Tracking Aviation 2020

The jet engine heralded a technology revolution: by dramatically improving the productivity of the de Havilland Comet and reducing its cost, it made commercial aviation possible. Continued airframe and engine improvements have made today’s new aircraft about 85% more efficient than the early ones that entered into service in the 1960s – and the fleetwide carbon intensity of commercial passenger aircraft has dropped more than 70% per available seat-km from that time.

But further operational and technical efficiency improvements, in excess of the targets set by various stakeholders in aviation (including the ICAO1 and IATA2), will be needed to hold fuel demand in check.

Robust recent demand growth prior to the current pandemic indicates that efficiency must continue to improve at the same rate as in the past to offer any prospect of eventually substituting fossil-based jet kerosene with more sustainable fuels, and to reduce CO₂ and other climate-related emissions incurred directly by aircraft operations.

Finally, efforts to develop sustainable aviation fuels (SAFs) that can be commercialised at a competitive cost and in a truly low-carbon manner – on a lifecycle basis – need to be scaled up. This will require that policies provide certainty for direct investments at the various early stages of development, for technologies and RD&D, while also ensuring secure and steadily growing demand from airlines.

Since aviation is one of the most difficult to sectors to decarbonise, it is important to exploit all promising opportunities, both in the near and long term. Three characteristics make reducing emissions particularly challenging:

• Unparalleled demand growth: passenger activity growth averaged 6.2% per year in the past decade, and in 2019 it was projected to continue growing by 4.3% (Airbus, 2019) or 4.6% (Boeing, 2019) in the next two decades. While the Covid-19 crisis is likely to substantially curb near-term demand growth, aviation has been remarkably resilient to previous crises and, even with a structural reduction in demand, is likely to remain relatively strong in the coming decades.
• Industry structure: Airlines operate in a highly competitive market and on relatively tight margins, with industry average profits of around 6-8%. Meanwhile, aircraft manufacturers that invest billions of dollars and decades of research in new airframes prefer incremental design tweaks over riskier revolutionary “clean sheet” designs.
• Physics: aviation requires high power output and energy-dense fuels. This limits (and makes more uncertain) prospects for fuel switching to become a promising means of decarbonisation, for example by using renewable electricity to power batteries or produce hydrogen. Even if new pathways could be commercialised to make energy-dense hydrocarbons with a low-carbon footprint, uncertain but considerable short-lived non-CO₂ climate-forcing emissions from aircraft further exacerbate the challenge of minimising the climate impacts of flying.

Globally, the volume of aviation activity3 for domestic and international passenger flights increased more than 2.7-fold between 2000 and 2019. This activity growth, unparalleled by any other mode of transport, has been fastest in developing and emerging economies, led by Asia and Pacific countries, where the middle classes and white-collar workers are joining the ranks of occasional and frequent business fliers. As incomes continue to rise in these economies, rapid demand growth is projected to continue at rates only slightly below historical ones, and unmatched by any other mode of passenger or freight transport.

Whether for business or personal travel, only a small portion of the world’s population flies, and an even smaller share accounts for the majority of trips. This pattern is evident even in the wealthiest countries: in the United States, while most adults fly less than once per year, frequent fliers who fly at least six times per year make up 12% of the adult population yet account for more than two-thirds of trips.

Worldwide, the 16% of global population living in the highest-income countries account for 62% of aviation CO₂ emissions, while the half living in low and lower-middle income countries account for only 9%.

Even when demand is healthy, only about one-quarter of airlines reap economic profits. Airlines operate in a fiercely competitive market on relatively tight margins; the industry typically averages profits of around 6-8%. Their business consists of purchasing or leasing very long-lived assets: aircraft operate for at least 30 years on average. Airlines then operate and maintain these aircraft and, depending on flight length, incur costs ranging from 20% to as much as 40% for fuel. While this encourages operational and technical actions to reduce fuel burn, efficiency measures must be balanced against safety, noise, and local pollutant emissions trade-offs.

With costs of tens of billions of dollars and development cycles in the order of many years to decades, aircraft manufacturers prefer to focus on incremental and isolated improvements to existing aircraft, whose functionality and safety have been proven by logging billions of kilometres in commercial operations.

Even without considering the wider network of airports, air traffic control and pilots, the aircraft themselves are a complex system, so changes to any single component have cascading impacts on the rest. In this sector, the fact that the certification of safety standards is the first priority, combined with trade-offs in terms of fuel burn, noise, and local pollutant emissions, means that manufacturers prefer to perfect existing designs, and not change too many variables at once.

Commercial aircraft commonly weighing 30 to 600 tonnes travel thousands of kilometres at speeds of 700 km/hr to 1 000 km/hr. For aircraft to accelerate to speeds that generate the lift needed to take off, they require fuels that have high energy and power densities. While current all-electric aircraft prototypes have proven able to complete flights of more than 100 km and carry as many as 15-20 passengers, even those using advanced battery chemistries (which have yet to be deployed as prototypes, even on the component level) of sufficient size to operate on the scale of small to narrowbody aircraft, are limited to upwards of 1 000 km at best by mid-century.

Since energy-dense liquid fuels will continue to power most commercial aircraft activity for at least the upcoming century, novel pathways must be developed to produce these fuels in a manner that incurs lower (and eventually zero or even net-negative) GHG emissions.

While both businesses and policy makers are giving greater attention to SAFs, the first flight with biojet fuel was made only a little over a decade ago and SAFs just began to gain a foothold in the commercial market (though still only at about 0.01% of total fuel use) in the past five years.

As of February 2020, six biojet fuel production pathways had been approved by the American Society of Testing and Materials (ASTM) standard D7566, the fuel standard required for international flights. Of these, only one – HEFA jet – is commercially available. All the approved pathways except sugar-based synthetic isoparaffins (SIP) are technically drop-in fuels, though current regulations cap them at 10-50% blend rates with fossil-based jet kerosene.

But even if pathways for producing SAFs at acceptable costs could be developed and integrated at scale into the aircraft fuel supply, at best they would likely reduce – but not eliminate – the climate impacts of flying.

There are two reasons for this: upstream in the production cycle, producing SAFs will emit CO₂ and other GHGs; and downstream, during flight itself, the water vapour emitted from jet engines and the contrails that are formed in airplanes’ wakes are two of the most prominent non-CO₂ climate-forcing impacts.

In the near term, various operations and technologies to reduce fuel burn and maximise service efficiency present themselves.

In operations, “big data” and analytics can be used to help airlines optimise engine cleaning schedules and other maintenance regimes, and to train and reward pilots in flying as efficiently as possible during every flight stage – from take-off and cruising to descent. Airports can also exploit information technologies to improve congestion management and optimise departure and arrivals scheduling.

Ground operations, including taxiing and “pushback” – when the aircraft is pushed backwards from the gate by an external tractor or tug, or using the aircraft engines – are ideal candidates for electrification. Investing in onboard systems or external units such as taxibot or mototok tugs can reduce fuel burn (and hence per-flight emissions), operational costs, ground operations time and space requirements, and local pollutant emissions.

New current and next-generation aircraft can achieve reductions in cruising weight through optimised cabin space use and weight reduction, and increased reliance on composites. Ultra-high-bypass-ratio engines, folding wingtips and higher aspect (length to width) ratios on the wings offer further prospects to reduce fuel burn in the upcoming decade.

While aircraft and jet engine manufacturers have realised impressive fuel efficiency gains in the past half-century, with a few exceptions most of these improvements have been incremental. Once a well-functioning design has proven its value, improvements to the engine and structure are engineered from one generation to the next.

The five-decade evolution of the B737 family offers a good illustration of how the aircraft industry builds heavily on past designs: this aircraft first was given a new engine, then longer wings and a larger fuselage, and in the latest generation, the redesign shifted the centre of gravity.

At the same time, however, the Boeing 787 Dreamliner is a good example of the exception that proves the rule: here, a revolutionary redesign of both the airframe and engines resulted in dramatic efficiency gains. When it was introduced in 2011, this aircraft was 25% more fuel-efficient than its predecessors, and it achieved this revolutionary reduction in fuel burn by making heavy use of composites, improved aerodynamics and advanced engines.

The risks of introducing the completely new designs that would be needed to maintain the energy intensity reduction pace of recent years are not only monetary. They may involve trade-offs with noise, pollutant emissions, operational costs, and passenger comfort, as well as potential safety implications and the retraining of pilots, maintenance crews and air traffic controllers.

Supersonic passenger jets have long been a goal of the commercial aviation industry. Despite the retirement of the Concorde, aircraft makers have continued to develop supersonic designs intended to lead to a second generation of passenger jets. Multiple government-sponsored research programs supplement private funding for these efforts. One of the most prevalent concerns about supersonic aviation is pollution, including noise pollution from supersonic booms and exhaust emissions from burning fuel.

Supersonic aviation’s major appeal, speed, requires a substantial amount of power to overcome aerodynamic drag, which is proportional to the square of the velocity. This means that the power needed increases much more quickly than the speed of the aircraft; hence more fuel must be consumed to provide the thrust necessary to maintain desired speeds.

In emerging supersonic transport studies, models have estimated fuel burn at five to seven times as much, per passenger, compared to subsonic aircraft. Relative to conventional aircraft, other pollutants such as nitrogen oxide are expected to increase by 40%, which has negative human health impacts, particularly for those with respiratory diseases and heart problems.

Although there have now been more than 200 000 flights using aviation biofuel blends, the current share of SAFs in jet kerosene for aviation overall is still very small (<0.1%).

However, even the most commercially viable SAFs are substantially more expensive than oil-derived jet kerosene, with current breakeven at oil prices above USD 100 per barrel. Since airlines compete on thin profit margins and the use of SAF incurs a cost premium over fossil jet kerosene there is a need for policies to support SAF consumption in order to push the demand growth that will realise economies of scale in production.

Such policies also need to be long term in order to provide market certainty over the time horizons of significant capital investments needed to bring SAF production online.

These options include investment in production capacity, airline fuel offtake agreements and new policy initiatives, and the ability for SAF to contribute to carbon reduction credits in the ICAO Carbon Offsetting and Reduction Scheme for Aviation (CORSIA).

Various airlines have begun adopting SAFs and are announcing goals for blending certain shares into their overall fuel consumption by a given year.

In 2019, United Airlines agreed to purchase up to 10 million gallons (37.85 million litres) of SAF in the next two years. Air France pledged to blend biofuels into its flights from San Francisco International Airport, and Scandinavian Airlines (SAS) has pledged to run all domestic flights (less than 20% of their overall fuel demand) on SAFs by 2030.

In addition to these airlines, Lufthansa, FinnAir, Virgin Atlantic, Virgin Australia, Azul, British Airways and KLM have also flown flights on biofuels, and many have made pledges to scale up their use in the near future.

Oslo Airport led the way in adopting SAFs in 2016, with United Airlines at Los Angeles Airport (LAX) close behind. Oslo and Stockholm Arlanda have both made impressive achievements in green design, and both are among the five airports that regularly distribute biofuels (Bergen, Brisbane, Los Angeles, Oslo and Stockholm).

In addition to these five, many other airports now offer occasional SAF supplies. KLM is planning to introduce SAFs into its regular fuel supply at the Schiphol airport by 2022, and it is partnering with Neste to secure the supply. New targets for SAF adoption are also tied to the COVID‑19 stimulus package being presented to Air France-KLM.

To significantly increase the availability of low carbon SAF further, more aviation biofuel technologies need to be commercialised for producers to access a wider feedstock base (e.g. agricultural residues, municipal solid wastes) and increase production volumes.

Synthetic fuels that use H₂ produced via low- or zero-carbon pathways could be viable alternative fuel substitutes for fossil-based jet kerosene.

Ensuring that aviation carbon intensity continues to fall should be a top priority for the sector, as Paris-compliant emissions reductions pathway are likely to materially restrict the opportunities and volumes of intersectoral emissions trading.

Achieving emissions reductions in aviation will require action from a broad range of stakeholders: airlines and airports can prove their commitment to reducing GHG emissions by setting goals for efficiency improvements, clear schedules for SAF adoption, or even absolute emissions reduction targets. These targets should not only consider direct CO₂ emissions, but should be designed to address all climate forcing emissions on a lifecycle basis.

Supranational, national and sub-national governments that have a keen interest in sustained and sustainable aviation operations could promote progress by integrating GHG emissions costs into ticket prices and by mandating ambitious improvements on operational and technological efficiency and adoption of SAFs.

National and sub-national governments are well placed to implement policies to incentivise the uptake of SAFs or to promote the adoption of lower-emitting alternatives to fossil-based jet kerosene. Policy makers should recognise, however, that taxes and regulations could exert unequal impacts on the competitiveness of different airlines: although such impacts should be minimised, the fact that they cannot easily be avoided altogether is no excuse for policy delay.

Airlines can give their customers the option to pay extra for SAFs, options that have recently been offered by Finnair. For those residual emissions that are particularly difficult to reduce via technical or policy measures, airlines and consumers can follow through on their “green” signalling by purchasing offsets on international carbon markets.

But such voluntary, opt-in measures have had limited impact to date, and are unlikely to lead to the changes needed to put aviation on a more sustainable trajectory. Ultimately, global actions to reduce the climate-forcing emissions of commercial aviation will have to be agreed upon by the ICAO, the UN agency responsible for international aviation activity.

The ICAO has already put various policy frameworks in place, including aircraft efficiency and CO₂ emissions standards, as well as CORSIA in 2016. CORSIA has been designed as a carbon market-based mechanism to help reach the goal of a carbon-neutral growth for international aviation from 2020 onwards. This scheme was the result of lengthy and diplomatically complex multilateral negotiations; however many analysts agree that the goal is not aligned with the Paris Agreement of the UNFCCC, for which climate neutrality (and not carbon neutral growth from a given year) needs to be achieved as soon as possible in the second half of the century to minimise catastrophic changes in our climate.

Putting the sector on a more sustainable trajectory will require that technical efficiency standards and CORSIA be made more ambitious.

An alternative option could be to integrate the price of carbon in the flight ticket, which would allow internalising the environmental and climate costs of aviation fuel use with a full pass-through of the cost to consumers. The revenues generated in this way could be used by governments to foster low-carbon innovation and to address potential socio-economic competitiveness issue that could impact airlines. Such designs have been already successfully implemented in various major carbon pricing schemes in other key economic sectors, such as in the EU ETS and the Quebec ETS.

Action from leading airlines and airports that serve as key international and domestic hubs can generate the market pull that is needed to catalyse adoption of efficient operations, best-in-class technologies, and SAFs. Those that act early will benefit not only from asserting their leadership in corporate social responsibility, but from being the first to gain experience in innovative practices and technologies that will eventually need to be taken up more broadly.

By showing that innovation towards greater energy and resource efficiency in building design can both benefit their customers and yield dividends (or at least not comprise their bottom line), the airlines and airports that adopt these operations and technologies are paving the way for others to learn and adopt the most successful practices, and are providing the market stimulation needed to scale up production of new equipment and fuels – thereby reducing costs through learning and economies of scale.

A number of means are already in place to support the deployment of sustainable aviation fuels by providing certainty about future demand needed to spur investment in production capacity.

The most common are offtake agreements between airlines and SAF producers. These are essentially commercial agreements on the part of the airport or airline to purchase biojet fuels at a given price – typically at very close to the prevailing price of jet kerosene before the COVID‑19 crisis. Financial de-risking measures to enable suppliers to delivery capitally intensive commercial scale SAF production facilities are another key means to mobilise investment.

Various policies should be considered to promote SAF development on both the supply and demand sides.

On the supply side, funding to promote the leap from demonstration to first commercial plants will be needed to stimulate continued innovation on novel, low-carbon and sustainable production pathways based on feedstocks such as agricultural wastes forestry or municipal waste and residues. Moreover, trials of suitable biomass feedstocks that can be grown on marginal lands or through double cropping with minimal requirement for prime agricultural land warrant consideration. 

On the demand side, in addition to offtake agreements, low-carbon fuel standards (LCFSs) and blending mandates are both promising policy instruments that provide clear long-term demand signals. LCFSs mandate the gradual adoption of alternative fuels and link their price to their real-world GHG emissions reduction potential, but they do not stipulate which fuels are to be adopted, leading to some uncertainty. Blending mandates may provide a greater degree of assurance to would-be biofuel producers.

For either mandates or an LCFS to be effective, they need to account for current actual production volumes and for their capacity to scale up. Next, they must take practical and logistical elements into consideration: airlines would have to be able to fulfil biojet fuel blending mandates or meet the credits required for LCFS compliance imposed on them, which means the availability of biojet fuel supplies across the airports where they operate must be examined. Finally, they will need to be designed to minimise disproportionate impacts on the competitiveness of any single company, while at the same time avoiding potential loopholes that allow airlines to avoid them and ensuring that they don’t lead to operational workarounds that reduce their effectiveness (i.e. “leakage”).

Given the risks in lost investment that can result from radical changes to aircraft design, governments can facilitate knowledge spillovers by promoting basic research at public institutions and funding innovative, high-risk private engineering ventures (including research that involves materials for lightweighting and new strength and thermal-resilience properties; aerodynamics; and crossovers from military applications).

Since airlines have an interest in maintaining competition in aircraft and engine design and production, there may be value in national governments supporting domestic industrial airframe and engine producers of all sizes, from start-ups to incumbents.

The repayable development grants offered by European governments are one model for promoting new aircraft development programmes, but these entail a moral hazard, as recipients may take excessive risks based on the perception (or fact) that they will not have to repay the grants should these programmes fail.

The CO₂ offsets or reductions required under CORSIA were originally conceived to be set relative to a 2019-20 baseline level. CORSIA consists of three phases: a pilot phase (2021-2023), a first phase (2024-2026), and a second phase (2027-2035). The pilot and first phases are voluntary, while the second phase will be mandatory for all ICAO Member States and is expected to cover one-half of aviation emissions,

Airlines operating on routes between participating States will be subject to the offsetting requirements under CORSIA, based on growth over the sector’s baseline emissions. Offset credits are generated through emission reductions via the implementation of carbon mitigation projects in other sectors.

In March 2020, the ICAO announced it had approved six offsetting programmes for CORSIA’s 2021‑23 pilot period. Some of these programmes, however, have been criticised for not guaranteeing the environmental integrity of the generated credits. To address this risk, CORSIA’s Technical Advisory Board has adopted various eligibility criteria that could limit the risk of carbon offset credits not representing real emission reductions (i.e. limiting the eligibility of the credits for those issued after 2016).

Originally, the baseline to calculate the carbon-neutral growth of the sector was set to be the average of total CO₂ emissions for the years 2019 and 2020. Due to Covid-19, however, flight activity is expected to be 50% lower in 2020 compared to 2019. Thus, including the 2020 CO₂ emissions level in the baseline calculation for CORSIA would likely decrease the previously anticipated baseline emissions level by at least 25-30%.

Following a request from IATA, the ICAO council agreed that only 2019 emissions will be used as the baseline for the pilot period between 2021 and 2023. The exclusion of 2020 activity from the calculation of the crediting baseline is, however, likely to effectively delay climate action by the civil aviation industry for several years and could reduce the offsetting and mitigation requirements by about 25-75%.

Moreover, if flight activity rebound takes as long as most industry projections expect, this decision will nullify any offset obligations during CORSIA’s pilot phase. The ICAO Council will conduct a periodic review of the CORSIA every three years from 2022, at which point Covid-19 impacts can be further examined and the baseline emissions level can be reassessed for its first phase.

For CORSIA to result in real and additional emissions reductions, credits will have to be of high quality – implying i.a. strong monitoring, reporting and verification (MRV) regimes and conservative baselines – and not double-counted, implying an effective accounting system, also in accordance with any possible accounting decision taken under Article 6 of the Paris Agreement.

While offsetting could be useful to compensate for any residual emissions, the ICAO should ultimately try to address all emissions generated within the aviation sector. This would ensure that, as other sectors of the economy reduce their GHG emissions, aviation emissions would not rise to a level that would risk making the sector a pariah as other sectors take substantive measures to reduce climate impacts.

SAFs are eligible under CORSIA as a means to reduce in-sector emissions directly. Robust GHG modelling has been undertaken and certification requirements for SAFs have been built into the scheme; this modelling and regulatory framework can be leveraged and potentially even improved further by national policy frameworks seeking to promote SAFs. Only once CORSIA can effectively ensure that both offsets and sustainable aviation fuels used for compliance offer additional and robust lifecycle emissions reduction, will it offer an avenue for decarbonising international aviation.

The authors extend their thanks to Jen-Ann Lee and Colin Murphy of the University of California, Davis Policy Institute for Energy, Environment, and the Economy for contributing the content on supersonic aircraft, and to Lynnette Dray of University College London for reviewing and providing valuable feedback on an earlier draft of this section.