Strategic decisions on EU aviation biofuel deployment urgently required to overcome cost obstacle
Tue 28 Feb 2017 – Despite efficiency improvements and a global agreement to stabilise carbon emissions from international aviation at 2020 levels, due to rapid growth in the sector there is likely to be a gap of 232 million tonnes of CO2 between 2020 and 2030 within the EU alone. Although carbon offsetting may plug this gap, it is not a long-term solution and renewable jet fuels will be an essential element of structurally reducing these emissions but a number of obstacles need to be overcome in order to stimulate their use, says a new report. A major stumbling block is overcoming the price premium and researchers at Utrecht University and the Energy Research Centre of the Netherlands (ECN) estimate that replacing 5% of all regular aviation fuel by 2030 will cost upwards of €10 billion ($10.6bn). Their report looks at the pre-conditions for the ramp-up of biofuels for aviation in the EU and conclude that rapid strategic decisions are required to realise the required significant long-term emissions reductions.
Although alternative propulsion systems may be promising options towards the end of this century, drop-in renewable jet fuel derived from biomass is the most technically and economically feasible option in the coming decades to decrease the carbon intensity of aviation fuel, argue the researchers. Depending on the production pathway, RJF can, they say, reduce life-cycle emissions significantly – up to 95% – compared to fossil jet fuels.
Although carbon offsets are a cheaper CO2 abatement option compared to RJF, they have limitations as the global availability of offsets of an acceptable environmental integrity level is limited and may only just be enough to achieve CNG in the 2020-2035 period covered by ICAO’s CORSIA carbon offsetting scheme. After this period, the cost may rise steeply because supply becomes tighter as the world moves towards the net zero CO2 emissions society required under a 2 degrees target.
“Offsetting does not provide a structural solution to the industry’s emissions growth,” says the report. “Hence, the introduction of RJF is likely necessary as an additional measure to achieve deep carbon reductions over the long term.”
As well as quantifying the required emission reductions of the EU aviation sector to achieve carbon-neutral growth up to 2030, the report explores the role of renewable jet fuel (RJF) in reducing aviation CO2 emissions, and the available feedstock and technology options to produce RJF towards 2030. Four possible RJF deployment scenarios are formulated and evaluated in terms of cost and impact on the EU bioenergy portfolio. The deployment scenarios vary in the share of carbon offsets and RJF deployment used to cover the emissions gap.
Under a Business as Usual scenario, RJF deployment relies on investments by airlines or external co-funding, and estimates only 13 kt of RJF will be produced by 2030 due to the absence of an external incentive. This effectively means the aviation sector will have to meet its carbon-neutral growth target until 2030 using carbon offsets. As a result, believe the researchers, it will most likely fail to meet further emission reductions after 2030 since the required RJF technological options have not been developed while the amount of available carbon offsets may rapidly deplete after 2030.
In the Delayed Action and Strategic Action scenarios, the RJF share increases exponentially from 0.5% in 2021 to 5% in 2030 (3.4 Mt/yr). Carbon offsets are used to buy time to gradually integrate RJF in the feedstock technology portfolio. In the Delayed Action scenario, HEFA RJF represents nearly 90% of the total RJF supply in 2030 but as the potential of sustainable oil feedstocks is limited, and while alternative technologies remain undeveloped, such a system could give rise to major scale-up difficulties in the period beyond 2030, says the report.
In contrast with the Delayed Action scenario, the Strategic Action scenario presents a growth trajectory that gradually introduces lignocellulosic-based biofuels produced through a varied technology portfolio while phasing out food-based biofuels. This would provide a more scalable and potentially cheaper alternative to RJF production than waste oils, and feedstock imports can be significantly reduced. Under this scenario, more investment is directed to building production capacity, hence supporting the development of a more EU-focused advanced biofuels industry, including the macro-economic benefits that may accompany such development.
“Governments should see the macro-economic and environmental benefits that may accompany the development of an advanced biofuel industry, such as job creation, energy security, rural development and innovation,” said Sierk de Jong, a lead author of the report and researcher based at the Copernicus Institute of Sustainable Development at Utrecht University.
The Full RJF adoption scenario assumes that RJF covers the entire emissions gap – no carbon offsetting is used – in which volumes grow from 1.3 Mt in 2021 to 14 Mt/yr by 2030 (representing 20% of total jet fuel use), with an accumulative 74 Mt of RJF being produced over the period. This scenario would require an extremely high rate of feedstock mobilisation and capacity deployment, including lignocellulosic biofuel production capacity to increase from virtually zero to 26 Mt/yr over the course of 15 years. As even more substantial RJF volume is required after 2030 to reach the industry’s target of halving net CO2 emissions by 2050, it is essential to have a long-term vision with a prominent role for early action such that significant volume growth can be achieved towards the middle of the century, says the report.
To achieve large-scale RJF deployment, substantial funds are of course required. In all four scenarios, a price premium is assumed to exist and likely to remain beyond 2030 irrespective of feedstock-technology combination, unless fossil jet fuel prices increase strongly or production costs reduce drastically. In the Strategic Action scenario, total expenses of the introduction of RJF in the EU were quantified by the study as being in the region of €10.4 billion. These funds only cover the price differential between RJF and fossil jet fuel, so excluding R&D funds required for technology development.
So what is required to overcome this gap? A structural financing mechanism to bridge the price premium is essential, says the report. Due to the high price premium over fossil jet fuel (average €762/t RJF) and emission mitigation cost (€242/t CO2), a level playing field with other bioenergy sectors will likely be inadequate to stimulate RJF uptake, it cautions. Supplementary measures such as guaranteed feed-in tariffs will therefore be necessary and public investment may be justified on the grounds of potential environmental and macro-economic benefits of RJF deployment.
Alternatively, fund raising may be coupled to the expenses of carbon offsets at a global or regional (CORSIA, EU ETS), national or airport/airline level. A modest surcharge of €0.90-4.10 per passenger – roughly twice the cost of a carbon offset – towards a ‘RJF deployment fund’ could be sufficient to support a 5% biofuel blend in 2030, said de Jong.
There are many other challenges too. RJF deployment requires substantial R&D and demonstration efforts and high feedstock mobilisation rates.
“Developing an industry takes time – we need to develop advanced technologies, mobilise sustainable feedstocks and attract investments,” said de Jong. “We need a stable environment in which this industry can develop. Taking strategic action now is cardinal to reaching long-term climate goals.”
Robust sustainability standards are also key to guarantee sustainable production and global use of RJF, says the report. “Sustainable practice is a prerequisite,” explained de Jong. “The global character of the sector requires a robust sustainability framework which is flexible to capture region-specific contexts yet stable to give investors certainty about the compliance of long-term investments with sustainability standards.”
He added: “CORSIA is a clear milestone, but we need biofuels to structurally reduce aviation emissions and contribute to COP21 targets. We therefore urge the industry and governments to continue their efforts to stimulate the development of biofuels for aviation.”