Boeing’s boss has warned that new climate-friendly biofuels “will never reach the price of jet fuel”, throwing cold water on a central pillar of the airline industry’s strategy to cut emissions.
Sustainable aviation fuel (SAF), made from food waste such as cooking oil and plants, could rapidly decarbonize by replacing kerosene-based fuels such as Jet A used on aircraft today, airlines say.
But SAF currently accounts for less than 1% of global aviation consumption and trades at least twice the price of conventional jet fuel.
“We’re going to scale up and get more economics,” Boeing CEO Dave Calhoun said. But he added: “No, I don’t think we’ll ever get to Jet A prices. I don’t think it’ll ever be.” It’s going to happen. It’s more positive, it’s going to have an impact, but it’s going to be what it is.”
Calhoun’s comments echo concerns raised privately by the industry, which represents one of the crowning achievements of the oil age in creating mass transcontinental travel, about the difficulty and expense involved in decarbonizing an industry.
“He’s saying it out loud,” Robert Campbell, head of energy transition research at Energy Aspects, said of Calhoun’s comments. “There’s no cheap way to do SAF — if there was, we’d be doing it Done.”
The tax credit for US SAF production is one of the huge clean energy subsidies in the sweeping Inflation Reduction Act (IRA) that the Biden administration passed last year. The EU is also requiring airports to use increasing amounts of SAF to fuel European jets.
The International Air Transport Association, a trade group that includes the world’s largest airlines, set a goal in 2021 to achieve net-zero emissions by 2050. Iata estimates that SAF will account for 65% of the reduction.
But Willie Walsh, the former chief executive of British Airways, which runs Iata, said the move would be costly.
“It’s achievable,” he told Financial Times Conference last week. But “anyone who says the costs of transitioning to net zero will be low or not noticeable is probably deluding themselves”.
“Passengers are going to have to pay a higher fare. We need to be honest with our customers,” Walsh said. “Airlines can’t afford to cover that cost, so ultimately it has to be passed on to consumers.”
U.S. sustainable aviation fuel prices settled at $6.83 a gallon on Friday, compared with $2.34 for a gallon of jet fuel, according to energy data provider Argus Media.
One of the costs associated with going 100% SAF is that all existing fueling infrastructure – at airports and on aircraft – must be adapted to handle biofuels, which lack the properties found in hydrocarbons that help seal pipelines “Aromatics”.
Boeing and its rival Airbus say their planes will be able to handle 100% SAF by 2030, up from 50% today. Boeing also launched Cascade, a new modeling tool to help airlines and policymakers assess decarbonization options.
Critics of SAF also warn that feedstock from food fats will quickly be depleted as demand for fuel increases, creating new demand for crops, threatening forests, or creating feedstock to grow on land needed to supply food motivation.
The Biden administration has set a “grand challenge” for the industry to produce 3 billion gallons of SAF per year by 2030, up from less than 16 million gallons currently. The Biden administration says the feedstock will come from agricultural waste produced alongside corn and soybeans, as well as woody biomass from western states.
But analysts say investors will be reluctant to plow money into new SAF capacity until long-term demand for the fuel is assured, keeping costs high for the niche product.
U.S. Agriculture Secretary Tom Vilsack said the IRA tax credit will help the industry overcome investment hurdles, though price parity with jet fuel won’t be achieved anytime soon.
“In the beginning you will have support and help from the government . . . to understand the efficiencies that are needed to eventually bring prices down,” Vilsack told the Financial Times last week.
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