The cost of decarbonising flying will increase air fares and slow growth in demand, according to an updated roadmap to ‘net zero’ emissions published by the Sustainable Aviation industry coalition last week.
Its appearance on April 17 coincided with the government reaffirming its commitment to stimulate sustainable aviation fuel (SAF) production and a meeting of the Jet Zero Council of ministers, officials and industry leaders at Farnborough airport.
But industry and ministers continue to disagree on whether the government is doing enough.
The Sustainable Aviation alliance of UK airlines, airports, aerospace manufacturers and air traffic control providers asserted UK aviation “can continue to grow whilst meeting its commitment to net zero carbon emissions by 2050”.
But it warned the opportunity to build a UK SAF industry “is at risk without government support” and called for a “price support mechanism” to secure investment in SAF plants funded by revenue from emissions trading.
A single UK SAF production plant on the Humber began operating last year and at least eight more are planned but awaiting clarity on government incentives.
The industry body acknowledged: “The increased cost of decarbonising aviation will inevitably reduce passenger demand.”
It suggests this demand reduction, due to the costs of SAF, carbon trading and offsetting schemes, will represent “around 14% of the industry’s reduction in CO2 emissions”.
Sustainable Aviation argues: “The UK has the right conditions to lead the world in developing sustainable aviation technologies. However, this leadership and opportunity is at risk without urgent government action. The UK is competing in a global race to capture private investment.”
It points to the US, where the Inflation Reduction Act passed last year aims to provide $369 billion in tax credits for ‘clean’ technologies including SAF, and to the EU which announced provisions last month to match subsidies for projects that otherwise risk moving abroad.
Ministers describe their own plans as “ambitious”, arguing they aim for the UK “to decarbonise faster than any other G7 country” and the government welcomed a report on ‘Developing a UK SAF industry’ by former BP head of alternative fuels Philip New, which the Department for Transport commissioned.
This acknowledges the UK’s “competitive strengths in aviation technology, fuels infrastructure [and] finance capacity”, but warns the government’s existing SAF mandate – which targets 10% SAF use in flying by 2030 – “is not sufficient to unlock material investment, due to the dependence on debt finance and market and technology immaturity”.
That 10% target amounts to 1.5 billion litres of SAF a year.
New’s report argues the SAF mandate “does not provide the longer-term revenue certainty sought by many investors” and concludes: “Multiple barriers need to be addressed before substantive investment will be attracted towards UK SAF plant development.”
In response, the government said it “recognises uncertainty of future revenues remains a key barrier” and ministers “will continue to consider whether additional support is required”. But it gave no fresh details on funding after issuing a second consultation on its SAF mandate at the end of March.