Podcast: 123Carbon on importance of accurate SAF data collection

Jeff Lee
Hello and welcome to this episode of cargo facts connect, the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I’m Jeff Lee, editor of cargo facts and it’s Friday, the 14th of March. Over the past two years, we’ve seen SAF initiatives gaining momentum as companies continue to try and make aviation more sustainable. My colleague, deputy editor Yael Katzwer, recently spoke with Jeroen van Heiningen, founder and managing director of carbon insetting company 123Carbon, to discuss how 123Carbon works with IATA to make its platform interoperable with the IATA SAF registry that will launch next month..

Yael Katzwer
Tell me about 123, carbon and what you do.

Jeroen van Heiningen
So I have a background in sustainable transportation for over about 18 years after my career at Accenture, and we noticed that book and claim as a methodology was one of the most efficient ways to decarbonize transportation. So we developed into that, and it’s especially in aviation, is required that we have book and claim in place to correctly allocate saf. So in 2019 I initiated the development of a new platform that allows the creation, the allocation and the verification of among saf but also other types of low carbon transportation, so that fuel suppliers and carriers could create certificates that they could allocate to their cargo owners and forwarders to in order to basically share the costs of decarbonization and also share the the benefits, the carbon reductions. So we are, we are an independent platform that operates across all modalities, and that has transparency and integrity as a key and they we basically offer a registry for everyone, but also a branded platform for airlines and other carriers to interact directly with their customer with so we’re very much focused and specialized in in book and claim.

Yael Katzwer
And what are environmental attribute certificates and how exactly do they work?

Jeroen van Heiningen
So in principle, environmental attribute certificates are the carbon reductions that have been realized, or the carbon equivalent reductions that have been realized through the use of a low carbon technology, which could be saf, it could be bio methanol, it could be electrification, it could be hydrogen, anything that provides a, let’s say, a discount or an advantage compared to a certain baseline. We have that verified by external parties, we log all the data surrounding that project. So where was it uplifted? What were the emission factors used? Was it? What kind of data was it? How was it verified, and that in an entire data package is through a certificate sent to a customer so that he fully understands what he is procuring. As you might be aware in book and claim, we separate the physical stuff from the environmental attributes. So the physical stuff goes into an airport, for instance, and then the carbon reductions are allocated to airlines and to freight forwarders and cargo owner. So you need a water tight system to make sure that there’s no double issuance, double claiming or double selling. And that’s what we that’s what we provide as an independent platform.

Yael Katzwer
And I know you guys are working on interoperability with I add a staff registry partially to, you know, reduce redundancies and things like that. As you were just saying, you don’t want someone double claiming, even accidentally. So do you have interoperability with any other registries at the moment?

Jeroen van Heiningen
I think this is a first in the market. There’s we are part of an ecosystem of of book and claim specialist government or organized by NGOs, like like RSB or especially smart freight center. We have, we’re in part of the committee, committees that deal with registry interoperability. However, we also agreed that at some point you just need to start doing it. And and we were spending quite some time on discussing how we want to do it, how we want to pick it up. As an industry, everyone has their own innovative motivation, so together with IATA, who said, Well, I think we’re advanced enough. Let’s just make this happen. And then also invites, because the publication was also an invitation to other industries to join that and take a pragmatic, bilateral approach to to registry interoperability. And this is just the first step, but obviously we expect to to announce more of these partnerships, not only in in aviation, but as we said, we are a multi modal player. So for us, it makes sense to to be aware of the environment of registries out there. There’s not, not a whole lot, apart from aviation, but potentially they will come.

Yael Katzwer
You said, this is a first step. What are some of the other steps that you foresee down the line?

Jeroen van Heiningen
Yes, so registry interoperability can be quite a few things. It’s the way that registries communicate, and they can communicate about a lot of things. The first step we do with within IATA, and that’s the scope, what we’re doing now is, as you said, to avoid the redundancies and the double issuance, so to make sure that fuel is not registered on a registry twice with that immediately would lead to double counting. Now the. Also means that we are aligning the data models that we are using. We’re using the same taxonomy and using the same wording. So we’re also standardizing the data structure that we are dealing with in the second phase, and then we’re also developing a protocol. If we find these redundancies, what do we do? Who gets priority? Who needs to back off? Things like that are being mentioned there. However, you can also argue that in a later phase that some people are transacting on one registry and the other ones are transacting on another, so that it would make sense also to create some kind of transfer between the registries, where maybe a fuel supplier would use registry A, but an airline would look at it from registry B, and then they would ask, please, can you transfer from register one to registry B so that I can continue to do to to proceed with, with my customers. That’s not the part of the scope of this first phase with IATA. But you can imagine that that that is where potentially they they will go. Another element is also obviously that book and claim is primarily for the voluntary market. You can also imagine that in technical interactions with the mandated market systems that are there are also that to avoid that things are correctly divided between a voluntary and a mandated market. So I think there are different ways that registries or systems need to be integrated, but also standardized. So integration is one, but also standardization in the interpretation. There’s a lot of work to be done on that space as well. And then over seeding that all, if I this is, allow me over seeding that all is also a movement from where you see airlines now all having individual book and claim methodologies, which all differ a little bit and all have different, slightly different certificate than a slightly different approach, and also deliver different levels of transparency. That this the standardization of the registries is also a pulling mechanism to move the airlines from using their own methodologies or Excel based and on board onto a registry, because obviously we can check between the registries. But there are also airlines, obviously out there, the majority that run their own programs on Excel and have them verified by their own auditors. And this is what we’re hoping to achieve with this movement.

Yael Katzwer
How have you seen the attitude towards sustainability and saf change in the aviation industry in recent years?

Jeroen van Heiningen
I think what you do see happening is that there are shifts in interpretation on sustainability, and there will always be When, when, let me give you an example, maybe beyond soft, but when, when biofuels was first introduced, we were very happy, and this was first gen bio fuels. Now, at the moment, everyone’s looking at advanced bio fuels, and in a few years time, there’s even, especially a marine we’re looking to go beyond bio fuels, and we need to move into E fuels or even zero emission and hydrogen electrification. So we will, I think the society as a whole has always demonstrated that it keeps raising the bar on what it perceives as sustainable, and that definition there will become a time where maybe some of electricity will not be seen as sustainable because we keep on shifting, shifting that, raising that bar. And therefore where I think as soon as long as those differentiations are there and people want to be more sustainable than someone else, then I would imagine that that systems like book and claim will be there to allocate the most greenest of molecules, to those customers that are willing to pay. If that, if that answers your question.

Yael Katzwer
Yeah, so IATA has set a goal for the aviation industry to reach net zero by 2050 based on where we are now. Do you believe we can reach that goal by 2050?

Jeroen van Heiningen
We must say that as a whole, we have not been very well positioned to achieve the tar any targets on this purpose that we’ve set and and as you are well also, geopolitical movements are infecting, affecting The whether or not we can use these targets, but it’s not on the political side. It also has to do with the companies that are willing to invest in this. So I don’t think we ever should say the the politics should make this happen, or should we whatever? No, it’s also society as a whole that needs to move. It’s not just the mandates or whatever that needs to bring this together is is to come. Communicating barrels of the voluntary market and the mandated market, and if they can work together, there’s a lot we can do. Unfortunately, we also see that, if you look at saf a lot of production has been announced, and not all of that production is, in the end, also hitting the market, which is obviously unfortunate. But there’s for us as a registry. Obviously, we are not involved basically in the discussion on the type of fuels or whatever. We take the reductions that the fuel bring and create our certificates based on that through a globally approved methodology, and we are not, let’s say, a body that sets the targets or sets the methodology that should be done through stakeholder dialog. We’re here to facilitate the process, but either I think, I think there, there, it will flow up and down, as will the pricing. But if you look at the general trend, I think it’s non reversible and and we also come into that a little bit. We also need institutes like sbti that set the science base target, if that set the targets for these corporates, and they make the fortune 500 move, and they need to start moving them towards investing in their supply chain, so moving them a little bit away from maybe the planting trees, but investing in their own supply chains, paying the actual abatement costs that it takes to decarbonize supply chain, because that’s what it’s all about. If I can plant a tree for one euro, why would I spend 300 euro on soft if it has the same value? So it needs to make be made clear that if you want to achieve certain targets, and we want those companies to invest in supply chains, we need to facilitate that process. Because you can imagine, corporates will always try to find the most cost efficient way to achieve their targets while still maintaining the approval from the sbti. So there’s also, there’s also major role there, where, where do we put the bar?

Yael Katzwer
And you mentioned there’s obviously the voluntary component and then the regulatory component. What more do you think should be done or could be done in terms of regulations to move this along? What are you hoping to see?

Jeroen van Heiningen
Yeah, no, this is, this is the most fundamental question. I think under under SAF, we need to be aware that you don’t solve everything with mandates. Mandates and the voluntary markets are communicating barrels that need to coexist. So the way I see it is that mandate is for basically, for the laggers is to make sure that the entire industry is moving, and then the voluntary part is so that corporates, or anyone that wants to achieve their target faster, or want to do more that they can do that. So if, if all the market was a mandate, then why would companies like like Microsoft still invest they wouldn’t, because it would only regulate it for them. So we need them. We need the mandated market to shift up and raise the bar. And then there will be companies like the Amazon or the Microsoft that want to do more, and they need food access to the voluntary markets to make that to make that happen. So in developing a mandate, you need to develop it in such a way that it doesn’t interfere with a voluntary market, that it coexist with the voluntary market. And and a lot of players are not that aware. The mandated markets are just looking at the mandates to solve everything. The voluntary markets look at the voluntary markets do everything, and we need to look more at that cross field, where they do Where did the two meet, and how can they, how can they coexist? That will be my goal going forward, to see that improving. For us as a positioning we position yourself multi modal, which is not typically the discussion of book and claim, but if you look obviously at the cargo owners or the freight forwarders, they are dealing with multi modality. So that’s why we position this as a multi modal play, to make sure that a big freight forwarder or a cargo owner can absorb certificates from air, road, marine and rail in a constant, standardized approach, and then introduce them into their infantry. So for us, it’s also important that we standardize across the modalities, so that’s something that fits in aviation. Also works in Marine, and that’s at the moment, not the case. The two have a different view on mandates, which is strange, because as an end user, if I’m buying a certificate, there will be other rules. For air, then it will be for real, whereas the company would say, these are all my emissions. So we are also a strong advocate of that multi modal view to solve it, and not just the silo view of within within saf.

Yael Katzwer
All right. We’ve reached the end of my questions. Thank you. I really appreciate you taking the time to meet with me today. Thank you so much.

Jeff Lee
That was Jeroen van Heiningen, founder and managing director of 123Carbon, talking with my colleague Deputy Editor Yael Katzwer. And that’s all the time we have today. For more coverage of the freighter aircraft and AAM market, visit cargofacts.com. Thank you very much for tuning in, and join us again next time.