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#DeloitteESGNow — Accounting Considerations Related to Sustainable Aviation Fuel (April 26, 2023)

ESG Spotlight
April 26, 2023
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#DeloitteESGNow — Accounting Considerations Related to Sustainable Aviation Fuel


See the World Economic Forum’s November 2020 insight report Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation.
As noted below, there is currently no standardized guidance on how an entity can claim the environmental benefit of SAF emission reductions acquired by partners. See the next section for further discussion.
See the EPA’s Web site for a discussion of Scope 1, 2, and 3 inventory guidance.
Currently, there is no agreed-upon framework or registry for claiming SAF environmental benefits as a reduction of Scope 3 emissions. However, this is an evolving area, as discussed below.
The Clean Skies for Tomorrow Sustainable Aviation Fuel Certificate (SAFc) framework being developed (see the Looking Ahead section for further discussion) is designed to be compatible with the Roundtable on Sustainable Biomaterials’ (RSB’s) draft Book & Claim Manual. As the RSB explains in its draft manual, the book-and-claim model is a “[c]hain-of-custody model in which the administrative record flow does not necessarily connect to the physical flow of material or product throughout the supply chain.” Under this method, even if SAF is not always used on flights taken by a company’s employees, the company can still claim its SAF emission reduction purchase to help meet its GHG reduction goals.
The Clean Skies for Tomorrow community will be working to support the adoption of the SAFc framework with the GHGP in accordance with the World Economic Forum’s white paper Sustainable Aviation Fuel Certificate (SAFc) Emissions Accounting and Reporting Guidelines.
According to the EPA’s Web site, a REC “is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.”
For additional information on accounting considerations related to environmental credits, see Deloitte’s November 16, 2022, Financial Reporting Alert and December 5, 2022, Renewables Spotlight.
Occasionally, partners may also buy SAF from SAF developers. To the extent that partners do so, some of the accounting considerations discussed in this section would also apply to them. See also the Accounting Considerations for Partners Related to Their Purchases of SAF Emission Reduction Benefits section.
FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 4, Elements of Financial Statements.
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”
ASC 815-10-15-88 states, in part, that an underlying “is a variable that, along with either a notional amount or a payment provision, determines the settlement of a derivative instrument.”