Incentives needed to increase SAF production

(June 27, 2022, 10:57 +07)
IATA has called on governments to urgently put in place large-scale incentives to rapidly expand the use of sustainable aviation fuels (SAFs) as aviation pursues its commitment to achieve net zero carbon emissions. 2050.

To meet aviation’s net zero commitment, current estimates are that SAF will account for 65% of aviation’s carbon mitigation in 2050. This would require an annual production capacity of 449 billion liters. Investments are in place to increase annual SAF production from the current 125 million liters to 5 billion by 2025. With effective government incentives, production could reach 30 billion liters by 2030, which would be a switchover for the production and use of SAF.

Aircraft flying overhead with contrails. Photo by Steven Howard from TravelNewsAsia.com

“Governments don’t need to invent a playbook,” said IATA Director General Willie Walsh. “Incentives to transition electricity generation to renewable sources such as solar or wind power have worked. As a result, clean energy solutions are now cheap and widely available. With similar incentives for SAF, we could see 30 billion liters available by 2030. Although still a long way from where we need to be, this would be a clear tipping point towards our net zero ambition of sufficient quantities of SAF at affordable prices.

In 2021, regardless of the price (SAF costs between two and four times the price of conventional jet fuel), airlines have bought every drop of the 125 million liters of SAF available. And already, more than 38 countries have SAF-specific policies that pave the way for market development. Inspired by these policy measures, the airlines entered into $17 billion forward purchase agreements for SAF.

Additional investments in production must be supported by appropriate policies. This would increase supply and reduce costs.

Generating electricity from solar or wind energy faced similar obstacles when these technologies replaced fossil fuels. Thanks to effective policy incentives, both are now affordable and widely available.

By applying similar incentive policies to SAF, governments can help global SAF production reach 30 billion liters by the end of the decade. This would be a tipping point as it would send a clear signal to the market that SAF is playing its long-term role in decarbonizing aviation and encourage investment to increase production and lower prices.

The SAF market needs stimulation on the production side. The United States sets an example for others. Its SAF production is expected to reach 11 billion liters in 2030 thanks to strong government incentives.

Europe, on the other hand, is the example not to follow. As part of its Fit for 55 initiative, the EU plans to require airlines to increase SAF by 5% at every European airport by 2030. Decentralizing production will delay the development of economies of scale. And forcing ground transportation of SAFs will reduce the environmental benefits of using SAFs.

Hydrogen and electric-powered planes are part of aviation’s plan to achieve net zero emissions by 2050, but they will likely be limited to short-haul routes. SAF is the proven solution for long-haul flights.

“Hydrogen and/or electric propulsion systems will most likely be available for short-haul commercial flights by 2035, but the majority of emissions come from long-haul wide-body flights and to combat these emissions, SAF is the only proven solution. We know it works, and we need to redouble our efforts to engage all industry players, including governments, to increase production, availability and adoption,” said Sebastian Mikosz, vice- IATA Senior Chair for Environment and Sustainability.

In October 2021, IATA member airlines came together and made the monumental decision to commit to achieving net zero emissions by 2050, a huge challenge as the expected scale of the industry in 2050 will require mitigation of 1.8 gigatonnes of carbon.

In order to provide the right set of coherent policies and the long-term stability needed for investments, the aviation industry calls on all governments to support the adoption of a long-term climate goal for air transport at the 41st Assembly of the International Civil Aviation Organization (ICAO) in September, in line with industry commitments.

This climate target is key to supporting industry’s decarbonisation ambitions and would provide a global multilateral framework for action without distorting competition.

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