CORSIA Phase 1: Credits, Compliance, and What Comes Next

Key Takeaways

• Decarbonizing steel is key to meeting ambitious climate targets in the face of rapidly expanding AI infrastructure as well as broader infrastructure growth.
• The gap between corporate climate ambitions and near-term commercial reality is widening. Despite strong demand signals from hyperscalers and other major buyers, leading producers have recently canceled or delayed flagship green steel projects, citing high energy costs, slow hydrogen market development, and unfavorable policy environments. 
• Bridging this gap requires significant capital investment and supporting mechanisms to scale low-carbon technologies. Environmental attribute certificates offer an effective mechanism to channel capital toward transformative, low-carbon steel projects, supporting technology scale-up, as well as providing a way for buyers to meet their emissions reduction targets.  
• To protect the credibility of environmental attribute certificates as a market mechanism for decarbonization, projects should seek to meet rigorous quality criteria such as additionality, verifiability, and catalytic impact.

Forging New Climate Ambitions for Steel Production

Decarbonizing steel production is essential to meet global climate targets. Steel production accounts for approximately 7–9% of global CO₂ emissions. This is driven chiefly by coal-based primary steelmaking, which still accounts for the majority of global production. Globally, at least 1.8 billion tonnes of crude steel were produced in 2025 to serve a broad array of industries including real estate, infrastructure, automotive, and data center construction. 

As hyperscalers race to build the infrastructure underpinning the AI revolution, steel demand for data center construction, and associated energy infrastructure, is increasing. While the relative share of data center demand for steel versus global steel demand is small, the need for approximately 20,000 tonnes of steel per data center has a material impact on hyperscaler’s public climate commitments. Microsoft, Meta, and other large technology companies have set ambitious 2030 climate targets that include their scope 3 emissions. The embodied carbon of the steel used to build their data centers sits squarely in scope 3.

Hyperscaler’s climate commitments have generated sector-specific demand for decarbonized steel, presenting an opportunity to affect steel decarbonization more broadly. Despite this demand, the supply of low-carbon steel remains limited. The industry faces significant scale-up challenges due to the diffuse nature of demand and the nascent market. Catalyzing growth in decarbonized steel production will require market innovations and new production pathways designed to overcome these challenges. Credible environmental attribute certificates can help bridge the gap between today’s market and tomorrow’s low-carbon steel sector.

What is an Environmental Attribute Certificate?

An environmental attribute certificate (EAC) represents the environmental attributes of a product that can be unbundled and transacted separately from the underlying physical commodity. The most widely used EACs today are renewable energy certificates (RECs), which track the environmental attributes of renewable electricity. The same concept can also be applied to steel and iron, as well as to materials such as cement and concrete.

In a book and claim model, a steel producer can implement a verified emissions reduction intervention, quantify the resulting lowered carbon intensity per tonne of steel produced, and convert that into tradeable certificates. Buyers can then purchase those certificates to support the deployment of low-carbon steelmaking capacity in cases where direct procurement of low-carbon steel is currently impractical due to geographic, contracting, or scheduling incompatibilities.

EACs are distinct from carbon credits. They do not represent emissions reduced or avoided relative to a counterfactual; they represent the intrinsic carbon intensity of the material produced, measured through a life cycle assessment. 

Decarbonizing Steel Requires Significant Capital and Infrastructure Deployment

Steel Production Today

Steel is currently made via three main production routes. About 71% of the world’s steel is produced through the blast furnace–basic oxygen furnace (BF-BOF) route, which emits an average of 2.33 tonnes of carbon dioxide (tCO₂) per tonne of crude steel. A further 24% is produced using scrap-based electric arc furnaces (EAFs), which emit 0.68 tCO₂ per tonne on average—far lower, but still dependent on the carbon intensity of grid electricity. The remaining roughly 5% uses direct reduced iron combined with an EAF (DRI-EAF), typically using natural gas, emitting 1.37 tCO₂ per tonne on average.

While increasing scrap-based production is a critical decarbonization lever, scrap availability is limited. Primary steel production, which uses iron ore as the main feedstock rather than recycled scrap, will remain necessary at large volumes through 2050. This makes it essential to decarbonize ore-based pathways, especially ironmaking: the step where iron ore is reduced to iron and where most emissions occur.

Decarbonizing ore-based steel production requires one of three fundamental interventions: (1) replacing coal and natural gas with low-carbon fuels such as hydrogen or bio-coke, (2) electrifying ironmaking directly, or (3) capturing and storing the CO₂ generated from fossil-fuel-based processes. All three involve significant capital expenditure and dependencies on infrastructure that is not yet in place at the necessary scale. As a result, the energy and cost challenge is substantial.

Low-Carbon Steel: Emerging Pathways

A range of transformative technological pathways are currently in development to overcome these barriers, offering the potential to deliver deep decarbonization to the steel industry exceeding 90% by 2050: 

• Hydrogen-based DRI-EAF: Using green hydrogen instead of natural gas within the DRI process provides a pathway to significantly lower the carbon intensity of ironmaking. Producers such as Stegra are deploying commercial-scale facilities designed to utilize 100% green hydrogen to reduce iron ore.
• Electrifying ironmaking: 
  
  • Molten oxide electrolysis: Boston Metal is commercializing a process that uses electricity to directly convert iron ore to molten metal through electrolysis at high temperature, eliminating the need for hydrogen or carbon reductants entirely.
  • Low-temperature electrowinning: Colorado-based startup Electra uses renewable electricity to extract iron from ore via an aqueous electrochemical process that operates at near-ambient temperature. 
• Carbon capture and storage (CCS): For blast furnaces and DRI plants with long remaining lifetimes, retrofitting with CCS technology can significantly reduce emissions. With new high-emitting capacity still being built, and assets expected to operate for decades, integrating CCS will be essential to avoid long-term carbon lock-in and to decarbonize these facilities over time. To date, commercial-scale deployment remains limited. The Al Reyadah facility at Emirates Steel is the only project currently capturing CO₂ from a DRI process at scale, though a handful of other large-scale projects have entered the development pipeline.

Progress and Setbacks: A Mixed Picture

The past year sent contradictory signals about the pace of steel decarbonization. On the demand side, technology companies with ambitious climate targets are actively signaling their intent to procure near-zero steel and support its development.

In September 2025, Microsoft and Stegra announced a landmark agreement that combines a physical supply deal for low-carbon steel with a separate EAC purchase agreement. Around the same time, Meta announced an agreement with Electra to purchase EACs tied to the startup’s clean iron production, becoming one of the first buyers to use the EAC model for an entirely novel, pre-commercial ironmaking technology. Nucor, the largest US steelmaker, also entered into a physical iron purchase agreement with Electra.

Despite these demand signals, the industry has experienced significant setbacks. A series of low-carbon steel project cancellations and delays has raised questions about the pace and viability of the steel transition, especially due to the high costs associated with green hydrogen production.

At present, the green premium for most low-carbon steel remains too high for buyers. A combination of sustained policy support, long-term demand signals from buyers willing to pay more, and scaling of supporting industries, such as green hydrogen production, is necessary for the low-carbon steel industry to be successful in the long run.

How EACs Can Bridge the Funding Gap in Steel

EACs unbundle low-carbon steel attributes from the physical material, reducing the friction between buyers who are willing to pay a green premium and geographic or logistical constraints that may inhibit physical offtake. Buyers, such as hyperscalers procuring conventional steel for data center construction in locations where low-carbon steel is not yet available, can purchase these certificates to support the development of low-carbon capacity, attribute lower-carbon production to their steel use via a market-based mechanism, and advance toward their scope 3 targets.

A primary objective of the Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sectors, jointly developed by Relae (formerly Carbon Direct) and Microsoft, is to establish high-integrity standards for the EAC market in these sectors. For steel EACs, that means demonstrating significant emissions reduction performance by reaching at least Progress Level 2 in the ResponsibleSteel Decarbonization Progress Levels framework, and aiming to achieve Progress Level 3 by 2030. ResponsibleSteel’s scrap-variable benchmark provides a technology-neutral mechanism to evaluate emissions reduction performance by accounting for the specific proportion of scrap used.

EACs for steel are designed to be catalytic. Rather than supporting incremental improvements that are already becoming cost-competitive, they should target transformative capital changes, such as replacing BF-BOF routes with DRI-EAF, adopting low-carbon hydrogen in DRI processes, or deploying novel ironmaking technologies. Multi-year purchase agreements are particularly powerful because they provide the investment certainty that first-of-a-kind projects need to access capital at a lower cost.

What this Means for Buyers and Suppliers of Low-Carbon Steel 

Whether you are producing or procuring steel, EACs are only one part of a broader decarbonization strategy. For buyers with significant emissions from steel, and other building materials such as cement and concrete, EACs can be a powerful tool to help advance scope 3 reduction goals where supply for physical low-carbon materials is limited. Suppliers can complement commercialization strategies for low-carbon materials by using EACs to monetize emissions reductions, generate additional revenue to support decarbonization investments, and help scale markets for low-carbon materials. Navigating the steel market requires decisions at the intersection of technical feasibility, greenhouse gas accounting, and capital strategy. Key considerations include:

• Greenhouse gas accounting and reportability: Cradle-to-gate emissions for steel production must be tracked using life cycle assessments and should strive for interoperability with environmental product declarations (EPDs). EAC transactions must be reported transparently, especially given the absence of formal market standards at this stage.
• Additionality and catalytic impact: EAC purchases must demonstrably support projects that would not proceed without financial support from the EAC market mechanism, and projects should have a credible pathway toward the near-zero (Progress Level 4) threshold on the ResponsibleSteel framework.
• Avoiding double counting: EAC buyers must verify that the environmental attributes they purchase are not also being claimed by the physical product buyer via an EPD.

FAQs

What is an environmental attribute certificate (EAC) for steel?
An EAC represents the environmental attributes of low-carbon steel, unbundled from the physical material itself, so a producer can quantify a verified reduction in carbon intensity per tonne and sell that value as a separate, tradeable certificate. Buyers can purchase EACs to support low-carbon steel production while still working toward their own emissions targets.

How is an EAC different from a carbon credit?
An EAC reflects the intrinsic carbon intensity of the material itself, measured through a life cycle assessment. That's different from a carbon credit, which represents carbon dioxide actively avoided, reduced or removed from the atmosphere relative to a baseline.

How are AI data centers impacting the demand for low-carbon steel?

Data centers use roughly 20,000 tonnes of steel each, and as hyperscalers build out AI infrastructure, that steel use counts toward their scope 3 emissions and public climate targets. That's turned data center construction into a meaningful driver of demand for low-carbon steel, even though supply remains limited.

What makes an EAC credible enough to count toward a company's emissions goals?
A credible steel EAC needs to meet criteria like additionality (the project wouldn't happen without the EAC revenue), verifiability through life cycle assessment, and catalytic impact toward transformative technology rather than incremental gains. Relae (formerly Carbon Direct) and Microsoft jointly developed criteria for high-quality EACs in the steel and concrete sectors, which set a threshold of at least Progress Level 2 on the ResponsibleSteel Decarbonization framework today, rising to Progress Level 3 by 2030.

Can a producer sell an EAC and also get credit for the physical steel elsewhere?
No. EAC producers need to confirm the environmental attributes they're selling aren't also being claimed by whoever buys the physical steel through an environmental product declaration; otherwise the same emissions reduction gets counted twice.

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. 

Key Takeaways

• Cement is the key ingredient in concrete and is responsible for more than 80% of concrete’s emissions. Cement’s GHG emissions are the primary technical challenge in decarbonizing an industry that accounts for over 8% of annual global greenhouse gas emissions. 
• The global market for low-carbon concrete is constrained by the slow deployment of breakthrough technologies, yet demand from major buyers such as hyperscalers, developers, and infrastructure investors is accelerating. This mismatch between demand and supply is creating a new market mechanism: environmental attribute certificates (EACs) for building materials. 
• EACs represent the climate benefits of low-carbon materials and can be traded separately from the physical product. These certificates, when backed by robust technical diligence, offer a near-term funding mechanism to accelerate decarbonization across the cement and concrete supply chain.

The AI Boom Meets an Industrial Reality

As the market for AI infrastructure expands, data center construction is accelerating—and with it, demand for concrete, one of the most carbon-intensive materials in the built environment. For both builders and material suppliers, the embodied carbon of cement and concrete is under a microscope due to its significant climate impact. Hyperscalers, like Microsoft and Meta, have 2030 targets that far outpace the concrete industry’s readiness to provide near-term low-emissions materials. 

This piece explores why cement and concrete decarbonization is so challenging and how credible, high-quality EACs can help bridge the ambition gap. 

Cement and Concrete: An Important Distinction 

These two terms are often used interchangeably, but they are not the same—and the distinction matters for decarbonization strategy. Cement is the reactive ingredient in concrete, acting like an egg in a cake batter. Concrete itself is a blend of cement, aggregates (like sand and gravel), and water (the batter overall). While concrete is widely used and often seen as the emissions culprit, it is actually cement—just 15% of the mix by volume—that is responsible for more than 80% of concrete’s lifecycle carbon emissions. 

Why Is Concrete so Hard to Decarbonize?

Concrete is the second most-used material on Earth after water. Despite emitting only ~0.13 kg of CO₂ per kilogram, its sheer scale gives it an outsized climate impact—contributing around 8% of global CO₂ emissions. Yet decarbonization has been slow, held back by technical, structural, and accounting challenges across a complex supply chain. 

The Supply Chain Behind Concrete’s Carbon Footprint

To understand why decarbonizing concrete is so difficult, it’s essential to understand how it’s made and what drives its emissions. Three factors explain much of the difficulty: 

• Cement is made in an emissions-intensive process. Cement is produced by heating limestone to extreme temperatures (~1450 °C) to create clinker, a reactive material that binds sand and aggregates into concrete. This energy and carbon-intensive process is where the majority of the emissions occur. 
• Concrete is made to order. Concrete is a blend of cement, aggregate, and water. It is made to order at local batch plants and poured on-site or used in precast molds, with mix designs tailored to specific compressive strength and durability requirements. 
• The supply chain is decentralized and performance-driven. Because concrete mixtures must meet application-specific performance requirements, low-carbon innovations are limited to those that do not decrease product quality and performance at any point in the value chain. 

This layered supply chain, from kiln to batch plant to job site, means decarbonization strategies must be compatible with local infrastructure, material availability, and performance needs. There is no single lever to pull. 

Clinker Is the Main Emissions Driver

Clinker production alone accounts for the majority of cement’s emissions, due to the chemical process (calcination) that converts limestone into lime and releases CO₂. Not only does calcination directly produce CO₂, but the combustion of fossil fuels used to heat the kiln adds to the emissions of the overall process. 

Low-Carbon Concrete Technology: Invented, Not Yet Deployed

Six promising technologies are in development to address cement and concrete emissions, including: 

1. Carbon Capture and Storage (CCS): CCS can be retrofitted to capture the fuel and process emissions from clinker production, delivering nearly complete decarbonization of the cement manufacturing process. CCS can be combined with electrification or fuel switching to deliver deeper decarbonization
2. Supplementary cementitous materials (SCMs): SCMs offer two key benefits: they can partially replace conventional cement in concrete mixtures, and certain SCMs react with CO₂ from industrial or atmospheric sources to enable durable carbon storage.
3. Electrification: Electrifying kiln heating systems can reduce emissions from fossil fuel combustion during clinker production. When powered by low-carbon electricity, this approach lowers the carbon intensity of cement manufacturing while maintaining the high temperatures required for clinker formation.
4. Fuel Switching: Natural gas, biomass, and renewable natural gas are low carbon-intensity fuels that can replace the higher-emitting coal and refuse derived fuel that usually drive the clinker production process. Unlike electrification, some alternative fuels can be used as 'drop-in' replacements in existing equipment. 
5. Synthetic and recycled aggregates: Alternatives to traditional gravel and crushed stone, made from waste materials or industrial byproducts, which can lower emissions and reduce resource extraction.
6. CO₂ curing: A process where concrete is cured with captured CO₂ instead of air, helping lock carbon into the material and partially offsetting upstream process emissions.

Each solution faces deployment challenges, from raw material availability and geographic constraints to cost, performance certification, and integration with legacy infrastructure. 

Few decarbonization strategies have reached industrial scale today, but these strategies are being piloted and demonstrated, and given targeted support, some have the potential to significantly decarbonize the future of the industry. 

The Gap Between Targets and Real Market Capacity

Hyperscalers, utilities, real estate developers, and other large organizations with ambitious scope 3 targets are looking to significantly reduce the embodied carbon throughout their supply chain. However, the current supply of deeply decarbonized cement and concrete is insufficient to support these targets through direct procurement alone; the low-carbon material simply does not exist at the required volume or in the right geographies. In some cases, pilot plants produce too little material to meet large-scale demand, while projects capable of larger volumes may not yet be located in regions where interested buyers are concentrated.

In this context, EACs offer a flexible mechanism to fund innovation and bridge the gap. By unbundling climate attributes from physical materials, near-term obstacles, such as geographic availability, can be overcome while channeling capital toward scalable and catalytic solutions. 

When backed by rigorous life cycle assessments and high-quality, transparent traceability standards, EACs can provide the financial bridge for truly innovative suppliers to invest in the capital solutions required to decarbonize cement and concrete. EACs can serve a catalytic role to support scalable strategies and help ensure that first-of-a-kind facilities are built, and direct procurement of low-carbon concrete is increasingly feasible in the years to come.

How Environmental Attribute Certificates Work in Cement and Concrete Markets

EACs translate emissions reductions from low-carbon cement and concrete production into climate attributes that can be purchased separately from the physical material. Instead of requiring buyers to procure low-carbon concrete directly from a specific supplier site, EACs allow the climate benefit associated with that production to be transacted independently through a book and claim model.

In practice, a producer implements a verified emissions reduction intervention, such as reducing clinker content through supplementary cementitious materials, installing carbon capture at a kiln, or deploying alternative cement chemistries. The resulting emissions reductions are quantified through life cycle assessment and product-level disclosures such as Environmental Product Declarations. Verified reductions can then be converted into certificates representing the climate benefit of that lower-emissions production.

Buyers can purchase these certificates to support the deployment of low-carbon cement and concrete technologies while making progress toward embodied carbon reduction targets. In this way, EACs provide an early demand signal and a revenue stream that can help producers finance capital-intensive decarbonization investments across the cement and concrete supply chain.

What This Means for Suppliers and Buyers

Whether you are procuring concrete or producing it, EACs are only one part of a broader decarbonization strategy. Navigating this space requires decisions at the intersection of technical feasibility, GHG accounting, and capital strategy. Key considerations include: 

• GHG accounting and reportability: Life cycle assessments, Environmental Product Declarations, and other product-level attributes must be tracked and transacted with high integrity. Buyers should report their EAC activities responsibly, especially in the current absence of formal standards and guidance.
• Procurement alignment: EAC buyers must ensure purchased certificates reflect equivalent performance grade materials to what was directly procured for structural applications.
• Monetization pathways: Book-and-claim EAC models offer producers a way to fund capital-intensive decarbonization upgrades while giving buyers a credible way to meet interim scope 3 goals. EAC transactions can take many forms and should be designed thoughtfully to minimize risks such as double counting.

Frequently Asked Questions

What is low-carbon cement, and how does it work?‍

Low-carbon cement reduces emissions by replacing traditional clinker with supplementary cementitious materials (SCMs), switching to cleaner fuels, electrifying kilns, or capturing CO₂ at the point of production. Because cement is responsible for more than 80% of concrete's lifecycle emissions, interventions targeting clinker production deliver the greatest climate impact. Most approaches are technically proven at smaller scales but have not yet reached the industrial volumes needed to meet mainstream demand.

How do EACs for cement and concrete compare to direct procurement of low-carbon materials?‍

Direct procurement means physically buying low-carbon concrete from a supplier, which requires that product to exist at conditions that often can not be met today. EACs decouple the climate benefit from the physical material, allowing buyers to fund verified emissions reductions across the supply chain even when direct sourcing isn't feasible. Both approaches can count toward scope 3 targets, but EACs offer more flexibility in the near term while the low-carbon materials market matures.‍

Is low-carbon concrete proven and available at scale today?‍

The core technologies for decarbonizing cement and concrete are technically demonstrated, but most have not reached commercial scale. Supply is geographically concentrated and insufficient to meet the volume demands of large buyers like hyperscalers, utilities, and real estate developers. This gap between technical readiness and market availability is precisely what makes EACs a valuable bridging mechanism right now.

What should a company look for when evaluating EACs for cement and concrete?‍

‍High-quality EACs should be backed by rigorous life cycle assessments and transparent traceability standards that tie the certificate to a specific, verifiable emissions reduction intervention. Buyers should also confirm that the certificates represent materials with equivalent performance grades to what they are directly procuring for structural applications, and that accounting practices minimize risks like double counting. Working with a technically credible advisor to evaluate EAC quality is essential, since the market currently lacks formal standards and guidance.

How Relae Can Help Decarbonize Cement and Concrete 

Decarbonizing cement and concrete is both a technical and a strategic challenge. Relae brings integrated expertise across geochemistry, life cycle assessment, carbon accounting, and industrial decarbonization strategy to help buyers and producers navigate the complex path to decarbonization. Relae works directly with producers developing low-carbon cement and concrete technologies and with global buyers seeking credible pathways to address embodied emissions in construction. Our team combines industrial decarbonization engineering, geochemical expertise, and carbon accounting to evaluate emerging EAC frameworks and ensure they deliver real climate impact.

• EAC advisory for buyers: Relae helps buyers procure high-quality EACs through criteria development and in-depth technical diligence of EAC offerings across a range of low-carbon commodities, supporting purchased certificates that reflect genuine, verifiable climate impact. 
• EAC advisory for suppliers: Relae helps producers design high-quality EAC interventions and assess potential EAC claims throughout the supply chain, informed by technical assessment, book-and-claim systems, and market landscaping.
• For both: Relae’s levelized cost of carbon abatement tooling provides custom modeling to assess trade-offs across cement and concrete decarbonization pathways, helping ensure that every dollar of climate spend goes further.

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

• The EU Renewable Energy Directive (RED III) sets the sustainability rules behind clean fuel markets in Europe, and frameworks in the UK and US draw on it. Producers typically show compliance through certification schemes recognized by the European Commission, such as ISCC and RSB.
• Certification provides evidence that a fuel meets the regulatory minimum, but schemes apply RED differently, particularly on topics like social outcomes and leakage. As a result, two compliant fuels can differ in quality.
• Relae’s Criteria for High-Quality Low Carbon Fuels give buyers a single benchmark for assessing quality beyond compliance. By comparing a producer’s certificate against the criteria, buyers can identify gaps and develop contract provisions on quality areas the certificate does not cover, tailored to their own priorities. This can help buyers identify and manage quality risk and stay ahead of tighter regulations likely to come under RED IV.

RED Sets the Bar for Clean Fuels in Europe and Beyond

RED III is a key regulatory framework governing sustainability requirements for clean fuels. Its sustainability criteria underpin Europe’s clean fuels markets, including sustainable aviation fuel (SAF) under ReFuelEU Aviation, marine biofuels under FuelEU Maritime, and biomethane injected into Europe’s gas grid. Its reach extends beyond the EU, too. The UK Renewable Transport Fuel Obligation and SAF Mandate apply sustainability criteria modeled on RED, and the certification schemes built around RED will play a role in California’s new feedstock sustainability requirements under its Low Carbon Fuel Standard.

A Certificate Confirms Compliance, Not Quality

Low-carbon fuel producers typically demonstrate compliance with RED through voluntary certification schemes recognized by the European Commission, such as the International Sustainability & Carbon Certification (ISCC) and the Roundtable on Sustainable Biomaterials (RSB). A certificate provides evidence that a fuel clears the regulatory bar. Every recognized certification scheme covers RED’s core requirements, but each applies them differently, and some go further than others.

How Certification Schemes Can Differ

Certification schemes tend to differ most on questions RED only partly addresses. Social outcomes are one example. RED largely requires certified producers to comply with the laws of the country where the feedstock is grown or the fuel is produced. Following local law, however, is not the same as paying living wages, respecting land rights, or delivering benefits to nearby communities, especially where local protections are weaker than the EU’s. Some schemes fill that gap with their own social requirements; and others do less. 

Leakage is another example. It refers to emissions a fuel causes outside its own supply chain, which its carbon intensity does not reflect. One common form is indirect land-use change (ILUC). When cropland or feedstock is redirected to fuel production, the food, feed, or other uses it previously supplied still need to be met elsewhere. That can push cropland expansion into forests or grasslands, releasing the carbon they store. RED manages this risk by limiting the use of feedstocks most associated with expansion into high-carbon-stock land. However, RED acknowledges that ILUC is not limited to these high-risk feedstocks, and diverting waste feedstocks from existing uses can have similar knock-on effects. Without asking specific questions about a given producer’s supply chain, buyers may have limited visibility into the leakage risk behind the fuel they buy.

These examples show that, on paper, two RED-compliant fuels can look the same while differing significantly in overall quality. One reason is that they can be certified under schemes with different requirements on issues such as social outcomes. Another is that RED is built to work at scale, applying a consistent set of rules across the whole market. That consistency is a strength, but it means that some issues, such as leakage, are addressed at the system level rather than for each individual fuel. For buyers, the certificate is a useful starting point for offtake conversations, but may not be enough on its own to judge the quality of what they are buying.

Assessing Quality Beyond Compliance

So how can a buyer tell whether one certified fuel is higher quality than another? Today, doing so means comparing certification schemes rule-by-rule, which is cumbersome. Relae’s Criteria for High-Quality Low Carbon Fuels provides a shared definition for what “better than compliant” means. It brings together requirements from RED, CORSIA, ISCC, RSB, national SAF mandates, and other frameworks into a single benchmark, and adds criteria on social outcomes, additionality, and leakage. We built the criteria for voluntary buyers, but they are just as useful for regulated companies that want to go beyond meeting their mandates and show how well they do it.

How Buyers Can Apply the Criteria, and How Relae Can Help

In practice, buyers can use Relae’s criteria in four steps. Each one calls for technical judgment on scheme rules, supply chains, and contract terms. Relae’s fuels team works alongside buyers at every stage, from the first certificate review to the final offtake terms.

1. Start with the certificate. Confirm which scheme the fuel is certified under, what the certificate covers, and whether the producer holds any optional add-ons, such as a low ILUC risk certification. Our team reviews certificates and the scheme rules behind them to confirm what is and is not covered.
2. Map the certificate against Relae’s quality criteria. Sort each criterion into what the certificate already covers, what it partly covers, and what it does not address. Our experts carry out this mapping for a specific fuel and pathway and highlight the gaps that matter most.
3. Ask the producer to fill the gaps. Turn each gap into a direct question, for example, how the producer verifies wages and land rights in its supply chain, or how it manages ILUC risk. The answers help buyers see where quality risks may lie that compliance alone does not cover. We help prepare these questions and assess the producer’s responses and evidence.
4. Build the answers into an offtake agreement. Use the answers to develop contract provisions on quality that the certification does not cover, such as additional verification, disclosure, or feedstock-sourcing requirements. These provisions help buyers manage quality risks over the life of the deal, whether it’s a SAF offtake agreement or another fuel supply contract, and support the sustainability claims they make about the fuel. Our fuels experts work with buyers and their counsel to shape these provisions.

Procuring for Where Standards Are Heading

The criteria are also a guide to what may come next. The European Commission is preparing its post-2030 renewable energy framework (RED IV). The Commission held a public consultation from March to June 2026, and plans to propose legislation by the end of the year. The final scope is not yet known, but industry submissions point to areas where bioenergy rules could tighten, such as stricter traceability and on-site audits for imported waste feedstocks. Buyers who procure against where standards are heading, not just today’s minimum, will be less exposed when the rules change and better able to back up the sustainability claims they make about their fuel.

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Frequently Asked Questions

What is RED III?

RED III is the current version of the EU Renewable Energy Directive. It sets renewable energy targets and the sustainability criteria that biofuels, biogas, and other renewable fuels must meet to count under EU regulations. Those criteria apply across Europe’s clean fuel markets, including SAF under ReFuelEU Aviation and marine fuels under FuelEU Maritime.

How do producers show their fuel complies with RED?

Most producers use a voluntary certification scheme recognized by the European Commission, such as ISCC or RSB. The scheme audits the producer and its supply chain against RED’s requirements and issues a certificate if they are met. 

Are all RED-recognized certification schemes the same?

No. Every recognized scheme covers RED’s core requirements, but each applies them differently, and some add requirements or optional add-ons of their own. Certification schemes differ the most on issues RED only partly addresses, such as social outcomes and leakage. As a result, two RED-compliant fuels can differ in overall quality.

Who should use the Relae Criteria for High-Quality Low Carbon Fuels?

We designed the Criteria for High-Quality Low Carbon Fuels for voluntary buyers, but they are equally useful for regulated companies. Buyers can compare a producer’s certificate against the criteria to find gaps, raise those gaps in offtake discussions, and address them through contract provisions. Relae works with both voluntary and compliance buyers to apply the criteria to specific fuels and deals, from assessing producers to shaping offtake terms.

What is RED IV, and why does it matter for buyers today?

RED IV is the post-2030 renewable energy framework the European Commission is preparing. The Commission consulted on it from March to June 2026, and plans to propose legislation by the end of 2026. Sustainability rules for bioenergy could tighten. Buyers who procure against where standards are heading, rather than today’s minimum, will be less exposed when the rules change.

Key Takeaways

• The revenue stack for a given fuel is set by the rules that govern the market for low-carbon fuels: regulations, certification schemes, certificate registries, and corporate accounting frameworks. 
• Regulators and buyers reward characteristics beyond regulatory eligibility and carbon intensity, such as reportability, broader sustainability, and advanced technology.
• Relae helps producers with commercial strategy relating to feedstock, production pathway, and certification, which impact access to markets. 

The Route to Market Is a Strategic Choice

Low-carbon fuels (LCFs), such as sustainable aviation fuel (SAF) and renewable natural gas (RNG), will cost more to make than their fossil equivalents for the foreseeable future. Projects narrow that gap through some combination of regulatory-market value, sales of environmental attribute certificates (EACs) to voluntary buyers, and financial incentives such as the 45Z Clean Fuel Production Credit.

Regulatory programs are pulling investment into new facilities and novel production routes, and voluntary reporting frameworks are moving toward allowing companies to count fuel certificates in their emissions inventories. What the revenue stack for a given fuel looks like is set by the rules that govern the market for LCFs: regulations, certification schemes, certificate registries, and corporate accounting frameworks. 

In voluntary markets, the certification scheme, certificate registry, and reporting framework determine the official carbon intensity (CI) of the fuel, the number of certificates generated, and how buyers can use them to make claims. 

In regulatory programs across Europe and North America, the rules determine how the fuel is classified, and whether its feedstock receives premium value, is capped, or is excluded altogether. Producers who understand how their market entry decisions impact value will be better positioned now and going forward.

EACs Carry a Fuel’s Value to Market

An LCF EAC records characteristics of a batch of fuel separately from the fuel itself, such as whether it qualifies for a given program, the CI, or its feedstock. The certificate can travel with the fuel (bundled) or be sold on its own (unbundled): 

Bundled EACs

In most regulatory markets, an obligated party purchases the fuel and its certificate together. These buyers are mainly fuel suppliers, as under the California Low Carbon Fuel Standard (LCFS), and airlines, as under the EU Emissions Trading System and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). They need both the physical fuel and the EAC that proves the fuel is eligible.

Unbundled EACs (Book-and-Claim) 

Often in the voluntary market, the fuel is consumed wherever it can be delivered. The EAC is sold separately to whoever wants to claim its attributes, a system called book-and-claim. This matters because most companies have no control over the fuel burned in their supply chains: a company that ships freight cannot choose the fuel its carriers use, but it can buy EACs with a certified CI and claim the associated emissions reduction.

In both markets, the characteristics the EAC carries determine the regulatory and voluntary value in a fuel’s revenue stack.

Three Layers of Rules Determine the Value of an EAC

An LCF producer chooses the feedstock, production pathway, and markets to sell into. How those choices translate to the value of a fuel’s EAC is determined by three layers of rules that govern the LCF market (Table 1).

Table 1. The three layers of rules that set an LCF EAC’s value. Examples are illustrative and not exhaustive. ISCC = International Sustainability and Carbon Certification; RSB = Roundtable on Sustainable Biomaterials; SAFc = sustainable aviation fuel certificate; RED III = Renewable Energy Directive; GHG = greenhouse gas; SABA = Sustainable Aviation Buyers Alliance. Source: Relae.

Where the Rules Disagree: Three Feedstock and Pathway Examples

The result is that the same batch of fuel can carry a different CI, or a different classification, depending on which rules it is subject to. Three examples below demonstrate how production pathway decisions can impact a fuel’s value:

1. Manure-based RNG ⇨ avoided emissions. The three layers treat avoided emissions differently. At the regulatory program and voluntary standard layer, ISCC PLUS follows the EU Renewable Energy Directive (RED III) in crediting methane emissions avoided through improved manure management, but CORSIA does not. At the registry and accounting layer, the Greenhouse Gas (GHG) Protocol’s draft Action and Market Instruments (AMI) Standard and the AIM Platform have proposed separating avoided emissions from a fuel’s direct life cycle emissions and reporting the two on different statements, and whether negative CI values from avoided emissions are accepted at all depends on the registry where the EACs are listed.
2. Crop-based feedstocks ⇨ indirect land use change (iLUC). Regulators don’t agree on how to incorporate iLUC, either. Under the LCFS, modeled iLUC emissions for all crop-based fuels are positive. Under CORSIA, they can be positive or negative. Under RED III, iLUC is excluded from the CI, though separate rules restrict feedstocks deemed high-risk for iLUC. And because modeling and assumptions keep evolving, iLUC values are also subject to change over time.
3. Synthetic fuel ⇨ e-SAF mandates. Regulatory programs also differ on what counts as a given category of fuel. ReFuelEU Aviation and the UK SAF Mandate both reserve a share of their mandates for e-SAF, but define it differently. The EU requires the fuel to qualify as a renewable fuel of non-biological origin (RFNBO). The UK sets its own power-to-liquid criteria, including which electricity sources it accepts. The same e-SAF can therefore count toward one sub-mandate and not the other.

Beyond Eligibility: EAC Characteristics the Market Rewards

In regulatory markets, an EAC’s value depends first on whether the fuel is eligible and how it is classified. In voluntary markets, value depends on the fuel’s CI and the number of certificates issued. Both regulators and voluntary buyers also reward characteristics beyond that baseline, and those characteristics can impact a fuel’s revenue stack:   

• Voluntary reportability. The value of an EAC depends on how a buyer can report it, today and in the future. The GHG Protocol is still finalizing its rules for fuel certificates and what a buyer can claim. Certificates that fit cleanly within those rules may command a premium.
• Breadth of sustainability criteria. Some buyers screen EACs against criteria beyond emissions savings. The Sustainable Aviation Buyers Alliance (SABA) explicitly prefers advanced feedstocks and certification schemes with stronger social and environmental safeguards. Regulations set a minimum bar, but voluntary markets have no single standard for a high-quality EAC. The Relae Criteria for High-Quality Low Carbon Fuels consolidate these characteristics into one framework, and can show producers how their fuel and certification choices measure up against it.
• Advanced feedstocks and technologies. Fuel from novel pathways typically costs more than fuel from established ones, and some buyers are willing to pay that premium: early buyers want to support technologies that need offtake to reach commercial scale, and others want to diversify supply ahead of expected constraints on hydroprocessed esters and fatty acids (HEFA) SAF.¹ Regulators reward the same pathways directly through e-SAF sub-mandates and financial incentives, such as the UK Revenue Certainty Mechanism. 

Where Should Producers Start?

How each program treats a feedstock, how each methodology calculates CI, and what each set of buyers will pay for are inputs to the feedstock, production pathway, and offtake decisions themselves. Once those decisions are made and contracts are signed, the route to market is largely fixed. Producers should weigh the routes open to them against three questions before committing:

1. How will my feedstock, production pathway, and certification affect access to markets?
2. How do I position my product within overlapping voluntary and regulatory markets?
3. Who are my buyers and what do they require or prefer?

A sound strategy must consider the complex interactions between voluntary and regulatory markets, certification schemes and registries, and buyer preferences.

The landscape continues to evolve, with new national certification programs and regulations for LCFs emerging across the globe and accounting frameworks shifting. The policy experts, scientists, engineers, and economists at Relae help producers understand how each certification route affects the value of their fuel in the markets they want to enter, choose feedstocks and pathways with that in mind, and make sure the claims behind their EACs are high-quality and hold up to buyer and registry scrutiny as the rules evolve.

Frequently Asked Questions

What is the difference between a bundled and an unbundled EAC?

A bundled EAC is sold with the physical fuel, usually to an obligated party under a regulatory program such as the LCFS or ReFuelEU Aviation. An unbundled EAC is sold separately from the fuel through book-and-claim, so a buyer can claim its attributes without taking delivery of or consuming the fuel.

What is the difference between a regulation, a certification scheme, a registry, and a corporate accounting framework?  

A regulation or voluntary standard sets the CI methodology and decides whether certain feedstocks are rewarded, capped, or excluded. A certification scheme verifies that a batch of fuel meets that methodology. A registry issues and tracks the certificates and can apply additional rules on CI, while corporate accounting frameworks determine what a voluntary buyer can claim.

Why can the same fuel have more than one carbon intensity?

Each regulatory program and voluntary standard sets its own CI methodology, and registries can add rules of their own. Manure-based RNG is one example: RED III and ISCC PLUS credit avoided methane emissions, CORSIA does not, and some registries cap CI at zero. The same batch can therefore carry different CIs depending on where it is certified and what market it is sold into.

How does carbon intensity affect LCFS credits?

Under the LCFS, the number of credits a fuel generates depends on how far its certified CI falls below the program’s fossil fuel benchmark for that year. Credit price is set by the market, so a lower CI increases the credits a producer has to sell, and the program’s rules decide the CI of the fuel.