2023-08-11 14:11:31
After surviving the Covid-19 pandemic, the aviation industry is about to hand passengers the multi-trillion dollar bill to combat its next existential threat: decarbonization. Announced the agency Bloomberg.
Cleaning up aviation is a mission of unlikely scale: neutralizing the carbon emissions of some 25,000 planes in the world’s commercial fleet, which typically carry about 4 billion people a year and burn about 100 billion gallons of jet fuel.
About $5 trillion of capital investment could be needed to reach aviation’s goal of achieving carbon neutrality by 2050, almost all of it invested in sustainable fuel production and renewable energy generation, according to McKinsey & Co. That’s a mountain of money so big that it could wipe out airlines’ global revenue for the better part of a decade.
Industry leaders are starting to speak an uncomfortable truth. Of course, they say, the costs of reducing the use of fossil fuels in air travel will fall on passengers.
Through seven decades of almost unrestrained expansion, the aviation industry has paid little attention to emissions. Passengers have become accustomed to ever-improving connectivity, increasing competition and cheap fares.
Suddenly, carriers find themselves in an environmental bind, with governments setting deadlines and activists lining up on the runways to draw attention to global warming.
While international air travel is just one of many ways humans are warming the planet, its share of CO2 production is set to increase dramatically as other segments decarbonize – to around 22% by 2050, from around 2% today if emissions are not cut quickly.
Governments are also increasingly aware that continued climate change will have great economic and human costs. After a summer of lethal heatwaves, with tourists in Greece and Hawaii being evacuated from deadly wildfires, the impact on the airline industry is no longer theoretical.
For passengers, the cleanup effort means little prospect of relief from a post-Covid price hike that has left US domestic fares, for example, more than 8% above 2019 levels. fares will be a more permanent affair, reflecting massive long-term investments by manufacturers Boeing Co. and Airbus SE, along with fuel refineries, airports and airlines.
Because they don’t make the aircraft or supply the fuel, carriers rely on other players, such as plane makers, engine makers and energy companies, to spur technical advances.
Even with unprecedented coordination, options are limited. Commercial jets delivered today could still be flying in 2050, and new designs powered by batteries or hydrogen will take years, if not decades, to materialize. So, for now, the best option is to fuel conventional planes with less polluting copycat fuels that don’t require more drilling to extract oil. Even that will require a monumental effort to maintain an alternative fuel production system that barely exists today.
All in all, this will make the flight much more expensive. Estimates vary, but the costs are significant. According to data from the International Civil Aviation Organization’s Environmental Report, the sustainability measures will add up to $73 to the cost of a one-way seat on a long-haul flight from Singapore to Dubai or New York to Paris.
In the European Union, regulations coming into effect are expected to raise ticket prices almost immediately. The new RefuelEU rule will require airlines to fuel their planes with a sustainable jet fuel blend of 2% by 2025, increasing to 6% by 2030 and reaching 70% by 2050.
Under economic pressure and with political demands on the rise, airlines have honed their sustainability messages, preventing punitive actions. Almost all aircraft purchases are now made as a commitment to reducing carbon – even if the jets are used for expansion rather than replacing older, less efficient planes.
Industry lobbying has had results in the US with the Inflation Reduction Act of 2022, which will provide subsidies of up to $1.75 per gallon for SAF production. Airline executives hailed the move, targeting an annual production of 3 billion gallons by 2030, as a model for other regions.
Also in favor of airlines: The introduction, over time, of newer, more efficient aircraft that will enter the global fleet and gradually reduce average fuel consumption.
IATA, a group representing about 300 airlines, estimates that reaching net zero by 2050 will require annual investments of close to US$180 billion on average. Even if carriers only pay 65% to 75% of the total, the outlay can be unbearable.
Commercial airlines emit around 1 billion metric tons of carbon dioxide each year. However, it is far from clear that the public is ready to take financial responsibility. Voluntary programs to offset emissions typically enroll only 1% to 3% of passengers.
Technological advances may not be coming soon. Electric aircraft that will arrive in a few years will not have autonomy for longer flights. ICAO does not expect hydrogen-powered aircraft to have a significant impact on emissions before 2050.
Higher costs may force some airlines to avoid the world’s farthest destinations. Australia, for example, is at risk of being “cut off from the global aviation network once emissions reduction and carbon pricing strategies start to take effect,” according to the country’s airport association.
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