Finance & investment
Biofuel futures and SAF certificates
Drop-in fuel is designed to be indistinguishable, so the environmental attribute must be book-and-claim — and its value rests on a lifecycle calculation whose boundary and allocation choices move the number materially.
Sustainable aviation fuel is defined by a requirement that makes its own accounting difficult. Under ASTM D7566 a synthetic blending component must produce, once blended, a fuel meeting the same specification as conventional jet fuel — same freeze point, same energy density, same behaviour in an unmodified engine. The best-established pathway, hydroprocessed esters and fatty acids, is approved at up to 50 per cent by volume in the blend. The product is deliberately a drop-in, which means that once it enters an airport hydrant system it is chemically indistinguishable from the fossil kerosene around it.
That is the whole reason the certificate exists. Physically routing specific molecules to a specific aircraft would require a parallel fuel infrastructure and would deliver no emissions benefit, since the atmosphere does not care which airport burned the batch. So the environmental attribute is unbundled from the physical fuel and transferred separately — book and claim. The fuel is sold where it is made; the claim is retired by whoever paid for it. The instrument’s integrity then depends entirely on a registry preventing the same batch from being claimed twice, which is an accounting problem, not a chemical one.
The number being traded is a calculation
What the certificate carries is a lifecycle emissions figure, and this is where the technical content sits. Combustion of the fuel emits roughly the same carbon dioxide per unit energy regardless of origin; the claimed saving comes from the carbon taken up by the feedstock and from the emissions of growing, collecting, converting and shipping it. None of this is measured on the aircraft. It is computed.
Three modelling choices move the result materially. The first is co-product allocation: a conversion plant makes jet fuel alongside naphtha, diesel and propane, and the upstream burden must be divided between them. Energy-based, mass-based and economic allocation give different numbers from the same plant, and economic allocation additionally makes the carbon intensity move with market prices. The second is whether the feedstock counts as a residue or a crop — a residue conventionally carries no burden from producing the material it came from, so the classification of used cooking oil or tallow decides a large share of the answer before any physics is applied. The third is indirect land-use change: growing a crop for fuel on existing farmland displaces food production elsewhere, and the emissions from that displacement can only be estimated from economic models, not observed. CORSIA handles this by publishing separate core lifecycle and land-use-change values.
What this means for the price
Because a certificate’s value is proportional to the saving it certifies, methodology is not a footnote. The EU’s renewable energy directive sets a minimum greenhouse-gas saving threshold for qualifying fuels — 65 per cent for transport fuels from installations starting operation from 2021 — and restricts which feedstocks count toward advanced targets. A batch can be physically identical under two schemes and carry different, or no, value in each.
The honest summary is that these markets trade a modelled quantity with real physical inputs. The uncertainty is not in whether the fuel burns cleanly; it is in the boundary drawn around everything that happened before it reached the wing.