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Global News Regulatory support critical for aviation’s green energy transition: IATA

Registration dateJUN 13, 2023

Greg Knowler, Senior Editor EuropeJun 6, 2023, 2:53 PM EDT
Articles reproduced by permission of Journal of Commerce.

Greg Knowler, Senior Editor Europe
Jun 6, 2023, 2:53 PM EDT
Articles reproduced by permission of Journal of Commerce.

Regulatory support critical for aviation’s green energy transition: IATA Finnair is one of a host of airlines around the world that are using sustainable aviation fuel produced by Neste Corporation. Photo credit: Neste.
Without a global regulatory framework to drive investment in energy production, airlines will not have access to the share of renewable fuel required for aviation’s energy transition, the International Air Transport Association (IATA) warned Tuesday.

“We need governments to act to ensure that sustainable aviation fuel [SAF] gets its fair production share,” Willie Walsh, director general of IATA, said in a statement issued at the association’s annual general meeting in Istanbul, Turkey.

“That means, in the first instance, production incentives, to support aviation’s energy transition, and we need continued approval for more diversification of methods and feedstocks available for SAF production,” he added.

The pleas for policy intervention to advance the decarbonization agenda and send investment signals to the energy and capital markets have been increasing across both the aviation and ocean transport sectors.

While ocean shipping looks to liquefied natural gas (LNG), methanol and ammonia as its low and zero-carbon alternatives, aviation is focusing on fuels collectively known as SAF, which are expected to provide about 62% of the carbon reduction levels needed by 2050.

IATA believes 85% of future SAF volumes over the next five years will be derived from just one of nine certified pathways — hydrotreated esters and fatty acids (HEFA). However, that fuel is dependent on the availability of waste fat, oil and grease feedstocks, which is limited and will likely make it more expensive than green ocean alternatives.

There are more than 130 relevant renewable fuel projects that have been announced by more than 85 producers across 30 countries, according to IATA. Each of the projects has either announced the intent or commitment to produce SAF within their wider product slate of renewable fuels, and there is typically a three- to five-year lag between a project announcement and its commercialization date.

“But with governments the world over agreeing at ICAO [International Civil Aviation Organization] to a long-term aspirational goal of net zero by 2050, they now share accountability for aviation’s decarbonization,” Walsh said. “That means establishing a policy framework to ensure that aviation gets the needed share of renewable energy production in SAF.”

Sourcing SAF for flights to and from Europe will increase in importance following a deal that spells out the fuel expectations for airlines on flights within and departing from the EU between 2025 and 2050. Under the green fuels law for aviation — known as ReFuelEU — all flights departing from an EU airport must use a minimum share of SAF, starting at 2% in 2025, rising to 6% from 2030 and gradually to 70% by 2050. European regulators step up While air and ocean transport bodies set out their decarbonization ambitions, pressure is building on regulators to step up their efforts to drive investment in production of low- or zero-carbon fuels as well as to reduce the price gap between the current fuels and the alternatives.

Leading the way in legislation is the European Commission, which has included emissions from aviation in its emissions trading system (EU ETS) since 2012. Airlines are required to pay for emissions for flights within Europe, the UK and Switzerland, with the carbon price currently about €100 ($106) per tonne of carbon.

Maritime emissions were included in the EU ETS from this year. Under the “cap and trade” system, approved in April by the European Parliament, shipping will be required to pay for allowances covering 40% of greenhouse gas (GHG) emissions in 2024, rising to 70% in 2025 and 100% from 2026.

But a coordination of emissions regulations at a global level remains elusive. The International Maritime Organization (IMO) will be holding its 80th Marine Environment Protection Committee meeting (MEPC 80) in London in early July to discuss revised emissions reduction targets for the global shipping industry.

Currently, the IMO strategy is to reduce CO2 emissions across international shipping by at least 40% on average by 2030 compared with 2008 levels, increasing to 70% by 2050. Negotiations under way at the IMO toward a new, more ambitious IMO strategy are expected to face stiff opposition from many member states that are concerned at the damage it may inflict on their economies.

“It’s hard to read the room over there [at the IMO],” Ed Glossup, head of sustainable operations at Bunker Holding Group, told the Decarbonizing Shipping conference in Copenhagen last week. “I am not sure we will get full decarbonization, but we will see significantly more ambitions than what we see today.”

While airlines and ocean carriers are focusing on different fuels in their zero-carbon transitions, capital market funding of new technology development and production facilities presents an investment risk without a regulatory framework.

“Governments must look at the broader sustainability picture with these investments,” Walsh said. “To promote SAF production, there are many tried-and-tested tools including tax credits, grants, or even direct investments in emerging technologies and solutions. The market is there. Airlines want to purchase SAF.”
· Contact Greg Knowler at and follow him on Twitter: @greg_knowler.