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Momentum is building around SAF but more state-set targets are needed
The aviation industry is primed for a decade of growth following the turbulent Covid-19 period. Within the first half of 2023, demand for domestic travel should surpass its 2019 pre-pandemic peak, while the global aircraft fleet is expected to breach its January 2020 level of around 28,000. This number is estimated to reach 38,000 by 2032.
This is positive news for the aviation industry but it increases the challenge of lowering climate impact.
The aviation sector contributes over 2% of global CO2 emissions and, as other easier-to-abate industries post progress in lowering emissions, there is likely to be upward pressure on this number.
The aviation industry is stepping up to the mark, with numerous proposals, mandates and targets emerging from governments, industry bodies and lawmakers. These include the Inflation Reduction Act, Sustainable Aviation Fuel Grand Challenge and the opt-in RFS2 and LCFS fuel standards in the US, the ReFuelEU Aviation and Fit-for-55 proposals in the European Union, and the Jet Zero Strategy in the UK.
A global aspirational goal of net-zero carbon emissions in aviation by 2050 was announced in October 2022 by ICAO, mirroring a similar goal set a year earlier by the International Air Transport Association (IATA).
To reach these targets, the industry must take a holistic approach, combining improved operational efficiency of airports and routes, advancements in aircraft design and technology, usage of sustainable aviation fuels (SAF) and market-based measures, such as carbon pricing and offsetting.
But it is not all self-driven—regulation and policy will also be crucial in emission reduction.
Within the aviation industry, design and technology (mainly delivered through fleet renewal) have always been important in unlocking efficiencies. For instance, each new generation of aircraft is up to 20% more fuel efficient than the previous one.
An aeroplane today, therefore, produces 80% less CO2 per seat than aircraft in the 1950s. Between 2000 and 2010, fuel efficiency improved by 2.4% per annum, but by only a further 1.9% annually from 2010 to 2019—showing the difficulty in maintaining efficiency gains over the long term.
Meanwhile, the European Air Traffic Management (ATM) Master Plan, run by SESAR 3, believes that by modernising and harmonising European ATM systems, CO2 emissions per flight could be reduced by 5-10% by 2035 compared to 2017.
A FUEL’S ERRAND
While improved design, better technology and optimised ATM will deliver benefits, the real impact lies within the fuel itself.
By one estimate, new measures may be capable of reducing CO2 emissions by 69% to 59 million tonnes in 2050 compared to a business-as-usual “technology freeze” scenario. More than half of this reduction can be made through the use of SAFs.
But with SAF currently providing less than 0.05% of total EU aviation fuel use, according to the European Union Aviation Safety Agency’s 2022 Report, we are still waiting for takeoff.
IF NOT NOW, WHEN?
Relatively speaking, the SAF industry is still in its infancy. In 2022, however, the first signs of a much-needed growth spurt were seen with the IATA estimating that SAF production would top 300 million litres during the 12 months, marking a 200% increase on the 2021 production figure and dwarfing 2019’s 24 million litres.
It also noted that optimistic calculations have estimated that 2022 SAF production was actually closer to 450 million litres.
These are big numbers until you consider 300-450 million litres is a mere 0.1-0.15% of global jet fuel use and that reaching 2050 goals will require an estimated 450 billion litres of SAF to be produced annually.
For SAF adoption to take off, two significant and interconnected obstacles need to be overcome: The supply capacity of SAF producers and the cost competitiveness of SAF compared to petroleum-based/kerosene jet fuel.
Upon announcing the 2022 SAF estimates, Willie Walsh, IATA’s director general, struck a cautionary tone—the fact that airlines had used 100% of the SAF produced during 2022 showed that SAF uptake was “a supply issue and that market forces alone are insufficient to solve it”, he said, before calling for governments to “put in place comprehensive production incentives for SAF”.
Perhaps too little and too slowly, but this incentivisation is happening. The US, for example, has set an aspirational SAF production goal of at least three billion gallons per year by 2030. This aim is backed up by a mix of tax credits and new research funding.
Meanwhile, California’s lawmakers recently passed legislation mandating that SAF should comprise 20% of aviation fuel consumed in the state by 2030, while the State’s Low Carbon Fuel Standard is also a high watermark in SAF incentivisation.
A proposed amendment from the European Parliament has recommended the amount of SAF supplied to EU airports should be 2% of jet fuel by 2025, increasing to 37% in 2040 and an ambitious 85% by 2050—though from an incentive perspective, the EU remains more stick than carrot.
These global standards are necessary to increase the supply capacity across pathways and lower the cost of SAF. However, the variation within regional or country-specific regulations and incentives—around the use of feedstock, blending mandates, renewable fuels and carbon capture, for instance—create obstacles.
To fast-track the scaling of decarbonisation solutions, it is crucial to establish standards that are closely aligned and are designed to remove barriers to both production and adoption of SAF.
In order to reach net-zero emissions, all available pathways must be utilised. With less than a decade left to reduce global carbon emissions by 50% compared to 1990 levels, it is also critical to finance new technologies, like SAF, that could drive significant decarbonisation.
With proper support and incentives, ramping up production to the levels already required by 2030 is possible. Reports from BloombergNEF and World Economic Forum’s (WEF) Clean Skies for Tomorrow (CST) initiative both believe that targets can be met if the required levers are used.
The WEF says SAF production can feasibly ramp up to 10% of total European jet fuel consumption by 2030 (about ~6.5 Mt/year) if a long-term policy framework is in place to aid airlines and fuel providers; more diverse SAF pathways come online (with the help of de-risking through the public sector); policies drive higher production and/or collection of sustainable biomasses; and SAF production capacity is optimised for jet fuel output.
It is an intimidating but achievable wish list—perhaps one that also points towards a globally scalable framework for short and longer-term success.
And you never know, with financial incentives, increased supply, economies of scale and, yes, a little bit of a blue-sky outlook, SAF might get a lot more cost competitive too.
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