The clock is ticking. The COP26 climate summit has proven now is the time for countries and corporations to accelerate action on climate change. The 2015 Paris Agreement set an ambitious goal to limit global warming to below 2 degrees Celsius above pre‐industrial levels and pursue efforts to limit it to 1.5 degrees Celsius. About 200 countries have committed to reaching net-zero carbon by 2050 – and many global organizations are making a similar pledge. Incredibly, a majority of people now live in countries with net-zero targets.
Despite these positive actions, much more needs to be done. “On current unconditional pledges, the world is heading for a 3.2 degrees Celsius temperature rise,” the United Nations Environment Program predicts.
Currently, air travel accounts for around 3% of global carbon dioxide emissions. If action isn’t taken now, it could represent up to 22% of global emissions by 2050 as other industries decarbonize at a faster pace. Promisingly, the International Air Transport Association (IATA), inclusive of nearly 300 airlines, approved a resolution for the global air transport industry to achieve net-zero carbon emissions by 2050. This commitment will align with the Paris Agreement goal for global warming not to exceed 1.5°C.
A recent white paper entitled “Decarbonizing Aviation: Cleared for Take-off” asserts that aviation is an industry that needs to escalate its efforts in order to achieve net-zero emissions by 2050. More than 100 aviation industry executives and experts, including American Express Global Business Travel (GBT), shared their perspectives for Decarbonizing Aviation, identifying barriers and solutions for the aviation sector to reach net zero by 2050. The “flight plan” for decarbonizing aviation includes 15 recommendations for action with sustainable aviation fuel (SAF) – a clean energy fuel made from renewable and waste sources – emerging as the most promising solution.
SAF demand from corporate travel, quite literally, sits at the top of the list. Alternative propulsion technologies such as hydrogen- and electric-powered planes are important but not expected to deploy at scale for a couple more decades. New fueling or charging capabilities would have to be built for hydrogen and electric‐powered aircraft.
Meanwhile, SAF can be used immediately as a drop-in fuel blended with conventional jet fuel without the need for a fundamental change in infrastructure or aircraft design. More than 250,000 flights have already blended SAF with fossil-based jet fuel. SAF is the key to net-zero long-haul flying.
Despite all the benefits of SAF, supply remains extremely small – it represents less than 0.1% of aviation fuel. Price is the primary constraint on both supply and demand. SAF currently costs two to eight times more than conventional jet fuel. Consequently, airlines can only afford to make small volume commitments to buy SAF. This, in turn, means SAF producers cannot attract the capital required to invest in additional production facilities or technologies needed to achieve economies of scale.
The role of corporate demand
Corporate demand can play a pivotal role in stimulating demand for flights that use SAF. Business travel represents a significant and concentrated proportion of global air travel, which means that a relatively small number of customers could drive meaningful change in short order.
Many companies have introduced sustainability initiatives into their corporate travel programs, such as offsetting programs that allow organizations to compensate for the carbon emissions, they consume for business trips. We ourselves have taken this approach. Effective 2019, GBT became one of the first global travel management companies to become carbon neutral for our travel activities. This year, we launched an offsetting platform to help our business partners reach their carbon targets.
While carbon offsets are a vital part of the solution, they alone will not solve the climate crisis. A more direct way for companies to mitigate carbon emissions related to air travel is through a concept known as insetting, in which they work to reduce their carbon footprint within, not outside, their supply chain – such as investing in cleaner energy sources to fuel air travel like SAF.
Our solution to the SAF supply issue
To help solve SAF supply-and-demand constraints, GBT and Shell are designing a program to unite airlines and the corporations that depend on air travel to unlock investment and scale up the commercialization of SAF.
Through this new business model built by GBT and Shell, corporate and airline commitments will help de-risk investment in SAF production plants and new technologies, thus supporting the development of new production facilities and delivering increased SAF supplies.
The GBT-Shell offering will function as a turnkey solution for corporations who are looking to continue to fly but emit less. This program will enable airlines and corporations to pursue carbon reduction targets and accelerate the adoption of SAF.
“Travel is a force for good, connecting people across the world and generating global prosperity. Aviation, in particular, has an unparalleled power to make the world accessible for everyone. But with that power comes responsibility: industry actors can make travel more sustainable with carbon offsets and carbon insets, with sustainable aviation fuel emerging as the most promising decarbonization solution,” said Si-Yeon Kim, Chief Risk & Compliance Officer and Executive Chair of ESG at GBT. “Corporate investment in credible carbon offsets and SAF can restore consumer confidence and trust in the intrinsic value of travel. Now is the opportune time to capitalize on these opportunities and we can solve this together.”