‘Left behind’: Australia lags on low-emissions jet fuel
Published Mon 14 Mar 2022
The Age
14 March 2022
Australian airlines’ efforts to reduce carbon emissions are being undermined by the country’s slow start establishing an alternative jet fuel industry, which carriers, producers and industry groups blame on government inaction.
Sustainable aviation fuel - or SAF - is the cornerstone of the world aviation industry’s long-term plan to drive down its carbon footprint, which before the COVID-19 pandemic accounted for about 2 per cent of global emissions.
Qantas boss Alan Joyce is disappointed at the slow development of a sustainable aviation fuel industry in Australia. CREDIT:CRAIG ABRAHAM
But SAF is not currently being produced in Australia at commercial scale, frustrating airlines like Qantas, whose chief executive Alan Joyce last week expressed dismay he could buy SAF at overseas airports but not at home.
Shahana McKenzie, CEO of industry group Bioenergy Australia, said the country was being “left behind” as the United States and Europe invested billions developing domestic SAF industries, spurred on by government incentives and mandates.
“If Australia doesn’t really make some big steps in this space in the next five years, then we will end up importing our sustainable aviation fuel,” Ms McKenzie said. “Other countries are looking at SAF as a new industry... it’s really now that we need the government to be stepping up.”
SAF produces up to 80 per cent less carbon emissions than conventional jet fuel and is made from biomass such as household waste, used cooking oil and crops, which could be a new revenue stream for Australian farmers.
Ms McKenzie said $33.5 million in federal funds announced late last year through the Australian Renewable Energy Agency would not be enough to create a new local industry, and that SAF deserved the same government attention as hydrogen, which has limited short-term application in aviation.
Oil and gas giant BP - which is converting its Kwinana refinery, near Fremantle in Western Australia, into Australia’s first SAF and renewable diesel plant - said a lack of SAF mandates and government support had held back local production.
“Countries with clear regulatory frameworks are understandably attracting greater investment in supply projects,” BP said. “In the short-term, interim support from governments and other stakeholders through policy incentives is needed.”
SAFs usage worldwide is negligible due to its high cost, being two to three times more expensive than petroleum-derived fuel. Larger scale production is considered key to lowering costs to parity with petroleum-based jet fuel.
Qantas will use SAF for about 15 per cent of its fuel use out London’s Heathrow Airport this year (pictured) but it is not available locally.
The International Air Travel Association (IATA), the airline trade body, forecasts SAF could account for 2 per cent of the global industry’s fuel use by 2025, 17 per cent by 2035 and 65 per cent by mid-century. Hitting that target is key to its 2050 net-zero emissions target. The Australian government’s Bioenergy Roadmap, released in November, said that 18 per cent of the Australian aviation industry’s fuel usage could be SAFs by 2030.
A spokesman for Angus Taylor, the Morrison government’s minister for energy and emissions reduction, said the government had supported biofuels to the tune of just under $500 million to date through its Technology Investment Roadmap, and would continue to work with industry to develop lower production costs through its ARENA funding package.
“This technology-led approach is important in developing a sustainable biofuel industry that isn’t reliant on consumer-funded mandates or ongoing subsidies,” the spokesman said.
“Mandates can increase costs for consumers while removing the important ability to choose. This contradicts the government’s position to encourage consumer choice.”
US airlines can earn carbon credits when they use SAFs and the Biden administration last year proposed $1 billion in grants for SAF production facilities and tax credits for SAF usage as part of a plan to uplift production to at least 3 billion gallons a year by 2030.
France has made it compulsory for all flights leaving to the country to fill up their tanks with at least 1 per cent SAF while the European Union has proposed a bloc-wide 2 per cent mandate starting in 2025 and increasing over time.
Qantas committed in 2019 to spending $50 million over 10 years helping to develop a local SAFs industry, and in December entered a contract with BP to provide 10 million litres of SAF at Heathrow Airport this year, which will cover about 15 per cent of its expected fuel use on flights out of London.
Qantas chief executive Alan Joyce said higher oil prices meant high ticket prices.CREDIT:RHETT WYMAN
Mr Joyce, the CEO, said at a conference in Sydney last week that Qantas was close to signing a deal for SAF supply in California, too.
“The problem is we don’t have an industry here,” Mr Joyce said. “Could you imagine an industry here, where you create jobs, you’re buying crops ... you’re investing back in agriculture? It could be massive, and we’re missing that opportunity now.”