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Sustainability chief calls for tax on oil companies

Crowd, Person, Adult Natalia Mroz/IATA via Flickr
Dr Marie Owens Thomsen said governments need to make investing in fossil fuels less attractive
  • Oil companies could be taxed
  • Sustainable fuel production trebles
  • SAF production needs huge boost

Oil companies should be taxed and renewable alternatives incentivised in order to meet ambitious sustainability targets in the aviation industry, according to the sector’s industry trade body.

“It’s too easy today to make money by drilling for oil,” said Dr Marie Owens Thomsen, senior vice president for sustainability and chief economist at the International Air Transport Association (IATA). 

Speaking at the World Air Transport Summit in Dubai, she said: “It’s very difficult to make money in SAF [sustainable aviation fuel]. Governments need to make it less attractive to invest in fossil fuels.”

IATA this week revised its production targets for SAF from 63 million tonnes by the end of this decade down to 51 million tonnes.

SAFs are liquid fuels that are used in commercial aviation. They can reduce CO2 emissions by up to 80 percent. 

They can be produced from a number of sources or “feedstock”, including waste fats, oils and greases, municipal solid waste, agricultural and forestry residues and wet wastes, as well as non-food crops cultivated on land that has little potential for profit. 

They can also be produced synthetically via a process that captures carbon directly from the air.

Willie Walsh, the IATA director general, said he expected SAF production to treble this year to 1.5 million tonnes, although this would make up only 0.5 percent of the industry’s total fuel needs.

SAF is expected to account for up to 65 percent of the total carbon mitigation needed to achieve net zero carbon emissions in air transportation by 2050.

In order to meet this target, production would have to be accelerated by a factor of 1,000.

But Walsh told reporters on Monday this would not come at the expense of the industry’s growth.

“No, I don’t see that happening,” he said. “When I travel around the world, meet with airline CEOs, talk to regulators, talk to politicians outside of Europe, they have a huge appreciation for the value that new connectivity will bring to their economies.”

Crowd, Person, Adult Yvonne Manzi Makolo, CEO of RwandAir, said that in Africa fuel made up to close to 40 percent of aviation costs in 2023Natalia Mroz/IATA via Flickr
Yvonne Manzi Makolo, CEO of RwandAir, said that in Africa fuel made up almost 40 percent of aviation costs in 2023

In 2023 SAF production doubled to 600 million litres from 300 million litres in 2022, representing 0.2 percent of global jet fuel use.

Last month Emirates airline took delivery of more than 3,000 metric tonnes of neat SAF, blended with conventional jet fuel, from Shell Aviation, which will be supplied into the fuelling infrastructure of London Heathrow Airport until the end of the summer.

However, SAF is up to four times more expensive than conventional jet fuel.

“I’m sorry to say, but the transition to net zero will require customers to pay,” said Walsh.

IATA expects fuel to make up 31 percent of aviation costs in 2024. However, Yvonne Manzi Makolo, CEO of RwandAir and chairperson of the IATA board of governors, said in Africa that figure was closer to 40 percent.

Walsh said that industry revenues will be close to $1 trillion in 2024, but expenses will also increase to a record high of $936 billion, representing a net margin of just over 3 percent.

Tim Clark, president of Emirates, said ticket prices would not necessarily increase if enough SAF can be produced at scale, but cautioned that the issue was being treated as a “political football” by governments across the world.

“At the moment, we’ve got a long journey ahead and it’s difficult and it’ll be expensive, but our main goal is to try and get the amount of SAF into the aviation industry at the levels that everybody wants, the consumers want, the governments want. And that’s not an easy task.”

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