By Robert Thomson and Adam Healy

Aviation needs a sustainability revolution. In 2019, civil aviation made up ~3% of global carbon emissions – but while other industries reduce their emissions, aviation's share is expected to keep growing once the industry recovers from the COVID crisis. Electrical propulsion, hydrogen fuels and sustainable aviation fuels (SAFs) will all have a role to play in decarbonising the industry.

With billions invested in R&D and constant fleet renewals conducted by airlines globally, the aerospace and aviation sectors have improved aircraft efficiencies at ~1% p.a. for many decades. This is a huge achievement – aircraft today are far more fuel efficient than they have ever been, enabled by high bypass ratio gas turbines, composite aerostructures, and advanced airline operations.

However, despite current lows due to the COVID crisis , the aviation sector is expected to return to growth far in excess of ~1% p.a., meaning that its emissions will continue to grow in the long-term. By 2050, without intervention, aviation's emissions are expected to triple.

At the same time, the industry has set itself a target to reduce emissions to half of 2005 levels by 2050.

To meet this target and decarbonise, aviation will need to adopt revolutionary measures. Alongside electrical propulsion and hydrogen fuels , Sustainable Aviation Fuels (SAFs) will have a crucial role to play.

The benefits of SAFs

SAFs are a wide range of kerosene alternatives produced through chemical reactions from various feedstocks, both biological (e.g. Algae) and synthetic (e.g. Hydrogen and CO2). SAFs can be a "net-zero" decarbonisation option: while CO2 is still produced during aircraft operation through burning SAFs, atmospheric CO2 is absorbed in their production. In this way, CO2 emissions on a net basis are reduced, or could even hit zero with the correct production and operational processes.

By nature, SAFs have very similar physical characteristics and energy content as kerosene, so do not have the gravimetric or volumetric density limitations suffered by batteries or hydrogen fuels, respectively, as energy storage options . SAFs are thus uniquely suited to decarbonising aviation segments inaccessible to electric or hydrogen aircraft. Furthermore, SAFs are already in production today, with about 50 m litres produced per annum.

Barriers to overcome

However, there are significant barriers to overcome before SAFs can be utilised at scale. Currently, SAF production would only account for ~0.01% of annual aviation fuel demand, and thus a significant supply chain ramp-up is required. Furthermore, SAFs are currently 2x to 5x more expensive than conventional kerosene, making any case for SAFs extremely negative considering economics alone. Compounding both challenges is the fact that most SAFs require biological feedstocks (such as sugar cane or algae), meaning that SAFs may compete with food crops, or exacerbate global water shortages, unless produced sustainably.

Fortunately, SAFs can be manufactured in a range of processes, or pathways, each with different costs and levels of sustainability.

Roland Berger's SAF Sustainability Index

We have compared each SAF production pathway on its Sustainability (considering inter alia CO2 reduction potential, non-CO2 emissions, feedstock availability, land/water usage, etc) and its Cost (considering capital expenditure, feedstock costs, and operational costs).

Power-to-Liquid fuels produced using the Fischer-Tropsch process clearly emerge as the most sustainable option, driven by their lack of biological feedstock (only requiring access to atmospheric CO2, water and renewable electricity as feedstocks). While HEFA fuels made from waste oils are currently the least expensive, Power-to-Liquid fuels are also expected to become very cost-effective by 2030 as renewable energy costs continue to reduce.

The way forward

In the near-term, the industry should capitalise on SAFs being available before electric and hydrogen technologies to contribute towards sustainability targets. In the medium-term, as hybrid-electric technologies start coming to market, they should be designed to be SAF-compatible, allowing a double environmental benefit to serve the narrowbody/Middle-of-the-Market sector. In the long-term, SAFs will likely remain the only viable solution for sustainable long-haul aviation, particularly for widebody aircraft.

Given their clear role in helping to address climate change, executives should allocate resources to ensure the potential of SAFs – in particular Power-to-Liquid fuels – is fully exploited, in parallel with investments into electric and hydrogen-powered flight.

How will the industry evolve due to become more sustainable? How will sustainable aviation fuels impact your company? How may sustainability targets and business cases be impacted by the ongoing COVID-19 crisis? We invite you to contact us at EP@rolandberg.com, or connect with Robert Thomson or Nikhil Sachdeva via LinkedIn to discuss your thoughts.