How sustainable are ‘sustainable feedstocks’?

‘Sustainable feedstocks’ could be less sustainable than many think. That’s the uncomfortable conclusion to be drawn from the verification of sustainable aviation fuel (SAF) feedstocks that rely on company audits rather than scientific testing.

SAF made from used cooking oil (UCO) is incentivised in the US, UK and EU. This is because they are categorised as waste and have low carbon intensity score.

But this categorisation can serve as a backdoor for unsustainable feedstocks. Verification of these feedstocks relies on auditing company records of producers and suppliers rather than actual testing of the feedstock used. These ‘voluntary’ verifications can be easily falsified.

“All SAF under the UK SAF mandate must meet strict sustainability criteria, undergo third-party verification and may be certified through recognised voluntary schemes, with [Department for Transport] DfT investigating and auditing claims as needed,” DfT spokesperson tells SAF Investor.

According to the rules of compliance, the DfT requires “evidence on the origin, type and sustainability of approved feedstocks for both domestic and imported SAF, supported by third-party assurance and investigation of any non-compliance.”

In reality, this evidence includes invoices, bills of lading and audit reports designed to track the fuel to its original feedstock. The goal of these documents is to have a robust paper trail which can be audited in case any fuel is flagged for potential fraud.

Despite the comprehensive reporting requirements, the reliance on paper trails creates potential vulnerabilities in the verification process. This is mainly because the physical testing of the feedstocks itself is not routinely required, nor is ensuring the production facility complies with regulations always straightforward.

The DfT explicitly tells us that “crop-based SAF is not eligible under the mandate,” acknowledging the concerns around use of virgin vegetable oils.

However, this exclusion can be effectively bypassed if virgin oils are chemically treated or falsely labelled as UCO through fraudulent documentation and certificates. This is the critical ‘backdoor’ that undermines the sustainability criteria. 

These vulnerabilities became apparent recently when German authorities uncovered a massive fraud this year. This case involved the issuance of sustainability certificates to a non-existent biofuels production facility. 

This phantom plant, which on paper had an office in Hong Kong and a production facility in Malta, had produced and supplied tens of thousands of tonnes of HVO into the European market – supposedly made form UCO. 

The fraudulent company had all the right paperwork but no office or production site. 

This fraud raises serious questions about the integrity of feedstock value chains, particularly those coming from Asia, where verifying sources is particularly difficult. 

To combat this risk, the DfT emphasises that: “All SAF must show proven carbon savings across their full production and use, with more certificates awarded to fuels that achieve the greatest emissions reductions.” 

Furthermore, the department’s guidance on SAF mandate compliance emphasises that using an approved voluntary scheme alone does not guarantee certificates. The suppliers can be required to provide additional evidence for the entire supply chain if concerns arise. 

The penalties of failing to satisfy these concerns can be significant. “The department can withhold or revoke certificates, issue civil penalties, and refer cases to authorities if evidence of fraud or non-compliance is found,” the DfT tells us. 

For serious violators found to be using fraudulently obtained certificates, civil penalties can reach up to 10% of a supplier’s turnover or twice the value of the certificates in question. 

Ultimately, however, enforcement challenges remain significant given the global nature of the supply chain. 

In addition, this potential risk of fraud creates risks for SAF industry’s growth particularly the investment outlook. Fraud, such as the one uncovered in Germany, leads to a trust shock among investors making them hesitant to multi-billion dollar facilities. 

Transparency in how sustainable are sustainable feedstocks is non-negotiable priority for both investors as well as offtakers who need the confidence in SAF they purchase to meet their decarbonisation commitments.