Michael Schneider, assistant director for aviation environment, IATA
Michael Schneider is assistant director for aviation environment at the International Air Transport Association (IATA), the trade association for the world's airlines. It represents some 350 airlines – which account for more than 80 per cent of global air traffic – and helps formulate industry policy on critical aviation issues, including sustainability and the environment. BTN Europe's Andy Hoskins spoke to Michael Schneider in early September.
BTN Europe: IATA is committed to net zero by 2050 and you have detailed roadmaps of how the aviation industry can achieve this. But 2050 is not all that far off now – is it still achievable?
Michael Schneider: It is indeed a big challenge and it’s not so far off. If you look at the five roadmaps we have addressing different areas you might think it is very challenging and particularly if you look at SAF [Sustainable aviation fuel]. The development of SAF is absolutely critical – 65 per cent of the industry's decarbonisation will come from SAF.
What we have not seen yet is the ramping up of it [SAF production] as we would have hoped. This is due to a number of different factors – feedstock availability, the large investments that need to be made, and of course governments have to play their part too, putting in place the right environment and mechanisms to allow SAF production to scale up, and it needs to happen rapidly. We need between 5,000 and 7,000 SAF production facilities – it’s a staggering number – and a new plant can cost $1 billion so there has to be the right environment to make it happen.
But SAF is not the only contributing lever. There are technological improvements, operational improvements… every new aircraft can be between 15 and 25 per cent more fuel efficient. Then of course there are other propulsion methods – hydrogen can play a role in short-haul aviation. And then there is a remainder of CO2 emissions that we cannot reduce by deploying SAF and we need to look at CO2 removal tech.
We are still very confident that we can meet net zero 2050 conditional on those things falling into place.
BTN Europe: At 65 per cent of emission reductions, there is a heavy reliance on SAF. There are EU and UK mandates on adoption in place now, but what are the biggest challenges in driving up SAF production?
Michael Schneider: Usually our jet fuel consumption [annually as an industry] is 300 million tonnes. We will have produced 2 million tonnes [of SAF] by the end of this year, so that is not even 1 per cent of what's needed. But this will rapidly grow.
With the mandates, it’s a two-edged sword. In a way it makes those producing SAF really focus because in renewable fuel production not everything is used for SAF. Unfortunately, what we’re seeing in Europe is that compliance costs have increased. SAF has got more expensive because the mandate is on the SAF suppliers not on the airlines and they want to pass on the cost. They see an opportunity to increase the price in this way and they call it a compliance cost so we’re seeing the cost of SAF in Europe being higher than in any other part of the world. It’s concerning and it’s an effect of a mandate.
In that sense we would think maybe incentives work better and we have seen that in the US with the IRA [Inflation Reduction Act] and the subsidies that have been offered to those who produce renewable fuel, and that really works well. We see the volumes there increasing rapidly. In Europe the decision was to do it via mandate and that has had a worse effect as we can see happening now. We have stats and charts on this that show how the cost per tonne of SAF has increased since the mandate was introduced.
BTN Europe: What else can governments do? What can IATA do?
Michael Schneider: Everyone has to play its part. Airlines are willing to make an investment – it’s a large investment; SAF is an expensive commodity. The profit margins [for airlines] are razor thin. We used to say it was a cup of coffee per passenger and maybe now it’s two cups of coffee because oil prices are a bit lower. But that is still not much and it does not give much room for extra investment. New aircraft models are being introduced and fleet renewal is already happening.
It is really on governments to create the right environment and the incentives to help make those steep investments in a production plant. But as long as you can make a lot of money with conventional fuels, there is a problem. A lot of subsidies, let’s be honest, don’t go into the renewable areas – it goes into the petroleum industry and fossil fuels. We’d rather see subsidies going into something linked to renewable fuels. And then of course we need governments to make it easier to build those plants by giving planning permissions and cutting the red tape.
On the technological aspect of SAF production, there are ways for established oil companies to repurpose some of their faculties to produce SAF. It is limited in terms of adding capacity but every drop of SAF that can be produced plays its part so it’s also on the oil majors to deliver. Unfortunately over the last two years we have seen some of the major producers row back.
[Editor's note: In the same week that this interview took place, news broke that Shell has cancelled the construction of a major biofuel production plant in the Netherlands due to cost concerns]
BTN Europe: In corporate travel there is sometimes confusion and scepticism around SAF. Deals are announced by airlines for SAF that doesn’t exist or is not actually supplied to or flown by that airline...
Michael Schneider: There are many commitments from airlines and these are important signals for producers. But if you’re an airline based in Kenya you don’t have direct access to SAF. However, there is SAF in the US and maybe San Francisco airport can offer it to them even though they don’t fly there, and it can be used by another airline. So you have SAF ‘book and claim’ where you can detach the environmental attribute from the product and this environmental attribute is certified and linked to proof of sustainability. You can invest in those attributes and account for them via the [IATA] SAF Registry.
It’s a seamless system that allows producers to transfer the attributes to the airline in an immutable way via the system. The airline can then decide how to reduce its offset obligation via CORSIA and put it in front of the state.
At the moment, there are clusters of SAF [production] happening in North America and in Europe, and also starting now in Singapore, Malaysia and Japan, but there are still areas where not much is happening so the book and claim approach really helps. It gives everyone access [to SAF]. In the end it doesn’t matter who actually flies with that SAF; what’s important is that it’s not counted twice. The registry takes care of that.
BTN Europe: There are a large number of emissions calculators and methodologies in the market and these can produce very different estimates and cause confusion for corporates. What sets IATA’s CO2 Connect methodology apart from others?
Michael Schneider: I think the crux of the problem is indeed the proliferation of methodologies and calculators. That is certainly confusing for travellers. We realised early on that this is a major issue not just for passengers but for airlines too. If you’ve invested hundreds of millions of dollars in the latest [fuel-efficient] aircraft and it’s not reflected in a model... then it is not fit for purpose and that’s disappointing for airlines. You want your investment reflected.
As a standard-setting organisation, we understood the problem early on. In 2016 we finalised a cargo emissions methodology and that was followed by the standard on the passenger side and here we needed to involve not only the airlines but other organisations too, such as the ISO [International Organization for Standardization]. But the difference here – and is what we strongly advocate for and it’s super important – is the use of primary data.
A lot of calculators out there use data that is based on modelled information that is often outdated and provides a crude look. But when looking at a given flight, the load factor is very important. You can have a very fuel-efficient aircraft but if it is half empty then the CO2 emissions per passenger are very high. So you need good load factor information and you need the fuel burn information, and you need to calculate the fuel consumption in a standardised way.
The idea is to have a global approach so that airlines know exactly what they’re measuring – block off, block on times; do I include the auxiliary power unit?; do we include non-revenue passengers? There’s so much detail so you need to have a very, very good understanding and a standardised approach. We need that primary data and it needs to be independently validated.
We have access to all that information and I think that’s our great strength. We are working with the airlines and they understand that we all need to work together to generate a good industry average but can also distinguish between different airlines. If you’ve invested in fleet or in SAF then that should be reflected in the calculation.
Ideally, you would get the same result [an emissions figure] across all methodologies but that is not the case at the moment. But we feel this one [CO2 Connect] is being developed by the airlines for the airlines, and for their customers, and that this is the right approach because it offers the great advantage of primary data and that is absolutely critical.
BTN Europe: How many member airlines participate currently?
Michael Schneider: Around 70 airlines have contributed fuel burn data and more than 150 have contributed operational data, meaning load factor information. We have a big target this year – we want to hit 100. I think it’s feasible; we have good traction now at alliance level. Given the time spent on this project until now, it’s been a very good result.
BTN Europe: What’s preventing more airlines from participating?
Michael Schneider: In general, airlines have always been reluctant to share sensitive data and this is extremely commercially sensitive data because it’s fuel burn information and it’s about load factor. These tell you exactly how well or how badly an airline is performing. It requires some consideration and persuasion... more and more airlines are ready to take that step.
I think a lot of airlines realise customers want emissions transparency. There is an expectation among people and especially among businesses. They need to understand what the impact of taking a flight is even more so on the corporate side. They have targets and they need to understand if they’re hitting those and how they can maybe reduce some of their impact from flying. Companies are becoming very selective in their choice of airline and they cannot do this unless they have the right data in front of them.
BTN Europe: IATA is pro-aviation expansion and you laud passenger growth and airline performance. How do you balance that with the urgent need decarbonise? That’s a difficult balancing act.
Michael Schneider: Absolutely right. In the big scheme of things we certainly contribute to global emissions – around 2.5 to 2.7 per cent – but if we want a licence to grow we must have concrete plans [to decarbonise]. Those plans are reflected in the roadmaps we have in place about what we think the solutions are.
But we should not lose sight of the benefits of aviation. There are 100 million jobs indirectly linked to the industry – it’s the guy who drives people to the airport or the small shop at the airport. It’s also small island states and countries that rely on tourism. It’s critical for them and it delivers huge value, but of course we must reduce our impact.
I love aviation and fully understand its impact and how in particular the younger generation might be concerned about flying, but they get value [from it] – it allows them to study abroad, to visit other places. No other sector delivers those benefits. It’s easy to say we should just stop flying but that would have such a huge impact on this world. It is a humongous task that we have in front of us but I’m still hopeful we can reach our targets and reduce emissions as planned by 2050.
BTN Europe: You alluded to it earlier, but will the cost of SAF and of sustainability efforts in general, get passed down to passengers in the form of higher fares?
Michael Schneider: Airlines have committed to achieving net zero carbon emissions by 2050 – an effort that is expected to cost $4.7 trillion over the period 2024 from 2050. So yes, this is likely to impact airfares. However, this investment will ensure that aviation can deliver its direct contribution of 3.9 per cent of global GDP and 86.5 million jobs globally while addressing its estimated 2.5 per cent share of global carbon emissions.*
BTN Europe: Some governments are clamping down on domestic flights where rail services exist. Do you agree that makes good sense for the environment?
Michael Schneider: Multimodality is important and could be part of the answer but it is a very European discussion as we have a very well-developed train network. In the European context, there are opportunities that could be explored – for anything below 500km I think it makes sense to rely on what’s there [in terms of rail infrastructure]. We all need to work together where it makes sense.
BTN Europe: Every so often we see talk of frequent flyer taxes or, most recently, a premium flyer tax, where funds raised could be invested in sustainability initiatives. What are your thoughts on those?
Michael Schneider: The Global Solidarity Levies Task Force’s (GSLTF) proposal disregards the role of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which was agreed through the International Civil Aviation Organization and is the world’s first globally agreed mechanism to manage carbon emissions from an industrial sector – in this case international aviation.
In addition, the GSLTF has not released any assessment of the impact that such a levy would have on the economies of the very states to which it aims to funnel the funds, or the broader impact it will have on all travellers. It has also not detailed how such funds would be used. *
*Answers to two questions were provided via email in the days after the interview took place
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