Although the prospects for the production of sustainable aviation fuels (SAFs) look a little better since October, governments and oil companies need to step up toward large-scale incentives to produce more SAF. These incentives are essential if the airline industry wants to get to net-zero carbon emissions by 2050. That was the message of IATA on the final day of its Annual General Meeting and World Air Transport Summit in Doha (Qatar). The long and winding road to SAF production. During the previous AGM in Boston in October, IATA adopted a resolution to get to net-zero by 2050. Since then, there has been some momentum on SAFs. According to Sebastian Mikosz, Senior Vice President of Environment and Sustainability, there are now identified 61 initiatives for SAF production worldwide that should be able to produce 30 billion liters by 2030, up from 23 billion IATA calculated in October. But the step to 449 billion liters that is required in 2050 is still a huge one. “I am disappointed that we haven’t made more progress. I was very pleased that during this morning’s panel discussion, one of the speakers made the point that the major oil companies need to do more”, said Director-General Willie Walsh. “The costs of extracting the oil haven’t doubled, the costs of providing the oil haven’t doubled, but they are selling it at twice the price. There is plenty of margins there for the fuel companies to do a much better job in relation to SAFs. We need to look at these companies to play their part in the transition. We are making progress, but it is measured today in words instead of actions.” Even at the current high fuel prices, SAFs are 2.4 times more expensive than kerosene. That makes it unattractive for airlines to buy it, if that’s possible at all. “I have said it before: we have used every single drop of SAF last year and we will be this year and the same next year. I don’t believe the industry needs to signal its intention, the industry is using SAFs and is demanding more products. But it is chicken and eggs: once the volumes are increased, we should see a reduction in pricing,” said Walsh. Geographical disparity But the geographical disparity of availability is big. Ten new plants are being prepared, which have a combined production of five billion liters, ten times what was available in 2021. That will reach 30 million liters in 2030. SAF is produced the most in North America, thanks to the tax credit incentives of the Biden Administration. They are the most efficient way to boost production, as is demonstrated by commitments from US airlines to buy SAFs for their domestic and international operations. World map showing in blue which countries and regions are strong in the production of SAF. (IATA) Europe also looks positive. The Fit for 55 plan of the European Commission includes a mandate for five percent SAF and availability at every airport in 2030, although IATA is worried about decentralization of the production as it delays the development of economies of scale. Japan, Malaysia, Singapore, Indonesia, and China are also well-positioned. But Latin-America only has Paraguay where SAFs will be available. Africa is totally without production. The Middle East is also at the lower end of the SAF market. “First and foremost: how can you have a contract if you don’t know how much they are going to charge you? You need to know the price, you can’t put the cart in front of the horse”, said Qatar Airways CEO Akbar Al Baker. He added that Qatar Airways together with local research centers have been working for two years on SAFs, which eventually should be produced in Qatar. There is also a disparity in Australia. That’s why Qantas and Airbus announced the Australian Sustainable Aviation Fuel Partnership last Sunday on the sidelines of the AGM, with both companies jointly investing AS$200 million to establish a production infrastructure in the country. This should make an end to the current situation in which feedstock from Australia is transported to the US for the production of SAF. The five-year project should allow Qantas to meet its target to use ten percent SAFs in 2030 on flights from London and between the US and Australia. The support from Airbus looks surprising, as you would the Australian government to incentivize the production of SAFs. But Sebastian Mikosz isn’t so surprised: “At our AGM in Boston, we called on everyone in the aviation value chain to support on SAF. I can only welcome the support from Airbus. Airlines will bear the costs but there is no way in which we can achieve our plan without involving all of the stakeholders. The OEMs are fundamental because their involvement in decarbonizing through SAFs confirms what we are also aiming at. This is the best technology we have.” Not helping are the different policies of credits or mandates, the difference between the carrot and the stick. “We need one kind of regulation because aviation is a global business. If you want mandates, have the same everywhere. But incentives drive the SAF market more and in my view are more clever”, said Katja Klefman of Lufthansa. What’s positive is that more variants of SAFs will become available. Instead of the traditional feedstock like cooking oil or waste, thanks to new technologies different feedstock will become available. This will result in eleven so-called SAF pathways in 2025 compared to seven right now. “Ultimately we need to get to a truly scalable raw material. You can’t have scale if your basic ingredients that are going into the SAF process aren’t scalable, because they are by-products of an industry (…) and cost more money. We need to innovate to scale raw materials and feedstocks beyond fat and grease. Then you can produce more to meet demand and reduce prices”, said Bryan Sherbacow, CEO of Alder Fuels. To meet net-zero targets in 2050, SAF production will have to grow to 449 billion liters. (IATA) Eventually, the industry will have to adopt SAF, thinks Akbar Al Baker: “There will be such a big public outcry if oil companies don’t produce SAFs, because there is such a big movement now to find sustainable fuels. You will have to do it, sooner or later.” And if the traditional oil companies won’t lead, others will take over. SAFs account for 65 percent of IATA’s long-term net-zero strategy, which should reduce carbon dioxide emissions by 1.8 Gigatons in 2050 compared to now. A 19 percent must come from offsetting and carbon capture initiatives, 13 percent from new aircraft technologies, and 3 percent from improvements in infrastructure and operations. Offsetting Part of IATA’s net-zero roadmap is offsetting carbon emissions. The airline industry continues to fully support the CORSIA plan under the International Civil Aviation Organization (ICAO) which will be implemented on a voluntary basis from 2024 and will become mandatory from 2027 but only runs until 2035. But two developments are causing concern. The first is the discussion on the baseline years used for offsetting emissions that are used for the reduction target from 2024. Originally, 2019 and 2020 were to be the baseline years, but with 2020 effectively canceled because of the pandemic, IATA is pushing to stick to 2019 as the reference year. However, some factions want the industry to base its carbon emissions also on 2020. This has led to an extreme polarization between countries which risks split unanimity within ICAO during the upcoming annual assembly in September. “Our position as IATA is that we should stick at least for the full phase to 2019, which gives an even distribution between continents, countries, and airlines without introducing the disparity of 2020,” said Mikosz. The second development is Europe’s Fit for 55 plan. On June 8, the European Parliament amended the plan by including the Emissions Trading Scheme (ETS) not only for intra-European flights but also for all international flights departing from the European Union. IATA says that this amendment threatens the unanimity of the CORSIA agreement, which already covers emissions for international flights. Europe's new policy creates a separate situation for EU carriers and endangers international cooperation to tackle climate change. “It isn’t helping a global solution. For our industry, CORSIA is a huge success, because it is the only market-based mission and the rules cover the entire industry. It would be panic if the system is no longer a system of global offsetting but becomes a regional system,” said Mikosz. Lufthansa CEO Carsten Spohr thinks that ETS will result in carbon leakage and the disparity between EU and non-EU carriers, even those in the UK. “What the European Parliament wants is the end of European hub traffic, even though the whole effect comes into effect at the end of the decade. The estimate is that by then, it would cost €20 more if you fly via Istanbul or Doha to Asia but €200 more if you go via a European hub. Let’s take a family with children: they would pay €800 more if they would go to Singapore via Paris or Munich instead of paying €80 more via Dubai. Very few people will pay for this. This can’t be in the interest of European policymakers. By the way: emissions aren’t reduced: my friend Akbar (Al Baker) or my friend Tim (Clark) have similar emissions per passenger as I do.” Spohr hopes that the European Council will not adopt the amendment of the parliament.
