The Aviation Industry Is Investing In Sustainable Fuel, But More Is Needed

The U.S. airline industry has set an ambitious goal to be net carbon neutral by 2050. To some this may seem like a long way off, but consider this is an industry worldwide that was built on using fossil fuels. Given the long lead time and risk to develop new aircraft, 2050 seems like it’s right around the corner. The two most popular commercial planes in the world, the Boeing 737 family and the Airbus A320 family, first took to the skies 56 and 36 years ago, respectively. The newer models are of course more efficient than these first models, but the underlying engineering for both planes is decades old.

Sustainable aircraft fuel, or SAF, is one encouraging development for a more sustainable airline future. SAF uses fossil fuel by-products or plant based sources to create fuel for existing aircraft engines. With enough SAF, world airlines could become almost immediately net carbon neutral because their energy needs would no longer require any new oil drilling. The problem is the amount of SAF being produced at rates airlines could buy is tiny compared to the industry’s energy needs.

Encouraging Partnerships

Multiple airlines and aviation companies have announced partnerships to increase the production of SAF. United says they will be able to power 50,000 flights starting in about 2028 in a partnership called Blue Blade Energy. Delta and DG Fuels have announced a partnership that is less ambitious in total but may happen sooner. Shell Oil is partnering with multiple air operators to push the development of more SAF. These are all encouraging signs that the industry takes their sustainability target seriously and sees SAF as an important component of that strategy.

The challenge is that this is still far short of what is needed. The International Air Transport Association (IATA) has projected a massive increase in the need for SAF production in order to meet their target for 2050 net neutrality. The encouraging partnerships together are the first steps on this long journey and should be applauded, but no one should think that meaningful SAF production is likely anytime in the next five to ten years.

Economic Realities

Much of today’s SAF is created by using refinery by-products. Over time, this source will shrink as the world depends less on fossil fuels. The only realistic way to produce SAF in the volumes needed for world airlines is to use a lot of land to grow a lot of plants. Even if this is possible, the costs of this hasn’t fully been reflected in views of long-term sustainability.

Today’s SAF won’t be competitive with normal aviation jet fuel until 2037, according to Simple Flying. Even if SAF production becomes more efficient with volume, let’s use some simple math to see the effects of paying more for SAF over time. Fuel represents about 30% of an airlines cost structure at today’s prices. Over time, this may rise without SAF if fewer fossil fuel options are resourced. But if SAF costs 5% more than jet fuel eventually, the impact to the cost structure is about a 1.5% overall cost increase (5% of 30%). Will industry margins drop by this amount, or will people be happy paying 1.5% higher ticket prices for this greater good? What people say and what they do is often different. If this increase was a voluntary check box asking “please check here to add $10 to your trip to promote the development of more sustainable fuels,” only a small percentage of customers would click the box.

The biggest problem with this is that a 5% increase for SAF is a pipe dream today. The infrastructure need to produce SAF at volumes to power the industry will likely make SAF 50% to 100% more expensive than aviation fuel. Think of that impact on industry margins and/or pricing.

What Can Fill The Gap

The realities of SAF production and its costs should not dissuade the industry from meeting its 2050 net neutrality goal. It just means that SAF will play a smaller role than the current hype suggests. Airbus has released a 5-part plan to reach the 2050 goal that includes major issues beyond SAF. Boeing and IATA have also released projections, and while these differ in percentages from the Airbus plan, they all consider the same major initiatives.

Beyond SAF, the least risky part of all the plans is to convert existing airline fleets to the currently most efficient fleets. The most modern aircraft equipment only accounts for about 20% of worldwide flights. Replacing the 80% of older, fuel-inefficient planes flying today will make a part of getting to 2050 with no new technology. Fleet plans of both American and United contemplate replacing many older aircraft with new, more fuel-efficient ones. United is also planning to replace some smaller, regional jet flying with larger jets. This will be more fuel efficient because flying three trips a day on a 737s will burn less fuel than seven or eight 70-seat jet trips. The more exciting part of the plans is new, transformative technologies. These could include electric airlines, also already on order by United. Hydrogen-powered aircraft have more promise for bigger planes and longer flights, but the world still needs to learn how to deliver and store this fuel source. But importantly, SAF is not the only path to net neutrality.

A Better Narrative

People have become used to short sound bites to get their news. But transforming a big user of energy industry like the airlines is not a short or simple strategy. IATA, or Airlines for America (A4A) should consider a marketing message the puts the major airline initiatives toward sustainability in context. We should of course promote SAF partnerships and initiatives, but not at the exclusion of other important efforts. It is dangerous if people believe SAF is the only future for airline sustainability, while they don’t understand the massive infrastructure needs or airline ticket price impacts.

The airline industry is in good shape with both a realistic goal and a commitment to meet it. SAF is part of the plan, but only a part of the plan. The industry should be marketing everything that will help.