High oil profits ‘stand in the way’ of sustainable aviation fuel production, says Iata. Ian Taylor reports
Iata has accused the oil industry of withholding investment in sustainable aviation fuels (SAF), and governments of failing to act to correct the imbalance in funding.
Marie Owens Thomson, Iata chief economist and senior vice-president for sustainability, said: “We need to strive to install SAF production everywhere, on every continent.”
She noted total SAF production this year is estimated at 500,000 litres or 0.2% of total jet fuel and said: “That is a tiny number. The estimated demand in 2050 will be 1,000 times that. It’s a phenomenal challenge. Many think it’s not possible.
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“What stands in the way are the profits from oil. ESG [environmental, sustainability and governance] ratings and sustainable investing only intervene at the margins. Investors choose the most profitable [investment] and it’s too profitable to invest in oil. That has to change.”
Owens Thomson suggested: “Aviation fuel represents about 8% of total oil refinery output so the [oil] industry is not concerned.
“Investment in oil and gas was $800 billion in 2023. Iata calculates $150 billion would be enough to transition aviation [to SAF], or about 19% of oil and gas investments.”
However, she said: “Our investment needs are struggling. Most investors optimise over a short timeframe. We’re looking at a 26-year timeframe [to 2050], but we feel our feet to the fire now.
“How quickly these alternative fuels become commercial is an issue of investment.”
Owens Thomson noted an International Civil Aviation Organisation (ICAO) Conference on Aviation Alternative Fuels (CAAF/3) in Dubai in November agreed a global framework to promote SAF production and a target of using SAF to cut the carbon intensity of aviation by 5% by 2030.
That would require 14 million tonnes of SAF by 2030, said Owens Thomson, noting: “ICAO member states are responsible for making sure this happens. But how many times have states promised to stop subsidising fossil fuel production and every year they carry on doing it?”
She added: “A SAF registry and accounting system is a key piece of SAF infrastructure so airlines can claim against their decarbonisation obligations [and] airlines in countries producing no SAF can benefit.”
‘Every drop of SAF will be used’
Iata director general Willie Walsh dismissed a forecast that there could be excess production of sustainable aviation fuel (SAF) by 2030, describing it as “complete nonsense”.
Walsh insisted: “Every drop of SAF will be used.” He said: “Just look at the number of agreements signed by airlines. There is a new [SAF production] agreement every day.
“Every airline in Europe is signing purchase agreements for SAF in the US because they can’t access SAF in Europe.”
He defended use of the term ‘sustainable aviation fuel’ for fuels made from cooking oils, animal fats and other feedstocks, arguing: “We are, in effect, recycling carbon. We’re not adding new carbon to the atmosphere. It’s why it’s a credible option.”
But Walsh noted SAF will only grow from 3% of all renewable fuel production this year to 6% next and said: “This limits supply and keeps prices high. Aviation needs 25% to 30% of renewable fuel production capacity for SAF.”
Iata calculates SAF added $756 million to the global fuel bill of carriers this year.
Walsh said: “Governments want aviation to be net zero by 2050. They need to deliver policy measures that can achieve the exponential increase in SAF production needed.”
‘A mandate doesn’t mean production’
Iata energy transition director Hemant Mistry reinforced the message, suggesting aviation is in danger of being forgotten in the ramp up of renewable fuels production.
He noted government incentives for SAF production and mandates (requirements) for SAF use amount to 17 million tonnes (Mts) by 2030 – of which the US accounts for nine million, the EU 3.5 million and the UK 1.2 million.
But Mistry argued: “Just because you have a mandate doesn’t mean you will have production.”
He noted 43 airlines “have made voluntary SAF commitments and agreements” amounting to 13 Mts of SAF by 2030 and said: “Our ambition is to hit 24 Mts of SAF by 2030.”
But he said: “Production is a different story. We’re at such a nascent stage.”
He pointed out SAF output is forecast to be 1.5 Mts, or 0.5% of global aviation fuel in 2024, and warned: “We’re in danger of aviation being forgotten. Once we get to 2030, we’ll need to ramp up production another 20-fold to get to 2050.
“We need to diversify feedstocks, decentralise SAF production and develop a global framework and standard set of rules.
“Once SAF is mixed with jet fuel it’s no longer traceable. It needs recording to register the amount and the feedstock, and to allocate emissions savings to counter double accounting and fraud.”
Mistry added: “We need to understand the comparative availability of feedstocks by region and the economic benefits of feedstocks. There should not be any competition with food or water requirements. It’s important we’re able to uphold stringent sustainability requirements.”
Asked will flying become more expensive to pay for SAF production, he said: “There are costs to decarbonising. [But] as we increase volumes, it will get cheaper.”
Mistry hailed the Virgin Atlantic flight from Heathrow to New York on 100% SAF on November 28 as “a key milestone”, saying: “It was important to prove to the public and make everyone understand that we’re moving in this direction.”