Airlines, stakeholders discuss future on sustainable fuel

During the World Aviation Festival, Shell and leading airlines discussed aviation's future on sustainable fuel and other technologies.

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When then-16-year-old Greta Thunberg sailed to North America to avoid flying and attended the UN Climate Action Summit, perhaps everyone at that summit knew it was time to take action on sustainability, with every move under the watchful eye of the younger generation.

Under pressure the aviation industry faces an opportunity to be bolder with its carbon neutral ambitions, and out of the emerging technologies the one that emerged to fill the gap is sustainable aviation fuel. So what do we do now as the call to action is urging the industry to make things faster?

The industry has been solving problems, as Anna Mascolo of Shell Aviation, pointed out at the sustainability panel during the World Aviation Festival last week. Recent commercial flights operated by KLM with Shell have shown the viability of SAF. Lufthansa and DB Schenker have started cargo flights running on sustainable fuel. The expert panel wanted to ask what now are the challenges of building back better and scaling new technologies to meet industry targets?

Not enough volume for a policy
Currently it is not possible to fuel an aircraft with pure SAF for technical and legal reasons, and the prices are much higher than conventional. Putting the industry in a tighter position is the fact there is not enough supply. “We need sustainable aviation fuel at pace and at scale and we are nowhere near that,” said Mascolo, adding that even with all the ongoing projects materialising the industry can only produce 1 percent of expected demand for 2030, or 4 million tonnes annually.

One of the recent projects saw Airbus and Rolls Royce testing 100 percent SAF use, but despite the industry’s full commitment Anna says the size of the challenge is really high for aviation to take on it alone. “We also need supportive mandates and policies in place and in general a strong regulatory environment, and in some cases fiscal incentives.”

Meanwhile in the US, United Airlines’ view is leaning towards positive government policies and incentives. “We have a chicken and egg scenario where there’s just not enough volume to support mandates,” said Lauren Riley, managing director, global environmental affairs and sustainability at United. As part of a broader coalition, the airline is pushing for a blender’s tax credit, which is expected to scale up production and close the price gap between SAF and regular jet fuel. Recently it formed the EcoSkies Alliance with freight partners to collectively purchase 3.4m tonnes of SAF, as a step to go beyond offsets.

“It is 2 to 4 times the cost of conventional, so for an airline right now given the impact of the pandemic on our financial circumstances, that’s very difficult for us to present that business case and pay for that premium associated with the lower carbon fuel.” So a blender’s tax credit would really be a positive mechanism to enable a shift and scale in production, she added.

Long vs short term solution
easyJet’s director of flight operations David Morgan agreed that rule makers need to offer sufficient incentives to scale up new technologies up to the point that pricing becomes good if not better. The short-haul carrier is optimistic about hydrogen but given how such technologies are still relatively nascent, Morgan made the case for offsets as the only viable option at the moment given the lack of SAF supply. “As an industry perhaps we should be a little less snobbish of carbon offsets in the very short term,” he added.

Coming from a major oil exporter, Mariam Al Qubaisi, head of sustainability at Etihad, said carbon offsets work for the airline in the current situation, particularly for passenger customers who wish to do more for the environment. “We don’t have SAF, we don’t produce SAF, transporting SAF is an issue and maybe flying less as part of our network is the solution.” “When we look at all the solutions out there, we need to take the quick wins and carbon offsets is one of them,” she added.

Will customers pay the premium?
In that regard, KLM’s VP for sustainability, Karel Bockstael, expressed that even if there weren’t many passengers over the last year, corporate and cargo customers have been proactive in asking for compensation and SAF given they also have set their own ‘enterprise responsibility’ in terms of decarbonisation.

“In the value chain, especially on the B2B, we see there’s a lot of interest and readiness to pay the premium to the level of SAF,” he noted. The end game, he says, will be a ‘true price for flying.’ “That’s where it’s all evolving: the complete impact of flying is somewhere in the price of tickets.”

Better intent for alliances
Whilst this may be welcome news for producers like Shell, the challenges are systemic and need a collaborative approach. Mascolo said the energy company comes in as an enabler for the synergies needed to make the sustainable shift, actively engaging with governments and stakeholders to bring the conversation forward.

“These alliances are incredibly powerful and absolutely needed, but I do think that there may be too many alliances and there needs to be more convergence,” Mascolo noted. easyJet echoing the sentiment said these conversations have to be meaningful enough that the policy makers are also in the conversation. “The important alliances are those that have meaningful strategies and with milestones in them otherwise they become a bit of a talkshop,” Morgan added.

Sharing her comments, Lauren from United said that despite a sort of a kitchen sink effect where everyone is forming alliances, at the end of the day, “she’ll take the enthusiasm over inaction.”

Public perception
In terms of public perception, Etihad’s Al Qubaisi mentioned that communications play an important part of bringing this wider discussion on sustainability and decarbonisation to drive change. “We have been put on a pedestal where the industry is seen as the perpetrator of climate change.” But as part of the solution, she says it is important that the industry showcase that despite being competitors, when it comes to the planet, we’re all in this together. “There is no competition in sustainability. Either we all win or nobody wins,” as Anna points out.

Global approach
With industry developments happening regionally, KLM’s Karel thinks there has to be a global approach, warranting the need for associations like IATA and ICAO to step in and be a voice for the industry. IATA, representing leading airlines, he says, can take a leading role in preparing the objectives in line with the UN’s Paris Agreement for next year’s assembly. easyJet’s Morgan urged getting more into the details of how industry targets will be achieved, stating the need to start ‘nailing down’ milestones to make those targets.

“I don’t think inaction by the global aviation industry is going to be accepted,” as United’s Riley reiterated. “I think asserting 2050 or 2060 or whatever the target might be, might not be even good enough. So I think there’s going to be continued pressure, engagement, dialogue around ‘can we go further sooner?’”

This brings us back to one of the major themes in the discussion: are the right stakeholders really pushing on the right levers to accelerate some of the solutions? The answer could be very well a resounding ‘yes’ because, as Riley pointed out, we might really need to.

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