PTQ Q4 2026 Issue

include indirect land use change (iLUC) penalties. This contrasts with the US LCFS and CORSIA frameworks, in which iLUC factors can mate- rially affect the CI score for crop-based feedstocks. As a result, the same produc- tion pathway may achieve more favourable CI outcomes under 45Z than under other programmes. These methodological dif- ferences reflect distinct pol - icy objectives but have direct

California LCFS: Pathway Certication Timeline

Credit revenue builds gradually – nancial models must account for ramp-up phases

Day 0 Start No credits until 30 days

3 months Provisional Provisional CI values

30 days Temporary Default CI values apply only

2 years Certied

Site-specic CI Full credit value

Credit value and CI accuracy improve at each phase – early nancials should use conservative default values.

Figure 3 California LCFS pathway application timeline

65% lifecycle greenhouse gas savings against the fossil comparator. The calculation methodology is different from GREET- based US models, and verification is conducted by International Sustainability and Carbon Certification (ISCC) or Roundtable on Sustainable Biomaterials (RSB) rather than QAP. Crop-based feedstocks are not allowed under the ReFuelEU Aviation regulation. Producers targeting both US and European markets will need to manage parallel compliance frameworks. The same production process can generate different CI results depending on which model is applied, which has practical consequences for market access planning. CORSIA: The global baseline The CORSIA, operated by the International Civil Aviation Organization (ICAO), provides a global framework for air- lines to offset international CO₂ emissions, with CORSIA- eligible SAF as one of the compliance mechanisms. CORSIA accepts a wide range of ATJ feedstocks, includ- ing sugarcane, corn, lignocellulosic biomass, agricultural residues, municipal solid waste, waste-based oils, algae, and power-to-liquid pathways. With more than 150 coun - tries signed up, the programme offers SAF producers a broad addressable market (see Figure 4 ). The minimum CI reduction required under CORSIA is just 10% against the fossil baseline. That is considerably lower than US RFS requirements, the 65% required in Europe, or the thresholds typically required under CA-LCFS. For pro - ducers whose CI score is too high to qualify for premium

implications for project economics. For producers using feedstocks such as US corn starch or sorghum grain, iLUC treatment can influence programme attractiveness and the order in which credits are pursued. California LCFS: Timing is everything The California LCFS, administered by the California Air Resources Board (CARB), is the most developed state-level credit programme in the US and can generate significant credit value per tonne of carbon dioxide (CO₂) equivalent avoided (see Figure 3 ). However, the application process is primarily post-commissioning: • Temporary pathway : available after 30 days of operations. • Provisional pathway : available after three months of operations. • Full certification : available after two years of steady- state operations. During the temporary and provisional phases, producers must use default CI values rather than site-specific ones. Default values are less favourable, so financial models built on full-certification CI numbers from day one of production will overstate early revenues. The previous case, where the operator converted an existing refinery to renewable fuels production, is a direct example of what happens when this timing gap is not properly accounted for. The 2024 LCFS revision also introduced financial penal - ties for producers whose actual CI score deviates from their certified pathway value. Start-up problems, feedstock var - iability, and process upsets all carry a direct financial cost under the revised rules. Investors should budget for this risk.

CORSIA: Eligible ATJ feedstocks & programme overview

RED III and the 65% reduction threshold

CORSIA oers the most accessible global credit threshold – just 10% CI reduction required

SAF is a global commodity, and European airlines are mandated buyers under the ReFuelEU Aviation regulation. Qualifying for European cred- its requires meeting tighter CI reduction thresholds than US programmes. Under RED III, existing production facilities must demonstrate at least

Lignocellulosic biomass

Agricultural residues

Sugarcane

Corn

Municipal solid waste

Waste-based oils & fats

Power-to-liquid (PtL)

Algae

10% Minimum CI reduction required

150+ Countries signed up to CORSIA

vs 65% Required under Europ e ’s RED lll

Figure 4 CORSIA: Eligible ATJ feedstocks for global credit eligibility

PTQ Q4 2026