Listen in as Aviation Week Network's Karen Walker sits down with IATA Director for Net Zero Transition Hemant Mistry, who explains what’s needed to grow the global supply of sustainable aviation fuel. 

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Rush Transcript

Karen Walker:

Hello everyone, and thank you for joining us for Window Seat, our Aviation Week Air Transport Podcast. I'm Air Transport World and Aviation Week Network Air Transport Editor-in-Chief Karen Walker. Welcome on board. And I'm absolutely delighted this week to be joined by an absolute expert in aviation sustainability. Hemant Mistry is the Director Net Zero Transition at the International Air Transport Association, or IATA.

Hemant, welcome to Window Seat and thank you for your time today. I would really just like to start by letting you just talk a little bit about how important the supply of sustainable aviation fuel, or SAF, is to the air transport industries, the airlines industry's goal to be carbon net-zero by 2050. First, there's really two things. Sustainable aviation fuel is very important to that, but there's very little supply at the moment of that fuel. The airlines are using every drop they can, but the problem is about growing the supply. Can you just talk to me a little bit, maybe just give us a bit of numbers of where we are now with what's available and where we need to be in terms of our 2030 and 2050 goals?

Hemant Mistry:

If we step back, in 2021, airlines and all IATA members committed to net-zero 2050 and we've been doing a lot of work internally to understand what that means and how we're actually going to get there. And SAF, sustainable aviation fuels, is by far our biggest lever to get there and actually according to our projections, we would see that SAF would be responsible for delivering over 60% of the carbon abatement in 2050. So this is a really important facilitator for us for net-zero and one of the reasons why it's so important and also so interesting for us is because SAF offers a drop-in solution. So what it means is that we can use existing aircraft, we can use existing fuel supply networks, we can use the existing infrastructure to basically move aviation to a more sustainable environment and in fact we can move to a large part, as I explained, to net-zero using SAF. So this is why it's so important.

Why is it in such scarce supply at this moment? Well, one is because we're starting off in terms of the ramp up itself. SAF is an output. When it's developed through biomass as a feedstock, it's an output from a renewable fuel refining process and those refineries are going into place around different parts of the world. So while now we may have a handful, maybe slightly over 10, between 10 and 15 around the world of these renewable fuel refining production capabilities which can also develop SAF, by 2030, we expect there to be over 150 around the world. So that's a great development.

The focus for us is try and make sure that these facilities do produce SAF as part of their product portfolio and there is a fair proportion of that as well. So if we do that, our projections show that through these facilities we'll be on the right track to meet our 2030 milestones and that will also make sure that we meet what is necessary for different policy developments around the world, including what's been produced through ICAO recently. In November, the conference in Dubai, there was a key development as this conference is the ICAO conference on aviation and alternative fuels. It's the third iteration of that. And this conference was able to produce a declaration, a resolution they call it, which is basically saying that there is a vision for a 5% reduction in terms of emissions through the use of SAF and lower carbon aviation fuels by 2030.

This is a good development because what this is saying is the States and ICAO are all going to work in the same direction to help facilitate this process. That's one policy objective, which is a global policy. There's also various other policy developments in the US. There is the US Grand Challenge, which is really a collaborative effort and it's a good initiative between industry, including feedstock providers and producers and suppliers and airlines and the government to see what can really be done to support the ramp up of solutions, technologies and scale up into functioning markets. So that's a really good challenge and I think that's going to be very successful. And there's other solutions which have been pushed forward in places like Europe, such as the ReFuelEU, which is more of a mandate on suppliers to produce SAF.

Our focus is really on trying to make sure that the right incentives are there because what we want is functioning markets and as an airline community representing the airline community through IATA, what we want is basically to get to a stage where we have commercially viable markets for the production supply of SAF and then we can run business as usual through our normal processes. That's where we should get to.

Karen Walker:

Right. So you need to broaden, not you, IATA, the world needs to broaden the supply and types of feedstocks, yes, and also where SAF is produced because there's a lot of gaps around the world where this doesn't even exist as an industry. That really comes down to government policies around the world. So how critical do you see governments being involved in all of this and how are you helping for them to understand the economic benefits of doing this?

Hemant Mistry:

That's a really good question. I think the output from the ICAO SAF conference was really important because that is really a conference which has now been led by the 193 member states of ICAO. They have bought into the notion of supporting this ramp up of SAF, which is very, very important. So we would expect them to support going forward in terms of the right policy decisions and also to support training of local stakeholders to make sure everyone's up to speed. They also have an initiative which is called Finvest, which is really almost like a matchmaking facility to bring together producers and other stakeholders and financiers so we can really develop a ramp up.

I also look at this whole landscape of SAF ramp up not so much as a challenge to convince people, but more of an opportunity that people, now different governments and different stakeholders, should be able to recognize and utilize because you can through this process start to really capitalize on new feedstocks which haven't really been used in previous solutions. So we can find also solutions which can support local economies as well, and at the same time be able to create renewable energy solutions and energy and fuel solutions. We as aviation will benefit for sure. So we know the transport modes, but so will local communities. So there's a great opportunity here, which I think we all need to focus on.

Karen Walker:

You have talked about a SAF accounting system. Can you just summarize what that is and why that's important?

Hemant Mistry:

Yeah, there's different modalities to it, but basically fundamentally what we need to make sure is that there is a global set of rules which everyone understands to make sure that the environmental attributes from the feedstock generation all the way through to the supply and all of those things are clearly registered. So there's no double claiming in terms of the actual merits of using SAF, but also it allows flexibility into a unlock where the feedstock is actually generated, where the production actually happens and where the actual flights are undertaken as well.

This is really important because we are really focused on global distribution. We are a global business and we don't have so much time to make this work, but we do have enough time to have a functioning, credible accounting system that makes sure everything is tracked, there's notable counting, and we're able to not have supply lines which are required just to transport things from one place to another, which is not really necessary because the environmental benefit's going to be the same without doing that really. So I think we need to be really efficient and we need solutions like the SAF accounting framework, which will best help us create decentralized SAF production and use. Really important. This is not just something which is specific for aviation. This type of solution has been used in electricity networks when you're looking at renewable energy as an import as well. So this has been used in different markets and this is something which is a key facilitator to really ramp up the supply and use of SAF.

Karen Walker:

Hemant, the goals, as we've said, they're challenging. SAF is still a lot more expensive than a jet fuel, but overall where's your confidence level in both meeting those targets and ultimately seeing SAF get to prices more what the industry is used to.

Hemant Mistry:

So the confidence level in terms of whether this is all meetable and so on, we spent a lot of time this year doing bottom-up modeling looking at the overall aspects for energy transition and how you get to net-zero 2050. So we modeled everything in terms of technical solutions, availability, policy, financing capabilities and all those things. And this was the first time I think the industry has actually done a bottom-up model to see how all these different components build up to net-zero. We are reasonably confident now that we have actually have a good pathway and workable solutions to get there. Of course, there's a lot of effort required to make sure we're able to tick all those boxes and that will continue from now all the way through to 2050 and way beyond, but I think we all accept that. I think that is something which is very, very doable.

In terms of price, because SAF is such a small volume right now and also because the feedstocks that we're primarily using at this stage is quite capacity constrained, the price is inevitably quite high and that's problematic. However, we are already diversifying into different feedstocks and different pathways and that is really going to unlock volume and also different cost structures in terms of feedstocks and so on. And that's really going to drive a better price proposal and offering for airlines as well, which is a great thing, I think.

Karen Walker:

Hemant, thank you. It's been fascinating to catch up with you on this. I mean, I think it's probably fair to say this is probably the biggest challenge and most interesting development for the airline industry to deal with probably since the industry began with Wilbur and Orville probably. But it does seem like there's a lot of people now really involved in this.

Hemant Mistry:

Yes, indeed. Yeah. I totally agree with you, this is the biggest challenge we have faced in our history, but there is a lot of momentum and the airline industry across the board is engaged to really make this work. And it's really interesting to see the different projects that are being progressed and the different initiatives and so on. And I'm really looking forward to continue to make progress on this.

Karen Walker:

Hemant, thank you very much for your time today and, of course, thank you to our listeners. You can subscribe to us each week on Apple Podcasts or wherever you listen. Also thank you to our producer Corey Hitt. Until next week, this is Karen Walker disembarking from Window Seat.