It’s easy to take modern air travel for granted. The rise of commercial aviation has transformed mobility to the extent that today, I can reach nearly any corner of the world in 24 hours for a very affordable sum. Low-cost flights have enabled much greater degrees of globalization. This has transformed the business world by breaking down geographic barriers. Just this year, I wrapped up meetings in Kuala Lumpur, Malaysia, on a Friday afternoon and was giving my daughter a hug when I returned on Saturday afternoon (aided, of course, by a 12-hour time change). Family holidays to once-inaccessible locations due to the slow pace and high costs of maritime transit have turned once-exotic destinations into tourism hot spots. Even regional travel has transformed. Despite the density of large cities in the Northeastern U.S., the only city where traveling via flying isn’t cheaper and faster from my home in Boston is New York City (and even then, trains only just beat the costs and speed of flying).
Air travel is unfortunately also increasingly problematic. Today, aviation accounts for roughly 2% of global emissions — a number that includes flights carrying passengers or cargo — and could be set to grow considerably. Today, annual emissions are just shy of 1 Gtonne of CO2, while the International Air Transport Association forecasts air travel to grow four-fold by 2040.
There is a clear focus on decarbonizing aviation today, and it emerged as one of the most asked about topics among Lux clients in 2023. Currently, there are three pathways to decarbonizing aviation:
- Electric: Electric aircraft mirror electric vehicles in that a battery stores energy that is used to power electric motors. While this enables lower-cost operations due to the relatively low cost of electricity compared to fuels, range is significantly reduced due to battery density, and speed is limited due to the inability to use jet engines.
- Hydrogen: Aircraft can use hydrogen to create electricity in a fuel cell or as a combustible fuel. More likely is the latter, as you can achieve the speed and thrust required to power commercial airliners with hydrogen. However, liquid hydrogen’s energy density is still just one-quarter of kerosene’s, limiting range without modifying aircraft to carry additional fuel.
- Sustainable Aviation Fuels (SAFs): These are liquid hydrocarbon fuels produced from biogenic or waste feedstocks, which mimic the composition of existing jet fuel to enable the use of existing infrastructure and aircraft. These are blended today but can be substituted completely. Given the minimal modifications required of aircraft and airports, and SAFs’ ability to support long-haul flights, this is the most promising opportunity for decarbonizing aviation.
Problem solved, right? Not quite. As attractive as SAFs may be, limitations in the availability of feedstocks prevent the deployment of the solution at scale, while other SAF pathways — like Fischer-Tropsch — face higher costs. Electric- and hydrogen-based flights remain at the prototype stage with no clear path to meeting range requirements for existing long-haul flights. Inevitably, the cost of this transition will fall on the shoulders of consumers. In Europe, where airlines will be subject to a 2% SAF-blending mandate in 2025, the industry has noted those costs will be passed in part onto consumers.
In the automotive sector, electrification is seen as a one-to-one replacement for existing cars. The transition to electric comes with a slight price premium that would result in a slightly smaller market, but not a dramatically different-size market. Aviation is unlikely to follow such a path; high costs will instead push many consumers (and businesses) to reconsider some trips. Even in a best-case scenario of cheap hydrogen (USD 2/kg) and non-fossil CO2 (USD 100/tonne), the cost of SAFs from the promising methanol-to-jet pathway will be twice as expensive as jet fuel today (which is already quite cheap). Business will likely push more interactions to virtual environments, a prospect seemingly more likely after Apple’s recently launched Vision Pro, while families reconsider their holiday destinations — or at least how to get there. For business travelers like myself, there may not be a choice, given that expense policies dictate that the lowest-cost method of transit should be used.
