How Sustainability Will Change the Future of Aviation

by Alastair Blanshard and Kata Cserep (ICF) Trend 2: Sustainable fuels have significant potential but require investment -- The foundations for sustainable aviation fuels (SAFs) are relatively mature. Seven different pathways to produce SAFs are certified through ASTM International, and over 250,000 commercial flights have used a fuel blend including SAFs, proving their feasibility and safety. The key obstacle is cost, with the cheapest feedstocks for the dominant hydrotreated esters and fatty acids pathway costing approximately 0.45 $/L, compared to 0.25 $/L for kerosene. Refinement, transport, and margins further widen this premium.

Alternative pathways may offer a way to produce SAFs at a cost closer to parity with conventional fuels. Producers such as Fulcrum, Velocys, and Sky NRG are looking to use the Fischer-Tropsch process to produce SAF from wastes, which effectively have a negative feedstock cost (as the alternative is to pay for landfill or recycling). Similarly, the alcohol-to-jet pathway explored by LanzaTech avoids costly feedstock expenses. As these technologies scale, their cost will come down, and higher carbon costs will increasingly supplement the value of their fuels. This will allow them to develop and grow without outside support—much as wind and solar energy production have done.

However, SAF production faces immediate challenges to get the investment required to develop and scale refinery capacity. A guaranteed market would help, and this exists for biofuels in other uses. For example, in the United Kingdom, the Renewable Transport Fuel Obligation requires some road users to use a portion of biofuels; in 2017, over 1,600 million liters of biofuel, equal to 3.1% of total road fuel, were consumed. Norway has already implemented a similar aviation mandate, requiring jet fuel suppliers to blend 0.5% of SAFs into all fuel. Sweden and Finland have discussed similar mandates, although these are all now likely to translate to an EU-wide policy through the European Union’s ReFuel project, which would be far more efficient by minimizing market distortions.

While effective at ensuring a minimum level of uptake, mandates by themselves incentivize airlines to use the cheapest fuels available— potentially compromising their sustainability. California’s Low Carbon Fuel Standard provides an example of a policy that successfully drives SAF uptake by rewarding producers to produce fuels with the most significant emissions reduction. Pairing such a market-based measure with the mandates under discussion would be a potent combination.

Ultimately, offsets channel money out of the aviation sector, often to those who have generated offsets by successfully decarbonizing more rapidly than expected. At a time when the aviation industry desperately requires significant investments to move technologies from prototypes to production, we believe the extensive use of offsets is a poor strategy that risks enabling the delay of these investments until they're too late to have sufficient impact. READ MORE