Achieving net zero emissions in commercial transportation is a significant technical challenge, but it is crucial if we are to meet the climate targets of The Paris Agreement. Currently, airplanes account for around 4.7% of global CO2 emissions, and marine shipping contributes 3%. As other sectors like power generation and road transport move toward electrification, the share of emissions from these hard-to-decarbonise industries will likely increase, further complicating global efforts to reduce emissions.
A key solution to this challenge lies in sustainable liquid fuels. These fuels are essential because no alternative technology yet offers the same energy density, range, or passenger/cargo capacity as liquid fuels. Sustainable liquid fuels, such as sustainable aviation fuel (SAF), sustainable diesel, and sustainable fuel oil, are compatible with existing fleets and infrastructure. This compatibility reduces technical risks and accelerates adoption, as fleets and infrastructure are designed for long-term operation, and replacing them prematurely would be costly.
The industry is progressing from research and development to large-scale production, thanks to various pathways for scaling and commercialisation. As Tim McDonnell pointed out in Semafor, sustainable fuels are a bright spot in an otherwise challenging cleantech investment market. However, the journey to widespread adoption is still long. In 2023, SAF accounted for less than 0.1% of aviation fuel consumption, highlighting the need for continued investment and innovation.
The good news is that sustainable fuel production is growing rapidly. In aviation, for example, global SAF production is set to increase by 98% in 2024, with further growth expected in the following years. Government mandates and incentives play a crucial role in this growth, as sustainable fuels are still more expensive than fossil fuels. Many airlines are setting ambitious targets for cleaner aviation, but voluntary market mechanisms alone cannot drive the necessary investment and innovation. Strong policy instruments, such as carbon pricing and subsidies, are essential to scaling sustainable fuels and making them cost-competitive.
Around the world, various mandates for sustainable fuels are already in place. The EU’s ReFuelEU Aviation legislation targets a 2% SAF share in EU airports by 2025 and 70% by 2050. The UK has set a 2% SAF target for 2025, increasing to 22% by 2040. Japan and Singapore aim for 10% and 3%-5% SAF use by 2030, respectively. The US has set a goal of net zero emissions by 2050, with incentives like tax credits and grants for SAF adoption. Similar mandates are being introduced in the maritime sector, with the EU’s Emissions Trading System and the International Maritime Organization aiming for net zero by 2050.
These mandates are creating a more predictable demand for sustainable fuels, which is attracting investment to increase supply. However, to meet future demand and lower production costs, the sustainable fuel industry must scale further. Policymakers must continue to encourage this growth while ensuring that sustainable fuels remain the most viable solution for reducing emissions in aviation and shipping.
A critical challenge in scaling sustainable aviation fuel (SAF) is expanding the range of feedstocks used for production. Currently, SAF is mainly produced using the Hefa process, which converts waste oils and fats into fuel. However, as feedstock availability becomes limited, it is essential to explore alternative feedstocks, such as forestry waste, biogas, agricultural waste, and even captured CO2. These materials are often geographically dispersed, adding transport and logistics costs. To address this, smaller, cost-effective production plants must be located near feedstock sources to maximise efficiency and keep production costs low.
In addition to scalability, sustainability remains a top priority. It is essential to ensure that new fuel production pathways do not lead to unintended consequences, such as deforestation or the displacement of food production. The industry must adhere to strict sustainability criteria, ensuring that feedstocks are genuinely waste materials and do not compete with food or feed production or cause environmental harm.
Tackling emissions from aviation and maritime transport is a crucial component of global efforts to reach net zero and combat climate change. The sustainable fuels sector is well-positioned to play a major role in this transition. However, to succeed, it is vital that the industry continues to innovate, scale production, and prioritise sustainability to avoid taking up valuable carbon removal capacity or creating new environmental problems.
The road ahead for sustainable fuels is full of challenges, but it holds significant promise for decarbonising some of the most difficult sectors to address. By continuing to scale production, improving feedstock efficiency, and enforcing robust policy mechanisms, we can work towards a cleaner, more sustainable future for commercial transportation.
Avation PLC (LON:AVAP) is a commercial passenger aircraft leasing company owning a fleet of aircraft which it leases to airlines across the world. Avation’s future focus are new technology low CO2 emission aircraft.
