Industry outlook

The International Air Transport Association (IATA) has cautioned that the aviation industry’s ambition to achieve net zero carbon emissions by 2050 is becoming increasingly difficult to realise. Speaking during IATA’s Annual General Meeting in Rio de Janeiro, Director General Willie Walsh said progress towards the sector’s decarbonisation target is being undermined by insufficient sustainable aviation fuel (SAF) production, ineffective government policy sequencing and limited commitment from oil producers.

The warning comes less than five years after IATA member airlines adopted a resolution at the association’s 77th Annual General Meeting in Boston in October 2021, committing the industry to achieving net zero carbon emissions from airline operations by the middle of this century.

SAF supply remains the critical constraint

IATA’s decarbonisation roadmap assumes that sustainable aviation fuel will provide approximately 65% of aviation’s fuel requirements by 2050. However, the association estimates that SAF will account for only 0.8% of global jet fuel consumption in 2026, highlighting the significant gap between current production and long-term requirements.

Addressing delegates in Rio de Janeiro, Willie Walsh said there remains hope that the industry can still achieve its 2050 objective, but acknowledged that the outlook is becoming increasingly uncertain as government policies and fuel production fail to develop at the pace required.

IATA Senior Vice-President Sustainability and Chief Economist Marie Owens Thomsen described the global SAF market as “teeny, tiny and embryonic”, despite 15 years having passed since the first commercial flight using a SAF blend.

POLICY AND MARKET CHALLENGES

Mandates ahead of supply

IATA continues to oppose sustainable aviation fuel blending mandates introduced by the European Union and the United Kingdom, arguing that regulatory demand has been introduced before sufficient production capacity exists. According to the association, this imbalance is increasing fuel costs by stimulating demand without a corresponding increase in supply.

The organisation maintains that expanding SAF production capacity must precede regulatory mandates if airlines are to meet future obligations without placing additional financial pressure on operators.

AIRLINES CONTINUE TO INVEST

KLM expands production partnership

While airline strategies differ, Dutch carrier KLM continues to invest in SAF production. The airline recently marked the start of construction of the Netherlands’ first sustainable aviation fuel production facility through its partnership with SkyNRG.

KLM Chief Executive Marjan Rintel said the airline used 4.5% SAF during the previous year, exceeding the current 2% requirement under the European Union’s ReFuelEU framework. She also expressed confidence that KLM will meet the bloc’s 2030 SAF mandate.

E-FUELS PRESENT A FURTHER CHALLENGE

Production capacity remains limited

ReFuelEU requires 6% of all aviation fuel supplied at EU airports to consist of sustainable aviation fuel by 2030, including a 1.2% requirement for synthetic e-fuels.

Rintel cautioned that meeting the synthetic fuel requirement will be considerably more difficult. She noted that large-scale e-fuel production facilities have yet to be established and that current prices remain around ten times higher than conventional jet fuel. She said stronger support from European governments and energy initiatives would be required to accelerate production in a similar manner to the development of the wind energy sector.