A wide array of sustainability storylines topped the agenda at IATA’s 78th AGM with the prospect in sight of a sustainable aviation fuels (SAF) production “tipping point”, the necessity of achieving a Long-term Aspirational Goal (LTAG) on emissions from international aviation at the ICAO Assembly in late September, and the risk of CORSIA being derailed, reports Mark Pilling from Doha. The meeting came only eight months after last year’s AGM, which approved the resolution for the global air transport industry to achieve net zero carbon emissions by 2050, described as a “momentous decision” by IATA SVP Environment & Sustainability Sebastian Mikosz. Airlines are more committed than ever on achieving net zero, he said, but needed an agreement on an LTAG. IATA Director General Willie Walsh said failure by states at the Assembly or a “polite agreement to kick the can down the road” would be “unacceptable outcomes”. As was demonstrated at the AGM, the industry’s net zero goal has resulted in a huge focus on SAF in order, according to IATA’s roadmap, to fulfil aviation’s net zero commitment.
Current estimates are for SAF to account for 65% of aviation’s carbon mitigation in 2050. That would require an annual production capacity of 449 billion litres. Investments are in place to expand SAF annual production from the current 125 million litres to 5 billion by 2025. IATA’s tracking of current SAF projects indicates that production could reach 30 billion litres by 2030, said Mikosz. There are at least 10 SAF plants coming online by 2025, each with capacity of 5 billion litres annually, a hike of 50 times what was available in 2021.
In Doha, IATA called for governments to urgently put in place large-scale incentives to rapidly expand the use of SAF. “Governments don’t need to invent a playbook. Incentives to transition electricity production to renewable sources like solar or wind worked,” said Willie Walsh, IATA’s Director General. “As a result, clean energy solutions are now cheap and widely available. Though still far from where we need to be, it would be a clear tipping point towards our net zero ambition of ample SAF quantities at affordable prices.”
Mikosz contrasted the governmental policies that promote SAF, with IATA favouring the US approach of giving industry incentives or tax credits whereas the European Union is going down the mandate route. The latter policy is less favourable because “it puts pressure on costs but not pressure on production,” believes Mikosz. “The SAF mandate in the EU is not the most efficient and can dilute environmental benefits.”
In the US, which is setting an example for others to follow, SAF production is expected to reach 11 billion litres in 2030 on the back of heavy government incentives, said IATA. Europe, on the other hand, is the example not to follow, it argues. “Under its Fit for 55 initiative, the EU is planning to mandate airlines uplift 5% SAF at every European airport by 2030. Decentralising production will delay the development of economies of scale. And forcing the land transport of SAF will reduce the environmental benefit of using SAF,” said the association.
At the event’s closing press conference, Walsh also called on the energy giants to step up further. “There is plenty of room for them to do a much better job in relation to sustainable fuels. Progress to date is measured in words rather than actions.” Akbar Al Baker, Qatar Airways Chief Executive and AGM host, added: “The pressure on these companies to move to SAF will be immense; they will have no option but to turn to it.”
According to Walsh: “The bottom line is that an opportunity is here. This is a business opportunity. It is a business opportunity for countries. You no longer need to have oil in the ground to produce fuel. If the oil majors don’t do it, they will no longer be the only people [in the fuel supply market].”
Asked about his airline’s views on SAF, Al Baker said it had been working for a decade with the Qatar University on SAF research. “The results are very positive and once they master the process, they will be able to produce a large amount of SAF.” He noted that some shippers are already asking his airline if it is using SAF, and are willing to buy it if available. However, on today’s price premium for SAF, Al Baker is clear: “I have no problem to pay 20% more [for SAF] to fuel my aircraft but I won’t pay 4-5 times more.” He is also unenthusiastic on deals that are ambiguous about what the price will be on delivery of SAF. “How can you have a contract when you don’t know how much they are going to charge you?” he questioned.
Whichever policy approach is better for incentivising its production, “as an industry we have created a demand point,” said Mikosz. By 2025, IATA estimates there will be at least $30 billion in forward purchase agreements for SAF, up from the $17 billion to be made this year. By 2025 there will have been 2 million flights where SAF will have been used, forecasts the industry body, up from 450,000 in 2022. By 2025, IATA also believes there will be 11 technical pathways approved for SAF production, up from the seven approved today.
However, there is a significant geographic disparity on SAF production plans, with plants coming on stream in Europe, North America, Singapore and China, but none in Africa or the Middle East, and only one in Latin America. This shows why a book-and-claim system is important, so airlines anywhere can buy and achieve the benefit of SAF, said Mikosz.
IATA also gave more detail on the need for offsetting and carbon capture to meet net zero by 2050. The use of Carbon Capture, Utilisation and Storage (CCUS) was called out more specifically by IATA at Doha. “We consider CCUS as part of the offsetting approach,” said Mikosz. “Offsets are a gap filler and there is no plan that doesn’t have a bit of offsets in it to reach net zero by 2050,” with up to 19% coming from these two sources. However, he added, “they will play a diminishing role in the industry strategy as other technologies develop.”
As with SAF, airlines are creating a demand signal for CCUS, a solution that removes carbon from the atmosphere and has a major advantage in that it is one of the components needed to manufacture power-to-liquid eKerosene, said Mikosz.
IATA used the AGM to urge governments to adopt a Long-term Aspirational Goal (LTAG) to decarbonise aviation “aligned with industry commitments” at the 41st ICAO Assembly starting in late September. Mikosz indicated he would be “extremely disappointed” if ICAO did not agree an LTAG as its own technical studies and scenario planning showed how crucial it is to decarbonise air transport and spell out the cost.
IATA has confidence that it will be adopted but whether it is aligned with the industry’s 2050 target is another question. However, Mikosz said IATA’s 2050 position would not change, with no ‘plan B’ in place if an LTAG is not agreed, leaving only the option to try again at the next Assembly in three years’ time.
At the AGM in Boston last October, China’s airlines voted against the industry target, arguing for a later date. Asked if there had been any rethink on the part of Chinese carriers towards IATA’s 2050 target since then, Mikosz confirmed Chinese airline chiefs had clarified to the IATA board in Doha that the position had not changed, and that they are adhering to China’s national policy of a 2060 decarbonisation date. One possibility at the ICAO Assembly is that states adopt different timetables, giving some states more time to reach net zero. However, said Mikosz, differentiated timelines “would not make me happy.”
ICAO’s carbon offsetting scheme CORSIA was another significant talking point in Doha. Despite its critics, “for our industry, CORSIA is a huge success because it is the only market-based measure agreed by an industrial sector to deal globally with emissions,” said Mikosz.
However, as Walsh said in his report to the AGM: “CORSIA is in danger. Governments are split on the baseline. It was meant to be the average of international emissions for 2019 and 2020. When CORSIA was agreed in 2016 nobody could have imagined that governments would stop airlines from flying for much of 2020,“ said Walsh. “After agreeing to remedy this by using only 2019 – the industry’s position – several governments now want to penalise us for not flying and have proposed to revert to the 2019-2020 average, irrespective of inequities.
“On top of this, not all governments respect CORSIA as the single economic measure for international aviation that it was meant to be,” said Walsh. “The most worrying is the EU. Its parliament voted to apply its ETS [Emissions Trading System] on top of CORSIA, forgetting that the world unanimously rejected this extra-territorial ambition in 2012. We need a successful, fair and effective CORSIA. Our proposal is to maintain a 2019 baseline. If states want to be more ambitious, and they should, incentivising SAF is the way to go.”
Mikosz acknowledged that states have differing views on CORSIA and how much they should pay to decarbonise. For instance, countries like Brazil and India are concerned that as CORSIA moves into the mandatory phase of paying for offsets from 2027 it could penalise the growth of their air transport industries. “The biggest challenge is having a global system, but one that does not impact negatively the growth of the market,” he said.
In September, all eyes will be on the ICAO Assembly to see whether an LTAG can be agreed and how CORSIA will change. These are complex and challenging times for an industry seeking state backing and a global approach to sustainability. Walsh observed during his address: “This approach is in the DNA of aviation. It is how we tackled noise and improved safety. Achieving net zero by 2050 is as critical. Failure to agree on a long-term aspirational goal, or a polite agreement that kicks the can down the road, would be unacceptable outcomes.”
Photo: Sebastian Mikosz, IATA’s SVP Environment & Sustainability