Hydrogen and Biofuel Setbacks Force Air NZ to Chart New Emissions Course

May 02, 2025

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by Jonathan Milne (newsroom) An Air NZ-Airbus initiative to build a 100-seater hydrogen plane has stalled, coming just after Meridian shelved its big Southern Green Hydrogen project -- The delayed arrival of Air NZ's eight new fuel-efficient Boeing 787-10s is one of the 'uncertain factors' that's driven Air NZ chief executive Greg Foran and chief sustainability officer Kiri Hannifin to push back its 2030 emissions reductions target.

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Delays to the delivery of eight more fuel-efficient Boeing 787 Dreamliners and difficulty obtaining affordable sustainable aviation fuel (SAF) have combined with Airbus pausing the development of hydrogen-fuelled planes that were touted as the future of domestic travel.

At the same time, Meridian has quietly announced that it’s shelved its big Southern Green Hydrogen project, saying the economics don’t work to produce green hydrogen at scale.

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Proponents have argued that hydrogen fuel cells would enable heavy trucks, ships and planes to decarbonise; the Labour government invested at least $62 million in hydrogen projects, and the coalition Government put in $30m last year for the more broadly-focused Low Emissions Heavy Vehicle Fund.

The Government’s hydrogen action plan, released just before Christmas, aims to enable private investment in low-emissions hydrogen through supportive regulation, reducing barriers for consenting, and supporting access to international investment and markets.

But MBIE’s energy markets sector director Peter Bartlett says there needs to be more affordable and secure electricity if hydrogen is to be viable. “Addressing the cost of electricity – one of the major barriers to hydrogen projects – is a key focus for the energy portfolio right now.”

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And there are supply chain questions about how large volumes of hydrogen would be piped, trucked or shipped to places where it would be needed, like the country’s major airports.

Air NZ’s American development partner Universal Hydrogen was wound up last year, after failing to secure further funding to develop its hydrogen fuel cell powertrain.

Such setbacks contributed to the “uncertainty” that’s led Air NZ chief executive Greg Foran and chief sustainability officer Kiri Hannifin to water down the national carrier’s 2030 emissions reductions target.

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“They just don’t think there’s enough green hydrogen infrastructure ready, so that’s very disappointing for us, because we think a 100-seater hydrogen plane would be very, very good for us here in New Zealand.”

She says Air NZ hadn’t spent much on the joint initiative with Airbus. “Just bits and bobs.”

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“When I started at Air NZ, there were quite a few little manufacturers looking at next generation aircraft, whether it was electric or hybrid or hydrogen. That’s dropped away,” she says. “Some of them don’t exist anymore. They’ve gone bankrupt, they’ve gone under, they’ve changed direction. So this pool of options has has shrunk.”

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There are limited supplies of sustainable aviation fuel from companies like Singapore-based Neste, and what little fuel there is sells at a high price.

With Air NZ increasing SAF to 3 percent of its fuel volumes next year, that increased cost has to be passed on to consumers.

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Hannifin says the Emissions Guidance will be updated annually in August, based on detailed modelling of its decarbonisation progress, external market conditions, and global and domestic policy developments. READ MORE

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Air NZ Sets New Emissions Pathway After Dropping 2030 Target (Sustainability Magazine)

Excerpt from Sustainability Magazine: While CO₂ is the primary greenhouse gas emitted, aviation also releases other substances like nitrogen oxides and soot, which contribute to climate change.

Air New Zealand (Air NZ) has updated its emissions pathway amid its dropping of the 2030 SBTi target of 29%.

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The move follows the company’s decision to withdraw from the SBTi and drop its original 2030 carbon intensity reduction target last year.

The change reflects the airline’s reassessment of the feasibility of its climate ambitions in the face of evolving operational, supply chain and policy-related challenges.

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“In recent months, and more so in the last few weeks, it has also become apparent that potential delays to our fleet renewal plan pose an additional risk to the target's achievability,” comments Greg Foran, Chief Executive Officer at Air NZ.

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“Given so many levers needed to meet the target are outside our control, the decision has been made to retract the 2030 target and withdraw from the SBTi network immediately.”

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Air NZ’s decarbonisation strategy relies on a combination of sustainable aviation fuel (SAF), new aircraft technology, operational efficiency and high-integrity carbon removals.

In 2023, the airline sourced just 0.4% of its jet fuel from SAF.

This is projected to rise to 1.6% in 2024, with a goal of reaching 10% by the end of the decade.

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“While the volumes of SAF we are buying are very small compared to the amount of fossil jet fuel we use, they give an important signal to alternative fuel producers that we are open for business,” explains Kiri Hannifin, Chief Sustainability and Corporate Affairs Officer.

The airline is also advancing fleet renewal where possible, optimising its network and routes, and investing in carbon credits to meet international regulatory obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Where appropriate, it will also employ verified carbon removal methods to offset remaining emissions. READ MORE