Policies must support energy transition

There is no single solution that will enable aviation to meet its 2050 Net Zero CO2 Emissions target.

Electric aircraft may be possible from the mid-2030s but, unless there is a major technical breakthrough, they will be small, regional aircraft flying short, local routes. Hydrogen looks more promising but comes with a number of challenges that are unlikely to be resolved in time to have a significant impact on Net Zero.

Offsets, meanwhile, are seen as a bridge—a tool to assist airlines until other, more permanent decarbonization solutions are fully online.

“That means sustainable aviation fuels (SAF) will have to do the heavy lifting,” says Sebastian Mikosz, IATA’s SVP, Environment and Sustainability. “They are absolutely vital if the industry is to meet its 2050 target and have a great benefit—they are a drop-in solution to existing infrastructure and aircraft systems.”

The trouble is SAF represent just 0.01% of total fuel uptake. Production, therefore, has to ramp up considerably. For that to happen—and for the other carbon reduction efforts to realize their full potential—the correct policy environment is essential.


Avoiding a patchwork

At the moment, there is a patchwork of taxes, carbon schemes, and mandates at the national and regional level.

There are 65 carbon pricing schemes around the world, for example. The European Union’s Emission Trading Scheme (EU ETS) is perhaps the best known. It undermines the Carbon Offsetting Reduction Scheme for International Aviation (CORSIA) for intra-EU flights. IATA points out the EU ETS risks the international consensus for CORSIA, which is the world’s only sector specific market-based measure.

In addition, SAF mandates are beginning to proliferate. France, Norway, and Sweden are among the countries stipulating SAF usage. The EU is proposing 20% SAF on all flights departing EU airports from 2035.

“Mandates don’t help,” says Hemant Mistry, IATA’s Director of Energy Transition. “If the demand is there—and more than $17 billion in forward orders from airlines shows that it is—we don’t need mandates.”

Mistry says forcing SAF to be available at every airport has a number of unintended consequences, including opaque pricing, distorted competition, and excessive costs. Far better would be allowing airlines to purchase SAF from wherever it is cheapest. Furthermore, is not possible to blend SAF with conventional fuel at the airport, never mind that, it is also counter-productive to transport an environmentally friendly fuel to diverse locations.

One possible antidote to this is the book and claim system. This separates the purchase and use of SAF. Because SAF is a lifecycle benefit so it shouldn’t matter if credit for the SAF is claimed in a different location from its purchase. This will drive greater efficiency, reduce costs, and encourage more production.


Positive policies

“Incentives are a much better way forward,” says Mistry. “There should be incentives for producers and tax breaks for procurement solutions.” Other solutions could include energy multiplier incentives, capital support, and loan guarantees or feedstock subsidies.

Mistry points to the United States as an example to follow. The Biden Administration is pushing for tax credits for SAF made from waste and vegetable oils. The deal is in Congress but is essential to a US target of 20% lower emissions by 2030. By that date, the US aims to supply 3 billion gallons of SAG per year.

“Aviation is a global industry and so we need a global framework for SAF uptake,” Mikosz concludes. “We need something agreed at the ICAO level akin to CORSIA. National and regional regulations should be complementary to this global approach and not lead to fragmentation and overlap of significant costs to airlines. That will only impede the industry’s efforts for energy transition.

“There must be a better way to fit the pieces together. Government Policy has an important role to play in supporting Net Zero, and it must not be regressive.”

The IATA Aviation Energy Forum will be in Munich, Germany 17–19 May.


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