Boeing boss warns sustainable aviation fuels will ‘never achieve the price of jet fuel’
Boeing’s boss David Calhoun has warned that new sustainable biofuels will “never achieve the price of jet fuel,” downplaying widespread hopes for the technology in the sector.
According to reports in the Financial Times today, Calhoun said he believes sustainable aviation fuels (SAF) have the potential to become more economical.
However, he also said: “I don’t think we will ever achieve the price of Jet A. I don’t think that will ever happen. It is more positive and it will have an impact, but it’s going to be what it’s going to be.”
SAF has been championed by the aviation sector as a key solution to moving away from kerosene-type jet fuels and hitting net zero and decarbonisation goals.
In February, Boeing announced that it would double its SAF procurement for the year, buying 5.6m gallons of the fuel from producer Neste.
Last month in the UK, the Sustainable Aviation alliance unveiled their Net Zero Carbon Road Map alongside the government, which reaffirmed the key role of SAF in hitting the sector’s decarbonisation goals.
However, critics and analysts have raised concerns over its cost, which is currently far greater than traditional kerosene.
John Grant, a senior analyst at aviation analytics firm OAG, told CityAM “unless something significant happens” SAF is unlikely to “ever be as cheap” due to costs associated with production, logistics and government taxation.
He added: “At the moment supplies of SAF are limited to a few country markets and even then not in great quantities.”
“Although there are lots of initiatives underway, the scale of ramp up required is immense and with the likely costs of SAF being higher than jet fuel, airlines are caught in a trap whereby they want to use more and more SAF, but either cannot afford to – or the supply isn’t there.”
Rob Barnett, senior clean energy analyst at Bloomberg Intelligence, said on the CO2-abatement economics of SAF, that “the carbon market has the potential to be the great equalizer, but based on current fuel pricing differentials, you’d need a CO2 cost of over $450 a ton to bring SAF in line with conventional jet fuel. By contrast, European carbon allowances currently trade for about €85 a ton.”
He added: “A carbon price of $450 a ton is awfully high, and there are numerous lower-cost abatement options in other sectors. That being said, if all sectors must eventually hit net-zero emissions, this suggests flying could be expensive in the future unless the cost of producing SAF falls considerably, perhaps similar to the cost-profiles of wind or solar over the last couple of decades.”
The International Air Transport Association (IATA) currently forecasts that SAF will contribute to around 65 per cent of the reduction in emissions needed by aviation to reach net-zero in 2050.
A spokesperson for the IATA said that Calhoun wasn’t questioning the importance of SAF as a whole. “Despite the high current prices for SAF, airlines have bought up every drop that has been created. Governments can help by introducing policies to drive the efficient production of SAF, and by refraining from cash-grab passenger taxes that do nothing for the environment.”
“In fact, they drain money away from airlines looking to invest in more SAF and even cleaner aircraft.”