Head of Boeing not optimistic that SAF will be cheap enough any time soon
The head of Boeing has warned that biofuels will “never achieve the price of jet fuel”, expecting that this central pillar of the aviation sector’s strategy to slash emissions is not likely to be successful. Airlines say that so-called “sustainable aviation fuels” (SAF) — made from food wastes, agricultural and forestry waste, and domestic rubbish, could enable lower CO2 from the sector, by replacing the kerosene-type fuels, such as Jet A, used in aircraft today. But SAF currently accounts for less than 1% of global aviation consumption and its price is at least x2 or x3 that of kerosene fuel. If the fuel could be made in anything approaching the scale the aviation industry wants, and without other serious unintended agricultural and environmental impacts, it would still be expensive. The extra cost would have to mean more expensive flying, and thus fewer people flying – less future growth for the sector. “There are no cheap ways to do SAF — if there were, we would already be doing them.” Governments want to mandate use of SAF by airports, even though it is not available in large amounts.
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Boeing boss cools hopes for sustainable aviation fuels
David Calhoun tells transport executives there is no cheap way of decarbonising air travel
By Derek Brower and Brooke Masters in Seattle and Claire Bushey in Chicago (FT)
23.5.2023
Boeing’s boss has warned that new climate-friendly biofuels will “never achieve the price of jet fuel”, pouring cold water on a central pillar of the aviation sector’s strategy to slash emissions.
Airlines say sustainable aviation fuels (SAF) — made from food waste such as cooking oil and plants — can bring rapid decarbonisation by replacing the kerosene-type fuels, such as Jet A, used in aircraft today.
But SAF currently accounts for less than 1% of global aviation consumption and trades for at least twice the price of traditional jet fuel.
“We will create scale and get more economic,” Boeing chief executive Dave Calhoun said. But he added: “No, I don’t think we will ever achieve the price of Jet A. I don’t think that will ever happen. It is more positive and it will have an impact, but it’s gonna be what it’s gonna be.”
The comments from Calhoun echo concerns raised privately in the sector about the difficulties — and expense — involved in decarbonising an industry that, in creating mass transcontinental travel, represented one of the crowning achievements of the petroleum era.
“He’s saying the quiet bit aloud,” said Robert Campbell, head of energy transition research at Energy Aspects, referring to Calhoun’s comments. “There are no cheap ways to do SAF — if there were, we would already be doing them.”
Tax credits for SAF production in the US were among vast clean energy subsidies in the Biden administration’s sweeping Inflation Reduction Act (IRA), passed last year. The EU has also mandated that airports use increasing volumes of SAFs to fuel jets in Europe.
The International Air Transport Association, a trade group including the world’s biggest airlines, set a target in 2021 to achieve net zero emissions by 2050. SAF would account for 65 per cent of the abatement, Iata reckons.
But the move would be costly, said Willie Walsh, the former chief executive of British Airways, who runs Iata.
“It is achievable,” he told a Financial Times conference last week. But “anyone who says the costs of transitioning to net zero are going to be low or unnoticeable I’m afraid is fooling themselves”.
“Passengers will have to pay higher fares. We need to be honest with our customers”, Walsh said. “Airlines are not in a financial position to absorb that cost, so ultimately it will have to be passed on to consumers.”
The US price of sustainable aviation fuel on Friday closed at $6.83 a gallon, while a gallon of jet fuel cost $2.34, according to energy data provider Argus Media.
Among the costs associated with a switch to 100% SAF use is that all existing fuelling infrastructure — at airports and aboard planes — must be adapted to handle the biofuel, which lacks the “aromatics” present in hydrocarbons that help seal pipes.
Boeing and its rival Airbus say they will render their aircraft capable of handling 100 per cent SAF by 2030, compared with 50 per cent at present. Boeing is also rolling out a new modelling tool, Cascade, to help airlines and policymakers assess methods of decarbonisation.
Critics of SAF have also warned that as demand for the fuel rises, feedstock from food fats will be quickly exhausted, creating new demand for crops, threatening forests, or generating an incentive to grow feedstocks on land needed to supply food.
The Biden administration, which has set industry a “grand challenge” to produce 3bn gallons a year of SAF by 2030 from less than 16mn now, says feedstock will come from agricultural waste produced alongside corn and soya beans, and woody biomass in western states.
But analysts say that until long-term demand for the fuel is guaranteed, investors will be reluctant to plough capital into new SAF production capacity, leaving costs for a niche product high.
Tom Vilsack, the US secretary of agriculture, said the IRA tax credits would help the industry overcome that investment roadblock, although price parity with jet fuel would not be achieved soon.
“At the beginning you’re going to have government support and assistance . . . to learn the efficiencies that need to go into ultimately getting that price down”, Vilsack told the Financial Times last week.
https://www.ft.com/content/42099d27-3095-4e10-ba94-a3d33f9ff35a
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See earlier:
Industry faces additional €820 billion cost to decarbonise European aviation in line with net zero by 2050
By Christopher Surgenor (GreenAir news)
14 April 2023
To achieve the European aviation sector’s ambition of achieving net zero emissions by 2050, additional expenditures amounting to €820 billion ($900bn) are required between 2018 and 2050, finds a study commissioned by five industry associations.
These additional or ‘premium’ costs, mostly to be spent on alternative fuels, are on top of business-as-usual (BAU) expenditures, such as fleet renewal, which are required for the net zero transition.
BAU expenditures over the 2018-2050 period are estimated at €1,068 billion, bringing the total expenditures towards reaching net zero at just under €1.9 trillion. The report just published, ‘The price of net zero’, determines financing in-sector sustainability measures yields substantially lower costs than realising the same emission savings through out-of-sector carbon reductions. The study follows up the industry’s Destination 2050 roadmap published in 2021.
The five Destination 2050 partners – A4E (airlines), ACI Europe (airports), ASD Europe (aerospace manufacturers) CANSO (air navigation service providers) and ERA (regional airlines) – commissioned consultancies SEO Amsterdam Economics and the Royal Netherlands Aerospace Centre to calculate the expenditures necessary to achieve the targets set out in the roadmap and accelerate European aviation’s decarbonisation.
“Although challenging to do an accurate assessment of the price of reaching net zero for the European aviation sector, we have commissioned this scientific study to establish a better understanding,” said the partners. “We are firmly committed to a climate neutral European aviation in line with the EU climate goals and the Paris Agreement targets. Therefore, decarbonisation is at the heart of our business.”
Of the €1.9 trillion, fleet renewal is found by the study to be the largest expenditure (43%) of which the BAU scenario represents over 90% and premium expenditure (the additional expenditures to be made above BAU) of around 10% (€740 billion and €80 billion respectively). However, the significant investment would result in a €188 billion saving in fuel costs and a further €78 billion saving in carbon pricing.
Expenditure on alternative fuels, which includes drop-in sustainable aviation fuels, hydrogen and renewable electricity, is the second largest expenditure (40%), with premium expenditures representing nearly 59% and BAU just over 41% of the costs (€441 billion and €310 billion respectively).
Other premium expenditures are required for air traffic management (€20 billion), ground operations (€9 billion), R&D in future aircraft (€100 billion), airport infrastructure adaptation (€18 billion) and carbon pricing and economic measures (€152 billion).
The use of economic measures, including negative emission technologies, accounting for about 19% of the premium expenditure, is required to compensate for all emissions remaining after the application of the in-sector activities. Both the EU Emissions Trading System (EU ETS) and ICAO’s CORSIA scheme are essential to reach net zero, say the partners.
However, they add: “Economic measures must be effective and focused on driving the required decarbonisation processes forward through positive incentives attracting in- and out-of-sector capital. On the contrary, taxation and operational restrictions will hamper the industry’s ability to invest and innovate due to a diminished financial capacity and in turn jeopardising the global competitiveness of European aviation.”
They “strongly recommend” revenues from the EU ETS be reused within the sector to support and incentivise breakthrough technologies, infrastructure and SAF production.
The report says financing in-sector sustainability measures yields substantially lower costs than realising the same emission savings through out-of-sector carbon reductions. It compares European airline revenues of an estimated €145 billion in 2018 with combined average annual expenditures towards net zero of €59 billion.
“The aviation sector’s expenditures towards achieving net zero are substantial and are dependent on access to finance from the private and public sector. This is vital when capital reserves are insufficient to make large upfront payments for new aircraft and infrastructure,” said the partners.
“Only with the right set of incentives and policies can the required capital be made available for the sector’s decarbonisation. This means timely and effective measures bringing long-term clarity and predictability for investors. Regulatory frameworks must encourage low carbon technology deployment.”
https://www.greenairnews.com/?p=4223
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Climate groups taking government to High Court over greenwash “Jet Zero” aviation strategy
In July 2022, the UK government published a “Jet Zero” strategy (the best part of which is the catchy name). It aspires to allow the UK airline sector to continue to grow, with unrealistic hopes of being able to decarbonise with novel fuels. It was widely condemned at the time as being greenwashing, with no credible ways to achieve its goals, and its steadfast refusal to contemplate measures to reduce the demand for flights. Two organisations, GALBA and Possible, challenged the government. In October 2022, with lawyers at Leigh Day, Possible filed for a judicial review of the “Jet Zero” strategy. They now have permission to proceed to a joint hearing. This is a hugely important milestone in climate change litigation in the UK. Experts have judged the plans in Jet Zero to be inadequate, and lawyers will argue that the failure to consider this risk to the delivery of its plans renders its net zero aviation strategy unlawful. The key grounds on which the challenge will be heard in the High Court are: The government failed to lay a report before Parliament setting out how the strategy would enable carbon budgets to be met. And the government failed to consult in a lawful manner by having a “closed mind” before the consultation commenced on whether demand management measures were required.
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