5% Sustainable Feedstock, 100% of the Credit
The aviation industry is under enormous pressure to decarbonize, so when a solution comes along that promises lower carbon intensity without requiring entirely new infrastructure, it’s tempting to embrace it. Co-processing, which involves blending modest amounts of sustainable feedstock into conventional petroleum refineries, looks attractive on the surface thanks to its lower capital requirements and faster scale. It also offers a role for existing oil and gas players in the energy transition.
But corporate buyers need to be aware of the tradeoffs. What looks like a shortcut may be a detour.
Co-Processing Doesn’t Equal Additionality
The logic of co-processing is straightforward: instead of waiting years for dedicated renewable fuel refineries to come online, why not introduce sustainable feedstocks, such as used cooking oil (UCO), into existing petroleum refineries today? Doing so would mean oil and gas companies get to participate in aviation’s decarbonization, and buyers get access to lower-carbon aviation fuel faster. In theory, everyone wins, but in reality, the carbon accounting tells a different story. The Greenhouse Gas Protocol is clear: an emission-reducing action must achieve a benefit that wouldn’t have occurred otherwise. Through their procurement decisions, buyers are responsible for making a measurable difference.
Purchasing dedicated sustainable aviation fuel (SAF) satisfies this requirement. Dedicated SAF producers take on real, irreversible capital risk. They build facilities that can only produce renewable fuels. When market conditions shift unfavorably, they don’t have a fallback. That commitment is exactly what creates additionality, i.e., new supply that wouldn’t have existed without long term buyer demand and investment.
Co-processors operate differently. When renewable economics look favorable, they introduce more sustainable feedstock and capture voluntary market premiums. When fossil fuel economics look better, they focus on conventional fossil-based production. Their infrastructure serves both purposes. There is no stranded capital, no irreversible bet on renewable fuel. That’s not additionality; it’s optionality.
And because co-processors don’t carry the same infrastructure costs, they can undercut dedicated SAF producers on price. This creates a troubling dynamic: buyers seeking cost efficiency may gravitate toward co-processed fuel, inadvertently starving the dedicated SAF market of the capital and demand it needs to scale.
Accurate Labeling
It’s important to note that co-processed fuel is not technically SAF. SAF is a technical designation under ASTM D7566 for a pure, unblended product. The “sustainable” in SAF is not a marketing flourish. It reflects certification standards that go well beyond carbon reductions to cover fair labor practices, water conservation, and land use. Co-processed fuel, by contrast, only exists as a blend with fossil crude as the majority component. Applying the SAF label to a fossil-dominant blend misleads buyers, confuses the public, and could erode trust in the very market the industry is working to build.
Co-processed products should have their own name and consistent disclosure across documentation, digital registries, and contract language. Two workable options already exist. “Co-processed biomass” is descriptive and accurate about what is in the tank. Alternatively, aviation already has a designation for fossil-based, lower-carbon products, the Low Carbon Aviation Fuel (LCAF), which is defined as a conventional fossil product with at least 10% lower lifecycle carbon than average jet fuel. Either option is a more accurate name for co-processed products.
The SAF label carries weight because it means something specific. That’s not just semantics, it’s about market integrity. Buyers making climate commitments deserve accurate labels. Investors financing new SAF production need confidence that the term reflects a real standard. Calling co-processed fuel “SAF”, even unintentionally, increases buyer and investor confusion.
If It Doesn’t Fly, Should We Call It an Offset?
Another concern is how co-processing producers are incentivized to use environmental attributes. In the refining process a raw material like waste oils will mitigate carbon from a range of end products. The biomass will become part of the road fuels, propane for home heating, naphtha for plastics, as well as jet fuel. But, under “free attribution accounting,” refiners can take biomass that has been delivered to other sectors and assign the carbon mitigation benefits solely to aviation.
This is different than the book-and-claim process for sustainable aviation fuel certificates, which closely follows the biomass through the chain-of-custody to make sure the emissions reductions match the end product. With free attribution, refiners are allowed to designate the emissions reductions to whatever product they choose. Without safeguards like those in regulatory programs like CORSIA and ReFuelEU, corporate buyers could incorrectly assume that their co-processed-based credits are directly decarbonizing aviation, when they’re acting more like a carbon-offset.
Is Co-Processing a Viable Steppingstone?
Some argue co-processing can serve as a bridge, a way to move product while the dedicated renewable fuel industry matures. According to the Air Transport Action Group (ATAG), aviation needs to achieve better than 75% renewable fuel adoption by 2050, and we will need a plethora of technologies to make that happen.
Co-processing is limited by ASTM to 5% biomass inputs today. Even the most optimistic, forward-looking scenario, in which a select few advanced refineries with equipment capable of handling the higher volume of biomass are considered, reaches perhaps 30%.
That brings us to the market distortion problem. Co-processors and dedicated SAF producers are competing for the same constrained pool of sustainable feedstocks: used cooking oil, agricultural residues, and cover crops. When co-processors enter that market, they drive up feedstock prices for everyone.
There’s also a financing problem hiding in plain sight: The very existence of co-processing infrastructure could delay the private investment that aviation’s long-term decarbonization requires. Banks and infrastructure lenders evaluating new, dedicated renewable fuel plant proposals will look at market conditions carefully. If they see underutilized co-processing capacity, they may conclude that new dedicated capacity is redundant or premature and hesitate to provide financing.
Where Does That Leave Us?
Aviation isn’t alone in this issue. The steel sector has grappled with a remarkably analogous transition challenge, and answered the question regarding the role for conventional production infrastructure. Steel producers today can use biomass to reduce emissions in their existing coal-powered facilities. By 2035, conventional steel plants in advanced economies will lose eligibility for low-carbon recognition. Developing regions get until 2040. After that, the industry requires transition to electric arc furnaces and green hydrogen-based production.
Co-processing is not a fraudulent technology, and there may be a legitimate role for it in the future, particularly if cellulosic biomass and pyrolytic oils that cannot currently be processed in dedicated renewable fuel plants, could instead be refined in conventional oil refineries.
Today, corporate buyers are making procurement decisions based on sustainability commitments they’ve made to employees, shareholders, regulators, and the public. Those commitments deserve scrutiny at the supply chain level. And right now, co-processed aviation fuel certificates do not meet the same standard as dedicated SAF on the three points that matter most: additionality, chain of custody, and systems-level climate impact. To achieve its climate goals, the aviation industry needs durable investment in new production capacity that will enable it to decarbonize, chain-of-custody practices that track environmental attributes to their end uses, and buyers who are willing to ask hard questions before signing procurement agreements. Not all refining technologies and processes provide the same level of decarbonization, and making an educated decision is an important step in helping us all get there faster.
