Will Airlines Meet Their 2050 Net-Zero Emissions Goal?

“The world’s airlines have taken a momentous decision to ensure that flying is sustainable.” That was how Willie Walsh, director general of the International Air Transport Association, hailed the organization’s commitment to achieve net-zero carbon emissions by 2050 in October 2021.

But in the nearly three years since, progress on sustainable aviation fuel (SAF)—both biofuel and synthetic e-fuel—that are keys to airlines’ decarbonization efforts in the short term has been slower than many in the industry would like, raising concerns that the target may slip out of reach.

• Airlines’ 2050 net-zero emissions goal is a moving target
• Differing regional approaches to stimulating SAF production are causing geopolitical tensions

The International Air Transport Association (IATA) has been lobbying for support from governments to boost SAF volumes. Drop-in SAF replacements for fossil jet fuel constitute the most pragmatic approach to decarbonizing aviation in the short term, but airlines complain that authorities are not doing enough to support the fledgling SAF industry and encourage production volume increases that would bring down prices. SAF can cost 3-5 times as much as standard kerosene and accounts for around 0.5% of global fuel usage.

In Europe, ReFuelEU mandates are set to come into force Jan. 1, 2025, but airlines—many of which have pledged to go beyond those levels—say they are at a disadvantage compared with their U.S. counterparts. In fact, the different actions on both sides of the Atlantic are making SAF a source of tension between the EU and the U.S.

One area of concern is that U.S. tax credit “carrot” is more effective at incentivizing SAF production projects than the EU mandate “stick,” leading to an imbalance of investment in future supply.

The other concern is that the ReFuelEU mandate specifically excludes SAF made from food and feed crops, as EU regulators worry that demand could lead to land use being switched from food to fuel.

But in the U.S., the Biden administration launched the SAF Grand Challenge in 2021 with the goal of producing 3 billion gal. a year by 2030 and the expectation that the country’s vast agricultural industry would be the major contributor.

Then in April, the U.S. Treasury Department finally issued guidance on eligibility for the blenders tax credit that makes it hard for SAF to qualify for the subsidy if it is derived from ethanol produced from corn and soybeans. And this is despite the administration setting the minimum life-cycle emissions reduction required to qualify for the tax credit at 50%, lower than the EU’s 65%.

The Treasury Department guidance allows corn-based ethanol to qualify for the subsidy, but only if it is sourced from farms that simultaneously use three climate-friendly practices that hold carbon in the soil: not tilling, planting cover crops and using higher-efficiency fertilizers. The Treasury Department argued that the bundling would encourage adoption of climate-smart farming practices.

Only when those three farming techniques are used in combination can SAF produced from ethanol meet the minimum 50% emissions, the Treasury Department ruled. But a May analysis of Agriculture Department data by Reuters revealed that few U.S. farmers use all three techniques at the same time and determined that little or no ethanol will qualify for the tax credit. Both the EU and U.S. positions are being challenged.

Neither the EU mandate nor the U.S. tax credit prevent the production and consumption of SAF derived from food and feed crops, but such SAF cannot be used to help meet the regulatory obligations on fuel producers and aircraft operators. And the decisions in the EU and U.S. have resulted in growing uncertainty over which fuels can be used and where, something that could undermine investment in SAF production.

“Agricultural commodity feedstocks like corn ethanol and soybean oil make up the predominant share of feedstocks for currently announced U.S. SAF projects,” SAF supplier SkyNRG says. “Since SAF produced from food and feed crops is not considered eligible SAF under the EU and UK mandates, much of U.S. SAF will not be eligible for export to Europe.

“U.S. SAF capacity coming online is most likely to be used domestically for voluntary markets, while some could potentially be exported for compliance under the proposed Japanese SAF mandate,” SkyNRG adds. “A smaller share of eligible SAF could be exported to the EU, benefiting from U.S. production incentives from 2025 onward.”

For now, European SAF production is ramping up, even if airlines would like even faster progress. In Spain, Repsol has begun production at its biofuels plant in Cartagena, which has an annual production capacity of 250,000 metric tons of biofuels per year, destined for aircraft as well as trucks and cars. Repsol also plans to build a synthetic-biofuel plant in the port of Bilbao.

Neste, the world’s biggest producer of SAF with facilities in the Netherlands and Singapore, expects to have 1.5 million metric tons of production capacity by year-end.

As available volumes rise slowly but surely, the discourse from airlines is shifting from complaints about the lack of SAF to concerns over its high price.

“For ReFuelEU next year, [demand] is going to be about 1 million [metric tons],” Alexander Kueper, Neste’s vice president of renewable aviation, said at the Paris Air Forum June 13. “Neste alone could provide all the SAF for that, and there are others, of course. So there is enough SAF; that’s not the problem. Maybe the price is a different story.”

Kueper’s statement is backed up by IATA, which said at its annual general meeting in June that its projections for a tripling of SAF production this year compared with 2023—to 1.9 billion liters (1.5 million metric tons)—were on track. This would account for 0.53% of aviation’s fuel need in 2024.

“I think the volume of production is probably OK, but there is the question of pricing,” Stephane Lagut, global aerospace and defense sector leader at EY tells Aviation Week. “We also have bottlenecks with the infrastructure on the ground, the availability of the fuel and the infrastructure to load. We shouldn’t underestimate the logistics of the mixing and feeding of those fuels into the aircraft.”

Walsh, for his part, described the expected tripling of SAF production this year as “encouraging” and added: “We still have a long way to go, but the direction of exponential increases is starting to come into focus.”

A June SAF market outlook published by SkyNRG also highlighted that the market is at a turning point, with most SAF consumed in 2025 set to be under mandates.

The policies are clearest in Europe, with ReFuelEU and the UK’s own mandate, as well as in the U.S., where guidance on tax credits recently has been updated. Meanwhile, Brazil, British Columbia, India, Indonesia, Japan, Malaysia and Singapore, have developed SAF legislation proposals. If these all materialize, demand under targets would rise to 9.2 metric tons (3.1 billion gal.) and under a mandate to 6.9 metric tons (2.3 billion gal.) by 2030, the report states.

“Next year will be crucial for projects aiming to start operations before 2030,” says SkyNRG, which itself has plans for a SAF production facility in Delfzijl, Netherlands, which could produce 100,000 metric tons per year. Another in Washington state, Project Wigeon, should produce 150,000 metric tons per year.

Even if enough SAF is likely to be available to meet short-term mandates—albeit at a price—many airlines are targeting uptake beyond the ReFuelEU targets.

“Most announced facilities still need to raise capital, build and commission, making policy certainty essential to unlock the pipeline of SAF announcements,” the SkyNRG report states.

And more needs to be done to ensure larger volumes are available in the long term, airlines say.

“Growing a nascent SAF industry into one that will provide the majority of the fuel for airlines is a monumental task,” Laurent Donceel, deputy managing director of Airlines for Europe (A4E) says in a June 13 statement released alongside the SkyNRG report. “For airlines, there is a need to work with airports to help develop the market for SAF. Finance needs to flow into the sector, and the energy industry needs to get serious about the transition away from fossil fuels.”

A4E Managing Director Ourania Georgoutsakou is confident this transition is possible. “Today we all walk around with more computing power in our pockets than would put a man on the Moon, so can we make SAF? Yes, we can make it,” she said at the Paris Air Forum. “We just need to get into the next gear. But we’re on track. The quantities are there, the mandates are there. The world is picking up.”