The largest sustainable aviation fuel (SAF) deal between Lufthansa (DE:LHA) and Shell (LON: SHEL) may raise confidence in the industry’s 2050 net-zero goal, but decarbonisation of the sector faces many challenges.
The airline sector has increasingly come under attack for growth plans, failure to agreed emissions limits, use of low quality offsets in passenger emissions programmes and much, much more.
Airline industry hard to decarbonize
There is very little the sector can do to reduce carbon emissions per revenue passenger kilometre beyond the air travel efficiencies already achieved. The airline industry accounts for 2.5% of global greenhouse gas (GHG) emissions, but that rises to 3.5% of total environmental impact.
Most of the reductions in the 2.5% emissions footprint is planned from using SAF, with further equipment and operational efficiencies offering very little additional benefit.
The 3.5% total environmental impact comes from ‘radiative forcing’, which measures the difference between incoming energy the energy radiated back to space.
Airliners absorb more energy that they radiate, while also affecting the concentration of other gases in the atmosphere, like nitrous oxide, soot and sulphur aerosols. Water vapour trails from aircraft exhausts, called contrails, account for the largest share of the warming effect.
SAF may ground airlines’ 2050 goals
One of the largest ever SAF supply deals is being hailed as a potential breakthrough, despite the reported agreement being at an early stage and covering seven years of fuel supply.
In the end the Lufthansa and Shell deal may do little to drive the airline towards its net zero goal, despite the fuel’s reported 80% lower lifecycle carbon emissions and interchangeability with tradition fuels in use with existing equipment. Its 50% higher cost to ordinary jet fuel stems from a lack of scale and availability of feedstock, which includes cooking oil and agricultural waste.
A future fuel option, called ‘power to liquid’ is a synthetic fuel made from hydrogen and CO2, could see the cost rise to four times the price of jet fuel, besides requiring half the electricity produced today globally to produce enough for the global aviation industry by 2050.
Lufthansa trials new Green, carbon neutral measures
Lufthansa is also piloting a new ‘Green Fare’ in conjunction with SWISS, Australian Airlines and Brussels Airlines. The fare offers passengers the ability to book carbon neutral travel, embedding the cost of fully offsetting the carbon footprint of the flight undertaken in the price. A lack of transparency on how the higher price effectively offset carbon emissions may decide the fate of this promotion.
Investigations into the carbon offsetting claims on similar fare schemes from British Airways (LON:IAG.I), Easyjet (LON:EZJ) and United Airlines (NASDAQ:UAL) revealed problems with how the carbon savings were being calculated. For example, one offsetting project in the Peruvian Amazon was being run by logging companies.
However, this does not prevent these claims and projects from continuing, given that many of them have been accredited by Verra, which administers the world’s leading carbon credit standard, VCS.
An economic downturn or recession, following closely on the heels of the pandemic, will likely place additional pressure on airlines to stimulate business. In the end, like every other for-profit enterprise, the lifeblood of the business (increased consumption) will remain at odds with its decarbonization ambitions.
