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EQ2 Report_Aviation biofuel

EQ2 Report_Aviation biofuel

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Published by: maximustb on Mar 31, 2011
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08/04/2011

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Managing the Future Today
insight
Sustainable Flying:
Biofuels as anEconomic and Environmental Salvefor the Airline Industry
EQ²
Email: enquiries@eq2.eu.comUK: 0845 371 2520
Internaonal: +44 7921 253 222
 
Managing the Future Today
insight
www.eq2.eu.com
Executive Summary
 
Feb 2010
 
The aviaon 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),starng from 2012, will put a direct cost on carbon emissions for all ights into or out of Europe. It is likelyonly a maer of me before most ights around the world will be similarly taxed. More than just the carbonrisks, the airline industry has been baered by unstable jet fuel prices and biofuels oer a potenally morestable (not to menon more sustainable) fuel source.This report provides a review of the development of biofuels for aircra and a crical examinaon of theeconomic and climate impacts of the aviaon industry moving towards the large-scale adopon of biofuels.Bio-derived Synthec Paranic Kerosene (Bio-SPK), made from Jatropha, Camelina, algae orhalophyte feedstocks, is the most promising candidate for alternave jet fuel and test ightshave successful proven its feasibility as a replacement for convenonal jet fuel.Although not commercially viable yet, the EU ETS oers a strong nancial incenve for theadopon 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 addional $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 costcompeve.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 operang cost of the EUaviaon industry by 2030. While airlines may be able to pass along some of these costs toconsumers, it is too compeve a market for the industry to reap windfall prots, parcularlyin later years when the industry needs to buy most (and likely all) of its carbon credits.Based on the Air Transport Acon Group (ATAG) industry body assumpons of 15% and 30%consumpon of biofuel in 2020 and 2030, the EU aviaon industry will be able to avoid 35million tonnes of CO
2
emissions in 2020 and 100 million tonnes in 2030. Such reducon inemissions is equivalent to $2.01 and $5.84 billion of savings on carbon expense in 2020 and2030, respecvely.Based on the same assumpon of aviaon biofuel consumpon, the global aviaon industrywill be able to avoid 129 million tonnes and up to 420 million tonnes of CO
2
emissions in 2020
and 2030, respecvely.
 
Managing the Future Today
insight
www.eq2.us.com
If the global aviaon industry is to achieve the Internaonal Air Transport Associaon (ATA)’saim of carbon neutral growth from 2020 solely by biofuel consumpon, it will need to useapproximately 46.1–72.0 billion gallons of biofuel in 2030, which is equivalent to 38-49% of total jet fuel consumpon.The internalisaon of billions of dollars carbon costs by the air transportaon industry will provide a sig-nicant nancial incenve for the development and adopon of new carbon reducon alternaves. Biofueloers the only near to mid-term soluon for the industry to signicantly reduce its climate impact, with theadded benet of diversifying away from non-renewable fossil fuels.
20102020
(15% biofuel)
2030 Lo
w(30% biofuel)2030 High(15% biofuel)1600
12008004000Av
oided CO emission
   C   O   e   m   i   s   s   i   o   n    (   M   i    l    l   i   o   n   m
   e   t   r   i   c   t   o   n   n   e   s
   t    )
Credit Cost ($ bn)Biofuel Cost ($ bn)
   E   x   p   e   n   s   e    (    $    b   n    )
Jet Fuel Cost ($ bn)$200$160$120$80$40$0
 2 0 2 0  ( n o  b i o f u e l )
 2 0 1 2 2 0 1 0
 2 0 2 0  ( 1 5 %  b i o f u e l ) 2 0 3 0  ( n o  b i o f u e l ) 2 0 3 0  ( 3 0 %  b i o f u e l ) 2 0 3 0  ( C  n e u t
 r a
 l  b i o f u e l )
 
2010 2020
(15% biofuel)2030 Low(30% biofuel)2030 High(30% biofuel)1600
12008004000Av
oided CO emission
   C   O   e   m   i   s   s   i   o   n    (   M   t    )

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