Airlines push for roadmap to boost sustainable jet fuel production

MONTREAL – Airlines are calling on the federal government to implement measures that boost sustainable aviation fuel production in Canada.

Investors and potential suppliers need incentives to start producing greener oil, a pair of industry groups said. They hope Ottawa can match new U.S. programs and ultimately help reduce airplane pollution, which accounts for about two percent of global carbon dioxide emissions, according to the International Energy Agency.

The country’s long history of resource development, agriculture, renewable energy and aircraft manufacturing should put it at the forefront of the fight for greener skies, according to the Canadian Sustainable Aviation Fuels Council and the National Airlines Council of Canada. .

However, Canada has yet to commercially produce any sustainable aviation fuel, also known as SAF.

Typically derived from used cooking oils, animal fats or organic waste, the product reduces about 80 percent of an airplane’s emissions.

Airlines have two main requests for Ottawa to encourage fuel factories and long-term production: an investment tax credit at a rate of 50 per cent on manufacturing facilities, and a production tax credit with a horizon of 10 years, on par with an incentive south of the border. (Commodity price contracts that aim to set a minimum price for SAF would be an alternative to the latter.)

US producers are already eligible for a tax credit of up to US$1.75 per gallon (3.8 liters) under the Inflation Reduction Act.

“Compare that to Canada, which is nothing,” said Jeff Morrison, who heads the national airline council.

“If you’re an energy company and you see SAF as an opportunity and you’re wondering, ‘Where do I go?’ – it’s kind of a no-brainer.”

Investors and potential suppliers need incentives to start producing greener oil, industry groups say. They hope Ottawa can match U.S. programs and ultimately help reduce airplane pollution.

Last year, the federal government pledged $350 million to support the decarbonization of the aerospace sector, establishing a national network that supports research and development projects ranging from alternative fuels to aircraft design.

But the plan offered none of the manufacturing incentives shippers were demanding, Morrison said.

“Research on green technologies and incentives for SAF production must go hand in hand,” he said.

The two groups are also calling for a “reserve and claim system,” whereby producers enter or “reserve” the fuel they have distilled and customers “claim” the product they have purchased, receiving a certificate to be used in business. corporate. emissions reporting and for tax purposes.

The aviation industry has set a goal of net-zero emissions by 2050 through bodies such as the International Air Transport Association trade group and the International Civil Aviation Organization, a United Nations agency.

“If we are serious about achieving a decarbonisation and net zero emissions target, approximately two-thirds of the activity needed to achieve this will come from SAF,” Mr Morrison said.

Other measures, such as electric batteries for short-haul flights and green hydrogen (gas produced with renewable energy) could offset the rest of the emissions in air travel, although widespread use of either energy source is still further in the pipeline. The horizon.

The advantage of sustainable aviation fuel is that it is a “direct” energy source. The engines and fuel pumps require virtually no adjustment to handle a half-and-half mixture of SAF and traditional jet fuel.

The world’s two largest commercial aircraft manufacturers, Airbus SE and Boeing Co., aim to be 100 percent SAF compliant by 2030.

SAF production rates have doubled each year for the past three years, rising to around 600 million liters in 2023, according to the Sustainable Aviation Council. This year they are expected to triple. But the boost will only bring the total to about 0.5 percent of global fuel demand.

Part of the slow pace of supply relative to demand is due to money. Producing the green alternative costs at least four times more than that derived from petroleum.

The prohibitive price of sustainable fuel, coupled with the growing urgency to deploy it amid stricter government rules and a warming planet, means the aviation industry faces an “existential threat” if it does not work to decarbonize quickly, Deborah Flint said. , who heads the Greater Toronto Airports Authority.

“It’s pretty jarring,” he told attendees at a panel on clean aerospace at the Canadian Club in Toronto in October.

“The threats of shrinking the (aerospace) business or making it too expensive are very real and imminent for us.”

Big players like Air Canada are on board with the push toward greater fuel efficiency, purchasing a number of new cost-saving planes such as the Boeing 787 Dreamliner and 737 Max and the Airbus A220.

In April, it announced the purchase of 9.5 million liters of SAF from the Finnish oil refiner Neste. But the amount totaled less than 0.2 per cent of the 5.71 billion liters of fuel Air Canada consumed in 2019.

“Canadians are travelers,” Morrison said. “This is the primary and most effective way to decarbonize air travel in Canada and around the world.

“People care about that,” he continued. “They want to know that when they travel, they are not contributing to global climate change.”

This report by The Canadian Press was first published Feb. 2, 2024.

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