As customers, investors, and other stakeholders increasingly demand that airlines take meaningful action toward net-zero, industry leaders face a daunting challenge: How they can continue to fly but emit less.
On the eve of IATA’s 78th annual meeting in Doha, Qatar, Jan Toschka, President of Shell Aviation, sat down with Lauren Uppink, Head of Aviation, Travel and Tourism for the World Economic Forum, to discuss solutions for aviation’s sustainable future.
“I think sustainable aviation is absolutely possible,” said Lauren Uppink, Head of Aviation, Travel and Tourism for the World Economic Forum. “But what we do know is that if we want to achieve that – especially if you want to achieve net-zero by 2050 – we have to act now.”
Sustainable aviation fuel (SAF) is key to reducing aviation emissions
The aviation industry, considered a hard-to-abate sector, must deploy all available measures to achieve net-zero emissions.
With technologies like battery electric and hydrogen-powered planes still in the early phases of development, sustainable aviation fuel (SAF) is the most viable solution to reduce carbon emissions today for aviation. SAF can be made from sustainable sources such as used cooking oil and agricultural waste and, in its neat form, has the potential to reduce lifecycle emissions by up to 80 per cent compared with conventional aviation fuel.
“It is mainly because of the cost that we don't see so much demand,” said Jan Toschka, President of Shell Aviation. “I think it's an investment needed well above a trillion dollars, which clearly indicates how big the challenge is.”
SAF is more expensive than conventional aviation fuel because new production technologies and facilities must be developed to bring it to market.
Currently, the cost of purchasing SAF at scale for airlines is significant, creating a chicken-and-egg scenario with insufficient demand to ramp up production to the level needed to bring costs down. As a result, SAF accounts for less than 0.1% of all aviation fuel today.
“If the players of the ecosystem all come together, there are ways of overcoming that challenge,” said Toschka.
A collaborative approach to solving SAF’s supply and demand challenge
Through the World Economic Forum’s Clean Skies for Tomorrow Coalition, Uppink said it became clear that while the funding needed to scale SAF exists, investors want more certainty.
“When we started Clean Skies for Tomorrow, of which Shell is a founding partner, what we realised was that no one wanted to take that one risk and the cost burden on alone,” said Uppink.
Toschka noted that thousands of corporations have already implemented their own science-based targets in line with reaching net-zero, demonstrating their commitment to sustainability.
Most corporations have focused their sustainability efforts on reducing emissions under their direct ownership or operational control, known as scope 1 and 2 emissions. This means indirect emissions from things like business travel are often not the priority. These are called scope 3 emissions and for many companies, these emissions may actually make up the majority of their carbon footprint.
Scope 3 emissions can be difficult to quantify because they fall outside of the company’s direct control or ownership. This lack of direct control makes collecting high-quality data increasingly complicated and creates barriers to reducing these emissions.
Despite these challenges, there is enormous potential for corporations to reduce scope 3 emissions to mitigate the worst impacts of climate change.
That is why Shell, Accenture, and American Express Global Business Travel (Amex GBT) partnered to create Avelia, a new platform aimed at helping to jumpstart the SAF market by enabling business travellers and airlines to share the cost of SAF while getting credit for the associated carbon reductions.
Avelia’s scalable co-investment model allows companies to jointly fund the cost of SAF, which provides the necessary demand signals to producers, and thus is a crucial step to increasing SAF supply. An industry-accepted carbon accounting mechanism, like book-and-claim, is key for such programmes to credibly grow.
“They want to be able to account for and demonstrate that they've made that commitment,” said Uppink. “It is crucial to have traceability, accountability, and legitimacy from an environmental perspective.”
Avelia aims to build the credibility of the book-and-claim model by using blockchain technology to ensure that companies and airlines that buy SAF can get credit for its environmental attributes while avoiding issues such as double counting.
“Aviation brings with it so many benefits, not just to corporate travel, but to fostering tolerance and peace, tourism, and economic growth,” said Uppink. “We need to make sure that many who benefit from that are also taking responsibility for sharing the price premium.”
Uppink sees programs like Avelia as a step in the right direction for corporations focused on meeting their own science-based emissions reduction targets. Still, the challenge of decarbonising aviation remains an enormous task that requires cross-sector collaboration.
“The work has been done to find a solution to this challenge, but getting it right is going to take everyone's commitment and investment of time, energy, and resource,” said Uppink. “We need all hands on deck.”