McKinsey & Company
The Sustainable Aviation Fuels (SAF) as a Pathway to Net-Zero Aviation Report shows that a transition to carbon-neutral flying is possible, with SAF the most promising decarbonization option in the near term. There are enough sustainable, renewable feedstocks to fuel all aviation using SAF by 2030. Scaling up SAF production to meet the net-zero ambition, however, depends on several new technology routes and significant multistakeholder collaboration. The main challenge will be developing appropriate commercial, financing, incentives and regulatory mechanisms.
SAF as a feasible route to net-zero aviation
In 2019, aviation accounted for 3% of human-made carbon emissions. Hybrid-electric and hydrogen-powered aircraft could help the industry reach the next efficiency target, but development and deployment at scale could take 10 to 20 years and the technology will initially be limited to smaller, shorter-range aircraft.
More positively, SAF has already fuelled more than one-quarter of a million commercial flights and is compatible with existing aircraft and fuelling infrastructure.
Even following the challenge to aviation during the COVID-19 pandemic, members of the Clean Skies for Tomorrow (CST) coalition are continuing their commitment to drive energy transition in aviation towards the goal of net-zero aviation. The coalition consists of leading players from the aviation sector such as KLM, Airbus Group, The Boeing Company, Schiphol, Neste, Shell, SkyNRG and Heathrow Airport.
An economic opportunity for developing markets
Aviation delivers significant benefits globally, not least to developing markets, from where a sizeable portion of global aviation demand is expected to come. The current crisis may also present an opportunity for countries with low renewable power prices and ready access to feedstock. If these countries act now, they can benefit from energy transition in aviation and become global SAF production hubs.
“The structural changes happening in the industry are an opportunity to rebuild and transition towards a low-carbon future and meet the sustainability demands of its consumers,” said Christoph Wolff, Head of Mobility Industries at the World Economic Forum.
To this end, the CST initiative is working on a pilot project to create a SAF sector in India and plans to replicate this process in other markets that have the necessary conditions to foster a valuable SAF industry.
Building scale is key to improving cost
This report, written in collaboration with McKinsey & Company, shows that despite feedstock availability and even if all currently announced SAF projects are completed, capacity will only increase to approximately 4 million tons annually, which equates to approximately 1% of global jet fuel demand in 2030.
Currently, SAF is more than double the cost of conventional fuel. As further innovations and efficiencies of scale in production are achieved, prices will drop.
“We see the classic Catch-22 problem as in other energy transition discussions. Insufficient scale drives per unit costs high and high costs keep demand low. Some structural solutions could break this impasse – B2B contracts, prioritized aviation and airport fee structures etc. that will give fuel producers the required support to invest in production capacity,” said Daniel Riefer, Associate Partner, McKinsey & Company.
Investments can accelerate promising new technologies
Fuels produced from used cooking oil and other lipids will contribute most to developing capacity in the short term. New technologies take time to mature and develop, but investment decisions, including building larger demonstration plants, are needed now.
Power-to-liquid fuels can contribute the most to SAF capacity, but will only prove effective after 2030 under current development plans. Fuels made from CO2 and green electricity will require financial support for their technology to mature and will need access to renewable electricity.
There is no silver bullet for net-zero aviation. No single feedstock will be practical in every geography or yield enough SAF to meet all demand. Even as costs fall, SAF will have higher production costs than fossil fuels, though a rising carbon price may enable parity in the 2030s.
While the report demonstrates that enough feedstocks are available globally to make SAF economically viable and scalable, several factors are required. These include supportive regulatory frameworks, measures to stimulate demand from corporate and private customers, and innovative ways to finance the transition. The CST coalition is debating how to meet these challenges and help aviation earn its right to keep growing.
Clean Skies for Tomorrow
The World Economic Forum’s CST initiative, established in 2019, is a mechanism for leaders throughout aviation’s value chain to facilitate the transition to net-zero aviation by mid-century. In partnership with ambitious senior leadership throughout industry, government and civil society, this public-private partnership is driving a shift to zero-emissions aviation through SAF and other clean propulsion technologies.