Regulatory Framework for CORSIA Eligible Fuels PDF

Regulatory Framework for CORSIA Eligible Fuels Dario Formenti, ISCC System GmbH ISCC CORSIA Training, Online, September 2024 © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 1  01 The CORSIA Framework 02...

Regulatory Framework for CORSIA Eligible Fuels Dario Formenti, ISCC System GmbH ISCC CORSIA Training, Online, September 2024 © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 1  01 The CORSIA Framework 02 Other Relevant Legislative Frameworks © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 2  The CORSIA Framework © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 3 Signifying a major milestone, CORSIA* was agreed on by the ICAO** Council as a new global market-based measure in October 2016 Source: ICAO. https://www.icao.int/newsroom/pages/icao-assembly-achieves-historic-consensus-on-sustainable-future-for-global-civil-aviation.aspx **ICAO stands for International Civil Aviation Organization *CORSIA stands for Carbon Offsetting and Reduction Scheme for International Aviation © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 4 CORSIA was set up to deliver on aviation’s short-to mid-term goal. A long-term aspirational goal to reach net-zero by 2050 was recently set. Long-term aspirational Short- to mid-term goal goal Carbon-neutral growth Net-zero by 2050 from 2020 Policy Policy ? © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 5 CORSIA covers the majority of international air travel and will be implemented in three phases Pilot phase First phase Second phase 2021 - 2023 2024 - 2026 2027 - 2035 VOLUNTARY MANDATORY With exemption for: Small islands, least developed countries, landlocked States are volunteering to be part developed countries and States with less than 0.5% of international air of the scheme from 2021 traffic in the year 2018 (although they can volunteer) 128 states (incl. all EU Member States) participate in CORSIA in 2024, representing more than > 80% of international aviation The majority of airlines will be affected by these developments © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 6  CORSIA aims to achieve carbon neutral-growth of the aviation sector from 2020 onwards ▪ CORSIA establishes an “emissions baseline” at 2019 emission levels for its pilot phase 85% of 2019 levels after the pilot phase (2024 – 2035) ▪ Annual emissions from aviation are expected to increase in future years CO2 offsetting requirement of aviation sector for given future year ▪ Any emissions exceeding the baseline level are subject to the offsetting requirement placed on aeroplane operators ▪ Aeroplane operators are required to purchase and cancel “emissions units” to offset* the increase in CO 2 emissions covered by the CORSIA scheme ▪ CORSIA only applies to international flights: flights that take-off in a state and land in another state Actual CO2 emissions of 85% of annual CO2 emissions (provided both states take part in CORSIA) aviation sector in a given of aviation sector in 2019 - future year “emissions baseline” (from First Phase in 2024) Source: Simplified, own depiction based on ICAO documents *Carbon offsetting refers to the compensation for emissions by financing a reduction in emissions elsewhere (i.e. „out-of-sector“) © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 7  CORSIA provides aeroplane operators with the option of using CORSIA Eligible Fuels (CEF) to reduce their offsetting requirements Use of CORSIA Eligible Fuels (CEF) CORSIA Eligible Fuel (CEF) “A CORSIA sustainable aviation fuel or a CORSIA lower carbon aviation CO2 offsetting requirement of fuel, which an operator may use to aviation sector for given future reduce their offsetting requirements” year Source: ICAO SARPS, Annex 16, Volume IV, definition of CEF Actual CO2 emissions of 85% of annual CO2 emissions aviation sector in a given of aviation sector in 2019 - future year “emissions baseline” (from First Phase in 2024) Source: Simplified, own depiction based on ICAO documents © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 8 CORSIA distinguishes between two different types of CORSIA Eligible Fuel CORSIA Eligible Fuel (CEF) “A CORSIA sustainable aviation fuel or a CORSIA lower carbon aviation fuel, which an operator may use to reduce their offsetting requirements” CORSIA Sustainable Aviation CORSIA Lower Carbon Aviation Fuel (SAF) Fuel (LCAF) „A renewable or waste-derived „A fossil-based aviation fuel that aviation fuel that meets the CORSIA meets the CORSIA Sustainability Sustainability Criteria under this Criteria under this Volume“ Volume“ Source: ICAO SARPS, Annex 16, Volume IV © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 9 All requirements and procedures relevant for CORSIA Eligible Fuels are laid out in six key ICAO documents Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/implementation-elements.aspx © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 10  CORSIA Eligible Fuels need to comply with sustainability criteria to be ‘eligible’ Greenhouse Gases (GHG) Carbon Stock Water Soil Air Conservation Waste and Chemicals Human Rights and Labour Rights Land Use Rights and Land Use Water Use Rights Local and Social Development Food Security Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 11  There are currently two CORSIA approved Sustainability Certification Schemes (SCS) Important: Approval of SCS currently only covers SAF, not LCAF! Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 12  CORSIA prescribes a stringent set of criteria that SCS must fulfil to become recognized and certify CORSIA eligible fuels General requirements for SCS Requirements set by SCS for economic operators Documentation & Annual reports, Stakeholder Mass Balance & (Group) Audits & Transparency on Management & Monitoring & Engagement Supply Chain Certificate Issuance other SCS used Transparency System Review Traceability GHG Reporting & Complaint Risk Management Assurance Level & Accreditation & CORSIA Accounting Procedure Plan handling Non- Auditing Standards Certification compliances Requirements Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 13 How does the CORSIA certification “ecosystem” work? Accreditation Body Surveillance / Information Reporting Accreditation and Approval Application Exchange Surveillance Cooperation Sustainability Certification Schemes (SCS) Certification Body Surveillance Sets certification Audit and requirements Reporting Certification Farm/Plantation, First Gathering Point, SAF Production Plant SAF Blend Point Downstream Airline Point of Origin Collecting Point (Processing Unit) (Trader) Trader* *Certification after SAF blend point not mandatory under CORSIA, © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 14 but possible under ISCC CORSIA to allow for full traceability  ICAO provides default life cycle emissions values for CEF ▪ Default values are a simple way of stating life cycle emissions information for a CEF ▪ This ICAO document includes default values that are available for SAF made from different conversion pathways, feedstocks and world regions ▪ Default values are provided for the prevalent SAF conversion pathways (including, but not limited to, HEFA) ▪ Document is updated regularly to include new default values Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 15  ICAO also provides a methodology for actual life cycle emissions values ▪ This ICAO document outlines the CORSIA GHG methodology, including clarifications on System boundaries of LCA calculations under CORSIA Life cycle stages Allocation rules ▪ The document also includes passages about other relevant topics for CEF, such as Technical reporting requirements for the chain of custody Feedstock categories Low land use change risk practices Emission credits calculation for landfill emissions credits and recycling emissions credits Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/implementation-elements.aspx © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 16  The CORSIA Supporting Document provides more detailed technical information ▪ This ICAO document gives the rationale and background information on everything related to CEF ▪ Describes the ICAO processes to manage and maintain the ICAO document on default values and how new default values can be included in CORSIA ▪ Includes the methodology used to calculate default values for all CORSIA eligible SAF pathways ▪ Gives further explanations and guidelines for calculating actual life cycle emissions for CORSIA eligible fuels Source: ICAO website: https://www.icao.int/environmental-protection/CORSIA/Pages/CORSIA-Eligible-Fuels.aspx © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 17  Other Relevant Legislative Frameworks © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 18 Besides CORSIA, a wide range of regulatory frameworks to promote SAF uptake have been put in place or are in the process of implementation ReFuelEU Aviation EU Emissions Trading UK ETS and Singapore SAF levy Regulation System (ETS) UK SAF mandate Requires airlines to buy and Under the UK ETS, similarly to the Sets a mandate on fuel suppliers surrender allowances for each EU ETS, airlines can use SAF to From 2026, departing flights will to supply a defined percentage of metric ton of CO2 emitted on reduce the allowances they will be required to use 1% SAF, SAF to EU airports, starting 2025 intra-EU flights need to buy and surrender with plans to raise this level to 2% of SAF in 2025, increasing to Airlines can use SAF to reduce 3-5% by 2030 SAF mandate set to start in 2025, 70% by 2050 the allowances they will need to requiring 10% SAF blend by 2030 buy and surrender SAF blender’s tax California Low Carbon US Renewable Fuel Japan SAF mandate credit (US IRA)* Fuel Standard (LCFS) Standard (RFS) Aims to reduce GHG emissions Aims to increase the use of by promoting cleaner transport renewable fuels in the US, while Japan intends to introduce a Grants tax credits for SAF that fuels reducing GHG emissions achieves a life cycle emissions mandate of 10% SAF by 2030, reduction of at least 50% Since 2018, SAF can earn SAF can be eligible under the RFS, though many details still compliance credits under the provided it meets GHG saving unknown LCFS (“opt-in”) targets (“opt-in”) *US IRA = US Inflation Reduction Act © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 19  Summary ▪ Under CORSIA, aeroplane operators are required to purchase and cancel “emissions units” to offset the increase in CO 2 emissions covered by the scheme. Another option to reduce an aeroplane operator’s offsetting obligations is via the use of CORSIA Eligible Fuels (CEF) ▪ To be eligible as CEF, a renewable fuel must comply with a set of sustainability requirements defined by ICAO and certified via the ICAO-recognized certification schemes ▪ CEF includes SAF (renewable or waste-derived SAF) as well as LCAF (fossil-based aviation fuel) that meet the CORSIA Sustainability Criteria ▪ The ICAO webpage on CORSIA Eligible Fuels includes all relevant information, requirements and guidelines for CEF ▪ Besides CORSIA, many other legislative frameworks consider SAF production and use. This includes national policies (e.g., in the UK) as well as regional policies such as the EU ETS and the ReFuelEU Aviation regulation © ISCC use © ISCC System GmbH: For personal System only.GmbH: For personal Reproduction use only. Reproduction and distribution is prohibited. and distribution is prohibited. 20  Thank you! ISCC System GmbH Hohenzollernring 72, 50672 Cologne, Germany www.iscc-system.org [email protected] © ISCC System GmbH: For personal use only. Reproduction and distribution is prohibited. 25