended as a living resource, with future updates possible as the market develops and new science emerges. Future editions may expand to cover synthetic LCF pathways, renewable natural gas, and sector-specific considerations such as maritime fuels.

For buyers navigating voluntary LCF procurement, the criteria offer a practical starting point: a framework to evaluate what existing certifications cover, identify where additional diligence is needed, and build procurement decisions on a consistent quality foundation. For producers, they provide clear guidance on what a sustainability demonstration looks like for voluntary market buyers.

Read the 2026 Criteria for High-Quality Low Carbon Fuels to learn more about how the criteria apply to your procurement strategy or production system.

Frequently Asked Questions

What is a low-carbon fuel?
A low-carbon fuel is a fuel whose lifecycle greenhouse gas emissions are lower than a comparable fossil fuel alternative for the same use case. The 2026 LCF Criteria focus specifically on biofuels for transportation, which currently make up most LCF production and use.

What do the 2026 Criteria for High-Quality Low Carbon Fuels cover?
The criteria are organized around six principles: social harms, benefits, and environmental justice; environmental harms and benefits; carbon accounting; additionality; feedstock sourcing; and leakage. Together they give buyers and producers a consistent way to evaluate what high-quality LCF production and procurement looks like.

Do the LCF criteria replace existing certifications like RSB or ISCC?
No. The criteria aren't designed to replace or compete with existing certification schemes such as the Roundtable on Sustainable Biomaterials (RSB) or the International Sustainability and Carbon Certification (ISCC). Instead, they consolidate key sustainability considerations from across those frameworks into a single reference so buyers can see what their certification already covers and where supplemental diligence may be needed.

Who do the LCF criteria apply to across the supply chain?
The criteria apply across the full LCF supply chain, not just producers, but also feedstock suppliers, fuel blenders, aggregators, and certificate traders, reflecting that sustainability outcomes are shaped by many actors, not only the producer.

What's the difference between the "must" and "should" requirements in the LCF criteria?
"Must" requirements set minimum thresholds for quality and integrity that need to be met, while "should" considerations reflect best practices and aspirational standards market participants can work toward. This sets a floor while leaving room for participants to demonstrate quality in ways suited to their specific context.

Key Takeaways

• Sustainable aviation fuel (SAF) will not reach price parity with fossil jet fuel under any realistic near-term scenario. The cost premium is structural—rooted in the chemistry of feedstocks—not a temporary artifact of early-stage markets.
• Neither airlines nor corporate buyers are purchasing SAF for its energy content. Both are buying sustainability claims: airlines for regulatory compliance and scope 1 credentials, corporates for scope 3 emissions reporting and social license to operate. The fuel is incidental to both transactions.
• Corporate offtakes can play a genuine role in building the SAF industry, but only if they create capacity that would not otherwise exist. Additionality is not a technicality; it is the entire value proposition.
• High-integrity SAF procurement requires evaluating not just carbon reduction, but feedstock sourcing, leakage, and social and environmental harms. The newly released Criteria for High-Quality Low Carbon Fuels from Relae (formerly Carbon Direct) provides a framework for doing this rigorously.

A Major Deal Illustrates How the SAF Market Really Works 

On June 5, 2026, Google and American Airlines announced a three-year agreement under which Google will purchase sustainable aviation fuel (SAF) certificates (SAFc) associated with 35 million gallons of SAF. American will take physical delivery of the fuel at Chicago O'Hare. Google receives the emissions attributes. The arrangement relies on book-and-claim accounting, in which the physical fuel and the environmental attribute are legally separated and transferred to different parties.

The deal is a window into how the SAF market works, and what every company in the value chain needs to understand before entering it.

The SAF Cost Premium Is Structural, Not a Market Inefficiency

There is a persistent hope in the aviation industry that SAF will eventually reach price parity with fossil jet fuel. This will not happen, at least not through any mechanism that currently exists or is credibly in development.

The economics are the product of thermodynamics. Petroleum is pre-deoxygenated; over millions of years, heat and pressure stripped oxygen from biological material, concentrating energy into the hydrocarbons we pump out of the ground today. Bio-based SAF feedstocks, e.g., vegetable oils, agricultural residues, and other biomass, are oxygen-rich (carbohydrates, not hydrocarbons). Power-to-liquid e-fuels start from captured CO₂, which is fully oxidized. 

Either way, every SAF production pathway must pay an energy debt to remove or chemically reduce that oxygen, in the form of hydrogen deoxygenation, energy inputs, and processing costs. This is not a manufacturing inefficiency that scale will solve. It is a constraint baked into the feedstocks themselves.

The numbers reflect this. According to the European Union Aviation Safety Agency (EASA), the average market price of SAF in 2025 was approximately €1,925 per tonne, roughly three times the €640 per tonne average for conventional jet fuel. 

The cheapest pathway, hydroprocessed esters and fatty acids (HEFA), produced from waste oils like used cooking oil or tallow, represents almost all current SAF supply and sits at the lower end of the SAF cost range. Costlier cellulosic and e-fuel pathways push it higher. EASA estimates 2025 production costs for power-to-liquid e-fuels at €7,520 per tonne, more than ten times the cost of conventional kerosene. While these costs can and will come down, none are expected to approach price parity.

The feedstock ceiling compounds this. HEFA from waste oils is the cheapest SAF pathway, but waste oil supply is finite and competes with renewable diesel, which typically offers better margins for producers. As mandates push SAF volumes beyond what HEFA can supply, the industry must move to cellulosic biomass or power-to-liquid pathways, at progressively higher cost. Scaling the SAF industry does not automatically bring prices down. In the near term, it pushes them up.

Policy Determines Who Absorbs the Cost

If price parity is not coming, the cost premium lands somewhere. Two policy philosophies have emerged to answer that question.

Europe has largely adopted the polluter-pays principle: SAF mandates place the cost burden on fuel suppliers and, by extension, on airlines and their passengers. The EU's ReFuelEU Aviation regulation and the UK's SAF mandate both carry steep penalties for non-compliance. As Relae has documented, in the UK, those penalties range from three to 13 times the cost of compliance, depending on the obligation type and year, signaling that regulators are serious about pushing aviation toward sustainable fuels.

The United States approached the problem differently, leaning on taxpayer subsidies.The Inflation Reduction Act (IRA) 45Z Clean Fuel Production Credit and its predecessor, the 40B Sustainable Aviation Fuel Credit sought to socialize much of the cost premium. The appeal of this approach was that it made SAF economics viable without raising ticket prices. Its vulnerability was political: when the IRA's incentive landscape was revised, the project pipelines that had formed around those credits evaporated quickly. US taxpayer-funded support proved politically less durable than the UK and EU’s mandated compliance obligations.

Neither model works in isolation. Mandates without bankable project finance generate demand signals but no new supply. Incentives without policy durability attract project interest but cannot get facilities to final investment decisions. The deals that have actually moved capital combine a stable policy floor, whether mandate or incentive, with long-term private commitments that provide the revenue certainty project finance requires.

The Google-American Airlines deal illustrates the incentives-plus-private-commitment structure. The deal explicitly credits the Illinois SAF tax credit as the enabling policy lever. HEFA SAF of this type is eligible to generate Renewable Fuel Standard credits (RINs), and fuel produced from 2025 onward qualifies for the IRA's 45Z Clean Fuel Production Credit. This stack provides additional floor economics. The corporate offtake completes the structure by delivering the revenue certainty that volatile policy credits alone cannot. Remove any one of those elements and the deal's economics likely do not hold.

Nobody in this Market Is Buying SAF for its Energy Content

This is the key to understanding how the SAF market works. Neither airlines nor corporate buyers purchase SAF for its energy content. Airports have kerosene. Airlines do not need SAF to keep planes in the air. Corporate buyers, like Google, have minimal operational use for aviation fuel at all. While recent global disruptions in crude oil supply have highlighted SAF in the context of energy security, the industry as it exists today does not represent a realistic hedge against conventional fuel volatility.

What all parties are buying is the sustainability attribute attached to the fuel. For airlines, the relevant claim is a scope 1 emissions reduction: the right to report lower lifecycle carbon intensity for their flight operations. For corporate buyers, the relevant claim is a scope 3 reduction, a documented abatement of the emissions associated with their employees' business travel. Book-and-claim accounting makes this architecture explicit: it legally severs the physical fuel from the environmental attribute, allowing each to be transferred to the party that values it. The fuel is the delivery mechanism for the claim. 

This distinction matters for assessing the market. Airlines operate on among the lowest margins of any major industry. They cannot absorb the cost premium voluntarily without fundamentally compromising their finances. They participate in SAF markets when required to by mandate, or when a corporate partner subsidizes the premium by purchasing certificates downstream. The cost premium does not disappear; it shifts. Understanding where it lands is the starting point for any serious procurement decision. 

Corporate climate programs have finite budgets. SAF competes with renewable electricity procurement, fleet electrification, CO₂ removal, and supply chain decarbonization for the same dollars. Buyers who want their sustainability claims to match the actual sources of their emissions (rather than offsetting aviation with unrelated activities elsewhere) have a genuine reason to prefer SAF. 

A SAF Claim Is Only as Strong as the Quality Behind it

SAF buyers and sellers trade sustainability claims. The quality of those claims is the entire value proposition, and the reputational liability travels with them. The companies with the greatest willingness to pay for SAF certificates tend to be those with the most brand exposure: high-profile technology companies, professional services firms, and financial institutions. These are also the companies most likely to face scrutiny from regulators, NGOs, and investors if a claim does not hold up. Buying a certificate does not protect a company from that scrutiny. It transfers the liability along with the attribute.

That means a rigorous buyer needs to answer at least three distinct questions before relying on a SAF claim.

1. Does this fuel actually reduce lifecycle emissions? 

SAF's climate case rests on a carbon cycle argument: the feedstock absorbs CO₂ from the atmosphere as it grows, so when that carbon is released during combustion, the net addition to the atmosphere is theoretically near zero. But that logic holds only if upstream production is clean, and it often is not. 

Indirect land use change (when demand for a feedstock crop displaces food agriculture elsewhere, triggering clearing of forests or grasslands) can generate substantial emissions elsewhere in the global land and food system, eroding or eliminating the lifecycle benefit. Even waste-based feedstocks are not automatically clean: used cooking oil and tallow have existing market uses, and diverting them without careful accounting can displace those uses, alter commodity markets, and create emissions leakage elsewhere. 

2. Is the purchase additional? 

Additionality asks whether the procurement caused SAF to exist that otherwise would not have. This is a harder question than it appears, especially in markets where multiple policy support mechanisms are already active. For the Google-American Airlines deal, one critical variable for financial additionality—the SAFc price—has not been disclosed. If Illinois credits and federal RINs already cover most of the HEFA cost premium, then the question of what Google's purchase actually caused to happen is genuinely open. However, American Airlines has stated publicly that the long-term nature of the agreement enabled them to secure a new SAF offtake with Valero Marketing and Supply Company. The supply arrangement that may not have been bankable on the basis of volatile RIN markets and changeable policy alone. That is a real additionality argument. But it requires transparency to evaluate. The undisclosed SAF credit price is a current market liability, not just in this deal, but across the voluntary SAF market broadly.

Long-term offtakes do something that policy credits cannot: they provide stable, bankable revenue certainty. RIN prices fluctuate. Tax credits change with administrations. Neither can reliably anchor a final investment decision at the project level. A multi-year, creditworthy offtake agreement can. This is the distinctive and genuinely valuable role that corporate buyers play in this market: not paying the cost premium per gallon, but reducing the financial risk premium that keeps capital on the sidelines.

3. Is the full supply chain sound? 

Carbon claims are not the only dimension of sustainability that matters to a buyer's reputation. Companies making claims about their SAF procurement are implicitly making claims about their supply chains. That means labor practices, community impacts, Indigenous rights, feedstock sourcing integrity, and market leakage from displaced uses all fall within the scope of what a rigorous buyer should evaluate. A SAF supply chain that displaces food crops, harms a proximate community, or causes deforestation through indirect land use change creates a reputational problem that no certificate can fix.

What High-Integrity SAF Procurement Looks Like

The voluntary SAF market is still early, and the transparency it requires does not yet exist consistently. Relae recently released the Criteria for High-Quality Low Carbon Fuels, a comprehensive, publicly available framework designed to help close that gap. 

The criteria address six principles across the full supply chain: carbon accounting, additionality, feedstock sourcing, leakage, environmental harms, and social harms and environmental justice. They are designed as a practical reference for what a credible SAF claim requires, and where existing certifications may leave gaps that require additional diligence.

At the transaction level, five questions should have clear answers before any buyer signs an offtake:

1. Is the certificate linked to a specific project or supply agreement? 
2. Is that project financially dependent on the offtake, after accounting for all policy support already in the stack? 
3. Is the lifecycle emissions profile documented across the full well-to-wheel boundary, including indirect effects? 
4. Are the feedstock sourcing and supply chain risks assessed and disclosed? 
5. Has the producer evaluated leakage and community impacts?

The Google-American Airlines deal demonstrates what serious voluntary SAF procurement can look like. The Criteria for High-Quality Low Carbon Fuels provides the framework buyers need to evaluate deals like this one rigorously.