Podcast: Are Airlines' Net Zero Goals Unrealistic?

In 2021 airlines pledged to hit net zero carbon emissions by 2050. Aviation Week experts debate their progress so far and what approach should be taken going forward ahead of airline CEOs convening in Dubai for IATA's AGM at the start of June.

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Transcript

Joe Anselmo:

Welcome to Aviation Week's Check 6 podcast. I'm Joe Anselmo, editorial director and editor-in-chief of Aviation Week & Space Technology magazine.

In October, 2021 in Boston, the world's airlines agreed to a momentous goal: Achieving net-zero emissions by 2050. Two and a half years later, business is booming, with demand for air travel soaring both domestically and internationally. Airlines for America, the US trade group, predicts US airlines will carry 6.3% more passengers this summer than they did in the summer of 2023. That's all great for the industry, but higher traffic also means higher emissions.

So how is the industry doing on those goals it set back in Boston? Here to give us a reality check are Jens Flottau, Aviation Week's executive editor for commercial aviation. He joins us from Frankfurt. William Moore, a sustainable aerospace technology analyst for the Aviation Week Intelligence Network. He's based in London. And Graham Warwick, Aviation Week's executive editor for technology, who has written extensively about sustainable aviation fuels and research into clean propulsion technologies. He's with me in Washington DC.

Jens, how are the airlines doing on meeting those sustainability targets?

Jens Flottau:

Well, short term the trends aren't looking great, to be honest. I've looked at two figures in particular. One is traffic growth and one is the renewal rate of the in-service fleet. So let's start with traffic growth. As you say, traffic is booming these days. In March, according to IATA, RPKs demand was up 13.8% globally. A lot of what's happening is Asia, of course, and international growth. We've seen the return of domestic flying first, but the return of international long-haul travel is continuing and obviously in terms of emissions that's far more damaging than the relatively short haul domestic flying that we've seen. So the boom's continuing. We do see some signs of weakness in terms of yields, load factors, but those are early signs and have not yet led to airlines slowing back on growth. But the other figure is equally worrying from a sustainability point of view, which is fleet renewal.

If you looked at the rates of aircraft being replaced in 2018, so before the pandemic, it was 5.8% of the fleet. It was only 4% in 2023, and for the whole of the 2010s, it was 5.4%. Of course, the 2010s were relatively good times for the airlines with lots of profits, so airlines could afford to order aircraft and replace their existing fleets. But even for the weaker 2000s with lots of bankruptcies and so on, we saw a rate of 4.6%, which is still significantly above what we're seeing today. The reasons are obvious. Covidis one big one, and right now the supply chain issues. According to IATA if we had a replacement rate of 5%, which isn't unrealistic historically over the past four years, we would've had an additional 3,000 new generation aircraft delivered by now. So we've got this growth, but the introduction of new technology is much slower than it should have been.

Joe Anselmo:

William, thanks for joining us. This is your first Check 6 podcast and you crunched the numbers and it's a little more difficult than just saying yes or no, isn't it, to answer my question?

William Moore:

Of course it is. Yes. First of all, thank you for having me. Very excited to be on here. As Jens has just said, the fleet window that we are seeing is perhaps not high as we would have liked. However, it does still show in the data that we are seeing improvements in... The metric that we like to use is CO₂ per ASK. ASK being available seat kilometers. So for those not in the know, that's the number of seats on an aircraft multiplied by the number of kilometers that it flies. So if you had an aircraft with 10 seats on board and it flew 10 kilometers, then the ASK for that flight would be 100. We like this metric because it levels the playing field essentially between large and small aircraft of long and short haul. And thanks to what little fleet window we have been seeing, these figures are falling.

Airlines are taking on more modern aircraft, for example, MAX or the NEO family of aircraft, and yeah, these figures are coming down, especially in LCCs, like for example, Wizz in Europe, or Frontier in the States, they have really low emissions per ASK. But I think the fact that these airlines are LCCs highlights the real reason that emissions are falling, and that's because emissions falling are simply a side effect of bringing costs down, less fuel burn because less money spent, and less emissions is secondary to that. Airlines are really trying to recover the money that they lost during the pandemic and green goals have kind of been pushed aside, and that becomes more apparent when you start to consider total CO₂ rather than CO₂ per ASK. So total being literally the grand total of CO₂ emitted by an airline over a given time. And yeah, we might say that, well, with all of these measures and this new technology, we're saving maybe 20% of fuel, but if you have 20% more flights, then that's redundant. It doesn't matter.

And so now that we are getting this amazing growth in the industry, we are returning back to roughly around the 2019 figures. And although it is really good for us, it doesn't do us any favors in terms of the climate goals that we have set that you mentioned at the beginning of this. Personally, I don't think these goals are achievable. I don't think they ever really were achievable because we've known for years the technology that we have available to us in the present day and in future, and it's not really up to scratch with these lofty goals that we have. Things like, for example, hydrogen, electric, et cetera, et cetera. Graham knows all about it.

It's not in place to make these goals. The same for SAF and other alternative fuels. Personally, I think it's probably time to start thinking about changing the goals. We give airlines these big goals and say, look, try and achieve these, but they know that they're not achievable and personally, why would anyone bother to try and achieve a goal that is unattainable? I think if we reduce the goals, make them more realistic, that's probably a better word to use, then maybe actually we see more efforts made to achieve these targets. As disruptive and ideal as the goals that we set ourselves were over the last maybe decade or so ultimately, I think it's time to take a view on what we can actually achieve and where we should set our sights as an industry.

Joe Anselmo:

I would push back on you a little bit. This is the airline industry's goal. This is IATA’s goal that was set. So the airlines did set this goal. But you mentioned hybrid electric propulsion, hydrogen propulsion, Graham, you write about that all the time, but you also say these technologies won't be available for many years. So, if the industry has to get anywhere near its target, it's got to massively ramp up consumption of sustainable aviation fuel, and yet this year it's estimated that SAF will be just half of 1% of the fuel airlines consume. So we've got a long way to go, don't we?

Graham Warwick:

Absolutely, we have a huge way to go. So let's break that down. Let's start with bio-based SAF, which is where we are today. So we're taking biomass and other natural products and turning them into SAF. Very small amounts at the moment, but there are a large number, a very large number of projects underway to build plants. So if we looked at this in 2030, we'll see a very different picture. There'll be a significantly more SAF being produced. Whether it's anywhere near the 10% level that people want to get to is a second issue because that's got to do with financing and how much money can be raised for these very expensive projects to build the facilities and whether they can find the feedstock and all that sort of stuff. But the big problem with bio-based SAF is you're not reducing emissions, the tailpipe emissions, you're still pumping CO₂ out of the tailpipe of the engine.

What you are doing is you are using the life cycle of carbon to say that as carbon dioxide is absorbed by plants and those plants are turned into fuel and that fuel is turned into carbon dioxide and goes back into the atmosphere, over that life cycle you get a reduction in carbon dioxide because the plants absorb it. So they're just talking about 80% or something. But it is an accounting reduction. It's not a physical reduction, it's an accounting reduction.

So longer term, we have got to go to what they call e-fuel SAF. Now, e-fuel SAF is where you use to renewable energy, renewable electricity and carbon dioxide, and you turn it into electro fuel SAF. Very expensive. You need an awful lot of renewable energy to do that. We've got to find the money not only to build the fuel plant, but to build the renewable electricity plants, solar, wind, whatever it is or something like that.

With e-fuel SAF, you are still pumping carbon dioxide out of the tailpipe of the engine. But what you are doing is you are actively pulling carbon dioxide out of the atmosphere by capturing it and either sequestering it in the ground or turning it into jet fuel that you put back in the airplane and the airplane burns and it goes back in the atmosphere. So over that particular cycle, you get an absolute reduction in CO₂. So you look at an airline like United, they have invested in a carbon capture company because what United wants to do is for every kilogram of jet fuel they burn, every kilogram of CO₂ they put into the atmosphere, they actively pull a kilogram of CO₂ out of the atmosphere. That's really where a lot of airlines, easyJet is another one, they don't see SAF as an answer because you're not reducing emissions.

You've got to go to a solution where you are actually removing carbon from the atmosphere.

Eventually, so you talked about hydrogen, electric, et cetera, after bio SAF and e-fuel SAF, the next thing, and Jens mentioned it, is we've got to get new aircraft into the fleet as quickly as possible. So we're not doing that now for all the reasons Jens talked about, supply chain, production rates, et cetera. We've got to get new narrow-body airplanes into the market by 2035. We've got to get them to very high rate within a very short period of time in order to turn the fleet as quickly as we can between 2035 and 2050. So that's a better airplane, better production. We've got to do that if we're going to get to 2025. Then on top of that, you layer, how do we use electric, how do we use hydrogen? And as William pointed out, both electric and hydrogen, even if they are real, they're under real for small short-range airplanes. So you do not move the needle for the overall industry before 2050. They get started, but they don't move the needle.

So really going back to what William said about we need to have more realistic targets, I would say absolutely not, because we've got to keep the pedal to the metal on this. And it's not about the industry not meeting its goals, it's about the industry being able to go to government and say, "We can't meet our goals because SAF is too expensive." There's not enough investment in technology, there's not enough incentives to build production plants. We've got to keep the pressure on the airlines. The airlines have then got to take that pressure, apply it to governments.

They've got to take that pressure, go show it to investors and say, look, to meet this goal, we need this much fuel. We are going to buy this much fuel off you in 20 years time because we have these goals we have to meet. And that's a message to the investors. So as long as we keep that target, then we keep the pressure on the entire system to try and meet that goal. Now we're not going to meet it. We'll get there and they'll say, "Oh, I need a waiver from this requirement. I need an exemption from that requirement. I can't meet that. I can't do this." But if we take our foot off the accelerator at this point in time, none of this will ever happen.

Joe Anselmo:

Hey, William, we're beating up on you a little bit here. Did you want to respond?

William Moore:

Yeah, of course. I completely understand what you're saying there, and if you'd asked me maybe a year ago, I would say, "Yeah, I absolutely agree, 100%." However, we've started to see not just in aviation, just in the general public consciousness surrounding climate change, this element of realism just creeping in and with the best will in the world, I am not sure that we could even turn around and say, actually, we need this much fuel. The absolute figure is this much fuel, whatever it might be, SAF to achieve our goals and that SAF actually be delivered. I'm not sure if we have the infrastructure and maybe we could rush that regulation into place in order to try and make it happen. Perhaps I'm wrong. Maybe that would move the needle a substantial amount, but I don't think that the goals are going to be achieved. We've taken too long. We've focused on growth for the reasons that we've already outlined at the detriment of achieving these goals, and it's become too late in my opinion.

Jens Flottau:

Yeah, and maybe we have to distinguish between the short-term and the long term goals. Short term I absolutely agree that they're not achievable. And there's another kind of dirty little secret that we haven't yet talked about, which is the industry actually needs growth to be able to finance the transition to sustainability. And when I say the industry, I mean the OEMs in particular. There's a reason why Airbus wants to go to 75. It's not only demand, but because they want to find the money, they need to find the money to fund the next generation aircraft, the hydrogen project. But more importantly, I would say the new narrowbody that they've now begun to talk about for the middle of the next decade.

And in terms of sustainability, the Boeing crisis is an absolute, absolute disaster because not only does it slow down current renewal of the fleet, but it also makes it a lot more difficult for Boeing to finance the next generation of aircraft, which the industry needs. Given all the technological problems, challenges that we've talked about, one big chunk of the reduction is building aircraft that use less energy, and no one will achieve that with the current generation. We will need a next generation as soon as possible, and to be able to finance that in the short term, more growth is needed.

Joe Anselmo:

Graham, we're starting to run short on time, but I wanted to ask you, no matter which of these technologies you use, if you use SAF, hybrid electric, hydrogen propulsion, no matter what we do, air travel is going to get more expensive if it's going to be more sustainable, right? There's no way to do this at today's costs.

Graham Warwick:

No, absolutely not. SAF price is tied to volume, but for bio-based, SAF, the cost driver is A the financial investment to build the refinery, which is huge. But with SAF there is some potential to convert existing refineries to produce biofuel as opposed to fossil fuel. So that's manageable. The biggest issue is just feedstock costs. When we started down this route with SAF, and you've got to remember, give the industry credit, it started this journey a long time ago. It saw this coming, and it started this journey a long time ago and a long time ago, SAF feedstocks were cheap. You could literally, you could get municipal solid waste, rubbish, garbage, you could get for nothing.

Now it's getting expensive. So your feedstock's getting expensive. Your facilities are expensive. If you go to e-fuel, which is the only way to actually pull carbon out of the atmosphere to match what you're putting into the atmosphere, you're talking about vast amounts of renewable energy that has to be built, and then huge numbers of facilities have to build. That money has to be recovered. And then you're talking about new technology, all these companies developing hydrogen, electric, whatever have got to make money. Got to recover their development costs. It's not going to be cheaper to fly sustainable.

William Moore:

Graham, I love the e-fuel that you're talking about, always been a big fan of that particular method of producing SAF. I think even that though, there are still concerns with that. For example, does the carbon, does it flow down into the lower levels of the atmosphere very well so that it can be captured, et cetera, et cetera?

Graham Warwick:

You're not removing the actual carbon dioxide molecules, you're removing the equivalent amount thereof. What United's argument is that for every kilogram we put into the atmosphere, we have got to pull a kilogram out of the atmosphere. They want to be able to go to a carbon capture company and say, "I am going to put this much carbon into the atmosphere on my operations. I will buy from you..." And they've already started this outfit in Texas. "I will buy from you credits that equal the same amount of carbon dioxide." So basically that's what you do. You go to Twelve, or whoever these companies are, and you say, "I will pump this amount of CO₂ into the atmosphere. I'm going to pay you to take that amount of CO₂ out of the atmosphere."

William Moore:

But over time, does it not sort of act as a CO₂ pump, if you will, pumping into the upper atmosphere, which can't be brought down particularly easily and basically-

Graham Warwick:

It doesn't matter because it's how much carbon dioxide do you put into the atmosphere? The airlines are putting CO₂ into the atmosphere today in a certain strata of the atmosphere and adding to the overall amount of CO₂. What the airlines want to do is remove that amount of CO₂. Now, your argument is actually also valid, is long term somebody's going to say, "Hang on a minute. It's not the same CO₂. You are putting the CO₂ into the upper atmosphere where it's doing more harm. Meanwhile, you're removing it from the air over Iceland, which where it's not doing very much harm at all." And that's the problem. We don't know how people will behave in the long term. All of this could change if... At the moment, you're absolutely right. People have got kind of climate ennui at the moment. That's why they're stopping buying electric cars and all that sort of thing.

They're just saying, "Oh God, I can't be bothered with all this doom and gloom," but as soon as their house burns down or their house disappears under the sea, or it gets burned in a wildfire in Canada or something like that, then their attitude changes and it will change over time. We just don't know how it'll change. And that's why we need to keep the pressure on now because we have no idea what's going to happen. If we take the foot off now, we won't even... If it goes to hell in a hand basket in 10 years time, we won't have a cat's chance in hell of doing anything about it. But if we keep the pressure on now, at least we're heading in the right-

William Moore:

Do you think that we've got the pressure on? In reality do you think-

Graham Warwick:

Yes, we have. It's just a very slow process. So the airlines have said all along they need multiple measures to incentivize SAF. A mandate in Europe is not enough. A tax benefit in the US is not enough. They've said all along, we need both, and we need other mechanisms. We need investment mechanisms and all that sort of thing. So they want to mandate in the US to go with a tax credit and they want a tax credit in Europe to go over the mandate, and they want government investment in facilities. So they've said all along, we need all of these things for it to happen. So they can't just sit back with a mandate or sit back with a tax credit and say, we've got it done, done and dusted. They've got to keep the pressure on, and that's when you're dealing with politicians, that's a years long process. We got a tax credit, we got a mandate after years of pushing for it. Now we're trying to go back and say, "Right, we've got those. Here's what we need next." It's a years long process.

Joe Anselmo:

Well, on that note, we will wrap up. I should note that Jens, and I will be heading to Dubai next week for the IATA AGM and the ATW Awards, so all the world's airlines will be gathering together again, and I'm sure we'll have much more to report on out of that event. But for now, that is a wrap for this week's Check 6. A special thanks to our podcast editor in London, Guy Ferneyhough. Thank you to our audience for your time, and we'll see you again next week for another Check 6.