Industries in Depth

Here’s how sustainable aviation fuel can take off in Europe

Image: Photo by Jerry Zhang on Unsplash

Kevin Soubly
Project Lead, Clean Skies for Tomorrow, World Economic Forum LLC
Lloyd Pinnell
Associate, Energy Transitions Commission
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SDG 13: Climate Action

  • 15 major companies from across the European aviation sector have codeveloped policy recommendations for delivery to the European Commission and UK government on how Europe can chart the course for an ambitious transition to sustainable aviation fuels.
  • This proposal is the first time such a diverse group of companies from across the aviation value-chain – including airplane manufacturers, airlines, airports, and fuel providers – have collectively backed such policies.

COVID-19 has resulted in arguably the worst economic crisis the aviation industry has ever faced. Revenues and passenger volumes are at historical lows, causing ripple effects throughout the travel and tourism industries.

Yet the pandemic will end, borders will reopen, and air travel will pick up again. As of 2019, aviation contributed to nearly 3% of global greenhouse gas emissions. Albeit tempered by expected lasting impacts from the pandemic, aviation’s greenhouse gas emissions are still projected to increase three-fold by the middle of this century, carrying with it a substantial impact on the Earth’s climate.

The European Commission’s RefuelEU Initiative aims to reduce aviation’s climate impact. Currently in an initial research and analysis phase, this legislative effort is intended to establish a policy foundation for increasing the production volumes and use of sustainable aviation fuels (SAF) in European aviation to help the EU meet its overall climate goals. The UK government has also launched the Jet Zero Council to drive its aviation sectors’ decarbonization.

Through the Forum’s Clean Skies for Tomorrow coalition, stakeholders across the European aviation value-chain have aligned on key policy proposals to inform the RefuelEU initiative and UK government policy. Taken together, this industry-backed policy package provides a clearly defined strategy to scale SAF in Europe – focused on measures that collectively increase both SAF supply and demand signals to create a balanced market.

Says John Holland-Kaye, CEO of Heathrow Airport, “This is the key step that needs to be taken for aviation to reach its net zero goals.”

Aviation and decarbonisation
Sustainable aviation fuels – produced from feedstock ranging from agricultural residue to carbon removed directly from the air – are an essential pillar of aviation’s decarbonisation journey. When responsibly sourced, they offer massive gains in lifecycle carbon reductions vs traditional fossil jet fuel and are fully compatible with existing airplane and airport infrastructure.

As hydrogen-based fuel systems and electric aviation are still years away and offsets are only a transitional solution, SAF is aviation’s best option in the near term to reduce its lifecycle carbon emissions. But due to limited production capacity and cost premiums over traditional fossil-fuels, SAF currently comprises only 0.05% of all jet fuel used.

“This is the key step that needs to be taken for aviation to reach its net zero goals.”

John Holland-Kaye, CEO of Heathrow Airport

Sustainable Aviation Fuel offers a rapid solution that benefits both the environment and the aviation sector, says Paul Griffiths, CEO Dubai Airports. SAF “does not rely on new technology and, if implemented quickly, could prevent aviation being regarded by its potential customers as an environmental pariah.”

Deutsche Post DHL Group Chief Financial Officer Melanie Kreis agrees: “SAF are essential for the sector to overcome its environmental challenges by enabling carbon neutral aviation logistics for a functioning global economy,” she says.

4 key policy recommendations

Clean Skies for Tomorrow’s recently released Community Paper, accessible on the Forum’s digital library, outlines four key policy measures:

  • Public policy must support innovation to advance biofuel and power-to-liquid technologies, emphasizing those with the most significant emissions and cost reduction potential.

    Scaling-up SAF production and use in Europe to meaningful levels won’t be possible by relying exclusively on technology pathways available today. Many of the technologies that are based on the most sustainable types of feedstock, like power-to-liquid or ‘e-fuels,’ are still in early stages of development and need policy support to mature and scale at the speeds required to achieve climate goals.
  • Government-backed price floors should be provided through the early stages of SAF production to enable investment confidence.

    As with any commodity, SAF is reliant upon the laws of supply and demand; production at scale is dependent on significant demand. The challenge is that SAF faces a “chicken and egg” conundrum as a result of the significant price premium between fossil-based jet fuel and SAF: costs will reduce if production scales up. But fuel providers are lacking a strong demand signal to increase production and demand is low due to the high price premium.

    Policy mechanisms to secure a price floor for SAF output will be crucial for making new SAF plants economically viable and to secure necessary investments. This is especially important in the early stages of deployment before regulations incentivising SAF demand (such as blending mandates) are in place.
  • Support development of SAF production facilities by directly de-risking investments.

    Even in a favourable policy context, investment in first-of-a-kind production facilities will entail a level of technology and commercial risks that lead to high financing costs and long timelines to raise capital. This will likely remain true for the first decade of SAF deployment. Different forms of support from public investment funds, national government, regional development banks, and international financial institutions should be used to facilitate these projects and secure capital.
  • SAF blending mandate for European aviation should be announced in 2021, go into effect by 2025, and increase through 2050.

    Key to this important recommendation is a clear timeline that will enable market confidence to support major investments in new SAF production infrastructure, make possible responsible scaling to ensure that only sustainably-sourced feedstocks are used, and improve emissions reduction capacity over time.

    The mandate is recommended to initially apply only to intra-EEA flights (ideally including the UK as well). Although the effect will be a powerful incentive to boost production and investment in SAF, public financial support will be required to compensate for the effect of competitive distortions, especially on intra-EEA feeder flights. And additional measures will be needed by 2030 to speed the decarbonization of long-haul aviation.

What is the World Economic Forum doing to help aviation meet net zero goals?

The work ahead

The paper’s policy recommendations are an important sign of progress, though more collaboration is ahead.

Further effort will be required to determine the specific design of blending mandates, for example, as well as appropriate levels of blending through time given the feasible ramping up of SAF production.

“We encourage industry and governments to work together to introduce ambitious, global blending mandates to promote the use of sustainable aviation fuel.”

Anna Mascolo, President of Shell, Aviation

Quickly scaling SAF production and use is possible, however, and to ensure it’s done effectively, sustainably, and affordably, the policy basket detailed by the coalition should be implemented in a strategic and sequenced manner. Public financial backing will be key to unlock cost reductions, and the proposed policies should be carefully tied to the technically feasible pace of production ramp up to avoid supply bottlenecks and price volatility.

Says Anna Mascolo, President of Shell, Aviation: “Shell, Aviation supports the policies recommended by the CST paper. We encourage industry and governments to work together to introduce ambitious, global blending mandates to promote the use of sustainable aviation fuel. Coupled with fiscal incentives, such collaborations could drive new technologies and help establish SAF production plants and ease supply chains.”

“Recent announcements by ourselves and others demonstrate real progress, but there’s much more work to do,” she says.

Christina Foerster, Member of the Executive Board Customer, IT & Corporate Responsibility, at Lufthansa, adds: “The industrialization of sustainable aviation fuels (SAF) is vital for mitigating airline emissions. … We now need regulators for an accelerated market introduction, and this report represents a joint proposal which balances ecological ambitions as well as economic requirements such as level playing field competition.”

This policy report was signed by Airbus Group, Deutsche Lufthansa AG, Deutsche Post DHL Group, Dubai Airports, Groupe ADP, Heathrow Airport, International Airlines Group, KLM Royal Dutch Airlines, Neste, Ørsted, Royal Dutch Shell, Royal Schiphol Group, SkyNRG, The Boeing Company, and Velocys, Inc. For more information on the Clean Skies for Tomorrow coalition or the Forum’s Shaping the Future of Mobility platform, please contact

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