Major airlines have committed to eliminating their net carbon emissions by 2050 even as they expect a fivefold increase in annual global passengers over the same period.
To meet that ambitious goal, they’ve touted the potential of sustainable aviation fuel, or SAF, a product that is chemically identical to kerosene but more environmentally friendly. Until technologies such as batteries or clean-burning hydrogen are commercially viable for powering large aircraft, which could take decades, SAF is the industry’s best option for getting greener.
Yet, for now, the alternative fuel is used only rarely in commercial flights. Its limited adoption is a result of two interconnected challenges: SAF is expensive for airlines to purchase, and production volumes remain constrained.
SAF makes up only about 0.1% of the global aviation fuel supply. Some carriers are blending small amounts of it with jet fuel on certain flights. Yet the largest carriers are keen to demonstrate how eager they’ll be as customers if production increases.
By year’s end, United Airlines Holdings Inc. plans to fly what it calls the first 100% SAF passenger flight from Chicago to Washington D.C. using a Boeing 737 Max 8. Federal regulators have approved the voyage — a technical demonstration without paying customers — to show that the current limit of 50% SAF for a flight can be raised without problems.
On Nov. 8, to mark the reopening of the U.S. to vaccinated Europeans, British Airways flew an Airbus A350-1000 from London to New York City on 35% SAF. The carrier said that was the largest amount blended to date on a commercial flight.
Widespread use of SAF could represent about 65% of the total cuts needed to meet the airlines’ 2050 emissions targets. But alternate fuels cost about four times more than standard kerosene-based fuel, a gap referred to as the “green premium.” That added expense could be difficult to shoulder given that airlines will need at least 119 billion gallons of fuel (449 billion liters) globally by 2050, up from current annual output of 26 million gallons, according to the International Air Transport Association.
That could end up leading airlines to raise ticket prices as they make the transition.
“That’s the way it should be,” United Chief Executive Officer Scott Kirby said at a panel discussion during the COP26 summit. “The ticket prices should be a little higher to offset the impact on the environment.”
Nudging Congress
In September, the Biden administration challenged the energy and aviation industries to boost U.S. production of sustainable aviation fuels to 3 billion gallons annually as part of its effort to cut aviation emissions 20% by 2030. To reach those goals, carriers are pushing Congress to offer subsidies and other incentives designed to spur investment and increase output. The idea is that boosting the scale of production will reduce costs per gallon, resulting in better SAF prices for the airlines.
A move by Congress might stoke new activity by refiners, which have slashed their spending amid the pandemic and have recently focused their investments on renewable diesel, which has benefited from government tax credits and mandates. Valero Energy Corp. and Marathon Petroleum Corp. said they haven’t yet seen the incentives they’d need to embark on greater SAF production. Both, however, expect the situation to change.
“We believe that the economic drivers for SAF are not there right now,” Raymond Brooks, Marathon’s executive vice president of refining, said last week in a conference call with analysts. “They will be there eventually as regulatory and product demand support builds for this.”
Marathon has a refinery in Martinez, California, that is converting to a renewable diesel facility. Brooks said the company is studying the costs of preparing it to produce sustainable aviation fuel, too.
Preparing for an Upswing
Producers of these new fuels include a handful of startups as well as oil giants such as Royal Dutch Shell Plc, BP Plc and Chevron Corp. These companies, which faced tepid demand for the products in the past, are signaling readiness to meet the sudden upswing in interest.
There’s no shortage of raw material, some of which can be procured from garbage destined for dumps and landfills. Alternative fuels can be made from a variety of source materials ranging from algae, wheat chaff and nuts to municipal solid waste like used cooking oil.
Inputs for SAF
SAF is made from a variety of sources, with FAA rules requiring it be blended with standard jet fuel. Those with higher yields might be more cost effective
Most are blended with petroleum-derived jet fuel, according to the Air Transport Action Group, a Geneva-based industry trade group. General Electric Co. says the use of these alternatives can cut emissions by as much as 80% on some of its engines.
“The challenges to using SAF are not technical,” Rachael Everard, head of sustainability for Rolls-Royce Holdings Plc, said Nov. 2 at a conference hosted by Politico. In 2023, the U.K. engine maker plans to certify that all its commercial jet models can operate on SAF. Representatives from GE Aviation and Pratt & Whitney also said their engines can operate on the newer fuels without changes.
Air travel is expected to surge to 10 billion people annually by 2050 from 2 billion this year, growth that, without changes, would more than double the industry’s share of total global emissions to about 6%. Trade group IATA estimates it will cost more than $1.5 trillion to reach its net zero carbon goal by 2050. Despite the expenses, industry executives see the importance of taking action.
“We have to get ahead of [emissions] otherwise governments will start taxing us, people will change their behavior,” JetBlue Airways Corp. Chief Executive Officer Robin Hayes said last month at a Centre for Aviation virtual event.
A group of 10 leading airlines, including American Airlines Group Inc., Cathay Pacific Airways Ltd. and Southwest Airlines Co., formed a task force advised by Boston Consulting Group in October to pool an unspecified amount of funds and speed development of greener fuels. Separately, Delta Air Lines Inc. said this month it joined a similar public-private partnership called the First Movers Coalition, which includes the U.S. State Department.
United and JetBlue blend a small amount of biofuel for departures from Los Angeles, and JetBlue does the same in San Francisco. In September, New York-based JetBlue said it’s on pace to use 10% SAF in its fuel supplies by 2030.
Delta, which is working with Chevron on test batches, also has committed to using 10% sustainable fuels by then. But the airline added an important caveat: “Subject to availability and feasibility.”