In Collaboration with McKinsey & Company Clean Skies for Tomorrow Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation INSIGHT REPORT NOVEMBER 2020 Cover: Unsplash Terms of use and disclaimer The analysis presented in this report (herein: liable to users for any claims brought against users “Report”) is based on a methodology integrating by third parties in connection with their use of any the latest statistics from academic research, public Data. The World Economic Forum, its agents, documents, international organizations, analysis officers and employees do not endorse or in any from McKinsey & Company, and interviews with respect warrant any third-party products or services industry experts. The findings, interpretations by virtue of any Data, material or content referred to and conclusions expressed in this work do not or included in this Report. 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Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation 2 Contents 4 Foreword 5 Executive Summary 7 Introduction 10 The Forum’s Clean Skies for Tomorrow Initiative 12 Report methodology 13 Part 1 Sustainable Aviation Fuels as a Decarbonization Pathway 16 1.1 ASTM-certified aviation fuels 17 Part 2 Recommended SAF Pathways 20 Part 3 SAF Feedstock Sustainability Guidelines 21 3.1 Identifying the most sustainable feedstocks 22 3.2 Assessing practical availability 24 3.3 Technological pathways 28 Part 4 Challenges of SAF Production and Technology Maturity 33 Part 5 Managing SAF Production Costs 34 5.1 Overview 36 5.2 Detailed cost breakdown by technological pathway 40 Conclusion 41 Acknowledgements 42 Endnotes Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation 3 October 2020 Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation Foreword Daniel Riefer Christoph Wolff Platform Fellow, Head, Shaping the Future World Economic Forum of Mobility, Associate Partner, World Economic Forum McKinsey & Company The World Economic Forum’s Clean Skies the year.1 This sudden crisis for the industry has for Tomorrow (CST) initiative, established in resulted in thousands of job cuts among airlines, 2019, is a coalition across aviation’s value airports, manufacturers and others. chain working to facilitate the transition to net- zero flying by mid-century. In partnership with Many have received significant government ambitious senior leadership across industry, financial support to remain in business, while government, and civil society, this public-private others have collapsed or declared bankruptcy. partnership is driving a shift to zero-emissions Recovery is expected, albeit slowly. As public aviation through sustainable aviation fuels (SAF) health experts learn more about the SARS- and other clean propulsion technologies. COV2 virus, international travel standards will improve. When governments reopen SAF is a necessary step in aviation’s borders and consumer confidence returns, decarbonization pathway, especially with next- air travel will again become commonplace. generation technologies like electric flight and hydrogen-powered propulsion still years away But in the meantime, climate goals must be from application at scale. The CST coalition is met and the clock is still ticking on this decade working to address the chicken-and-egg scenario of delivery. Encouragingly, CST’s stakeholders whereby producers and consumers of SAF are have shared that both individual and corporate both either unwilling or unable to carry the initial customers are demanding more sustainable cost burden of investing in new technologies to travel options. In line with the Forum’s Great reach a scale where they are more cost competitive Reset initiative, guiding decision-makers along with existing fossil fuel-derived options. the path to a more resilient, sustainable world beyond coronavirus, CST continues to accelerate The aim is to break this impasse and advance the the energy transition of the aviation sector. As commercial scale of viable production of sustainable the International Organization for Public-Private low-carbon aviation fuels (bio and synthetic) for Cooperation, the World Economic Forum is the broad adoption in the industry by 2030. This report, ideal platform to inform, support and accelerate developed in close consultation with the CST this transformation. coalition, serves to provide a fact base on which swift and bold actions should be taken by public Along this journey, we are consistently encouraged and private sector leaders alike. by the CST coalition members and partners who through their engagement reinforce their commitment The COVID-19 pandemic, however, continues to to achieve sustainable and climate-neutral flying even have profound effects on society, economies and in this challenging time. Together with the Energy the aviation and travel industries especially. With Transitions Commission and the Rocky Mountain many international borders closed and mandatory Institute, the Forum’s partners in the CST coalition quarantines imposed, airline passenger volumes secretariat, we commend the commitment of our are down approximately 60% and gross operating ambitious community and look forward to continued revenues have dropped nearly $400 billion for partnership on the global race to zero. Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation 4 Executive Summary A transition to carbon-neutral flying is possible and sustainable aviation fuels are the most promising decarbonization pathway in the near term. Climate change is one of the most urgent Aviation is one of six hard-to-abate sectors which, challenges of our time and requires collective along with cement, steel, plastics, trucking and action to solve, embodied in a shared vision and shipping, represent approximately 30% of global collaboration across government, industry and annual carbon emissions. According to the society. The decade until 2030 is our window European Commission, by the middle of the 21st of opportunity to shift the global trajectory to a century demand for flying could increase aviation’s sustainable future. Indeed, the actions taken now GHG emissions by more than 300% over 2005 will determine the ability of future generations to levels, although this increase has been temporarily sustain themselves on this planet. slowed by the COVID-19 pandemic. The United Nations Framework Convention on The economic and social benefits of air travel Climate Change’s (UNFCCC) Paris Agreement, are undeniable, providing global access to signed in 2016, was a watershed moment by goods and services and opportunities to demonstrating a global consensus on the threats of experience new places and cultures. The climate change and commitment to act. In charting aviation