Partnership for scaling the adoption of Sustainable Aviation Fuel (SAF)
Read how Standard Chartered joined forces with DHL Express to scale the use of Sustainable Aviation Fuel.
Partnership for scaling the adoption of Sustainable Aviation Fuel (SAF)
Many organisations seeking to transition to more sustainable energy sources can relate to the following chicken-and-egg dilemma: how do you scale demand for alternative fuels in order to increase their supply and bring down cost? DHL Express encountered this conundrum in its quest to transition to Sustainable Aviation Fuel (SAF) within its aviation network.
Partnerships are proving key to driving supply and demand to help build scale for SAF. Standard Chartered was the first global bank to explore SAF as a more sustainable fuel alternative by joining forces with DHL Express through its GoGreen Plus programme.
Decarbonising the skies: a vision and a challenge
For DHL Group, new solutions for air transportation are essential to providing more sustainable logistics over the long-term. The company’s air freight network accounts for around 90 percent of its carbon footprint. Therefore, improving aviation sustainability at DHL Express, the division for air express transportation services, is crucial to achieving net-zero emissions by 2050.
A multi-pronged strategy for decarbonisation includes solutions to burn less fuel (i.e. demand management) and solutions to burn cleaner fuel. However, burning cleaner fuel offers a larger contribution to sustainability for its carbon emissions. This involves DHL Express transitioning to cleaner and more sustainable energy sources, such as the use of e-vehicles in its first and last mile operations and the use of SAF in its aviation network.
Whereas conventional carbon-intensive aviation fuels derive from mineral oil, SAF is made from alternative raw materials with a more sustainable energy profile, including used cooking oil, waste and hydrogen. IATA, the International Air Transport Association, estimates that SAF could contribute to as much as 65 percent of the reduction in emissions that is necessary to reach net zero by 2050.
DHL Express aims to achieve a minimum of 30 percent blending of SAF into its aviation network by 2030. However, the current cost of SAF is nearly three times higher than traditional jet fuel. A key challenge for SAF is the lack of a sufficient supply. Demonstrating demand for SAF could help to encourage more SAF producers to scale their production. This would reduce the price, which would in turn increase demand, thereby creating a virtuous circle.
Fueling the market by building a network of partners
Growth in demand and supply is essential to scaling the market for SAF in order to pave the way for its broad adoption. This is a difficult task, but DHL has clear ambitions to lead the industry in this direction.
Towards this end, DHL Express launched its GoGreen Plus service in 2023 to enable customers to reduce the CO2emissions associated with their air freight. The programme allows customers to co-invest in SAF simply by adding the cost to their shipping fee. GoGreen Plus is made possible by three of the most significant SAF supply contracts with BP, Neste, and World Energy.
“Reducing carbon emissions in the logistics industry is vital to mitigating the impact of climate change,” says Yung Chiun Ooi, Senior Vice President for Commercial Asia Pacific at DHL Express. “It is a long-term journey that requires like-minded partners and customers to join together in scaling the growth of sustainable solutions for emissions reduction.”
Standard Chartered’s partnership with DHL Express through the GoGreen Plus programme began with the bank’s procurement organisation, which has visibility of the entire supplier ecosystem across the bank. This vantage point has enabled the procurement group to work with Standard Chartered’s supply partners to support the bank’s net zero ambitions. Previously, Standard Chartered participated in the GoGreen programme, which began in 2011. The earlier programme used a traditional carbon offsetting surcharge. GoGreen Plus was a logical expansion of this longstanding partnership.
According to Rob Davidson, Global Category Lead, Procurement at Standard Chartered, “We did not hesitate in working with DHL on the GoGreen Plus programme to make a real and actionable reduction in our carbon footprint whilst continuing to serve our customers.” Many of the bank’s customers are pursuing more sustainable practices and they expect their partners to follow suit. The use of SAF aligns with this shared commitment to continuously improve our sustainability practices and overall approach, while continuing to deliver for our stakeholders.
Leading the charge with global trade
As one of the largest trade finance providers in the world, trade was an obvious starting point for Standard Chartered’s participation in GoGreen Plus. “Our customers, both importers and exporters, entrust us with their crucial trade documents,” says Khuresh Faizullabhoy, Managing Director and Chief Operating Officer, Trade at Standard Chartered. “We are required to deliver these documents, worth billions of dollars, quickly and securely. For years we’ve been partnering with DHL to ensure these valuable documents reach their destinations swiftly and efficiently. We sought a way to reduce the fuel emissions that result from this essential courier service.”
SAF can help the bank to reduce lifecycle emissions of typical aviation fuel by up to 80 percent compared with traditional jet fuel. The bank estimates that it will save 3,780 tonnes CO2e between 2024 and 2030. The partnership is part of the bank’s efforts to invest in emissions reductions projects within its supply chain across a diverse set of services. The GoGreen Plus programme allows the bank to spread the cost across a wider cross-section of consumers of the service.
Faizullabhoy says, “Whilst the digitisation of trade documentation is progressing, through this agreement to scale the use of SAF with our logistics partner DHL Express, we will jointly drive down emissions that would otherwise be generated from this essential service. This is a win-win for our customers and in line with our own commitment to delivering net zero across Standard Chartered.”
Building market momentum
Standard Chartered hopes to set a positive example that encourages other organisations to adopt cleaner fuels as part of the collective effort to achieving net-zero emissions. Partnerships, through collaboration amongst industry players, are key to building momentum for solutions such as SAF to make sustainability initiatives sustainable themselves. This partnership provides a playbook for others who are committed to sustainability practices to adopt a similar approach, which should help make SAF more mainstream, thereby driving broad adoption.
In 18 months, the GoGreen Plus programme is experiencing very positive customer demand. More than 90,000 customers across Asia Pacific have signed up for the programme so far, and the programme has recently welcomed more global companies. Yung Chiun Ooi explains, “When we partner with the right providers and the right customers with like-minded carbon goals, it shows what we can accomplish together.”
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