Tracking Alternative Jet Fuel (2016)

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37 C h a p t e r 4 This chapter presents guidance on comparing the different tracking mechanisms for alter- native jet fuel. In addition, it includes factors to consider when choosing the right tracking mechanism according to local conditions and particular circumstances associated with the pro- curement of alternative jet fuel. 4.1 Main Considerations for Comparing Tracking Mechanisms 4.1.1 Infrastructure Requirements Each tracking mechanism has somewhat different equipment/infrastructure requirements and information transfer needs. As a result, the cost of implementing the different mechanisms varies. The physical segregation tracking mechanism requires the most significant additional invest- ment in equipment/infrastructure of all of the mechanisms since the alternative jet fuel must remain separate from the conventional fuel all the way into the wing of the aircraft. That means additional storage (either tanks or trucks) is required at the airport along with additional transfer equipment (e.g., pumps, hoses, piping, meters) that is needed to keep the fuel separate. As was shown in Figure 9 (the diagram for the mass-balance tracking mechanism), a minimal amount of additional equipment is required compared to conventional fuel delivery. The alter- native jet fuel producer must ship fuel to the blending location through dedicated equipment, whether by truck, barge, or pipeline. The blended fuel must then be shipped to the airport fuel farm, where the blended alternative jet fuel, which now meets the D1655 specification, can be “dropped into” the airport’s storage tanks used for conventional fuel. Book-and-claim has similar equipment/infrastructure requirements to mass-balance, with the addition of a book-and-claim administrator (as was shown in Figure 10). The book-and- claim administrator is an accounting function and carries with it certain costs, but there are no additional capital requirements for book-and-claim compared to mass-balance. The hybrid book-and-claim and mass-balance mechanism has the benefits of both mecha- nisms, but its costs are essentially the same as book-and-claim since it must include a book-and- claim administrator. 4.1.2 Data Requirements In addition to the additional equipment/infrastructure needed for different tracking mech- anisms for alternative jet fuel, additional data or other information is needed for different mechanisms. In general, however, the additional data requirements are not significant since Comparing the Requirements of the Different Mechanisms for Tracking Alternative Jet Fuel

38 Tracking Alternative Jet Fuel RCQs/COAs, invoices, BOLs, and fuel delivery tickets are fairly routine requirements for com- merce in any fuels. Blend tickets, required for alternative jet fuel delivery for use in aircraft, only require fairly routine, readily available data. There may be two new types of documents or data elements that could be of significance to the airport fuel farm. The first is the sustainability certification/PoS documents, which will be created based on detailed analysis and auditing of the alternative jet fuel production facility. Generation of these documents typically happens in conjunction with sustainability certification of the facility according to a chosen voluntary or regulatory framework, such as RSB or RFS2, respectively. This certification may be relatively expensive but may only need to be updated once every few years. The second, which will be new in this context, is alternative fuel credits. These are financial instru- ments that have significant value and are managed by a centralized third-party administrator. As such, the accounting, auditing, and surety requirements may be expensive to produce and maintain. Table 8 presents a summary of the data transfer requirements for the different mechanisms. For each document identified, the data elements that are commonly incorporated are shown Table 8. Comparison of data requirements for tracking mechanisms for alternative jet fuel. Tracking System Documents Data Elements Field Content Data Producer Data Consumer Cost to Implement Attribute codes>>> Unit of measure, code or specification, text description P – Producer B – Blender T – Transporter S – Storage operator A – Airport C – Carrier F – FBO/into-plane operator P – Producer B – Blender T – Transporter S – Storage operator A – Airport C – Carrier F – FBO/into-plane operator Nil Low Medium High RCQ/COA Fuel specification ASTM spec P B,T,S,A,C,F Medium Spec test results Various P B,C,F Medium Manufacturing facility Name/location P C,F Nil Manufacture date mm/dd/year P C,F Nil Batch number # P C,F Nil Volume Gallons (net) P B,T,S,A,C,F Low Creation frequency Every batch – – – Sustainability certification/PoS Producer name Name/location P B,C,F Nil Certification number # P B, C,F Nil Producer certification # P B, C,F Nil Certification system (e.g., RSB/ISCC) P B, C,F High Feedstock data – P B, C,F High GHG emissions CO2e/MJ P B, C,F High Quantity Gallons (net) P B, C,F Low Creation frequency Required audit schedule – – – Invoice Product specification ASTM spec P C,F Nil Seller Name P C,F Nil Buyer Name P C,F Nil Uplift point/title transfer Name/location P C,F Nil Volume Gallons (net) P C,F Nil Price $ P C,F Nil Batch number # P C,F Nil Date mm/dd/year P C,F Nil Creation frequency Every batch – – –

Comparing the requirements of the Different Mechanisms for tracking alternative Jet Fuel 39 Tracking System Documents Data Elements Field Content Data Producer Data Consumer Cost to Implement Attribute codes>>> Unit of measure, code or specification, text description P – Producer B – Blender T – Transporter S – Storage operator A – Airport C – Carrier F – FBO/into-plane operator P – Producer B – Blender T – Transporter S – Storage operator A – Airport C – Carrier F – FBO/into-plane operator Nil Low Medium High Fuel disbursement ticket Volume Gallons S,F C,F Low Fuel temperature °F S,F C,E Low Airline name Carrier code S,F C,F Nil Flight number # S,F C,F Nil Aircraft tail number N# S,F C,F Nil Date mm/dd/year S,F C,F Nil Creation frequency Every fueling – – – BOL Product specification ASTM spec P,B,T B,T,S,A,F Nil Seller Name and origination location P,B,T B,T,S,A,F Nil Point of fuel transfer Name and transfer location P,B,T B,T,S,A,F Nil Volume (gross and net) Gallons P,B,T B,T,S,A,F Low Fuel temperature °F P,B,T B,T,S,A,F Low Batch number # P,B,T B,T,S,A,F Nil Date mm/dd/year P,B,T B,T,S,A,F Nil Buyer Name P,B,T B,T,S,A,F Nil Creation frequency Every transfer – – – Blend ticket D7566 fuel Gallons B T,S,A,F Low Fuel temperature °F B T,S,A,F Low D7566 supplier Name B T,S,A,F Nil D1655 fuel Gallons B T,S,A,F Low Fuel temperature °F B T,S,A,F Low D1655 supplier Name B T,S,A,F Nil Buyer Name B T,S,A,F Nil Batch number # B T,S,A,F Nil Blend date mm/dd/year B T,S,A,F Nil Creation frequency Every blend B – – Table 8. (Continued). with information on who produces the information and who captures it (i.e., who consumes it), as well as a general characterization of how much it costs to generate each data element. 4.2 Choosing the Right Tracking Mechanism Deciding which tracking mechanism to choose will require a balance between the desire to track alternative jet fuel molecules all the way to the wing of the aircraft, and the infrastructure and data requirements associated with each tracking mechanism. Potential requirements have been described in detail in the preceding sections, but specific requirements will not be known until policy decisions are made. Here, concise, high-level guidelines are provided to aid in the selection of the right tracking mechanism. This guidance summarizes the advantages, disadvantages, and impediments to implementation associated with each tracking mechanism.

40 tracking alternative Jet Fuel 4.2.1 Physical Segregation • Overview: This mechanism requires dedicated infrastructure for alternative fuel storage and handling between the production facility and the wing of the aircraft. It allows for the tracking of alternative jet fuel molecules all the way to the wing of the aircraft. • Advantages: One of the main advantages of this mechanism is that the alternative fuel and its sustainability attributes as captured by a certificate or similar quality document move together through the supply chain to the wing of the aircraft. By not mixing alternative fuel in the common storage and delivery system with any other fuel, greater control over the supply and greater certainty over fuel quality are maintained. Additional advantages of this mechanism are that it is easy to audit and is the least likely to allow undetected fraud. • Disadvantages: The main disadvantages of this mechanism are the need for additional infra- structure to keep the alternative fuel segregated and the associated disruption it would cause to the existing system should it be introduced at a large scale. • Implementation considerations: Given the need for separate infrastructure, widespread adoption of this mechanism is likely to be difficult to implement. However, this mechanism may have a role to play in those circumstances where tests of specific alternative jet fuels are being conducted or the output of a dedicated refinery can be readily transported to separate fuel tanks at an off-site fuel depot or to an airport fuel farm. 4.2.2 Mass-Balance • Overview: This mechanism does not segregate the alternative jet fuel from the conventional fuel, but it keeps track of the proportion of sustainability-certified product at each step of the supply chain and transmits that information to the next steps. This system relies on periodi- cally verifying that the sustainability information is consistent with the volumes of alternative fuel being transported. Mass-balance mechanisms may either include information about the alternative fuel source or convey only information about the total proportion of conform- ing product within a specified batch. Preservation of identity increases the complexity of this CoC accounting mechanism and, therefore, the cost of implementation. However, it may be important to preserve identity if the time comes when refiners market alternative fuels that have arrived at the refinery from different fuel pathways or that are mixed with alternative fuels deriving from separate pathways before final transportation to the airport fuel farm. Without preservation of identity, different GHG emission reduction values could be lost, along with other characteristics of the fuel that may be of interest to airline end users, airports, regulators, and other stakeholders. • Advantages: Mass-balance provides a way to ensure that sustainability information accom- panies the alternative jet fuel from feedstock generation to the wing of the aircraft without requiring the same level of infrastructure as physical segregation. Moreover, while no CoC system is immune to potential fraud, the mass-balance mechanism is more readily auditable and enforceable than book-and-claim because it provides more points for the addition of data and application of controls. • Disadvantages: Implementation of a mass-balance system can be complex, in particular if identity preservation is desired, because this requires keeping track of sustainability attributes for potentially several components along the supply chain. • Implementation considerations: Mass-balance may provide an alternative for users inter- ested in tracking the sustainability attributes of alternative jet fuel along the supply chain with- out the need for dedicated infrastructure. While only physical segregation can guarantee the specific sustainability attributes of the alternative fuel in a given location, mass-balance can at least provide information about aggregate sustainability characteristics. It must be taken into account that mass-balance may require a complex data tracking and management system.

Comparing the requirements of the Different Mechanisms for tracking alternative Jet Fuel 41 4.2.3 Book-and-Claim • Overview: In this mechanism, the sustainability information associated with a physical vol- ume of alternative fuel is allowed to be separated from the fuel as it travels along the supply chain. This mechanism uses common fuel storage and delivery infrastructure for both the conventional and alternative fuels that have been properly blended and certified to the rel- evant quality standards. • Advantages: The book-and-claim approach provides the greatest simplicity and ease of imple- mentation from the perspective of existing transportation, storage, and procurement systems. The main advantage of this mechanism is the ability to mix alternative fuels with conventional fuels with no further differentiation of fuel types or additional infrastructure. • Disadvantages: The main disadvantages of book-and-claim are that the sustainability infor- mation is separated from the physical molecules once they enter the commingled infrastruc- ture and the control of information about the specific amounts of alternative fuel delivered to each customer is lost. Claims of alternative fuel use can be made on an aggregate basis, but customers do not know how much blended alternative fuel they received in each delivery. • Implementation considerations: While the book-and-claim approach does not require addi- tional physical infrastructure, it may need a sophisticated data collection and management platform to ensure data integrity and prevent fraud. A third-party administrator would be required to keep track of credits generated by alternative fuel providers and claimed by end customers. 4.2.4 Hybrid Mass-Balance and Book-and-Claim • Overview: In this mechanism, mass-balance is kept from the refinery up to an intermediate control point in the supply chain—for example, a blending location close to an airport. After this intermediate location, book-and-claim is used. • Advantages: An advantage of this mechanism is that it allows some level of certainty with respect to the location of the molecules of alternative jet fuel up to the intermediate control point and the use of common infrastructure beyond the control point. • Disadvantages: A potential disadvantage of this mechanism is the complexity of implement- ing and managing a hybrid approach. In addition, there may be the need to convince external stakeholders that this is a viable and credible approach. • Implementation considerations: Implementation of a hybrid approach may arise when a compromise between a book-and-claim and mass-balance is sought. For example, end users would probably favor book-and-claim because this offers the least disruption to existing sup- ply chain practices; however, regulators or other external entities (e.g., NGOs) may want a higher level of traceability of the alternative jet fuel. Thus, the needs of the relevant stakehold- ers will have to be clearly stated and taken into account when developing a hybrid approach.