On July 31, 2025, Japan Airlines announced the successful completion of Phase 1 of its world-first initiative to promote Sustainable Aviation Fuel (SAF) use and advance the decarbonization of aviation. This initial phase focused on pilot testing a digital trading platform for Scope 3 emission reductions associated with SAF use.
The pilot project began in August 2024 and ran for eight months at Narita Airport. It brought together a broad coalition of stakeholders, including fuel suppliers, airlines, banks, and airport operators. The objective was to establish a platform for trading CO2 reduction credits generated through SAF consumption, a potentially transformative approach to managing aviation’s environmental impact.
During the pilot, participants registered offers, matched trades, executed contracts, and transferred verified credits. All transactions were subject to third-party audits, which confirmed the platform’s transparency, accuracy, and operational integrity, as well as the absence of double counting.
Sustainable Aviation Fuel and Current Targets
Sustainable Aviation Fuel (SAF) is a type of aviation fuel derived from non-fossil, renewable, or waste-based feedstocks (such as used cooking oil or agricultural residues). Chemically similar to conventional jet fuel, SAF can be blended up to approved limits without requiring engine modifications. Functionally, SAF performs equivalently to traditional Jet-A fuel.
The use of SAF can reduce lifecycle carbon emissions by up to 80% compared to fossil-based jet fuel. However, SAF remains two to four times more costly, posing a significant barrier to large-scale adoption. In 2023, the aviation sector was responsible for emitting 950 million tonnes of CO2, representing approximately 2.5% of global emissions. With electrification facing technological and scalability constraints, particularly for long-haul flights, scaling SAF production and use has become a critical strategy for achieving net-zero emissions by 2050.
Currently, SAF use is primarily driven by voluntary initiatives, often aligned with Environmental, Social, and Governance (ESG) objectives, rather than regulatory mandates. However, mandatory SAF blending requirements are beginning to emerge globally. While overall volumes remain low, several jurisdictions have introduced initial targets to enable long-term scaling.
Notable policy milestones include:
- The European Union’s ReFuelEU Aviation Regulation, which mandates a 2% SAF blend in aviation fuel starting in 2025, increasing to 6% by 2030.
- The United Kingdom’s SAF mandate begins at 2% in 2025 and rises to 10% by 2030.
- Japan has committed to a 10% SAF target by 2030, leading adoption in Asia, while Singapore and India have also announced targets of up to 5% by 2030.
SAF Trading Platform
The trading platform was launched to facilitate the exchange of Scope 3 emission reductions generated from SAF usage. Phase 1 ran from August 24, 2024, to March 25, 2025, and was hosted and operated by Narita International Airport, Japan’s second-busiest airport.
The platform engaged eight participating entities. Japan Airlines, ENEOS, and ITOCHU acted as SAF suppliers and providers of associated Scope 3 environmental value. Nippon Express and Narita International Airport served as buyers of these credits. Mizuho Bank and Mizuho Research & Technologies offered operational support and helped validate the trading system’s integrity. ClassNK conducted independent verification to ensure transparency and confirm the absence of double counting.
The platform enabled sellers to list SAF-linked emission credits, while buyers submitted bids based on their preferred price, volume, and contractual terms. Matching occurred monthly, followed by bilateral contract execution and credit transfers. Post-trade audits were conducted to confirm each transaction’s validity.
This model allowed sellers to access external markets beyond internal offsetting, while buyers could tailor their credit purchases to align with specific environmental and ESG objectives.
Lessons and Next Steps
Although a formal launch date has not yet been announced, Phase 2 is expected to expand participation beyond the initial group. The next phase will aim to include additional airlines, marine carriers, fuel suppliers, and corporate buyers. Anticipated platform enhancements include accelerated matching processes and improved user experience.
One key challenge identified in Phase 1 was the limited buyer participation. Phase 2 will focus on building buyer awareness and articulating the strategic value of Scope 3 environmental credit procurement.
As transaction volumes grow, further systematization and scalability of the platform will be essential. Close collaboration with the Japanese government—or an equivalent regulatory authority—will be vital. Such engagement is considered critical for enabling broader social adoption and institutional integration of the trading scheme.
A Global First
The platform is especially notable because trading Scope 3 emission reductions offers a mechanism to redistribute SAF-related costs, helping address one of the major barriers to SAF uptake, its high price premium. Its importance is further underscored by Japan’s increasing SAF production capacity, including Cosmo Oil’s development of the country’s first large-scale domestic SAF facility.
As SAF adoption continues to advance through domestic and international policy support, this JAL-led pilot marks a world-first breakthrough in linking SAF use to a digital Scope 3 emissions trading system. The platform’s robust audit controls and safeguards against double counting enhance market confidence and demonstrate the potential for a credible, scalable framework for emissions trading in aviation.
Please contact us for more information.