EQ2 (2010). Sustainable Flying: Biofuels as an Economic and Environmental Salve for the Airline Industry, EQ2 insight, February 2010

http://eq2.uk.com/pdf_resources/Aviation%20biofuel.pdf. Accessed March 25, 2010

The aviation industry will need carbon-neutral biofuels as a feasible and desperately needed way to reduce its reliance on fossil fuels and cut its greenhouse gas emissions. The EU Emissions Trading Scheme (EU ETS), starting from 2012, will put a direct cost on carbon emissions for all flights into or out of Europe. It is likely only a matter of time before most flights around the world will be similarly taxed. More than just the carbon risks, the airline industry has been battered by unstable jet fuel prices and biofuels offer a potentially more stable (not to mention more sustainable) fuel source.

This report provides a review of the development of biofuels for aircraft and a critical examination of the economic and climate impacts of the aviation industry moving towards the large-scale adoption of biofuels.

• Bio-derived Synthetic Paraffinic Kerosene (Bio-SPK), made from Jatropha, Camelina, algae or halophyte feedstocks, is the most promising candidate for alternative jet fuel and test flights have successful proven its feasibility as a replacement for conventional jet fuel.
• Although not commercially viable yet, the EU ETS offers a strong financial incentive for the adoption of bio jet fuels. Based on the current EU ETS price for carbon in 2012 of €15 and 2009 average jet fuel price of $1.69 per gallon, every gallon of jet fuel burned would incur carbon costs of an additional $0.21, which is a total cost of $1.34 billion across the industry. This is a premium of 12.4% that would not apply to biofuel, but would help make it more cost competitive.
• Further out, the EU ETS will impose costs of $9.56B in 2020 and $19.48B in 2030 on the airline industry. This will be equivalent to approximately 3.6% of the total operating cost of the EU aviation industry by 2030. While airlines may be able to pass along some of these costs to consumers, it is too competitive a market for the industry to reap windfall profits, particularly in later years when the industry needs to buy most (and likely all) of its carbon credits.
• Based on the Air Transport Action Group (ATAG) industry body assumptions of 15% and 30% consumption of biofuel in 2020 and 2030, the EU aviation industry will be able to avoid 35 million tonnes of CO2 emissions in 2020 and 100 million tonnes in 2030. Such reduction in emissions is equivalent to $2.01 and $5.84 billion of savings on carbon expense in 2020 and 2030, respectively.
• Based on the same assumption of aviation biofuel consumption, the global aviation industry will be able to avoid 129 million tonnes and up to 420 million tonnes of CO2 emissions in 2020 and 2030, respectively.
• If the global aviation industry is to achieve the International Air Transport Association (ATA)’s aim of carbon neutral growth from 2020 solely by biofuel consumption, it will need to use approximately 46.1–72.0 billion gallons of biofuel in 2030, which is equivalent to 38-49% of total jet fuel consumption.

The internalisation of billions of dollars carbon costs by the air transportation industry will provide a significant
financial incentive for the development and adoption of new carbon reduction alternatives. Biofuel
offers the only near to mid-term solution for the industry to significantly reduce its climate impact, with the
added benefit of diversifying away from non-renewable fossil fuels.