The decarbonization of the aviation industry is seen as part of the global energy transition. The International Air Transport Association (IATA, referred to as "IATA") recently released two heavyweight news.

First, on January 31, 2025, IATA officially released the accounting and reporting scheme for the emission reduction effects of airlines using sustainable aviation fuel (SAF); then, on February 13, IATA announced a strategic partnership with 123Carbon to jointly promote the interoperability of their respective SAF registration systems. These two major initiatives mark a solid step forward for the global aviation industry in building a unified, transparent and reliable SAF market.

Why has SAF become the core lever for aviation decarbonization?

Sustainable aviation fuel (SAF) is regarded by IATA as the "largest contributor" to the aviation industry's 2050 net zero goal (estimated to contribute 65% of emissions reduction) due to its life cycle emission reduction potential of up to 80%. However, SAF currently accounts for only 0.3% of global jet fuel demand, and its cost is 3-5 times that of traditional fuels. Standardized accounting and market mechanisms are urgently needed to promote large-scale application.

The International Air Transport Association (IATA) released new estimates for Sustainable Aviation Fuel (SAF) production showing that:

● In 2024, SAF production volumes reached 1 million tonnes (1.3 billion liters), double the 0.5 million tonnes (600 million liters) produced in 2023. SAF accounted for 0.3% of global jet fuel production and 11% of global renewable fuel.

● This is significantly below previous estimates that projected SAF production in 2024 at 1.5 million tonnes (1.9 billion liters), as key SAF production facilities in the US have pushed back their production ramp up to the first half of 2025.

● In 2025, SAF production is expected to reach 2.1 million tonnes (2.7 billion liters) or 0.7% of total jet fuel production and 13% of global renewable fuel capacity.

“SAF volumes are increasing, but disappointingly slowly.”said Willie Walsh, IATA’s Director General.

“The airline industry’s decarbonization must be seen as part of the global energy transition, not compartmentalized as a transport issue. That’s because solving the energy transition challenge for aviation will also benefit the wider economy, as renewable fuel refineries will produce a broad range of fuels used by other industries, and only a minor share will be SAF, used by airlines. We need the whole world to produce as much renewable energy as possible for everybody. Airlines simply want to access their fair share of that output,” said Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist.

To reach net zero CO2 emissions by 2050, IATA analysis shows that between 3,000 to over 6,500 new renewable fuel plants will be needed. These will also produce renewable diesel and other fuels for other industries. The annual average capex needed to build the new facilities over the 30-year period is about $128 billion per year, in a best-case scenario. Importantly, this amount is significantly less than the estimated total sum of investments in the solar and wind energy markets at $280 billion per annum between 2004 and 2022.

SAF accounting and reporting scheme: Standardization helps aviation decarbonization

The aviation industry is facing unprecedented pressure to reduce emissions. To achieve the net zero carbon emissions target of 2050, SAF is regarded as the "biggest lever" for aviation decarbonization. To ensure that airlines can accurately quantify the environmental benefits when purchasing and using SAF, IATA has launched the SAF accounting and reporting scheme in conjunction with a team of experts from more than 40 airlines around the world. The scheme uses a "purchase-based" approach to calculate emission reduction benefits, which is consistent with ICAO's CORSIA approach, thereby achieving data consistency and comparability under different regions and regulatory frameworks.

Main content and technical features

● Unified calculation method: Regardless of the traceability mode of SAF (such as physical isolation, mass balance, or accounting and claims), the scheme uses the actual amount of SAF purchased and consumed by airlines as the basis for accounting. This approach ensures consistency and transparency of global accounting.

● Flexible selection of emission factors: Users can choose "tank to tail gas" (TTW) or "wellhead to tail gas" (WTW) emission factors according to their needs to meet different regulatory and voluntary emission reduction requirements.

● Preventing double counting: The plan specifically emphasizes that through a transparent and verifiable data management mechanism, the same batch of SAF emission reduction benefits should not be double counted in multiple platforms or reports, thereby ensuring that the data is authentic and reliable.

● Allocation to passenger and cargo levels: The plan also provides detailed calculation methods for how to allocate SAF emission reduction benefits to each passenger or each batch of cargo, providing accurate data support for airlines in voluntary or compliant emission reduction reports.

“The IATA methodology will provide a consistent approach to accounting for the environmental benefits of SAF purchases, regardless of location. This is an essential component of the soon-to-be launched IATA SAF Registry which will enable airlines to claim SAF benefits against their regulatory and voluntary obligations, irrespective of where SAF was uplifted. The transparency of a published global standard methodology will give confidence that the Registry is robust and fair, with no double-counting. This is essential in creating a functioning global SAF market,” said Marie Owens Thomsen, IATA’s SVP Sustainability and Chief Economist.

Cooperation to promote interoperability of SAF registries: building a global unified market

As the SAF market continues to expand, market participants have an increasingly urgent need for data connectivity and transparency. In response to this demand, IATA and 123Carbon officially announced a strategic partnership on February 13, and both parties will work to promote the interoperability of their respective SAF registry systems.

The collaboration between IATA and 123Carbon will focus on three key elements:

1. A unique identifier and alignment of the relevant data points to exchange between registries.

2. A process for the exchange of information to avoid any potential double issuance.

3. A dispute resolution process.

“123Carbon is committed to establishing integrity and trust in the market for Environmental Attribute Certificates (EACs) within multi-modal transportation (e.g. air, sea, road & rail). With IATA, we have found a strong partner in the aviation sector that shares our beliefs. This collaboration allows SAF providers, airlines, freight forwarders, and corporate entities to utilize our platforms without the concern of double issuance, whilst managing their SAF certificates digitally on our platform,” said Jeroen van Heiningen, Managing Director, 123Carbon.

Interoperability will not only help improve the overall data transparency of the SAF market, but will also promote closer collaboration among all parties and accelerate the application of SAF in global aviation decarbonization. The IATA SAF Registry is scheduled to go online in April 2025 and is expected to become an important platform for SAF certificate management worldwide, providing real-time and accurate environmental benefit data support for airlines, fuel suppliers and regulators.

In addition, IATA and 123Carbon will seek engagement with other SAF stakeholders to join this initiative to deepen the interaction between registries.

SAF scale-up still faces bottlenecks

1. Supply shortage and cost problems

● SAF production will only reach 1 million tons in 2024 (accounting for 11% of renewable fuels), requiring an average annual investment of US$128 billion to expand production, but current policy signals are complex and investors are waiting.

● In the short term, IATA said Progress on expanding SAF production and use could be accelerated in three critical ways:

- Increase co-processing:Existing refineries co-process renewable raw materials (co-processing is expected to save US$347 billion in capital expenditures by 2050).

- Diversify SAF production: There are 11 certified pathways to make SAF, but the HEFA method (hydrotreated esters fatty acids (used cooking oil, animal fats etc.)) accounts for around 80% of production in the next five years. SAF volumes could be boosted by increasing investments to scale up production through the other certified pathways, in particular Alcohol-to-Jet (AtJ) and Fischer-Tropsch (FT), which use biological and agricultural wastes and residue.

- Create a global SAF accounting framework

2. Infrastructure and policy coordination

● Airports need to upgrade SAF refueling facilities, and aircraft need to be compatible with high-proportion mixed fuels.

● Policies of various countries need to be coordinated to avoid market fragmentation.

By announcing key milestones and recent achievements, IATA has sent a clear message to the market: Although SAF currently accounts for a relatively low proportion of global aviation fuel, its production and usage ratio will increase significantly in the future, thus providing strong support for the entire aviation industry to achieve its net zero goal. In addition, IATA also calls for global policy coordination and active support to jointly promote the transformation of global air transport to a low-carbon and sustainable future.

SAF is the key to aviation decarbonization. With the continuous deepening of global policy support and technological innovation, the SAF market may usher in significant development in the next few years.

Author: Qinger