POLICY RECOMMENDATIONS FOR PROMOTING SUSTAINABLE AVIATION FUEL INTEGRATION: A PATHWAY TO ACHIEVING CARBON NEUTRALITY IN THE AVIATION SECTOR

Introduction

In an era marked by growing concerns over climate change and environmental sustainability, the aviation industry stands at a critical juncture. As one of the fastest-growing contributors to greenhouse gas emissions, accounting for approximately 2-3% of global CO2 emissions annually, the aviation sector faces mounting pressure to decarbonize its operations and mitigate its environmental impact. In response to these challenges, sustainable aviation fuel (SAF) has emerged as a promising solution, offering a pathway to reducing carbon emissions and achieving carbon neutrality in the aviation sector. With the potential to significantly reduce the industry's carbon footprint, SAF holds immense promise as a viable alternative to conventional jet fuel. However, widespread adoption and integration of SAF into aviation operations require concerted efforts from policymakers, industry stakeholders, and international organizations.

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SUSTAINABLE AVIATION FUEL INTEGRATION

The air transport sector is an integral part of economic growth and development. As the key available means of transporting passengers and goods across the globe within a single day, air transport provides critical connectivity between regions and better access to global markets. The creation of these benefits, however, leads to detrimental impacts on the environment and public health, including the emissions of climate-warming greenhouse gases (GHGs).

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Aviation accounts for about 1 billion metric tons or about 3% of global CO2 emissions annually.[i] Every metric ton of petroleum-based jet fuel burned produces 3.15 tons of CO2[ii] in addition to other emissions such as nitrogen oxide, soot and other radiative-forcing mechanisms. Research suggests that climate impacts of all propulsion-related emissions could be two to four times larger than those of CO2 emissions alone.

Domestic and international transport was responsible for 20 percent of global GHG emissions in 2019 and the sector experienced the fastest annual emissions growth between 2010 and 2019 (at 1.8 percent per year). Within the transport sector, the direct contribution of aviation emissions is 12 percent, the second largest after road transport at 70 percent, while shipping and rail contributed 11 percent and 1 percent respectively. Prior to the COVID-19 pandemic, combustion emissions from global aviation were estimated at around 2.5 percent of global carbon dioxide (CO2) emissions.[iii]

While the global energy-related CO2?emissions decreased by over 5% between the first quarter of 2019 and 2020 due to COVID-19[iv], the aviation sector was responsible for 915 million tonnes of CO2?emissions (Mt CO2) in 2019, which was 2% of the global human-induced CO2?emissions and 12% of global transport-related CO2?emissions[v] The United States of America (USA) was the top emitter of GHGs from aviation bunkers (energy consumption from aircrafts) in the world in 2019. As of 2019, GHGs released from aviation bunkers in the USA amounted to 179 MtCO2, which accounts for 19.5% of the world’s emissions of GHGs from aviation bunkers. The top five countries (USA followed by China, United Kingdom, Japan, and Germany) account for 40% the world’s total emissions of GHGs from aviation bunkers, estimated at around 363 MtCO2?equivalent in 2019.[vi]

The International Civil Aviation Organization (ICAO) is the United Nation’s (UN) body responsible for environmental regulations for international aviation. Its mandate includes defining an emission pathway for the sector, which is not covered by the UNFCCC Paris Agreement. In 2021, ICAO launched the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) for climate-neutral growth compared to the 2019 base year in participating member states .[vii] Governments in 2022 agreed on a long-term global aspirational goal (LTAG) for international aviation of net-zero carbon emissions by 2050. The LTAG is the most comprehensive environmental sector agreement to date and provides a clear direction. Detailed sector plans to implement low-carbon programmes and technologies are needed to achieve the goal(s).

Sustainable aviation fuels (SAFs) is the term used by the aviation industry to describe a set of fuels that can be sustainably produced and generate lower CO2 emissions than conventional kerosene on a life-cycle basis. In the context of international regulation developed under the International Civil Aviation Organization (ICAO), SAF is defined more precisely as a renewable or waste-derived aviation fuel that meets a set of Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Sustainability Criteria, including a GHG emission reduction criterion.[viii]

In 2021, the global airline industry pledged to become climate neutral by 2050 through the International Air Transport Association (IATA), and expects SAF to deliver 65% of the necessary emission reductions[ix]. SAF deployment has increased dynamically in recent years, but their share within aviation fuel demand remains marginal. Voluntary industry uptake is the strongest driver for SAF market growth to date, and many airlines have entered into purchase agreements with SAF producers to reduce their environmental impacts.

SAF market size estimates for 2022 reached 300 to 450 million litres, representing just 0.1% to 0.15% of global aviation fuel use. A database of announced SAF production capacity to come online in 2022-2025 shows that 83% of additional production will likely come from HEFA, followed by Fischer-Tropsch hydroprocessed synthesized paraffinic kerosene (FT) at 13% and alcohol to jet synthetic paraffinic kerosene (ATJ-SPK) at 2%. OECD countries will host over 90% of this additional production capacity, continuing the current concentration of facilities in a few developed markets.[x]

The first generation of alternative fuels, generally referred to as “biofuels”, are produced from biogenical sources, such as crops, which can be subject to additional sustainability concerns beyond carbon reduction (competition with food and water, land-use changes, among others). However, current technology allows the production of fuels from non-biogenical sources, such as municipal wastes, used cooking oil, and agricultural residues, which raise fewer sustainability issues. This diversification of feedstocks facilitate the production of SAF with less dependence on specific natural resources or land availability, allowing the establishment of SAF industries in a variety of States (developing and developed). It will also allow the production of SAF closer to airports, which will reduce costs associated with fuel transportation. This flexibility is expected to help the ramp up of SAF production.[xi]

While current and near-future SAF production is primarily planned in OECD countries, significant, untapped production potential is emerging in low- and middle-income countries. Already, non-OECD countries play an important role in providing feedstock for road transportation biofuels. For example, in the European Union (EU), 59 percent of the feedstock used for biodiesel in the year 2018 originated from outside the EU, with Indonesia, Malaysia, and Argentina representing the largest non-EU feedstock providers.

Reaching projected SAF production volumes will require significant capital expenditure (CAPEX) that could be beyond the reach of developing countries without assistance. Model estimates show annual greenfield plant investment in the high scenario peaks at approximately US$124 billion. This is equivalent to more than 370 Model estimates, which show annual greenfield plant investment in the high scenario peaks at approximately US$125 billion, which equals to more than 370 SAF-producing facilities coming online during the peak years in the late 2030s or early 2040s- the periods of highest SAF production growth. [xii]

Despite this, collective action from policy makers, industry, and financiers is needed to overcome the economic and technological challenges to scale up SAF production and use.

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POLICY RECOMMENDATIONS FOR PROMOTING SUSTAINABLE AVIATION FUEL INTEGRATION

Sustainable aviation fuel (SAF) has emerged as a promising solution, offering the potential to reduce emissions and mitigate the environmental impact of air travel. However, the widespread adoption of SAF faces numerous barriers, including regulatory hurdles, technological limitations, and economic challenges. To address these barriers and accelerate the integration of SAF into the aviation industry, various policies can help promote Sustainable aviation fuel integration.

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·???????? Establishment of Clear Regulatory Frameworks: Governments should establish transparent and consistent regulatory frameworks that incentivize the production and adoption of sustainable aviation fuel (SAF). This may involve implementing blending mandates or carbon intensity targets for aviation fuel, along with providing financial incentives such as tax credits or subsidies to SAF producers. These incentives are crucial for increasing SAF production, reducing costs, and encouraging wider adoption. Additionally, rewarding airlines already utilizing SAF despite existing barriers can serve as an effective incentive. Moreover, supporting producers in activating their current facilities for SAF production is essential. Co-processing bioenergy feedstocks alongside conventional fuel production can also boost SAF supply in the short term. Furthermore, mobilizing investments in production facilities utilizing advanced technologies is key to achieving commercial production scale, ultimately leading to cost reductions and a more expansive market.

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·???????? Supporting Infrastructure Development: There are several SAF types available today. They vary in their fuel feedstock type and production technologies. Different countries may choose to prioritise different SAF types, but support should focus on fuels that reduce emissions the most. To this end, governments should provide production incentives for fuels with high emission reduction potential. Policies should offer targeted support for fuel technologies that – while perhaps less competitive today – promise to deliver emission reductions at large production scales in the longer term. Policymakers should support the development of infrastructure necessary for the production, storage, and distribution of SAF. This may include funding for biorefineries, blending facilities, and distribution networks, in addition to incentives for airports to provide infrastructure for SAF refueling. Policies can enable the emergence of an international SAF market by aligning national policies regarding carbon accounting methods and monitoring measures. Such alignment also eases compliance with various regulatory or voluntary frameworks for international operating airlines.

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·???????? Expand existing SAF frameworks: The International Civil Aviation Organization (ICAO) has set a long-term global aspirational goal (LTAG) for international aviation to achieve net-zero emissions by 2050. Meeting this goal necessitates a significant scaling up of sustainable aviation fuels (SAF). While some governments have implemented support frameworks to mandate or incentivize fuel production and deployment, these frameworks primarily target a few leading markets. Without further policy ambition, the aviation sector may struggle to meet international climate objectives. Therefore, governments must enhance the scope and reach of existing frameworks to accelerate the adoption of SAF on a global scale.

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·???????? Creation of Transport Decarbonisation Strategies: To maximize emission reductions, governments should develop comprehensive decarbonization strategies that encompass all transport sectors and available technology options. Many markets already utilize biofuels to lower emissions in road transport, offering valuable insights for broader implementation of sustainable aviation fuels (SAF). Currently, drop-in fuels, which are fully compatible with existing aircraft, represent the sole decarbonization option for aviation. While advancements in hydrogen and battery electric aircraft are on the horizon, they are not yet widely available. Governments can optimize emission reductions and energy conservation across all transport modes by allocating existing drop-in fuels to sectors with challenging decarbonization prospects, such as aviation, while promoting alternative, more energy-efficient decarbonization technologies in sectors where feasible. For instance, transitioning road vehicles to electric power may reduce reliance on biofuels in that sector, freeing up feedstock for SAF production in certain contexts.

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·???????? Public Procurement Policies: Governments can leverage their significant purchasing power to drive the adoption of sustainable aviation fuel (SAF) by implementing policies that mandate the use of SAF in government fleets. Additionally, they can provide preferential treatment to airlines that demonstrate a commitment to SAF utilization, incentivizing the broader adoption of environmentally friendly aviation fuels.

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·???????? International Collaboration and Industry Stakeholders: Recognizing the global scope of the aviation sector, international collaboration is vital for driving the widespread adoption of sustainable aviation fuel (SAF). Governments must collaborate to harmonize regulations, exchange best practices, and endorse global initiatives like the International Civil Aviation Organization's (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Policymakers should actively engage with industry stakeholders, including airlines, fuel producers, and environmental organizations, to craft policies that are both pragmatic and aligned with industry requirements, thereby facilitating the transition to sustainable aviation practices.

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·???????? Carbon Pricing Mechanisms: The implementation of carbon pricing mechanisms, such as carbon taxes or cap-and-trade systems, offers an effective means of incentivizing airlines to mitigate their emissions and invest in sustainable aviation fuel (SAF). Additionally, governments can allocate funds from carbon pricing initiatives to support the development and adoption of innovative technologies, including advanced biofuels and synthetic fuels sourced from renewable feedstocks. By reinvesting revenue generated through carbon pricing into research, development, and deployment efforts for low-carbon aviation technologies, policymakers can further accelerate the transition towards environmentally sustainable practices within the aviation industry.

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·???????? Public Awareness and Education: Governments play a crucial role in promoting public awareness and education regarding the environmental advantages of sustainable aviation fuel (SAF) and incentivizing consumer preference for airlines that prioritize sustainable practices. Investing in robust awareness campaigns can highlight the climate benefits of SAF, while encouraging consumers to support airlines that utilize sustainable fuels. Moreover, promoting SAF adoption presents broader opportunities, including domestic industrial development and reduced reliance on energy imports. Regions currently dependent on fuel imports often possess abundant bioenergy resources or renewable electricity generation capabilities, enabling them to establish local SAF production facilities. Compared to conventional fuels, SAF production is typically more decentralized, offering avenues for local industry development and economic growth. By fostering public awareness and education initiatives, governments can catalyze widespread adoption of SAF and drive sustainable practices within the aviation sector.

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CONCLUSION

Considering the urgent need to address carbon emissions in the aviation sector, the implementation of policy recommendations for promoting sustainable aviation fuel integration is paramount. Establishing clear regulatory frameworks, supporting infrastructure development, expanding existing SAF frameworks, and fostering international collaboration are crucial steps toward achieving carbon neutrality in aviation. Additionally, strategies such as creating transport decarbonization plans, implementing public procurement policies, introducing carbon pricing mechanisms, and raising public awareness can further accelerate the adoption of sustainable aviation fuels. By prioritizing these recommendations, policymakers may not only mitigate the environmental impact of aviation, but also foster innovation, enhance energy security, and drive sustainable economic growth in the aviation industry and beyond.

[i] Clean Skies for Tomorrow Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation Insight Report November 2020

https://www.mckinsey.com/~/media/mckinsey/industries/travel%20transport%20and%20logistics/our%20insights/scaling%20sustainable%20aviation%20fuel%20today%20for%20clean%20skies%20tomorrow/clean-skies-for-tomorrow.pdf Accessed 14 March 2024.

[ii] Clean Skies for Tomorrow Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation Insight Report November 2020

https://www.mckinsey.com/~/media/mckinsey/industries/travel%20transport%20and%20logistics/our%20insights/scaling%20sustainable%20aviation%20fuel%20today%20for%20clean%20skies%20tomorrow/clean-skies-for-tomorrow.pdf Accessed 14 March 2024.

[iii] Robert Malina, Megersa Abate, Charles Schlumberger and Freddy Navarro Pineda: The Role of Sustainable Aviation Fuels in Decarbonizing Air Transport

https://documents1.worldbank.org/curated/en/099845010172249006/pdf/P17486308a996a08b098a10d078d421c6a3.pdf Accessed 14 March 2024.

[iv] IEA. Global Energy Review 2020

https://www.iea.org/reports/global-energy-review-2020 Accessed 14 March 2024.

[v] Climate Change Mitigation Pathways for the Aviation Sector

https://www.mdpi.com/2071-1050/13/7/3656 Accessed 14 March 2024 .

[vi] Climate Change Mitigation Pathways for the Aviation Sector

https://www.mdpi.com/2071-1050/13/7/3656 Accessed 14 March 2024.

[vii] “CORSIA Fact Sheet”, International Air Transport Association, Montreal,

https://www.iata.org/en/iata-repository/pressroom/fact-sheets/fact-sheet---corsia Accessed 14 March 2024.

[viii] Sustainable Aviation Fuels Policy Status Report.

https://www.itf-oecd.org/sites/default/files/docs/sustainable-aviation-fuels-policy-status-report.pdf Accessed 14 March 2024.

[ix] “SAF Deployment”, Policy, International Air Transport Association, Montreal, https://www.iata.org/contentassets/d13875e9ed784f75bac90f000760e998/saf-policy-2023.pdf Accessed 14 March 2024.

[x] The Role of Sustainable Aviation Fuels in Decarbonizing Air Transport, World Bank 2022, https://openknowledge.worldbank.org/server/api/core/bitstreams/cf151df5-5de5-5ed0-9e6e2a02ccad4541/content . Accessed 14 March 2024.

[xi] Sustainable Aviation Fuels Guide

https://www.icao.int/environmentalprotection/knowledgesharing/Docs/Sustainable%20Aviation%20Fuels%20Guide_vf.pdf ? Accessed 14 March 2024.

[xii] Robert Malina, Megersa Abate, Charles Schlumberger and Freddy Navarro Pineda: The Role of Sustainable Aviation Fuels in Decarbonizing Air Transport

https://documents1.worldbank.org/curated/en/099845010172249006/pdf/P17486308a996a08b098a10d078d421c6a3.pdf Accessed 14 March 2024.

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