Aviation is Fueling Up for Net Zero

By Paul Hodredge, Director of Industrials and Transport and Cameron Steagall, Manager of Collaborations at BSR

Special to The Digest

On a cool, overcast December day in Chicago, United Airlines flew a Boeing 737 MAX 8 jet from O’Hare to Washington Reagan National Airport. United was leaping forward in clearing the skies: this was the first commercial flight to use 100% sustainable aviation fuel (SAF) for one of the aircraft’s engines.

Many businesses are feeling pressure from customers and investors alike to decarbonize their operations and supply chains. Since aviation emissions account for about 2.5 percent of global carbon dioxide emissions, or 905 million metric tons of CO2, businesses are smart to reduce their emissions from aviation. No matter the company, moving towards a 2050 net zero goal is imperative. Currently, the most innovative way for businesses to reduce the aviation component of their Net Zero goals is by investing in sustainable aviation fuel.

Electric vehicles and renewable energy are becoming mainstream. Yet aviation has lagged behind due to its core dependence on energy-dense liquid fuels. Now, aside from not flying, SAF is developing to be the most promising way to reduce aviation emissions in the near term. SAF is made from feedstocks that can be grown or produced without the risk of unintended environmental and social consequences and has significantly lower lifecycle emissions than fossil jet fuels. SAF has the potential to reduce emissions up to 80 percent across its lifecycle compared to jet fuels. It is also designed as a “drop-in” replacement for fossil-based jet fuel in current turbine engines. However, for SAF to reach its full potential, utilization will need to ramp up significantly. Today, SAF turbine faces two key hurdles to widespread adoption: production and price.

Today, the production of SAF is constrained by raw energy sources. While there are currently nine production methods to create SAF, the majority is produced by Hydroprocessed Esters and Fatty Acids (HEFA). Few refineries today have the technology to utilize HEFA. At the same time, there will not be enough feedstocks of fats, oils, greases, and fatty acids to meet predicted global needs. Some regions will be better suited for alternate production pathways and feedstocks that have yet to take off. Based on current demand, the International Energy Agency predicts HEFA will remain the predominant source for at least the next decade, meaning the availability of SAF will continue to be constrained for some time. However, increased demand will expedite the other eight production pathways and open new regions to opportunities like synthetic SAF production.

The generally low supply and high demand also play into the second major obstacle of price. On average, SAF today costs around three times as much as conventional jet fuel. The price premium leaves many airlines reluctant to invest significantly and lock in long-term contracts given ambiguous deployment timeframes of lower-carbon alternatives like electric and hydrogen. Meanwhile, producers have yet to see substantial demand signals in the market to qualify significant investment in generating more supply.

The International Air Transport Association (IATA) predicts that SAF supply needs to grow from roughly 20.5 million liters today to at least 449 billion liters a year by 2050 for the aviation industry to reach its net-zero commitment. Scaling up SAF requires two direct actions from business: collaboration and SAF Certificate purchases.

We are already seeing robust SAF collaborations and partnerships take off. The Sustainable Aviation Buyers Alliance (SABA) formed by RMI and Environmental Defense Fund (EDF) invites companies to participate in scaling SAF via a rigorous and transparent certification scheme. Clean Skies for Tomorrow (CST) under the World Economic Forum aims to make SAF more affordable. There are also formal partnerships between companies, such as DB Schenker and Lufthansa Cargo’s fully SAF-powered freighter flights between Frankfurt and Shanghai. The fuel requirements for these weekly flights are completely covered by SAF, which has saved 31,000 tons of CO2 emissions since the end of 2020.

There is no established market for acquiring SAF nor is there an agreed-upon framework for transparently and accurately reporting SAF-related emission reductions. This may leave some companies concerned about accurate reporting of their carbon emissions. One set of guidelines known as the SAFc Framework, published by the Smart Freight Centre (SFC), helps companies get their footing when first obtaining SAF Certificates. This framework addresses both cargo and business travel and is the first step towards a formalized book-and-claim system. As companies begin purchasing more SAF Certificates, a mature book-and-claim system for the market will develop.

Some businesses may be holding out for the future of zero carbon technologies like electric or hydrogen planes before investing in what may seem like a transitionary solution. While these technologies could reduce emissions up to 95 percent, they are likely still far out on the horizon. Airbus expects hydrogen planes will require an extensive redesign to hold 100 passengers and meet necessary flight lengths which is unlikely until at least 2035. The ambiguity in the aviation future parallels the zero-carbon conversation happening in the maritime shipping and road sectors. Nobody knows which technology will come out on top, or when, but we do know that SAF is here now and is a critical piece of aviation decarbonization.

By pursuing SAF-related aviation contracts, business has the biggest lever to overcome price and production hurdles. With demand signals from collaborative investments and a finalized book-and-claim system, SAF could be market-ready for any company in the near term. There is no time to wait for the next unknown and unguaranteed technology to emerge; it is up to companies to act now. Immediate corporate investment in SAF ensures the aviation sector a hope of reaching its 2050 net zero goal and corporations an accessible way to reduce their carbon footprint inside their operations. Scaling SAF together is the most effective way to decarbonize aviation now.

About the Authors

Paul Holdredge is the Director of Industrials and Transport at BSR. Cameron Steagall is the Manager of Collaborations, with a focus on climate and transport at BSR.