Airlines have secured global forward purchase agreements for Sustainable Aviation Fuel worth $45 billion, according to an announcement made by the International Air Transport Association.
The Times reported that the International Civil Aviation Organisation held the Third Conference on Aviation Alternative Fuels in Dubai on Friday when this information was revealed.
The conversations mostly focused on how important it is for governments to support aviation’s decarbonization efforts with positive legislation.
IATA highlighted examples of airlines vertically integrating into the supply chain, indicating an increasing trend. Some airlines have shown their commitment to these initiatives by investing equity and risk capital in SAF projects.
Airlines have signed forward purchase agreements for SAF valued at approximately $45 billion in total, according to IATA, which is significantly more than today’s SAF availability.
“This is required because, in keeping with their pledge to achieve net zero carbon emissions by 2050, airlines have a significantly higher demand for SAF than there is supply of it at the moment, which will only account for 0.2% of jet fuel used by airlines in 2023. Major demand signals have been provided by airlines to the market for SAF manufacture.”
Airlines paid an extra $500 million in 2022 to obtain all that SAF generated, considering the fuel’s higher cost compared to conventional jet fuel.
The Director General of IATA, Willie Walsh, underlined that governments need to convert the CAAF/3 declaration into workable plans that support SAF production all around.
However, IATA Director General Willie Walsh clarified the necessity for governments to implement the CAAF/3 declaration by enacting laws that increase SAF production in all of its shapes and forms.
“The demand for SAF manufacture is clearly present, but the market is not growing quickly enough. Globally, SAF is essential, thus it is imperative that the correct supportive policies be implemented now. These policies should encourage innovation, boost output, encourage competition, and draw in funding.”
It is critical to strike a balance between current and future policy support for different energy sources, with a focus on renewable energy sources.
The goal is to increase SAF production worldwide by implementing beneficial legislative measures that do not penalize the sector.
IATA’s Senior Vice President of Sustainability and Chief Economist, Marie Owens Thomsen, said that the sector is prepared to accept higher SAF output.
She outlined the governments’ and the entire value chain’s joint role in reaching the aviation industry’s decarbonization targets by 2050.
She also noted that government support would pave the way for private investment. Thomsen, “It is essential that governments play their part, and we will certainly play ours,” she added.
