The sustainability challenge is, bar none, the biggest we will face as leaders of the aviation industry, Director General Willie Walsh told delegates in his keynote report at IATA’s 2023 AGM and World Air Transport Summit held in Istanbul. At its meeting in 2021, airlines committed to achieving net zero carbon by 2050 and released its Fly Net Zero strategy on how the aviation sector could reach the target. Together with industry stakeholders, IATA has updated the strategy and published five roadmaps covering aircraft technology, operations, finance, policy and energy and new fuels infrastructure. Achieving net zero will depend on early policy support and targeted financing to accelerate the transition, says IATA, but the greatest challenge will not be related to any specific solution but to the pace at which it needs to happen. The cost of the transition to net zero is estimated at over $5 trillion dollars.
Since the industry commitment in 2021, ICAO member states have adopted their own net zero goal, even if aspirational, which makes all governments now accountable to deliver a global policy framework to achieve net zero by 2050, according to Walsh.
“I must emphasise that the roadmaps are not just for airlines,” he said. “Governments, suppliers and financiers cannot be spectators to the challenge. We all have skin in the game. And each must deliver the products, policies or investments needed to decarbonise.
“The roadmaps are the first detailed assessment of the key steps necessary to accelerate the transition. Together, they show a clear direction and will evolve as we dig deeper to set interim milestones on the way to net zero. They are a call to action for all aviation’s stakeholders to deliver the tools needed to make this fundamental transformation of aviation a success with policies and products fit for a net-zero world.”
The roadmap work conducted through a peer-to-peer review was complemented by a modelling tool provided by the Air Transportation Systems Laboratory at University College London to calculate emission reductions for each technology.
“This is a different exercise to other roadmaps, which have largely adopted a top-down analysis on what levers can be applied to achieve net zero,” said Hemant Mistry, Director Energy Transition at IATA, during the roadmap launch. “What we have done is a detailed, bottom-up analysis and assessment of what specific actions are required across the value chain, including governments and financiers, and to track progress towards net zero.
“I stress these roadmaps are not a definitive recipe or fixed scenario of what will happen – things will change and we all have to accept that. We can expect some technological developments to accelerate faster, whereas others may be slower to take off. The roadmaps show the actions that need to be taken and the sequence in which they need to occur. They will be regularly updated as new information becomes available and become a reference source for the industry’s progress towards net zero.”
Passenger numbers have rebounded quickly following the Covid-19 hiatus and IATA anticipates a full recovery in 2024. By 2025, global passenger numbers are expected by IATA to reach 4.6 billion and continue rising to 10 billion in 2050. Boeing’s latest Commercial Market Outlook just released forecasts a doubling of the global aircraft fleet over the next 20 years, with replacement aircraft accounting for half of deliveries. Against this growth, IATA estimates carbon emissions from the sector will climb from a pre-Covid level of just under 1 gigatons to 1.8 gigatons by 2050, assuming a business-as-usual growth, leaving an accumulation of 21.2 gigatons of CO2 over the period to be mitigated by improved efficiencies from technology, operations and infrastructure, accompanied by a ramping up in the use of sustainable aviation fuels and the implementation of market-based measures.
IATA sees three ‘levers of action’ the aviation sector can use to reduce, neutralise and eliminate its emissions:
- Reduce aircraft energy use, so less fuel and therefore less CO2;
- Change the fuel and reduce its carbon footprint; and
- Recapture all the carbon that cannot be abated, or which is associated to the manufacture of new fuels.
The aircraft technology, operations and energy and new fuels infrastructure roadmaps focus on what is needed to get to net zero, whereas the policy and finance roadmaps show how new technologies, new fuels and better operations can be enabled through smart policy and financing mechanisms.
The development of more efficient aircraft and engines, particularly the steps needed to enable aircraft to be powered by 100% SAF, hydrogen or batteries is covered in the aircraft technology roadmap and has 37 milestones. Efficiency improvements through new aircraft technology could avoid 125-140 million tonnes (Mt) of CO2 by 2050, cutting aviation in-flight energy needs by 7-10% by that year, says the roadmap.
Major milestones are the entries into service of hybrid turboprop regional aircraft around the 2035 timeframe, revolutionary narrowbody aircraft around 2040 and a next-generation widebody aircraft by an aspirational 2045 timeline. Aircraft operated with hydrogen or batteries, so eliminating carbon emissions from their operations, could avoid an extra 35-125 Mt of CO2 by that year, depending on how fast they enter the market, how far they can fly and how many passengers they can carry on board.
The operations roadmap, with 15 milestones, looks at the opportunities for reducing emissions and increasing energy efficiency by improving the way existing aircraft are operated. Air traffic management needs to be prioritised in the overall strategy for bringing about sustainable civil aviation, says IATA. Automation, big data management and the integration of new technologies are seen as key enablers for optimising air traffic management and enhancing the overall efficiency of the air transportation system.
However, it is renewable energy – SAF and hydrogen – that will play a vital role in meeting the aviation sector’s energy demand, and the energy and new fuels infrastructure roadmap outlines 35 milestones to enable the necessary infrastructure developments. IATA’s central scenario requires SAF to represent 80-90% of aviation fuel use in 2050, reducing aviation emissions by 62%, slightly down on IATA’s Fly Net Zero forecast in 2021 of 65%. To meet the demand for SAF, IATA estimates 5,000 to 7,000 biorefineries will be required by 2050.
Most SAF pathways will require hydrogen for their production and under all scenarios most of the sector’s hydrogen demand by 2050 will be for this purpose. This could require close to 100 Mt of hydrogen by 2050, an amount comparable to all hydrogen production worldwide in 2023, with a small share (4-14 Mt) used in its pure form to power zero-carbon aircraft.
Carbon capture infrastructure will also be needed to remove residual CO2 from the atmosphere as well as to use atmospheric CO2 as a feedstock for SAF. IATA estimates more than 700 Mt of CO2 will need to be extracted.
“Today’s SAF production is less than 0.1% of what we need for net zero,” Walsh told delegates at the AGM, hosted by Pegasus Airlines. “But the trend is positive. In 2022, SAF production tripled to 300 million litres, and while critics of our industry dismiss that figure as irrelevant, it’s important to remember that airlines used every single drop, costing almost $350 million.
“With the right supportive policies, reaching 30 billion litres by 2030 is challenging but achievable. That would be about 6% of the 450 billion litres annual production capacity we need in 2050. We think it will be the tipping point because achieving it will establish the trajectory needed to scale up for 2050.”
With insufficient production capacity to meet current demand for SAF, Walsh is critical of policy action so far. “Governments should be jumping over themselves to be first in line for the job creation, local economic stimulus and biodiversity protection that SAF production brings – significant benefits for both developed and developing economies alike,” he said. “Unfortunately, the politicians have not made good on their COP 26 promise to stop financing fossil fuels. We’ve not seen a major shift of fossil fuel subsidies to green energy – certainly not for SAF.”
Walsh prefers the US ‘carrot’ approach of tax credits to drive up SAF production levels, rather than ‘stick’ approach of the UK and Europe, and now being considered by other countries, of a SAF supply mandate, which he believes will drive prices up, stall innovation and limit competition.
Added Marie Owens Thomsen, IATA’s SVP Sustainability and Chief Economist at the roadmaps launch: “Mandates are a dangerous tool. With limited supply and just three producers and one pathway – HEFA – in place currently, a mandate will favour the incumbents and that pathway, putting at risk new entrants and pathways. It also gives pricing power to what is effectively a cartel. While we are 100% committed to buying all the SAF that is being produced, we want to work with policymakers to ensure we don’t pay an abusive price. Mandates need to be put into an overarching national, regional or, preferably, global approach.”
However, she is confident the price of SAF will fall below the price of conventional jet fuel at some point before 2050 but said more price signals were needed to make larger capital flows towards renewable fuels.
The policy roadmap advocates a Book and Claim chain of custody mechanism, which allows a fuel purchase to take place in a location different from that of the physical fuel uplift, which IATA sees as crucial for SAF at the early stage of the commercial ramp-up. It says policy should be directed towards accelerating the SAF production pathways approval process, as well as the R&D, testing and demonstrations necessary to enable 100% SAF use in aircraft. It also calls for a harmonisation of policies, regulations and standards, preferably agreed globally, to address the need for a level playing field.
IATA estimates the investments required to enable a net zero transition of aviation amount up to $5.3 trillion between 2023 and 2050. Global investments of $40-50 billion are needed annually for SAF ramp-up.
“In general terms, the main policy objective in this context must be to de-risk the endeavour, i.e. provide more clarity and security for the parties involved,” says the roadmap. “Policy packages should aim to reduce the first-mover risk by offering grants for first-of-its-kind SAF plants to scale up new technologies. Projects currently in the pipeline are insufficient and need to increase by a factor of 5-6 by 2030 to be in line with aviation’s goals.”
The roadmap favours the introduction of Contracts for Difference, a form of derivative contract commonly used in financial markets and already in use in new energy markets. The contracts between supplier and government are aimed at incentivising capital-intensive long-term projects by agreeing on a fixed price of a product during a given high-risk period.
“The aviation industry cannot decarbonise alone, and the support of regulators and policymakers on this journey is absolutely essential,” says IATA.
The vast majority of technologies related to the aviation net zero transition are currently in the R&D stage, notes the finance roadmap, which includes important areas such as accelerating the development of electric and hydrogen aircraft, and novel SAF production pathways.
“As such, it is imperative that the commercial opportunities in the sector are advertised to venture capitalists and that governments monitor the industry for signs of lack of funding,” it says. “Any delay in R&D activities will result in a shift of the planned technology uptake profiles, delaying the industry’s timeline for achieving net zero.”
Government support measures will undoubtedly have to be implemented, particularly during the early stages of bringing a new technology to market, to attract the kind of private capital that has benefitted the development of renewable energies such as wind and solar, acknowledges IATA. “Past 2040, the technologies will have for the most part matured enough to be able to rely on traditional capital market finance, and investment needs will be more tied to incremental improvements, supported by reliable revenue streams.”
The $5.3 trillion investment needed for the industry’s net zero transition equates to around $180 billion per year from 2023 to 2050. Putting it into context, IATA points out this is less than a third to be allocated to new oil and gas development and exploration every year until 2030. Amounts similar to those needed in aviation were invested in solar and wind energy between 2015 and 2022, it adds, with governments spending $55.6 billion per year on fossil fuel subsidies over the years 2013-2020.
“Seen in this light, the necessary transformation in aviation seems possible,” concludes the finance roadmap. “The investment needs to make aviation sustainable are certainly significant, but do not seem disproportionate, neither in relation to the public support enjoyed by the fossil fuel industry, nor in relation to the private investments allocated to fossil fuels, nor compared to other sustainable sectors.”
Top photo: IATA launches the five roadmaps at its 79th AGM and World Air Transport Summit in Istanbul