No Clear Flight Path For Airlines On Sustainable Jet Fuel

Two days after a report concluded that none of the world's 20 biggest publicly traded airlines is doing enough to tackle climate change, executives from Alaska Airlines ALK and Delta Air Lines DAL said the sustainable jet fuel supply chain has a long way to go before airlines could transition away from conventional energy sources.

"There's a great business case for investing in problem-solving right now," said Diana Birkett Rakow, vice president of external relations for Alaska Airlines. "But the price differential to buy at larger scale" is too big, she said. "We all have to figure out how to fill that gap."

Through a combination of carbon offsets and efficiency measures Delta has reduced carbon emissions 13 percent since 2005, said Tony Gonchar, vice president of Delta Air Lines' Seattle operation. To meet 2050 emissions targets, low-carbon fuels will be necessary, he said. The biggest hurdle is "price, price, price."

"A penny difference in the price of fuel is $40 million to our bottom line," he said. "We are a public company; we have shareholders." Among the key questions yet to be addressed, said Gonchar, is what role government is going to play in subsidizing the cost of clean fuels.

Birkett Rakow and Gonchar participated in a panel discussion on March 7 at the Washington State Sustainable Aviation Fuels summit.

The fast-growing airline sector currently accounts for 12 percent of transportation related CO2 emissions. The International Air Transport Association (IATA) has set a goal of reducing global airline emissions 50 percent by 2050.

But a report released earlier this week by the Grantham Research Institute at the London School of Economics said that the aviation sector must do much more to reduce fleet emissions.

Many airports are greening their facilities. But as Gonchar noted, aviation's carbon footprint is dominated by fuel. Ninety-nine percent of Delta's emissions come from fuel, he said.

Throughout the summit, investors and fuel producers sounded the importance of putting in place a regulatory structure that would send the fledgling jet fuels sector a clear signal.

"It's only through clear government legislation that our industry can truly flourish," said Scott Lewis, executive vice president, commercial operations & strategy for World Energy, one of America's largest suppliers of biodiesel. "Being able to monetize the reduction of carbon is critical."

"The greatest challenge in the whole energy game is the challenge of scale," said Eric Toone of Breakthrough Energy Ventures, a fund that invests in technologies that reduce greenhouse gas emissions. The second is the challenge of cost. People will pay a premium for what they put in their mouth or on their skin. Full stop."

Birkett Rakow noted that Alaska Airlines has one of the sector's most fuel-efficient aircraft fleets and that the airline has flown multiple commercial passenger flights with sustainable jet fuel from used cooking oil.

To get to the next level, she said, industry and government need to "further best ideas about how do we encourage economically viable options, how do we close the logistics gap and how do we talk to the public about these issues."

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