The first fully SAF-powered airliner to make a transoceanic flight from London to New York was a Virgin Atlantic Boeing 787 last November. The event is a historic step, as Sustainable aviation fuels are considered decisive in the green transition of aviation, although only Richard Branson together with the British Transport Minister, Mark Harper, and a few other passengers were on the test flight.
A card to bet on
From time to time, similar episodes make the headlines: the first test of an all-electric plane or a commercial ‘green’ fuel supply agreement and so on. Indeed, SAFs could reduce in-flight emissions by 75-95%, but they are less than 0.1% of all fuel used currently and their production cost is still 2-5 times higher than that of conventional fuel. Moreover, existing engines are certified to run at peak performance with a 50% SAF blend, limiting the possible CO₂ reduction to -40%. New propulsion technologies such as electric or hydrogen-powered aircraft are only expected to reach commercial maturity in 2040.
Opting for SAFs is, in any case, the card played by the EU which has decided on an increasing mandatory quota for the use of this fuel in the coming years with the RefuelEU regulation. Sustainable fuels originate from circular economy feed stocks, such as waste cooking oil and animal fats, and their increased commercial availability is expected from 2025 onwards. By that year, suppliers will have to guarantee 2 per cent of SAF fuel to the airports of the Twenty-Seven, up to 70 per cent in 2050. In parallel, synthetic fuels such as e-kerosene will have to rise from 1.2% in 2030 to 35% in 2050.
Beyond the hopeful announcements and policies, what is the state of play and what are the actions, tools and time frames needed to witness the full ecological transition?
A titanic challenge
Aviation is part of a set of hard-to-abate activities not yet aligned with the Net-Zero 2050 trajectory, as determined by the International Energy Agency (IEA). This is according to the World Economic Forum's ‘Net-Zero Industry Tracker’, which describes difficulties and opportunities for the ‘green’ transition in aviation, a sector that contributes 2-3% to global emissions.
Some structural factors complicate the scenario towards 2050. By then, aviation will have a 317% increase in demand, the highest of any sector observed by the report (nautical, road transport, steel, cement, aluminium, ammonia, oil and gas), with travel requirements rising from 6 trillion kilometres ‘flown’ by paying passengers to 25 trillion kilometres.
Assuming that in six years' time production capacity could already reach 17.3 billion litres, this would have to increase 27-fold to meet SAF's target of 475 billion litres per year in 2050. Today, the starting point, however, sees non-fossil fuels at just 0.06% of the total used, while globally the target is 85% for SAFs in 2050. But that is not all.
“The current infrastructure is inadequate to support the development and scaling of decarbonisation pathways, especially regarding the production and availability of SAF feedstock. Less than one per cent of the required infrastructure exists,” according to the report, which estimates the required investment in infrastructure at $2.4 trillion, with about 0.9-1.5 trillion within the industry's reach. Eighteen per cent would go to the creation of 7,000 biorefineries, 76% would be absorbed by the production of clean hydrogen and another 6% would go to technologies for the capture of 490 million tonnes of CO₂ and transport to produce PtL synthetic fuels.
In all, the adoption of low-emission technologies will lead to a price mark-up of 350% industry-wide, between suppliers and airlines. This so-called ‘green premium’, the largest among the sectors analysed by the WEF, will have effects that will reverberate on the cost of the ticket for the consumer (+15%).
Market, policies, capital
Therefore, a new market is needed for the decarbonisation of aviation and this initial phase could favour the inclusion of new, more agile and innovative players. New contracts and supply chains are needed that can reduce production costs while decreasing the risks for early investors. For the stability of industrial ecosystems, setting standards will play a role, as there are eight certified production routes for SAFs, making traceability and regulation criteria complicated.
Subsidies, direct funding and international regulations are among the policies deemed necessary to support the development of SAFs. Existing instruments today are carbon pricing (EU's Emission Trading Scheme), emission caps (CORSIA), direct taxation of jet fuel (Fit for 55), performance and standard certifications, subsidies and tax credits (US Blender's tax credit), direct regulations such as AFIR for the development of electric aircraft, tax credits and anti-inflation measures for clean fuel production, direct financing, public-private partnerships, and incentives through investments.
Last but not least, the aviation sector needs to invest USD 5 trillion for net-zero transformation by 2050, a figure that underlines the enormity of the challenge. This means 2.4 times the companies' current annual commitment, $78 billion against the $185 billion needed. The case for investment in low-emission technologies continues to be weak, given aviation's narrow profit margins and an average capital cost of 7%, the industry does not seem ready to absorb extra expenses and generate satisfactory returns, either exclusively from internal funds or to attract private investment. Since the risk is greatest at the level of research and development and decreases with commercial deployment, varied forms of financing will be required.