Boeing boss dampens hopes for sustainable aviation fuels

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The Boeing boss has warned that new climate-friendly biofuels “will never catch up with the price of jet fuel,” pouring cold water on a central pillar of the aviation industry’s strategy to slash emissions.

Airlines say sustainable aviation fuels (SAF) – made from food waste such as cooking oil and plants – can lead to rapid decarbonization by replacing kerosene-type fuels, such as Jet A, used in aircraft today.

But SAF currently represents less than 1 percent of global aviation consumption and trades for at least double the price of traditional jet fuel.

“We will create size and become cheaper”, boeing said Chief Executive Officer Dave Calhoun. But he added: “No, I don’t think we will ever reach the price of Jet A. I don’t think we will ever. It’s more positive and it will have an impact, but it will be what it will be.”

Calhoun’s comments echo concerns raised privately in the industry about the difficulties — and expense — of decarbonizing an industry that, by creating mass transcontinental travel, was one of the oil-age’s greatest achievements.

“He’s saying the quiet part out loud,” said Robert Campbell, head of energy transition research at Energy Aspects, referring to Calhoun’s comments. “There are no cheap ways to do SAF – if there were, we’d be doing them already.”

Tax credits for U.S. SAF production were among the big clean-energy subsidies in the Biden administration’s sweeping Inflation Reduction Act (IRA), passed last year. The EU has also mandated airports to use increasing volumes of SAF to power jets in Europe.

The International Air Transport Association, a trade group comprising the world’s largest airlines, has set a goal in 2021 to achieve net zero emissions by 2050. SAF would account for 65% of the abatement, calculates Iata.

But the move would be costly, said Willie Walsh, the former chief executive of British Airways, which runs Iata.

“It’s achievable,” he told a Financial Times briefing last week. But “anyone who says the costs of transitioning to net zero will be low or unnoticeable is, I’m afraid, fooling themselves.”

“Passengers will have to pay higher rates. We have to be honest with our customers,” Walsh said. “Airlines are not in the financial position to absorb that cost, so it will eventually have to be passed on to consumers.”

The U.S. price of sustainable aviation fuel closed at $6.83 a gallon on Friday, while a gallon of jet fuel cost $2.34, according to energy data provider Argus Media.

Among the costs associated with moving to 100% SAF use is that all existing refueling infrastructure – at airports and on board aircraft – must be adapted to handle biofuel, which lacks the “aromatics” found in hydrocarbons which they help seal the pipes.

Boeing and its rival Airbus say they will make their aircraft capable of handling 100% SAF by 2030, up from 50% today. Boeing is also implementing a new modeling tool, Cascade, to help airlines and policymakers evaluate decarbonization methods.

SAF critics have also warned that as fuel demand increases, feedstocks from edible fats will run out quickly, creating new demand for crops, threatening forests, or creating an incentive to grow feedstocks on the land needed to supply food.

The Biden administration, which has issued a “major challenge” to industry to produce 3 billion gallons of SAF annually by 2030 from fewer than 16 million today, says the feedstock will come from agricultural waste produced along with corn and soybeans and woody biomass in the western states.

But analysts say until long-term demand for the fuel is secured, investors will be reluctant to invest capital in the new SAF production capacity, leaving costs high for a niche product.

Tom Vilsack, the US agriculture secretary, said the IRA tax credits would help industry overcome this investment hurdle, although price parity with jet fuel won’t be achieved anytime soon.

“In the beginning you will have the support and assistance of the government. . . to learn the efficiencies needed to ultimately bring that price down,” Vilsack told the Financial Times last week.

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