Airlines and energy companies clash over supply of green fuel

By Tim Hepher, Lisa Barrington and Aditi Shah

DUBAI (Reuters) – Airlines and energy companies clashed over the scarce availability of alternative fuels on Tuesday as carriers ended a three-day summit struggling to reconcile near-record demand with supply chain problems and pressure to meet environmental goals.

The aviation industry has committed to reducing emissions to net zero by 2050, largely through plant-based Sustainable Aviation Fuels (SAF).

But with current SAF supplies covering just 0.5% of airlines’ fuel needs, disagreements emerged during an annual meeting of the International Air Transport Association, attended by energy companies including France’s TotalEnergies.

“Total’s net profit last year was $23.2 billion. The net profit of the entire airline industry in 2023 was US$27 billion”,

IATA Director General Willie Walsh said during a closing debate.

“The fuel companies that produce the problem… we need to see companies like Total investing significant sums of money in developing Sustainable Aviation Fuel. That’s the reality of where we are.”

The head of the French energy giant’s aviation and maritime business defended its commitment to helping industries like aviation, which have few immediate alternatives, achieve their goals.

“Thank you for achieving our excellent results,” responded Senior Vice President Louise Tricoire during lively exchanges on stage in Dubai, adding that TotalEnergies already reinvests the majority of its profits into renewable energy research.

“So I don’t agree that we don’t do our part with the SAF; We are doing our part.”

SAF production doubled in 2023 and is expected to triple in 2024. But it costs three times more than kerosene and airlines reiterated that this fact would have to be passed on to consumers.

They also complain that they are competing with other industries for access to limited renewable fuel capacity and need more support from governments to complete the ambitious transition.

Last year, governments set an interim target of a 5% reduction in emissions through the use of low-carbon fuels by 2030.

IATA has failed to set its own interim target, with members reluctant to be trapped without widespread government policies to support the politically agreed target, delegates said.

But Walsh said the amount of SAF available made the interim target seem ambitious, while also reaffirming the 2050 net zero target.

At the same time, some senior delegates privately questioned whether aviation could meet the 2050 target, adopted in 2021 to link the sector’s climate action to the 2015 Paris Agreement.

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The industry is trying to transition while meeting post-COVID demand – an effort that Qantas sustainability director Andrew Parker likened to “heart surgery during a marathon”.

In Europe, environmental groups say the challenge of meeting targets is only compounded by the scale of the industry’s own growth, highlighted by figures released this week showing that IATA forecasts almost $1 trillion in revenue by 2024.

“I don’t get that debate or argument when I go to India, China, Latin America or Africa, where it’s exactly the opposite, where there’s a genuine desire to see greater connectivity,” Walsh told Reuters.

Attended by a record number of 1,700 delegates, the 2-4 June summit was held in Dubai, the world’s largest international hub.

IATA’s next annual meeting will be in Delhi, capital of the world’s most populous nation and another aviation powerhouse.

(Additional reporting by Alexander Cornwell; Editing by David Evans)