Air Fair?

The reason SAF is gaining momentum within the industry is because aviation alone contributes to 2 per cent of global CO2, and 12 per cent of CO2 in transportation. This has grown significantly overtime as technology – especially within the aviation industry – advances more and more. 

The Australian government has recognised the need for SAF within the industry, but has been slow in making moves. In 2013, a public report indicated Australia could establish its own SAF industry, but challenges such as cost, manufacturing and feedstock highlighted why advancements plateaued. It said Australia does have the “potential to involve feedstock that are cheaper, more plentiful” and more sustainable than natural oil feedstock. While the government has ramped up its focus on SAF in the past through funding and initiatives, one of the industry’s constraints is that it has relied on international sourcing instead of producing SAF locally. 

Numerous reports have been released about how Australia can manage its carbon footprint, but small and large airlines remain the heart of changing the nation’s approach in SAF. Some airlines have taken major steps in SAF and some have not. Qantas announced in 2019 it would commit to net-zero carbon emissions by 2050, a goal the Australian government announced this year. The state-owned carrier will invest $50 million over 10 years to help develop the industry and is replacing its Boeing 747 fleet with more fuel-efficient 787 Dreamliners, as the 747 jet slowly phases out in most airlines. 

“We want to do more, and faster,” says chief executive Alan Joyce. “We’re effectively doubling our carbon offsetting program from today and we’re capping our net emissions across Qantas and Jetstar from 2020 so that all new flying will be carbon neutral.” 

Qantas also announced this year its collaboration with BP, the oil and gas super giant, to work together on developing SAF in Australia. The partnership will explore renewable power solutions and generation, carbon management and emerging technology. Its subsidiary, Jetstar, is also a part of Qantas’ overall SAF solutions. 

Virgin Australia has been actively supporting the development of SAF since 2008, and in 2017 announced its initiative to trial alternative biofuels through Brisbane Airport’s fuel supply system. The initiative saw a US-based renewable fuel and chemical producer Gevo Inc supply the SAF at the airport. In 2019, the company announced it had reached its goal of 1 million kilometres of flights powered by SAF through the Gevo initiative, officially debuted in 2018. 

Industry groups and organisations have also been front-runners in making SAF accessible, especially in the last five years. Bioenergy Australia (BA), an organisation focused on nationwide renewable energy, created the Sustainable Aviation Fuel Alliance of Australia and New Zealand in 2017 when CEO Shahana McKenzie joined the organisation. Before, BA was solely a research and knowledge sharing hub, McKenzie tells Australian Aviation. Since she joined, she launched the alliance to develop a SAF industry for Australia and New Zealand, supplying and implementing it to become the new normal. 

The alliance works with government agencies to transform fuel production, policy, education and marketing within the two nations. Since then, 16 key industry leaders have become members, including Qantas, Virgin Australia, Neste, Air NZ, Sydney Airport, Cobham Aviation Services and others. These companies have joined in the last three years to be a part of advancing the SAF accessibility market. 

Cobham Aviation Services, Australia’s largest charter aviation service, joined the alliance in July. The director of business development in its regional services, Tim Pirga, says joining the alliance was an inevitable choice after discovering the company’s clients were becoming more sustainably-conscious. 

“When we were looking at preparing for the future and what our client’s needs were, coming up heavy was the focus in the energy and resources sector,” he tells Australian Aviation. “We are partnering with suppliers that are sustainable and always looking at ways to lower their environmental footprint, particularly around scope to sort of indirect emissions.” 

Cobham relies on three fundamental pillars in order to achieve sustainable aviation: recycle, replace and innovate. In 2019, the company launched a fleet replacement program, replacing its old British Aerospace 146’s Avro RJ100 aircraft with De Havilland Canada’s Q400 Turboprop and Embraer jets as they are considered more sustainable in its class. “So obviously, with bringing in those more sustainable aircraft types, that’s the first part,” he says. “So, we’re reducing the fuel burn where we can.” Pirga adds that joining the alliance was part of its ‘innovate’ pillar, participating monthly and addressing client pressure on incorporating sustainable options in its operations. 

As more industry leaders join the alliance, McKenzie says it shows the pandemic has triggered a shift within airlines, as companies want their customers back, and now need to work harder as consumers are far more sustainably-conscious.  

“Airlines at a global scale had realised that in order for them to get people back onto planes post-COVID, it was going to be essential that they had a really solid decarbonisation agenda, in order for people to justify getting back on particularly business travel,” she says. 

“Whilst yes, the airlines have definitely had one hand on survival, trying to keep things going, managing a daily kind of turbulence through the pandemic, their dedication to this area [SAF] has, I would say, actually increased.” 

Grazia Vittadini, chief technology officer at Airbus, told the World Economic Forum it would be “tempting” for airlines to go back to normal after the pandemic, but focusing on “profitability over commitments to achieve net-zero emission” would be a “false choice”. A growing proportion of Millennials dominate major airlines’ customer bases, who are likely to book with more sustainable brands that align with their values. 

The Bioenergy Australia roadmap for the incorporation of SAF follows the success in other nations leading the way. In 2010, California in the US adopted a 10 per cent reduction in carbon intensity target by 2020 under the Low Carbon Fuel Standard (LCFS). Since then, CO2 in California has been reduced by more than 30 million tonnes, leading to a new target of 20 per cent reduction in the state’s fuel carbon intensity by 2030. The European Green Deal in the European Union adopted legislative proposals in July to be implemented in European Climate Law to reduce greenhouse gas emissions by 55 per cent before 2030. 

McKenzie says Australia has just as much opportunity to develop biofuel targets as the nation produces some of the most effective stocks for sustainable aviation fuel: sugar and starch. The Australian sugar industry produces raw and refined sugar from sugarcane, and around 95 per cent of it is grown in Queensland, and the rest in NSW. More than 80 per cent of sugar produced in Australia is exported internationally, making the nation the second largest sugar exporter in the world, following Asian markets. 

According to traditional laws, only up to 50 per cent of SAF can be incorporated into fuel blends in 2021. If sugar were to be transformed into an approved fuel, it would be blended into a petroleum-based jet fuel of up to 10 per cent. The process would include modifying yeasts to ferment sugars into a hydrocarbon molecule called farnesene, which can be used as a blendstock biofuel. While there are numerous other biofuel products at hand, McKenzie said Australia has the largest advantage with its abundant sugar stock. 

“A short-term investment or short-term transition is an investment that needs to happen now”

In 2020, the Queensland state government granted $159,000 into the transformation of sugarcane as part of sustainable aviation fuel. The grant came from its $5 million Waste to BioFutures (W2B) fund. The funding supported the same company that worked with Virgin in 2019 – Gevo Inc – to research into sugarcane as SAF production. 

“This new research project will see Gevo collaborate with QUT to turn Queensland sugar cane waste and wood waste into sustainable jet fuel,” says Minister for State Development Cameron Dick. 

While the pressure for Australia to catch up to other nations is growing, the government continues to fall back onto inhibitors such as cost. McKenzie says that Australia should follow the lead of other nations, such as the UK, India and numerous Scandinavian countries that have invested into SAF and set common mandates and targets. She says if Australia finds the right “fit within the current framework”, the industry could support thousands of jobs, especially in regional areas. 

“Now, nobody’s going to build a new oil refinery in Australia, sustainable fuels are the fuels of the future,” she says. “No one’s going to be flying on a plane that isn’t electric or hydrogen in the next 40 years. 

“A short-term investment or short-term transition is an investment that needs to happen now, that is going to sustain an emissions pathway for the next few years.” 

A briefing from IHS Markit’s Climate and Sustainability Service in July said that as more companies invest in SAF – which is expensive – the additional costs will filter to customers as tickets will skyrocket in price. Per the EU proposals, mixing 63 per cent SAF with common jet fuel would increase ticket prices on a flight from Amsterdam to New York by around $120, according to the data findings. While this would impact consumer spending, it also is heavy on the pockets of airlines as SAF is around five times the price of common jet fuel. 

“It must also be considered that airlines are operating in a notoriously low-margin, capitalintensive environment, and many have precarious financial positions as a result of the severe disruption they have faced in the past year,” said IHS Markit analysts in the report. “In this context, it is hard to foresee any airline voluntarily making a large volume commitment to SAF as long as the price differential with conventional jet fuel remains substantial.” 

As travel restores to prepandemic levels, McKenzie says ideally Australia would develop enough SAF refineries in the country while oil refineries become more and more obsolete. Long term, the reliability on international importing of SAF will be phased out as Australia takes advantage of its own feedstock, she says. In the lead up to the last federal election in 2019, the Bioenergy Roadmap was developed but is still yet to be released, barring Australia from moving forward in SAF development. 

“Our expectation is that, it’s going to be released in the very near future, and that it is going to identify the key opportunity areas in Australia for deployment by energy … sustainable aviation fuel should rank highly in those opportunities,” McKenzie says.