Airlines globally have committed to carbon-neutral growth in international commercial aviation beginning in 2021 and airlines, such as those located in the U.S., have set a goal to reduce CO2 emissions by 50% in 2050 compared to 2005 levels. Improving efficiency alone will not be enough. U.S. airlines have improved efficiency by 130% compared to 1978 levels. Additional efficiency improvements in planes and engines are not likely to be enough and will require lower carbon fuels also known as sustainable aviation fuels (SAF), as alternative energy vectors, such as hydrogen, will not be sufficiently developed and deployed by 2050 to significantly contribute to air transport decarbonization.
There is massive potential for SAF, but there are also challenges. First, the size of the jet fuel market is large and growing. Global demand is expected to more than double by 2050. SAF production right now is scant. There are concerns about feedstock availability. And the price is much higher than Jet A fuel, which is 20-30% of an airline’s operating costs. Perhaps most challenging, there are not direct policies (yet) supporting the scale up of SAF. Some industry representatives have also expressed concern that the market is skewing toward producing hydrogenated vegetable oil (HVO) for the diesel market, in the context of existing road transport renewable regulations.
So, what is it going to take to bring SAF to market? What is the tipping point? What series of events/actions have to happen to make that tipping point happen? These and the questions below were the focus of this Q&A discussion held earlier this month. Joining me for the discussion were:
My co-host was Philippe Marchand, Steering Committee Member of the European Technology and Innovation Platform (ETIP) Bioenergy and Senior Biofuels Expert formerly with TOTAL.
Following below are a few highlights from the discussion.
Fred: I think some of the estimates are that the short haul level of in placements will be back up to pre-pandemic levels in 2023, 2024, long haul after that. A lot of it’ll depend which regions are more quickly to receive the COVID vaccine rollouts…I want to just highlight something Oskar said, and I completely agree with it. There will be a split between business and personal travel. Bill Gates a couple of weeks ago said he expects business travel travel to be cut in half…
I don’t think the flight shame movement has gone away and in any respect, it’s certainly less at the top of the news than it was previously. I think most of the people itching to get back on planes. It’s not necessarily for mass tourism. There’s a lot of folks like myself who haven’t seen their families since this pandemic started. I think that’s the type of demand that will be fulfilled soon, which is people need to get together with their families. Frivolous vacations classic fly from London to Barcelona for desserts — maybe that won’t happen as much. I think flight shame will not impact those real, real human desires to reconnect that aviation allows.
Oskar: It doesn’t do almost anything to the business case of the fuel. We cannot build a refinery on that piece of legislation. We need additional other schemes elsewhere where you can do a little step additional in certain regions that are a bit further ahead. But, looking at the entire world and trying to come up with something that works for everyone is difficult enough, and that has been shown by the UN multiple times and on CORSIA again. It’s a nice achievement that they’ve got through something. It just doesn’t do anything on the sustainable aviation fuel front. That’s it.
Oskar: From what I’ve seen so far, it looks really interesting. A couple of countries in Europe, Norway, Sweden have already implemented a mandate. If we want to create a market, pulling up a mandate is the most effective mechanism out there. Obviously it needs to be in a smart way that we can keep an European aviation industry. So there’s a lot of unknowns still to be solved. But, a mandate is the best way to create a market.
Sylvain: Yes, I totally agree. Finland is also in the list. France, Netherlands, Germany, all these countries have… at least I’ve seen the draft and many people have. They will go for mandates. I checked today, you mentioned this a mobility plan and I checked the working document, which is 300 pages. The prediction in 2050 is at one side of jet fuel would be fossil, one side biofuels and one side e-fuels. That’s prediction for 2050. The legislation for ReFuelEU will follow that.
Fred: The important part, what we’re seeing with ReFuelEU Aviation, with the recently introduced Sustainable Aviation Fuel Act in the US House of Representatives is a focus on looking at the aviation fuel use specifically. We’ve seen multipliers and other approaches to try to integrate aviation fuels into existing renewable fuel policies. But taking a specific look at aviation is important because it reduces the need to create complex structures within a regulation to have aviation fuels and Sustainable Aviation Fuels more competitive with renewable diesel and others. But if you focus on just aviation and you have differentiated targets that reflect where renewable aviation fuel is in its development timeline, you can actually design better policy.
Oskar: Yes, I think so. That’s at least our opinion. I think there’s two components to that. The first is on the business case. So if there is a mandate in play and you as an airline have a partnership with a fuel supplier to get that piece of SAF in let’s say, the most cost efficient way, then that’s interesting to compare to your competitors that have to purchase on the market. We’ve seen that with renewable diesel where there’s basically a shortage, so the prices are pretty high. There’s big margins and I think that’s also something that mandates could create, right? For airlines, it’s quite important to be involved in that supply chain.
The second thing is more of the feeling side, or let’s say the customer experience side. I do believe that as we’ve touched upon in the beginning, passengers will be more and more conscious on sustainability and will eventually start deciding on where to fly with or supporting soft mechanisms through paying a premium on their tickets. And although that’s at the moment limited, I do believe that’s changing quite rapidly.
Sylvain: Yes, planes running on hydrogen will play a massive part. Hydrogen will play a part in the production of renewable jet fuel. Like if you look at HEFA-SPK, you need hydrogen and quite a lot. So here, I think that’s where I see the most, at least the short-term and midterm contribution of green hydrogen would be for this and also for eFuels and so forth. So that’s really why I see it, but in a plane I don’t know.