Decarbonization has become a global imperative and a priority for governments, companies, and society at large. This report is the third in a series by Deloitte and Shell, exploring the decarbonization of harder-to-abate sectors. This research outlines the current state of the aviation sector, identifies the barriers to decarbonization readiness, and proposes solutions and a flight plan to accelerate decarbonization in the sector.
Aviation is fundamental to the world economy and keeping people connected. Today more than ever, it plays a vital role in expanding horizons and broadening opportunities to work, live and learn, for people all around the world. If even more people, communities and businesses are to enjoy these benefits the aviation sector must grow responsibly and play its part in a net-zero future.
Before the COVID-19 pandemic, aviation produced around one billion tonnes of carbon emissions in 2019, accounting for 3% of total emissions released into the atmosphere globally. And yet, aviation has been neglected when it comes to decarbonization. Action now is critical if society is to meet the Paris Agreement’s target to limit global warming to 1.5°C.
90% of research respondents prioritized the decarbonization of aviation but there are significant barriers. Sustainable aviation fuel (SAF) is up to two to eight times more expensive than traditional jet fuel, there is a lack of clarity and alignment across government and regulatory bodies regarding emission reduction targets, and many within the aviation industry are skeptical about the role of carbon offsets in helping mitigate emissions while SAF and other measures come to scale.
The research suggests clear strategies for overcoming these barriers. With collaboration across the industry, innovation and ambition, these strategies will significantly reduce aviation’s net emissions. Faster production, supply and use of SAF is crucial − hence, the need for incentives from Governments and regulators. Banks and other financial institutions should be encouraged to provide funding for SAF production and purchase as part of their environmental, social and governance commitments.
Deloitte and Shell interviewed over 100 aviation executives and experts representing more than 60 organizations across the global aviation ecosystem to identify the key barriers to decarbonizing aviation and practical solutions to accelerate the industry’s transition towards net zero. Highlights from this research includes:
Aviation has often been considered a sector that will decarbonize later than others, because of the complexity involved and the view that aviation accounts for “just 3% of global emissions”. But there is a need to act now.
The sector is facing several barriers to decarbonization − reluctance of passengers to accept the cost of low-emission solutions, lack of regulatory support, prohibitively high cost of SAF, and concerns about quality, transparency, and communications.
Long-term customer demand, enabled by recognition mechanisms and differentiated propositions, will play a fundamental role in providing the funding and incentives for airlines to invest in lowering their emissions.
Country- and region-based policy incentives relating to supply and demand will accelerate the adoption of SAF and regulation at regional and global level.
Offsets can play an essential role in funding the early stages of decarbonization. But for this to happen, they must be made more transparent and verifiable. They need to be more emotionally appealing to passengers, and their impact should be clearer.
Choosing SAF as the primary means of decarbonization will have a disproportionate impact on lowering emissions, because there is no need to redesign aircraft. As a result, investments and R&D efforts can focus mainly on scaling production and lowering cost.
Collaboration with other sectors is essential to the successful deployment of SAF. It can drive down the cost of required technologies, such as hydrogen production, direct air capture and biomass conversion, and ensure effective use of scarce resources.
The pathway to decarbonisation needs to be more ambitious and investments need to start sooner to address societal expectations, reach sufficient SAF volumes and bring down cost to the levels required for large-scale adoption within 15 years.
Individual initiatives should be integrated into comprehensive plans representing all points along the value chain – from energy producers to end-customers. These plans should be systematically deployed in areas with favourable policies, market conditions, and access to SAF.
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Aviation is fundamental to the world economy and to connecting people. While the pathway to decarbonize the sector is clear, it should be more ambitious and efforts should be front-loaded. Collaboration between ecosystem players in the sector, and more importantly across sectors, is essential to scale up demand and production of Sustainable Aviation Fuel (SAF). Working with more than 100 executives and experts around the world we defined 15 recommendations for action, which when integrated, would systematically decarbonize the sector
— Tarek Helmi, Partner, Deloitte Netherlands
As part of WorldClimate, we are focused on driving responsible climate choices, including a commitment to achieve net-zero greenhouse gas emissions by 2030 -- ahead of the 2050 timeframe set by the Paris Agreement. In line with the commitment, Deloitte LLP in the US has entered into sustainable aviation fuel (SAF) agreements with several US airlines—American Airlines, Delta Air Lines and United Airlines—which will cover a portion of Deloitte’s business travel. Through our SAF collaborations to date, Deloitte will be avoiding the emissions from approximately 5,000 metric tons of carbon dioxide (equivalent to approximately 16,000 passengers flying one way from NYC to LA). The investment in SAF is one way to actually avoid generating carbon emissions within our own value chain. Through these initial SAF agreements, Deloitte is leading efforts to create more market demand for SAF, with the goal of increasing availability and affordability and further SAF development, including clarity about corporate environmental reporting on SAF use. To this end, Deloitte is also one of the founding members of the Sustainable Aviation Buyers Alliance (SABA), launched by RMI and the Environmental Defense Fund. SABA supports and provides momentum to existing airline-company agreements, while driving investment and production of SAF and furthering technological innovation in the field of sustainable aviation.
More can be found here: Teaming up with top airlines for sustainable fuel
Energy is the pulse of our day-to-day life and how we create and use it is evolving rapidly. At Deloitte, we understand the opportunities the Future of Energy brings and the importance of connecting ecosystem players, innovators, regulators and thought leaders to create a new energy world that is sustainable and abundant. In collaboration with Shell and working closely with many leaders of the road freight industry, Deloitte explores the promise of decarbonizing the industry. We truly believe that as ecosystem players connect and adopt the right mind-set, the positive impact we make can be accelerated.
This report was produced in collaboration with Shell.