Even taking into account the decimation of air travel by the Covid pandemic, Airbus is forecasting that passenger traffic will continue to increase by 3.9 per cent per year between now and 2040.
If nothing is done to reduce the carbon emissions of aviation fuel, the airline industry looks like a blocker to achieving pledges cemented in the Paris Agreement to limit warming caused by greenhouse gas emissions to less than 1.5 degrees Celsius. The airline industry is taking this on, but how does travel management fit into the picture?
The road transport sector has embraced electric vehicles but the size and weight of batteries effectively rules them out for aviation except in very limited cases.
“We can’t switch to something like electric planes,” says Jaclynn Kidd, manager of CWT Solutions Group. “It is not feasible for long haul [flights]. If you can find a solution within the existing infrastructure, that is the way to go.”
Liquid hydrogen looks promising but is not a feasible near-term solution for cutting emissions. For now, the answer could lie in sustainable aviation fuels, or SAFs, an umbrella term encompassing fuels that are renewable or derived from waste and which meet certain sustainability criteria.
SAFs are drop-in fuels, meaning they can be used in place of fossil-fuel based jet fuel or blended with it and can use the aviation’s sector existing infrastructure. On the other hand, changing the world’s airline fleet and infrastructure that supports it to use liquid hydrogen, for instance, could take 30 years. However, SAF production will have to be ramped up significantly and quickly in order to help decarbonise aviation.
Commercial airlines currently consume 300 million metric tons of jet fuel a year. In comparison, global SAF production stands at around 300,000 metric tons. As such, SAF supply is currently just 0.1 per cent of the potential fuel demand. Neste, the world’s leading supplier, currently produces 100,000 metric tons of SAFs per annum but plans to ramp up production to 1.3 million metric tons by the end of 2023. Supply is not the only problem – SAFs are also expensive to produce.
Benefits and challenges
Do SAFs have lower carbon emissions than traditional aviation fuels? No… wait, what? “There is this idea that you fly using SAF, and the exhaust emissions are lower,” says John Harvey of the consultancy Globalyse which works with flySAF. “They are not. They are the same.”
The carbon benefit of SAFs only becomes apparent when you look at the full lifecycle. SAF production is what delivers up to an 80 per cent reduction in carbon emissions, depending on which method is used, which crop is used and the supply chain to the airport. SAFs also have the benefit that they will not run out, unlike fossil-based fuels.
Jonathan Wood, Neste’s vice president EMEA for renewable aviation says, “The nature of SAF as an emissions-reduction solution is different from carbon offsets that typically take a long time to realise the promised emission reduction, like growing a tree. SAFs reduce carbon emissions in aviation itself. This gives businesses the opportunity to clean up their own value chains, instead of compensating their emissions in another sector.”
That’s not to say that SAFs do not have their problems. One of the major concerns is that production methods based on biomass may push out other uses of land, such as food production in poor countries. Using crops also drives up water usage. This has led to the use of non-food crops such as jatropha and castor bean, using waste biomass from existing agricultural and forestry production, as well as more innovative ideas such as the use of algae or the euphemistically vague municipal solid waste.
SAF’s biggest challenge, however, is cost. Sustainable jet fuels cost anywhere between two and eight times traditional jet fuels, and this is unlikely to fall soon.
The high cost of SAF also compares unfavourably with the relatively low cost of carbon offsetting – a credit for a metric ton of carbon through the EU’s Emissions Trading Scheme currently costs around €80; in the US it is even less.
Who is using SAFs?
Some of the world’s largest airlines as well as a number of corporates have made commitments to use SAFs, including PwC Netherlands which says its employees are now flying 'entirely on SAF'.
Dutch airline KLM was one of the first movers, establishing its Corporate BioFuel Programme in 2012, allowing companies to pay a surcharge that covers the difference in price between SAF and traditional jet fuel. These surcharges were then used to purchase SAF for its commercial partners.
However, KLM’s claims were recently challenged in a lawsuit from environmental charity ClientEarth. The suit argues that “Contributing to the cost of sustainable aviation fuels (currently, biofuel) …does not reduce the climate impact of flying. It’s a donation to KLM’s business, not an offer for the customer to buy additional, new biofuels.”
Neste supplies SAFs to KLM and Jonathan Wood said the company follows a “strict atmospheric benefit principle, making sure that customers’ financial contributions lead to additional SAF usage and additional emission reductions.”
In 2020, American Airlines committed to buying nine million gallons of SAFs over three years from Neste, while in 2021 IAG signed a deal for 73 million gallons from the Bayou Fuels project in Mississippi and Lufthansa Group purchased $250 million worth of SAFs.
United Airlines announced last September that it had agreed to buy 1.5 billion gallons of SAF from Alder Fuels over 20 years – a purchase “one and a half times the size of the rest of the world’s airlines’ publicly announced SAF commitments combined,” according to the carrier, at least at that time. In May it committed to 50 million gallons from Neste. United also coordinates the Eco-Skies Alliance for corporate buyers to stimulate SAF demand. Big names like Meta, Microsoft and Maersk are among its 30 current participants.
In March this year, Delta announced a deal to secure 75 million gallons of SAF annually from producer Gevo for seven years starting in 2026 to achieve its planned 10 per cent SAF procurement target by the end of 2030. More recently, Japan Airlines and Finnair have also signed smaller commitments with Gevo.
There are a number of ways to make SAFs
Accounting for SAFs
One of the biggest concerns for corporates is how to know that the SAF they have purchased through one of these schemes has actually been used.
CWT Solutions Group’s senior director Richard Johnson says, “It is virtually impossible to say that a specific flight that an individual takes is a SAF-powered flight.”
John Harvey believes that only direct purchase of SAFs from the supplier gives the necessary transparency. “If I were responsible for making a SAF purchase, this is the only type of purchase I would make. I wouldn’t buy credits or certificates as there is a risk that the seller is selling to someone else,” he explains.
Neste’s Jonathan Wood says, “The SAF can be delivered to a mutually agreed airline and Neste ensures it is delivered and used. For corporate SAF deliveries, Neste is sharing all SAF delivery documentation with a third-party auditor, ensuring actual delivery and usage by the airlines, and protection against double counting.”
Concerns over accountability and double-counting have led Shell, Accenture and American Express Global Business Travel to launch a blockchain-powered platform called Avelia which it is claimed will ensure the allocation of SAF’s environmental benefits to companies and airlines after the fuel has been delivered into the fuel network.
There are also schemes that try to get companies to invest in production rather than in buying SAFs directly.
“A lot of the noise around SAF is around future development and plants and organisations trying to raise money for the development of the plant,” says Harvey. This is the process of carbon insetting (as opposed to offsetting) and means investing in a project in your own value chain. “Anyone buying an inset is placing their money forward. It might be a greenfield site that has no planning permission,” he says. “Good luck to all those people.”
Getting SAFs adopted
Increasing adoption is going to cost money – and a lot of it. The European Parliament says that airfares are likely to rise by 8.2 per cent by 2050 as a result of the higher fuel costs involved. Others say fares will rise more sharply.
Many experts say the only way to drive wider SAF take-up is to enforce adoption targets and to incentivise production.
Currently, there is a 50 per cent upper limit on the amount of SAF that can be blended with jet fuels. Europe is at the forefront of enforcing minimum blending rates. The ReFuelEU aviation proposal is that the minimum share of SAF supplied at each EU airport should be two per cent in 2025, rising to 63 per cent by 2050.
“Pressure from customers is also going to be an important catalyst,” says Johnson. “As they become less budget sensitive, companies are more willing to invest.”
Young generations entering the workforce and as consumers will play a part too. “The biggest pressure [to use SAFs] is going to come from the generation coming up,” says CWT’s Jaclynn Kidd.
Case study: SAF pilot in progress
Company: The Bill & Melinda Gates Foundation
Travel buyer: Pam Massey, deputy director, global travel
The Bill & Melinda Gates Foundation is one organisation that has been looking at how to purchase SAFs and has set a goal to reach carbon neutrality in global office operations, events, commuting and business travel by 2030.
The foundation’s Pam Massey spoke to BTN Europe about how the organisation is vetting the potential for SAF usage: “As a social impact organisation, business travel makes up a sizable portion of our footprint: about two-thirds in 2019. Today, we are focused on travelling less, travelling smarter, and purchasing SAF to reduce our footprint.
“We’re excited about SAF because it is a unique opportunity to immediately reduce emissions and help scale an important industry innovation. It’s also very early days in this space, so we are eager to talk and learn from others,” says Massey.
“We have engaged with a handful of airlines that make up nearly 50 per cent of our historical volume, and we are asking them a lot of questions. We haven’t entered into any contractual agreements, but we are looking at them and understanding that every airline has its own SAF agreement, accounting system and approach,” Massey explains.
She adds, “The goal of our pilot, once approved by our executive sponsor [the CFO], is to model the SAF purchase from end to end. We are a data-driven organisation and by connecting with others, engaging in SAF agreements and documenting our learnings we can model this and then make a case for a longer-term commitment to support our 2030 strategy.”