Managing the Future Today
The aviaon industry will need carbon-neutral biofuels as a feasible and desperately needed way to reduceits reliance on fossil fuels and cut its greenhouse gas emissions. The EU Emissions Trading Scheme (EU ETS),starng from 2012, will put a direct cost on carbon emissions for all ights into or out of Europe. It is likelyonly a maer of me before most ights around the world will be similarly taxed. More than just the carbonrisks, the airline industry has been baered by unstable jet fuel prices and biofuels oer a potenally morestable (not to menon more sustainable) fuel source.This report provides a review of the development of biofuels for aircra and a crical examinaon of theeconomic and climate impacts of the aviaon industry moving towards the large-scale adopon of biofuels.• Bio-derived Synthec Paranic Kerosene (Bio-SPK), made from Jatropha, Camelina, algae orhalophyte feedstocks, is the most promising candidate for alternave jet fuel and test ightshave successful proven its feasibility as a replacement for convenonal jet fuel.• Although not commercially viable yet, the EU ETS oers a strong nancial incenve for theadopon of bio jet fuels. Based on the current EU ETS price for carbon in 2012 of €15 and2009 average jet fuel price of $1.69 per gallon, every gallon of jet fuel burned would incurcarbon costs of an addional $0.21, which is a total cost of $1.34 billion across the industry.This is a premium of 12.4% that would not apply to biofuel, but would help make it more costcompeve.• Further out, the EU ETS will impose costs of $9.56B in 2020 and $19.48B in 2030 on the airlineindustry. This will be equivalent to approximately 3.6% of the total operang cost of the EUaviaon industry by 2030. While airlines may be able to pass along some of these costs toconsumers, it is too compeve a market for the industry to reap windfall prots, parcularlyin later years when the industry needs to buy most (and likely all) of its carbon credits.• Based on the Air Transport Acon Group (ATAG) industry body assumpons of 15% and 30%consumpon of biofuel in 2020 and 2030, the EU aviaon industry will be able to avoid 35million tonnes of CO
emissions in 2020 and 100 million tonnes in 2030. Such reducon inemissions is equivalent to $2.01 and $5.84 billion of savings on carbon expense in 2020 and2030, respecvely.• Based on the same assumpon of aviaon biofuel consumpon, the global aviaon industrywill be able to avoid 129 million tonnes and up to 420 million tonnes of CO
emissions in 2020
and 2030, respecvely.