The pathways for sustainable aviation e-fuels and incentive schemes
It’s no secret that aviation is a major contributor to the climate crisis.
Globally, flying causes about 2.4% of all carbon dioxide emissions. This might not sound like a lot at first, but if aviation were a country, it would be the sixth-highest emitting nation in the world. In the United States alone, emissions from commercial and business flights made up a tenth of all emissions from transportation, and 3% of total greenhouse gas emissions. Aviation is an enormous contributor to greenhouse gas emissions, and with consumer demand for airline flights not decreasing any time soon, finding sustainable alternatives to aviation fuel is more and more necessary.
The development of sustainable aviation fuels, or SAFs, are a major focus of most climate policies. While countries worldwide are naturally interested in incentivising their use and production, the creation of SAFs is not exactly straightforward. Not all SAFs are created equal, nor are all SAFs sustainable in the long term. In this article, we’ll look at what governments are doing to increase SAF production, and what pathways to SAF production are available.
Incentivising the production and use of sustainable aviation fuels
Governments across the world are taking strides to incentivise SAF use and production. In the European Union, provisions for SAF incentives are included in the EU’s Fit for 55 package — a package of proposals put together by the European Parliament to meet its goal of becoming carbon neutral by 2050. This package includes a proposal called ReFuelEU Aviation. As the name suggests, this proposal directly addresses aviation, with the goal of making 85% of all aviation fuel sustainable by 2050 and creating a sustainable aviation fund to support investment into these fuels or into research for more efficient engines. The EU is hopeful that developments in electricity and hydrogen technologies will help it meet its targets.
Meanwhile, in the United States, there has been a lot of talk about the 2022 Inflation Reduction Act (IRA). The IRA not only attempts to address rising inflation in the US, but it also includes major incentives for renewable energy, including the development of SAFs. The IRA calls for an increase in SAF production in the US to at least three billion gallons per year by 2030, an amount that’s about 100 times higher than current global production but still less than 5% of global demand (so the market opportunity is huge!). The Act doesn’t make demands without incentives though. Fuel companies can receive tax credits for every gallon of SAF they use, up to about $1.50 per gallon of SAF. But for a fuel to be considered sustainable, it has to emit 50% less greenhouse gases than standard jet fuel.
This all sounds really ambitious, but there’s some evidence that SAFs are more practical than you might think. While at the moment, uptake of SAFs is slow because they’re more expensive than conventional fuel (just over twice the price per litre), experts in the aviation industry think SAFs could achieve price parity with fossil fuels very soon. In fact, even though SAFs are still more expensive than conventional fuel, the demand for them is already very high, and both airlines and travellers are willing to pay a premium for low-carbon flying.
The growing market for SAFs represents an incredible opportunity for energy companies looking to expand into sustainable fuels. Assuming that Europe’s jet fuel consumption remains the same over the next few years, hitting even the smallest of the EU’s SAF targets (that 2% of all aviation fuels come from SAFs by 2025) would require more than 5 million barrels of sustainable aviation fuel. At current prices, that translates to nearly a billion dollars of total revenue. Even if SAFs reach price parity with conventional jet fuels by then, companies could still stand to gain over $400 million in revenue from SAFs.
The pros and cons of increased biofuel use
Where the environmental impact is concerned, some SAFs are more sustainable than others. While all sustainable aviation fuels are better for the environment than their fossil fuel counterparts, there’s a lot of concern that certain SAFs may end up harming the environment in new ways, or there simply won’t be a way to scale up their production to meet demands.
SAFs generally come in one of two flavours, biofuel or synthetic fuel. Biofuel is exactly what the name suggests. It’s a fuel that is still based on organic material but doesn’t come from oil or other fossil fuels. For example, the used cooking oil that currently makes up a large percentage of SAFs today would be considered a biofuel. Biofuels still release carbon dioxide when burned, but at a much lower rate than fossil fuels, greatly reducing greenhouse gas emissions.
As experts have pointed out previously, there simply is not enough cooking oil in the world to meet SAF targets, so biofuel production will likely have to scale up in other ways. That comes with environmental concerns, because many biofuels need to be grown, and some biofuels are grown in a way that competes with crops that are used to feed people and animals or with the natural ecosystem. In fact, the EU has excluded some biofuel feedstocks such as palm oil and soy-based fuels from its Fit for 55 plan because these feedstocks can’t be grown in ways that meet sustainability targets. It would be counterproductive, after all, for green technologies to cause further environmental harm.
The potential of synthetic fuels
Currently, SAFs are only in use in about 2% of flights a year, and all SAFs in use are biofuels, but regulators are optimistic that synthetic fuels could soon enter the market. In fact, the EU’s proposed legislation includes some targets for the use of both biofuels and synthetic fuels, with the hopes that synthetic fuels can be introduced into the market at scale by 2034. However, even proposals which look out to 2050, expect that the majority of SAFs will be made from biofuels.
Synthetic fuels do have some advantages over biofuels. Although biofuels greatly reduce CO2 emissions, burning any organic material still releases some carbon dioxide. On the other hand, it is possible to make fuel alternatives that don’t release any CO2 at all. Some proposals include using hydrogen as fuel, which would consume hydrogen and produce water as a by-product, or avoiding hydrocarbons altogether by introducing electric planes.
But there is still a lot of research to be done before either of these proposals is viable. While there is great interest in hydrogen power as a whole, it will be some time before hydrogen can meet demands, and before hydrogen-based planes can be deployed at scale (hydrogen needs more space than jet fuel, requiring a completely new aeroplane design and a full fleet change, which will take decades to realise). And powering planes with electricity is tricky because commercial planes are heavy and require a lot of thrust for take-off, which would be difficult to provide with our current level of technology (batteries today are much too heavy and provide too little energy). That said, small and limited-seat electric planes have been tested for short to medium-haul flights, so it’s possible that this technology could develop in the future.
INERATEC’s Fischer-Tropsch process
At Extantia, we believe that the synthetic pathway is the only truly sustainable and scalable pathway for air travel for the coming decades. We’ve therefore backed INERATEC, a Karlsruhe/Germany-based company committed to producing synthetic SAFs using a method known as the Fischer-Tropsch (FT) process.
The FT process is a chemical reaction that converts gas into liquid hydrocarbons, which can be used as fuel. This process was invented in the 1920s when countries like Germany did not have oil readily available. They did, however, have access to coal, which they gasified to create a synthesis gas, a gaseous mixture of carbon monoxide (CO) and hydrogen (H2). Using a catalyst, the synthesis gas could be converted into liquid hydrocarbons.
Fast forward to modern times, INERATEC has upgraded the Fischer-Tropsch process with an additional step, also known as the reverse water-gas shift (RWGS) reaction. The RWGS step essentially converts carbon dioxide (CO2) into CO, which is then used together with H2, sourced from water electrolysis with renewable energy, to create liquid hydrocarbons via the FT reaction. These hydrocarbons include not just kerosene and diesel, but also heavier hydrocarbons such as waxes and lighter hydrocarbons such as naphtha, or crude oil. The products of the FT process can be refined into fuel later on, which means that INERATEC’s process ultimately creates fuel by consuming carbon dioxide. This entire process is also known as power-to-liquid, or PtL in short.
Consequently, INERATEC’s fuel won’t add any additional CO2 into the atmosphere, if the CO2 has previously been sourced sustainably (e.g. via a Direct Air Capture process), making the whole process net zero. But it is important to note that the FT process still requires electricity to produce the e-fuels; water electrolysis, converting CO2 to CO, and converting CO and hydrogen to hydrocarbons all require energy input. To make fuel that’s truly net zero, the hydrogen used in the process has to be produced using renewable sources of electricity, and the carbon dioxide can’t come from new emissions. That means making sure to use green hydrogen and carbon dioxide that has either been captured directly from the air or from other green sources such as point-source capture (such as biogas or flue gas from industrial plants).
INERATEC is committed to making its fuel truly net zero. While the amount of fuel we can produce today isn’t enough to meet demands, this process has enormous potential. The sustainable aviation market is expected to grow substantially over the next decade, reaching an estimated $15 billion by 2030 (for comparison, the market was valued at $220 million in 2021). As INERATEC heavily invests to scale their tech, the amount of fuel produced will increase substantially. Although the creation of sustainable aviation fuels is the goal, aviation isn’t the only industry that will benefit from this. Hydrocarbon-based fuels like the ones produced by the FT process can be used in any mode of transportation that uses fossil fuels today, like the shipping industry. That means that this process could play a large part in meeting the EU’s Fit for 55 targets and bringing about a greener world.
