Royal Dutch Shell (RDSa.L) plans to start producing low-carbon jet fuel at scale by 2025, in an attempt to encourage the world’s airlines to reduce greenhouse gas emissions.
Aviation, accounting for 3% of the world’s carbon emissions, is considered one of the toughest sectors to tackle due to a lack of alternative technologies to jet fueled-engines.
Shell, one of the world’s largest oil traders, said it aims to produce 2 million tonnes of sustainable aviation fuel (SAF) by 2025, a ten-fold increase from today’s total global output.
Produced from waste cooking oil, plants and animal fats, SAF could cut up to 80% of aviation emissions, Shell said.
Shell, which at present only supplies SAF produced by others, including Finnish refiner Neste (NESTE.HE), said on Monday it wants green jet fuel, which can be blended with regular aviation fuel with little need to change plane engines, to make up 10% of its global aviation fuel sales by 2030.
SAF accounts for less than 0.1% of today’s global aviation fuel demand, which reached around 330 million tonnes in 2019, investment bank Jefferies said.
Growing the market faces several hurdles, primarily due to the cost of SAF, which is currently up to 8 times higher than regular jet fuel, and the limited availability of feedstock.
Shell said it wants others to follow its lead.