(Bloomberg) — To reduce the enormous climate impact of air travel, airlines around the world have pledged to use large amounts of cleaner jet fuel. But most carriers are falling far short of their pledges, according to a Bloomberg Green analysis of companies’ 2023 environmental filings.
Although many airlines have pledged to source at least 10% of their fuel from cleaner sources by the end of the decade, the International Air Transport Association (IATA) estimates that the use of sustainable aviation fuel (“SAF”) increased from 0.04% of global aviation fuel in 2021 to 0.17% in 2023.
European airlines are beating their competitors in the U.S. and elsewhere. That’s partly because of a government mandate: The European Union is requiring airlines to use 2% SAF starting next year. Other governments, including Britain, Singapore and British Columbia, are following suit with their own regulations. In contrast, the U.S. has opted for a voluntary approach: The government offers lucrative incentives for SAF but does not require airlines to buy the cleaner fuels, which cost about three times as much as conventional jet fuel. “There’s a really meaningful compulsion (for European airlines) to use it,” says Nik Pavlenko, who leads the fuels team at the International Council on Clean Transportation, a nonprofit think tank. “There is still some cognitive dissonance in the U.S. between the 2050 net-zero claims and excitement around SAF and what airlines are actually willing to pay for when they don’t have to.” DHL Group is leading the world in adopting SAF, sourcing more than 3% of its jet fuel from cleaner sources last year. To meet that goal, the Bonn-based cargo airline bought more lower-emission jet fuel than all U.S. airlines combined. Unlike its European rival, Memphis-based FedEx Corp. did not buy SAF last year, despite pledging to source 30 percent of its jet fuel from cleaner sources by 2030.
Air France-KLM led all passenger airlines last year with 1.1 percent SAF. That’s more than six times the percentage of U.S. market leader United Airlines Holdings Inc., which has heavily promoted cleaner jet fuels, and used 0.17 percent SAF. “I don’t think carrot alone is that effective,” says Marina Efthymiou, professor of aviation management at Dublin City University Business School. She calls on governments to use both incentives and regulations to get the SAF market going.
Representatives of several U.S. airlines told Bloomberg Green they are committed to increasing the use of cleaner fuels. While available supply is limited, things are starting to recover, say industry officials, who point to U.S. government data showing that the amount of SAF produced or imported into the country doubled in the first half of this year compared to all of 2023.
“This is the kind of exponential growth we were hoping for,” says John Heimlich, chief economist at Airlines for America, an industry trade group.But because SAF remains significantly more expensive, Heimlich says regulations would drive up air travel prices. “It would just make air travel more expensive and less affordable for all customers,” he says.United declined to comment on the SAF numbers, while a FedEx spokesperson said in an email that the recent increase in cleaner fuel production is a great sign considering the market’s “ups and downs over the past decade.”The task ahead for all airlines remains daunting. Aviation is responsible for about 2.5% of humanity’s carbon dioxide emissions. But that number is expected to rise as air travel increases and other major sources of climate pollution like power plants and cars switch to cleaner alternatives. Battery-powered planes likely won’t have the range to handle long-haul flights, which generate most emissions; and hydrogen-powered aircraft could still be decades away. That leaves cleaner fuels – made from lower-emissions sources such as used cooking oil, animal tallow and energy crops – the aviation industry’s main hope for reducing its climate impact. Dozens of new SAF plants are expected to come online in the next few years. Diamond Green Diesel, a joint venture between Valero Energy Corp. and Darling Ingredients Inc., says its Texas plant, which can produce up to 235 million gallons of SAF per year, will begin operations later this year.
But other highly anticipated sources of cleaner fuels have stumbled. Fulcrum BioEnergy, which raised more than $1 billion to convert municipal waste into liquid fuels, laid off most of its employees and shut down operations in May, Bloomberg Green first reported. The dire turn of events casts doubt on the future of Fulcrum’s flagship plant near Reno, Nevada, as well as planned waste-to-energy plants in Indiana, Texas and the UK.
The bumpy progress on new plants prompted IATA this summer to cut its estimate of future SAF production by the end of the decade by almost 20 percent. Meanwhile, Air New Zealand Ltd. last month pulled the plug on its 2030 climate target, citing a lack of lower-emission fuels in part.
The lack of cleaner fuels makes DHL’s market-leading numbers all the more remarkable. When the company announced a plan to accelerate its emissions reductions in 2021, it pledged to spend €7 billion over the next decade on it. Last year, that included €113 million to cover the additional costs of SAF over conventional jet fuel.
“We are serious about what we do,” Yin Zou, executive vice president of corporate development at DHL, said in an interview with Bloomberg Green last year. “We are searching every inch of the Earth’s surface to find suppliers” of cleaner jet fuel, he added.
DHL isn’t exactly financially strong compared to its competitors. Last year, it posted profits of about $4 billion, roughly on par with FedEx. United Parcel Service Inc., which posted nearly $7 billion in profits and has committed to using 30 percent SAF by 2035, didn’t disclose its amount of cleaner fuel last year, describing it only as “non-essential.”
“Supply remains limited and economies of scale have not been achieved, making widespread adoption too expensive,” a UPS spokesman said in a written statement.
For Efthymiou, the Dublin professor, it often comes down to the commitment of the people who run these companies. While some of them are taking action, she says, “some airlines are more reactive. Unless they are put in the spotlight, they will do nothing.”
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