Scaling low-carbon products with book and claim systems

Start with why the ordinary alternatives fail. Klauber lays out three ways to track a product’s environmental story through a supply chain. Physical separation keeps the good itself segregated, which works for a single vineyard’s wine and is impractical industrially. Mass balance measures what enters at one point and lets buyers at the far end assume a proportional share, the way a dairy at 1% of a regional milk brand gives every carton a notional 1%, and it is how fuel is already accounted for as it moves from refinery into pipeline and out to an airport or port. Mass balance falls apart for the case that matters here. When the clean share of the pool is tiny, a proportional claim is worth almost nothing, and a buyer who specifically wants an electrofuel rather than generic sustainable aviation fuel cannot get one at all. Book and claim keeps the mass-balance measurement and adds a digital layer: the environmental attribute moves separately by registry transfer, so it can be owned globally and specifically rather than only by whoever ends up with the molecules.

The precedent is renewable energy credits, and both speakers treat it as instructive in both directions. Klauber’s positives are that the mechanism demonstrably works, that registries have shown attributes can transfer without double counting, and that credit revenue made wind and solar projects more financeable, which he calls indirectly additional. His two criticisms are that this same point invites the additionality objection, since the projects were built anyway, and that the carbon intensity of an electron is genuinely hard to pin down, depending as it does on what would otherwise have been generated, when and where. He argues molecules are better behaved on both counts: the credit revenue in hard-to-abate sectors is what covers the cost differential rather than a bonus on top of it, and a gallon of clean jet fuel displaces a gallon of conventional jet fuel fairly consistently. Kann presses harder than Klauber does. He calls renewable energy credits a blunt instrument that has lost its luster, says some of those markets were clearly manipulated or amounted to giveaways to projects that did not need them, and points out that sophisticated corporate buyers have moved toward hourly, location-matched clean power instead. His sharpest question is whether molecule markets will follow the same arc, with an instrument that works in the early days turning out to be insufficient later. Klauber agrees it could, then redirects to the part of the power-sector experience he wants carried over, which is the long-term power purchase agreement rather than the spot credit.

The failure mode he spends most time on is double counting, which Kann frames bluntly: the producer sells the right to call the product green and then keeps calling it green. For fuels the proposed defenses are registry interoperability, so a batch registered once cannot be registered on a competitor’s system, or an issuing body sitting above the registries as a clearing house, plus a notice regime so the recipient of the physical product knows they have received a commodity with the environmental claim removed. Materials are harder, because an Environmental Product Declaration travels with steel or concrete and carries the climate claim on its face, so the industry would need a modified declaration recording that the reductions have been sold. Underneath the mechanics sits trust, which is why certification matters to him more than any single rule. Certified product costs more, and his illustration is a barge of uncertified sustainable aviation fuel off California at roughly half the price of his own company’s certified product, which customers hesitated to buy because they could not tell whether the feedstock was something like virgin palm oil. Where the market lacks a referee, he says, buyers alliances have become one, and they are now forming sector by sector across aviation, maritime, trucking and steel.

Two things follow about how this scales. First, book and claim is in his view mainly a financing instrument, because the customers worth signing are long-term ones with better credit than airlines or shipping lines, and a technology company that never burns jet fuel can only be reached this way. Long-term contracts with those buyers are what convince banks that willingness to pay is real. Second, the sectors diverge. Aviation is furthest along, and carries a rule that other sectors may copy: under greenhouse gas accounting where supply chain emissions legitimately overlap, both the airline burning the fuel and the corporate customer buying the attribute can claim the same reduction, which Klauber says is above board when both claims are voluntary and is a gray area when the airline needs the reduction for compliance. Shipping has real procurement happening but no drop-in solution, since instead of one specification there are ten or more candidate fuels needing different engines. Steel and cement are just opening, with the added wrinkle that the intervention may work better upstream, on green iron rather than finished steel, and the added difficulty that concrete is not a uniform product, so baselines and carbon intensities have to be established across mixes, strength grades and regions. His closing ask follows directly from the financing argument: some of the nonprofits building these systems want book and claim to expire, or to lapse once a clean product reaches some market share, and he considers that a mistake, both because it would strand contracts signed in good faith and because corporate net-zero targets will keep outrunning what any supplier can physically deliver.