Refineries that currently focus on renewable diesel need to monitor demand so that they can determine when to shift production to the most efficient mix of renewable diesel and SAF that maximises their profits.
Ferdinand Varga, managing director and senior partner at Boston Consulting Group
The aviation and heavy transportation industries are under pressure from customers, employees, shareholders, and policymakers to decarbonise. Without taking corrective action, the portion of total global emissions attributed to the aviation industry could grow by 20% until 2050.
Currently, emissions from heavy transportation account for about 8% of the global mark, without corrective action, that percentage could continue to grow by 2% each year.
Meanwhile, passenger vehicle emissions are expected to decline as more electric vehicles hit the road, resulting in an added dependence on heavy transportation, with global emissions expected to rise by 12%.
Five ways industry players can get started with renewable fuels
Ready or not, the renewable fuels market is evolving. Key market players need to understand what they need to do to capitalise on the trends and secure their position.
- Feedstock suppliers need to create a raw-materials strategy
Feedstock suppliers should map out a strategy to ensure that they have access to adequate sources of raw materials in a cost-effective manner. They need to track technology developments to ensure they can change course with advanced technologies, such as Alcohol to Jet Fuel (ATJ) or Power-to-liquid (PtL).
- Suppliers of waste products should monitor trends
Suppliers of waste products—including restaurants and other businesses that produce used cooking oil or byproducts that feedstock suppliers purchase—should keep up with the effects of increased demand for renewable fuels.
McDonald’s UAE recently revealed its latest milestone in its biodiesel program which gets Used Cooking Oil (UCO) from their restaurants converted to 100% biodiesel to fuel their supply trucks. To date, McDonald’s UAE’s supply trucks have saved more than 16 million kg of CO2 and related greenhouse gasses.
- Renewable fuel customers have to secure adequate supply
Airlines, freight carriers, trucking companies, and other industrial customers have to follow through on commitments to decarbonise by securing supplies of renewable fuels and do it in a way that minimises the impact on their operating costs.
One way is by investing in renewable diesel and SAF projects to lock in competitive prices. Some air carriers have already taken this step. UAE’s Etihad Airways, the first airline in the Middle East to announce net-zero carbon emissions by 2050, is exploring the potential use of synthetic fuel.
The airline is working with Siemens Energy, Abu Dhabi-based clean energy firm Masdar, and Japan’s Marubeni Corp. to explore the production of synthetic fuel as part of a wider strategy to use SAF on future flights. Meanwhile, Emirates and GE Aviation also signed an MoU to test fly with 100% SAF by the end of 2022.
- Producers must act
Refineries that currently focus on renewable diesel need to monitor demand so that they can determine when to shift production to the most efficient mix of renewable diesel and SAF that maximises their profits.
In line with the UAE’s latest initiative “Operation 300 Billion”, BioD has announced the commissioning of a biodiesel refinery in Dubai’s Jebel Ali Free Zone, which is expected to sustain a 30,000 metric ton per annum capacity refinery.
The feedstock used in the process is 100% non-human consumption residues, such as UCO (Used Cooking Oil), animal tallow, POME (Palm Oil Mill Effluent Waste), and acid oils.
To effectively reduce the carbon footprint in logistics, the aim is to source the raw materials as close to the plant as possible.
- Policymakers should monitor and support the market
Governmental support is essential to using sustainable aviation fuels to achieve the industry’s climate goals. Recently, the International Air Transport Association (IATA), whose 290 member airlines include almost every major carrier and move more than 80% of the world’s flyers, introduced a non-binding net-zero pledge for cutting emissions.
The Arab Air Carriers Organisation (AACO) has in turn pledged to achieve net-zero emissions by 2050, during its 54th Annual General Meeting (AGM) held in Qatar. Etihad Airlines also revealed interim targets during the 2021 Dubai Airshow to reduce emission intensity and volume while signing several sustainability-focused agreements.
In practice, by 2025, the carrier aims to reduce its fleet emissions intensity by 20%, and by 2035 it would halve its 2019-equivalent emission volumes, en route to the net-zero 2050 target. Climate change is one of the biggest and most complex global challenges of our time. Key stakeholders must act now to make the most of sustainability-driven investment decisions while taking into consideration carbon intensity, fuel price, technology maturity, and their overall impact on the supply chain.
The airline industry, responsible for nearly 3% of global carbon dioxide emissions, has pledged to hit net zero by 2050 to help curb global warming. But with travel demand likely to add to the present 100,000 daily flights, the ambitious 2050 targets still seem far away.
