In 2012, Delta purchased and restarted a then-closed refinery near Philadelphia in order to offset the risk of high jet fuel refining costs. The refinery also allows Delta to guarantee a steady supply of fuel in the Northeast region at an effective cost – an innovative approach that also maintained hundreds of jobs in the Philadelphia region.
Being a responsible steward of our environment is core to Delta’s values. That’s why we have long supported responsible environmental policies that help reduce emissions by replacing small, fuel-hungry airplanes with larger, more fuel-efficient aircraft, utilizing fuel conservation methods ranging from aircraft winglets to efficient use of power while parked at the gate; and allowing passengers the opportunity to offset carbon emissions associated with their trip. We are well on our way toward our goal to reduce net aviation carbon emissions by 50 percent by 2050, relative to 2005.
The RFS is a federal program designed to promote the use of specified renewable fuels over time. Congress set specific targets of renewable fuel to be used by the American economy. To reach those targets, the Environmental Protection Agency (EPA) chooses refiners and importers as the parties who have the obligation to demonstrate compliance with the statute. Under the RFS, compliance is demonstrated by obtaining and retiring tradable credits known as “RINs.”
The RFS has become a significant problem because when Congress set the statutory volume obligations in 2007, it did not account for the possibility of declining gasoline consumption. Lower levels of gasoline demand have reduced the opportunity for ethanol or other advanced fuels to be blended into the system thus creating a logistical challenge referred to as the “blend-wall”. The blend-wall is the point where RFS volume mandates cannot be met by blending renewable fuel into the gasoline used by automobiles. Prior to 2013, RINs prices hovered in the 1-5 cents range. In 2013, when EPA’s volume mandates were above the blend-wall, RINs prices skyrocketed to as high as $1.40.
Delta’s refinery is an obligated party that must demonstrate compliance with the RFS. Our refinery has a limited capacity to blend renewable fuel, thus is beholden to the RIN market in order to demonstrate compliance. In 2016 and 2017, our costs for compliance with the RFS were greater than the purchase price of the refinery ($150 million).
The RIN market is also highly volatile as it is primarily responsive to predictions about what the administration and/or the courts will do with respect to compliance obligations. Due to inadequate monitoring and safeguards, the RIN market has grown into an unregulated $6-$15 billion market (depending on RIN prices) in which RINs are being hoarded, bought, and sold for profit.
Delta supports legislative or regulatory reform of the RFS to improve the functionality of the RIN market, reduce our compliance costs and improve the RFS program so both farmers and refiners benefit from the structure of the program.
Delta is taking innovative steps to reduce its fuel consumption, including investing in new fuel-efficient aircraft, adding winglets to our current fleet, and streamlining our operations to use less fuel when not flying.
Also, Delta is committed to improving average annual fuel efficiency by 1.5 percent through 2020, stabilizing emissions with carbon-neutral growth and reducing net emissions 50 percent by 2050, relative to 2005.
Delta has partnered with the Carbon War Room, a nonprofit founded by Sir Richard Branson, in an effort to accelerate low-carbon jet fuel production worldwide. The research done by the Carbon War Room will help develop a sustainable, renewable fuel supply that will strengthen the airline industry’s access to high-quality jet fuel, reduce price volatility in the jet fuel market and meet the needs of climate-conscious customers.
As part of our commitment to environment accountability, Delta provides its customers the opportunity to offset the emissions associated with their travel. Through the Nature Conservancy, travelers can calculate the environmental impact of their travels and make a donation to support forest protection projects that produce measurable benefits to the atmosphere.
Delta has successfully verified its complete greenhouse gas emissions inventory under The Climate Registry and has been named to the Dow Jones Sustainability North American Index three years in a row. In addition, Delta has committed to purchase carbon offsets to maintain zero growth emissions relative to 2012.