IATA’s top economist stated on Wednesday that in order to assist airlines in reducing their carbon emissions, the oil and gas industry and producers of alternative fuels must step up their efforts to develop greener aviation fuel.
In contrast to other modes of transport, such as road travel, aviation accounts for around 2-3% of global carbon emissions and is not an easy industry to decarbonise. By reducing aviation emissions by up to 80%, sustainable aviation fuel is considered the key green solution.
The use of biojet fuel isn’t large, saying that it makes up only 0.2% of global jet fuel use, or about 500,000 metric tons. The cost of biojet fuel is three to five times higher than traditional jet fuel, based on IATA figures.
In 2024, Owens Thomsen estimated airlines would spend $2.4 billion on top of their regular costs to secure SAF. The pressure to meet regulatory requirements that come into force in 2025 has led to dozens of airlines signing uptake agreements with SAF manufacturers worldwide.
In the coming years, SAF producers may face oversupply issues due to a lack of certainty about how much fuel to produce. Neste executives said in November that there may be excess SAF capacity by 2028, which means more certainty about long-term demand will be needed to justify investment.
“This is nonsense from Neste,” said IATA’s head Willie Walsh. “Every drop of SAF that’s produced has been used and will be used.”
Neste did not respond to requests for comment right away.
The SAF market should also become more global, so as to meet demand around the globe, not just in the area where SAF plants are located, according to Thomsen.
