Airlines Ready To Embrace Higher Sustainable Aviation Fuel Costs

The airline industry would be ready to embrace the fact that sustainable aviation fuel (SAF) will always be more expensive than oil-based jet fuel, Willie Walsh, Director General at the International Air Transport Association (IATA), said on Wednesday. 

SAF is likely to always be more expensive than kerosene even when SAF supply grows in scale from the current very low volumes, the industry association’s head said at a conference in Lisbon, Portugal.

“I believe the industry is ready to embrace that,” Walsh said as carried by Reuters.

“The industry recognises the problem, is doing everything it can to address it and we will achieve the targets because... there isn't an option here,” the executive said, referring to the ambitions of the airlines to reach their emission reduction targets despite the higher costs of SAF. 

Despite numerous pledges from airlines and government support for SAF production, the alternative of the petroleum-based jet fuel faces challenges in supply, costs, and feedstock, analysts say.

According to the International Energy Agency (IEA), “increasing SAF use from less than 0.1% of all aviation fuels in 2021 to around 10% by 2030 in line with the Net Zero Scenario will require investment in production capacity and new policies such as fuel taxes, low-carbon fuel standards and mandatory blending.”  

According to the IATA, SAF has the potential to reduce CO2 emissions by up to 80%.

Earlier this year, Boeing Company’s president and chief executive officer David Calhoun said that SAF could never achieve price parity with jet fuel to be able to compete with conventional fuels and help decarbonize the aviation sector.

Calhoun told the Financial Times “We will create scale and get more economic,” but warned, “No, I don’t think we will ever achieve the price of Jet A. I don’t think that will ever happen.”

By Charles Kennedy for Oilprice.com

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