As the global climate continues to deteriorate, increased regulatory, investor, and customer pressure is being put on companies to accelerate the decarbonization of their operations. Aviation is not exempt from this pressure, and nor should it be. However, aviation emissions are more costly and harder to abate than other sectors.

For New Zealand, one of the most geographically remote countries in the world, aviation is the way our people connect with each other and the world.

Aviation is fundamental for our tourism and trade, both key parts of the New Zealand economy. For us, decarbonizing our aviation sector will not only help New Zealand maintain its competitive edge and reputation as an environmental leader, but it’s also essential to secure ongoing access to international markets.

The importance of alternative jet fuels

Alternative jet fuels, or Sustainable Aviation Fuel (SAF), as it is most commonly known globally, are critical to the aviation industry’s ability to transition to a lower carbon future. Retaining the fossil-fuelled operating model isn’t an option in a world increasingly experiencing the devastating impacts of climate change.  

Alternative jet fuels (SAF) are made from renewable or waste sources such as waste oils, biomass, or synthetic gases, and are a liquid fuel alternative to conventional fossil jet fuel.

Alternative fuels are not perfect and rigour needs to be applied to their sustainability assessments (and claims). However, such fuels can potentially reduce the lifecycle greenhouse gas emissions of aviation by up to 80%, depending on the feedstock and production process.

Important for an industry that is rightfully heavily regulated around safety, these alternative fuels are also compatible with existing aircraft engines and infrastructure and can be blended with conventional jet fuel and used without any modifications to the aircraft.

While some airlines, including Air New Zealand, could likely use battery electric or hydrogen-powered aircraft for shorter-range flying in coming years, alternative jet fuels are the only current lever the sector has to reduce long-haul emissions. And that’s important when you’re located at the bottom of the earth, at the end of the supply chain. 

Despite the benefits of these new fuels, production and supply are still extremely limited. It makes up less than 1% of the total global jet fuel supply currently and is expected to reach only 2% by 2025. Consequently, the price is high, ranging between two to five times that of fossil jet fuel at the moment, depending on the market. For aviation to reach its net zero carbon emissions goals by 2050, the alternative jet fuel industry has to scale significantly.

What it takes to make a difference

Air New Zealand is committed to decarbonizing our operations as quickly as we can. For us, this means taking a very proactive approach, including where we can, supporting the development of alternative jet fuels.

We are actively looking for more alternative fuels through a global Opportunity Statement, issued in March this year, which signaled our long-term interest and commitment to the market. We’ve had a good response, and we continue to welcome discussions with new or existing producers of alternative jet fuels from around the world.

The airline has also invested in industry-wide sustainable flight initiatives and co-funded two feasibility studies on the production of alternative jet fuel domestically in New Zealand. Our view is that cross-sector collaboration is critical to scaling up the development and deployment of production and supply.

Policy support is critical to bridge the cost gap and make alternative jet fuels more accessible. This support could take various forms, including mandates accompanied by subsidies, grants, contracts for difference, loans and/or tax credits. Long-term and strategic policy support sends a strong demand signal to producers and investors and supports a level playing field between alternative and conventional jet fuel. This in turn should foster greater innovation and competition and lower production costs and prices over time.

Some countries and regions, such as the U.S. And Europe, are already implementing such policies as part of their climate action plans. These are proving to be very important in advancing the industry. For example, when we recently purchased 9 million liters of SAF produced in Singapore, the uplift is from LAX due to the state and federal incentives in place that make the purchase more commercially viable.

Scaling up alternative jet fuels, advancing new technologies, and ensuring sustainability requirements are robust and transparent will take a coordinated global effort. At Air New Zealand, we know we must play our part in this collective effort. We are grateful for the support and partnership of our customers, suppliers, and airline peers who share our vision and our values. Together, we can make a difference and reach our 2050 net zero carbon emission goals.

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