Boeing’s boss has warned that new climate-friendly biofuels will “never achieve the price of jet fuel”, pouring cold water on a central pillar of the aviation sector’s strategy to slash emissions.
Airlines say sustainable aviation fuels (SAF) — made from food waste such as cooking oil and plants — can bring rapid decarbonisation by replacing the kerosene-type fuels, such as Jet A, used in aircraft today.
But SAF currently accounts for less than 1 per cent of global aviation consumption and trades for at least twice the price of traditional jet fuel.
“We will create scale and get more economic,” Boeing chief executive Dave Calhoun said. But he added: “No, I don’t think we will ever achieve the price of Jet A. I don’t think that will ever happen. It is more positive and it will have an impact, but it’s gonna be what it’s gonna be.”
The comments from Calhoun echo concerns raised privately in the sector about the difficulties — and expense — involved in decarbonising an industry that, in creating mass transcontinental travel, represented one of the crowning achievements of the petroleum era.
“He’s saying the quiet bit aloud,” said Robert Campbell, head of energy transition research at Energy Aspects, referring to Calhoun’s comments. “There are no cheap ways to do SAF — if there were, we would already be doing them.”
Tax credits for SAF production in the US were among vast clean energy subsidies in the Biden administration’s sweeping Inflation Reduction Act (IRA), passed last year. The EU has also mandated that airports use increasing volumes of SAFs to fuel jets in Europe.
The International Air Transport Association, a trade group including the world’s biggest airlines, set a target in 2021 to achieve net zero emissions by 2050. SAF would account for 65 per cent of the abatement, Iata reckons.
But the move would be costly, said Willie Walsh, the former chief executive of British Airways, who runs Iata.
“It is achievable,” he told a Financial Times conference last week. But “anyone who says the costs of transitioning to net zero are going to be low or unnoticeable I’m afraid is fooling themselves”.
“Passengers will have to pay higher fares. We need to be honest with our customers”, Walsh said. “Airlines are not in a financial position to absorb that cost, so ultimately it will have to be passed on to consumers.”
The US price of sustainable aviation fuel on Friday closed at $6.83 a gallon, while a gallon of jet fuel cost $2.34, according to energy data provider Argus Media.
Among the costs associated with a switch to 100 per cent SAF use is that all existing fuelling infrastructure — at airports and aboard planes — must be adapted to handle the biofuel, which lacks the “aromatics” present in hydrocarbons that help seal pipes.
Boeing and its rival Airbus say they will render their aircraft capable of handling 100 per cent SAF by 2030, compared with 50 per cent at present. Boeing is also rolling out a new modelling tool, Cascade, to help airlines and policymakers assess methods of decarbonisation.
Critics of SAF have also warned that as demand for the fuel rises, feedstock from food fats will be quickly exhausted, creating new demand for crops, threatening forests, or generating an incentive to grow feedstocks on land needed to supply food.
The Biden administration, which has set industry a “grand challenge” to produce 3bn gallons a year of SAF by 2030 from less than 16mn now, says feedstock will come from agricultural waste produced alongside corn and soyabeans, and woody biomass in western states.
But analysts say that until long-term demand for the fuel is guaranteed, investors will be reluctant to plough capital into new SAF production capacity, leaving costs for a niche product high.
Tom Vilsack, the US secretary of agriculture, said the IRA tax credits would help the industry overcome that investment roadblock, although price parity with jet fuel would not be achieved soon.
“At the beginning you’re going to have government support and assistance . . . to learn the efficiencies that need to go into ultimately getting that price down”, Vilsack told the Financial Times last week.