Sam from our Energy team explores the new net zero laws and regulations set by the government to become carbon neutral by 2050, and the pressure this has put on our suppliers within the Aviation Fuel sector.
What are the challenges our Aviation Fuel suppliers are facing?
New net zero laws and regulations set by the government to become carbon neutral by 2050, have put enormous amounts of growing pressure on our suppliers within the Aviation Fuel sector, to decarbonize their activity. These challenges have resulted in our suppliers to find alternative solutions to help reduce their CO2 emissions, moving away from using Conventional Aviation Fuel (CAF) that is derived from fossil fuels.
What alternatives can be used?
One of the alternative solutions comes from a renewable source known as Sustainable Aviation Fuel (SAF). This bioproduct is produced from several natural supplies, such as Edible oil crops/sugars, wastes and residues lipids, agricultural residues, wood residues, algae, and municipal solid wastes.
What does this mean for supply and demand and overall costs?
This renewable source has a ratio blend with standardized Jet Fuel, which does not require changes to existing infrastructures and aircrafts. The current demand of the product is controlled through well connected refined links between the UK and other offshore countries around the world, including Belgium, Australia, and the USA. Although the supply and demand are managed through these links, the cost of this demand can often result in the product being more than double the usual amount.
To help minimise these offshore costs, numerous manufacturing locations around the UK will site more refined bases that will ultimately eliminate these higher distribution costs from overseas and allow for the UK to be more independent in sourcing this renewable product.
How will this change help the environment?
In recent years suppliers within the market have sold manufacturer refined processes that were heavily involved in sourcing fossil fuels. Having sold these connections, and having begun sourcing renewable solutions, this has enabled suppliers to procure other offsetting opportunities that will ultimately also work towards helping the environment and global warming.
What schemes and projects are our suppliers undertaking?
By April 1st, 2021 - the industry is looking to offer Carbon Offsetting to its customer base that will bring new projects into play to coincide with net zero demands. In a ‘help the environment’ scheme, customers will be offered the possibility of selecting an option that will offer an additional cost of 2p-5p per litre when purchasing fuel before flying. Any additional costs will therefore be donated to projects around the globe to support reforestation.
Other net zero projects within our supplier base have been driven through sustainable projects within wind turbine farms, solar farms, and other renewable generations. This had led them to be one of the UK market leaders supplying energy to UK charging points for electric vehicles.
What does this mean for the future?
By continuing to drive net zero innovation within the aviation industry, this will further project growth of traffic, improvements on additional technologies and operations. Predictions are therefore forecasting that by 2050, net aviation carbon emissions will be half of what they were in 2005.
If you have any questions or would like to know more about our Aviation Fuel framework and how can YPO can help, please get in touch with the team!