Soaring Toward a Greener Future with Sustainable Aviation Fuel

Speaker 1 [00:00:01] Hi, it’s John here. If you are like me or probably like anyone you know, you probably have done a fair bit of flying this year. Some are calling it the year of revenge flying after the pandemic and flying continues to be at the center of our culture. It connects us with the rest of the world and promotes tourism, creates employment opportunities, helps generate trade and acts as an enabler for economic growth and development. It also poses a number of challenges when it comes to climate. I got to thinking more about this in September at New York Climate Week, when I was sitting on an airplane at LaGuardia Airport looking at all the airplanes lined up to take off and those waiting to land and wondered, is this the most hypocritical thing I’ve ever done to actually fly to a climate conference? Or is there actually a way to use all the ingenuity that has made the airline industry so great for so many decades to create sustainable flying? There are currently more than 100,000 commercial flights a day, and that number will keep on growing as the global population grows and as people pretty much everywhere take up more flying. And with that growth, of course, there’s going to be more emissions. The airline industry is trying to do something about that. Air transportation currently accounts for about two and a half percent of global CO2 emissions. And that may be a bit of an understatement because all those airplanes not only emit CO2, they affect the climate in several more complex ways through the concentration of other gases and pollutants. Some of us may buy carbon offsets to help reduce the net impact of our flying, but there’s also some incredible innovations going on in the industry, particularly around sustainable aviation fuel. European airlines have been pioneers with SAF, and now the Americans are racing to catch up. Under the Biden Administration’s Inflation Reduction Act, the U.S. now has a goal to produce 3 billion gallons of SAF by the year 2030. Can Canada catch up, too? We’re a nation of travelers. We have to be given our geography, but we also have to recognize how fast the game is moving. What’s our plan? What are the risks if we don’t get it right? And how long is the transformation going to take on the ground and up there in the sky? This is Disruptors. An RBC podcast. I’m John Stackhouse. Sustainable aviation fuel is at the center of the airline industry’s race to get to net zero, according to the World Economic Forum. SAF as its known could cut emissions by up to 80% when compared to traditional jet fuels. Can it also play a bigger role in Canada’s own plans to get to net zero? And how will it change travel for all of us? Today, we’ll explore the incredible world of aviation and the strides Canada is making towards a more sustainable sky. We’ll be joined by two experts. Our first guest is Angela Avery, executive vice president at WestJet. Angela is an experienced airline and energy executive. In addition to her work at WestJet. she’s been appointed to the United Nations Compensation Commission and has served on several not for profit boards, including the Canadian Energy Law Foundation, the Calgary YMCA, Arts Commons and the Calgary Zoo. Angela, welcome to Disruptors.

Speaker 2 [00:03:25] Well, thanks, John, for having me.

Speaker 1 [00:03:27] I’m so excited to talk about sustainable aviation fuel. I can be a bit of a geek that way. You’ve had a fascinating career. I’m wondering when you first got interested in what people call SAF.

Speaker 2 [00:03:38] Well, I was interested in SAF when I joined WestJet, so I joined WestJet in February 2020 and I came actually from the energy sector. So was an area where I was already keenly interested when I arrived at WestJet because I knew there were limited ways that we can really decarbonize in the aviation sector. And so for me, I was really excited to bring some of the knowledge I had from the energy sector to the airline when I joined.

Speaker 1 [00:04:02] That’s a great crossover. I wonder if you can define and explain for our listeners what exactly is sustainable aviation fuel.

Speaker 2 [00:04:10] Yeah, sure. It’s really a plug and play fuel that we can put directly into our aircraft fuel tanks today, but it’s developed from different sources than Jet A-1 fuel, which is the traditional fuel used in aircraft. And so, sustainable aviation fuel just means that it’s developed in a more sustainable way using more sustainable feedstock. I can geek out with you, John, in relation to what that means in terms of feedstock, but essentially what we’re using for sustainable aviation fuel is right now a lot of waste products. So whether that’s waste cooking oil or waste animal fat, or we can use waste forestry products and other things to essentially create what is almost the equivalent of regular jet A-1 fuel that would normally be produced through oil and gas activities.

Speaker 1 [00:04:55] What’s the environmental benefit?

Speaker 2 [00:04:57] The environmental benefits, interesting one, because at the end of the day the emissions are pretty similar in relation to the emissions that are the result of the flying. The real environmental benefit is frankly the feedstocks itself. And so by using biomass, we are essentially recycling. And so instead of introducing a new carbon product into the planet, we’re recycling a carbon product that already exists. What we’re finding right now is 70% less emissions through the use of sustainable aviation fuel than traditional Jet A-1.

Speaker 1 [00:05:25] And right now, and presumably for the foreseeable future, this is a blended fuel like I may have in my car. Is that correct?

Speaker 2 [00:05:32] That’s right. Boeing and some of the other technology leaders right now are testing flights that would have 100% sustainable aviation fuel on board. But right now, most regulators are suggesting that one ought not to go above a 50% blend. And so oftentimes what you’re seeing is one and 2% blends because there just is not a lot of sustainable aviation fuel available. But even blending one or 2% makes a difference. And so that’s the kind of blends that you’re seeing. But the regulators cap us at 50%. But with the view that we know that some of our technology leaders in this space are going to get us to 100% at some point.

Speaker 1 [00:06:10] And unlike electric vehicles, the plane doesn’t change. The fuel tank doesn’t have to change either.

Speaker 2 [00:06:16] No. And that’s the real benefit and game changer with sustainable aviation fuel, it truly is plug and play technology. We don’t have to change any of the kit on the aircraft. The engine stays the same, the fuel tank stays the same. And importantly, all of the kit leading up to the actual aircraft does not have to change either. Neither do the pipelines that service those tanks need to change. And so from an environmental perspective, it’s extremely benign in relationship to a fuel switch.

Speaker 1 [00:06:44] I’m guessing the fuel supply, though, and all the technology that goes into that is more complicated. Can you walk us through what has to change in the supply chain to make this work, especially at scale for the whole global fleet?

Speaker 2 [00:06:58] There’s two real challenges right now with sustainable aviation fuel. Otherwise, frankly, we’d be all filling up our tanks right now with it. But it’s the ability to produce SAF at scale is one issue and then one that is interrelated is frankly the cost of producing staff. So right now, producing staff is about 3 to 5 times more expensive than putting jet A-1 fuel in our tank. And so it’s difficult for the airlines to sign up for increasing their costs that way. The cost of our fuel would, in our case at WestJet, more than double the cost of an airline ticket in Canada. And so when you look at where SAF is being produced right now, globally, it’s being produced in jurisdictions that have extraordinary policy supports for the production of SAF where the producers of SAF had the capital confidence to be able to invest in what they often call in the refining complex the pots and pans necessary to create this new bio fuel. Oftentimes, you’ll see across North America biodiesel is being produced from these refining complexes. Biogen could also be produced as long as additional kit were added to these refiners, but they need that capital to do so.

Speaker 1 [00:08:09] Who’s leading the way?

Speaker 2 [00:08:10] Right now, it’s some smaller producers in Europe are leading the way. We’re seeing the U.S. now catch up, though, in so far as they’ve got now, those new policy supports that they had even prior to the Inflation Reduction Act. But what we’re seeing is a mix. We’re seeing some startups and we’re also seeing some of the traditional energy companies stepping in a meaningful way. We know both are required for us to get to our very large aspirations of billions of liters of sustainable aviation fuel being produced on an annual basis.

Speaker 1 [00:08:42] And right now, WestJet has a dedicated route, San Francisco, to Calgary. What have you learned from that and what will be required to take that to other routes?

Speaker 2 [00:08:51] It was a great trial, so we did that earlier this year, and so we trialed this for a three month period. What we learned was a couple of things. Firstly, there isn’t still a huge demand by our guests onboard the aircraft to pay more for sustainable aviation fuel. So I think that we’re really going to have to make the case with the policymakers and with our guests in relation to the importance of us continuing to decarbonize the industry. The other thing we learned, frankly, was that there were very few routes that we could actually do this trial on there, very few places that WestJet flies where you can actually acquire sustainable aviation fuel. And so we very deliberately picked San Francisco-Calgary as our route because you can acquire sustainable aviation fuel in San Francisco. You can do that because California has been providing policy support for the development of SAF for now many years and nothing is commercially available in Canada. So any of our domestic flying, if we were to use SAF, would require us to actually transport staff to Canada, which also causes its own obviously cost and emissions’ impacts.

Speaker 1 [00:10:00] What are the risks to Canadian airports and Canadian travelers of us not keeping pace with the U.S. Right now? It’s limited supply. You mentioned San Francisco, but a number of the big airports like LaGuardia are moving in this direction. And presumably in a few years, there will be a network of hubs that have SAF across the U.S.

Speaker 2 [00:10:22] Well, I think you’ll see it’s just increasingly difficult for Canadian airports to compete for business. And so to be left behind in relation to SAF as well, I think you could see that demand over time could erode in Canada. And so I think that’s the real risk here. And one of the big risks, I would argue too, John, is just that Canada has this incredible amount of feedstock in relation to SAF. We’ve got all the ingredients here in terms of also having a really great capacity when it comes to technological know how. I mean, a lot of the green tech investments that are being made right now globally in decarbonizing the energy sector are happening here in Alberta and also across Canada. And so I would hate for us to leave that intellectual horsepower on the sidelines. Airports will be the beneficiaries of SAF and they could be left behind. But I think that there’s a whole Canada question here as well.

Speaker 1 [00:11:14] You’ve mentioned the subsidies now available in the U.S., is that all Canada needs to do is keep pace with what the U.S. is offering or are there other challenges for Canada?

Speaker 2 [00:11:24] I think keeping pace policy wise would make the difference, John. And I think that’s what the IADA, which is sort of the governing agency for all airlines, is called the International Air Transportation Association. That’s what they’re looking for. They’re looking for convergence of policies around the world because you don’t want to create winners and losers. Air travel is not a luxury. This is something that’s absolutely required in Canada. We have a gigantic country with limited infrastructure relative to our size. And so unlike Europe, I can’t hop on a train to go up to Edmonton, but I can certainly fly to Edmonton. And in my estimation, Canada has to keep up when it comes to airline infrastructure.

Speaker 1 [00:12:04] I’m interested in your experience with customers and our unwillingness, if I can put it that way, to pay a green premium, as some call it, when you think about marketing, sustainable aviation fuel or sustainable flying generally, what do you think will be the right triggers for consumers, for travelers?

Speaker 2 [00:12:23] I think it’s going to be a really tough nut to crack, John. I don’t think we can market our way into gas paying a premium necessarily for the use of sustainable aviation fuel. We’d like to provide that option because we will have some guests that wish to do that. We also already provide the opportunity for our guests to use carbon offsets, but we don’t find a tremendous uptake. I don’t think that’s a Canada problem per se. When I talk to fuel providers globally, there are very few jurisdictions where the consumer will pay extra for the biofuel option. And so I think we have to find a solution to the problem of the commons that’s a bit different than relying on the guests to uptake it themselves directly.

Speaker 1 [00:13:05] And that comes back to the public policy point you’re making. This is going to take a lot more, frankly, government involvement if we’re going to see the switch move faster perhaps than it has been. Assuming governments do move in that direction or help the industry and all of us travelers move in that direction. How quickly do you think this will change?

Speaker 2 [00:13:27] Well, I think it will change really quickly. In 2016, there were only 500 flights that actually used sustainable aviation fuel. And this year they’re expecting almost 500,000 flights. So we go to half a million flights from 500 flights in the course of just a few short years. And there is hyperbolic growth right now in the SAF side. Obviously, we’re going to have to grow faster and we’re going to have to decarbonize more swiftly. But from my perspective, we can be fast, followers in this space now. We are not the ones necessarily in the lab having to invent SAF. We can be fast followers.

Speaker 1 [00:14:04] I mentioned the transformation earlier, and that’s going to take probably 20 plus years to play out, just given the vehicle life for most cars on the road. Do you think the airline industry will transform faster than that? Is this something that will will change completely in the next decade, or will it also take several decades?

Speaker 2 [00:14:24] I think that we have a better opportunity to decarbonize faster in aviation because of SAF. So if we were relying on EV technology like we are in the auto side, I would be less bullish because there’s obvious challenges when you’re adding weight to the to the aircraft and there’s very limited sort of flying that can be, we think in the short term, replaced with electric flying. Right, we’re very fortunate, I would argue in the aviation front that we’ve got a technology that’s right here available to us that can quickly decarbonize by up to 70% on average, now, the flying that we’re undertaking.

Speaker 1 [00:15:05] Meeting my carbon footprint as a traveler would be 70% less.

Speaker 2 [00:15:10] Yes.

Speaker 1 [00:15:11] What a fascinating conversation. Angela, I wonder as we move towards close, if you could look into your crystal ball and tell us where you think aviation will be a decade out in terms of sustainability?

Speaker 2 [00:15:22] I’m really excited about where we’re going to be in a decade, John, because you’re seeing new technology, even when it comes to aircraft themselves, aircraft are oftentimes 40% more aerodynamic now than they were 30 years ago. And so when you think about your own car, the how fuel efficient it was ten years ago versus what it is today, we’re driving those technology improvements when it comes to our fleet. We’re driving those technology improvements, even on board the aircraft. You’ll see we don’t have TVs onboard aircraft anymore and most airlines don’t because that saves thousands of liters of fuel. The other thing on the sustainability front, John, that I’m most excited about is that we’re going to see more people get the benefit of air travel. Only 20% of the world has actually been onboard an aircraft. I’d like to see that number change. I would really like for us to democratize, travel for the whole world. And so it’s going to be an imperative for us to decarbonize at the same time we democratize, but to advance everybody’s opportunities globally. I think you’re going to see a lot more aircraft and you’re going to see a lot more sustainable flying by that aircraft in the next ten years. And I’m excited about that.

Speaker 1 [00:16:30] What a great and exciting vision that is to decarbonize while also democratizing travel. Angela, thank you for being on disruptors.

Speaker 2 [00:16:37] Thank you. I’m so glad you would have me.

Speaker 1 [00:16:41] Angela Avery is executive vice president of the WestJet Group. In a moment, we’ll hear from one of Canada’s other leading voices when it comes to sustainability in the skies. So stay right there.

Speaker 1 [00:16:58] Welcome back. Today, we’re talking about sustainable aviation fuels and how they’re disrupting the aviation industry with aims of decarbonization. Our next guest is Geoff Tauvette. He’s one of the leading voices when it comes to SAF adoption and implementation in Canada. Jeff is the executive director at the Canadian Council for Sustainable Aviation Fuels, otherwise known as C-SAF. He’s a commercial aviation and engineering professional who’s at the forefront of airline sustainability. With more than 25 years of experience integrating aviation, fuel procurement, environmental and climate risk management. He’s also worked to develop Canada’s first SAF roadmap. Geoff, welcome to Disruptors.

Speaker 3 [00:17:38] Thank you, John. Glad to be here.

Speaker 1 [00:17:40] You’ve had a long journey, if you don’t mind the expression, in the aviation world. Tell me when you first got excited about sustainable aviation fuels.

Speaker 3 [00:17:48] Sure. I think over my aviation career, I was one of the first to meld the Fuel and Environment departments together several years back and was able to live through all the various climate policy discussions that were occurring at the time. And in my previous role, I spent a lot of time figuring out how to manage that carbon portfolio and how to manage emission reductions, progress for airlines and sustainable aviation fuels. Really our only solution at the end of the day for aviation to achieve emission reduction. So using my background at the time in the fuel world, I integrated myself into the clean tech business or network anyways, in western Canada and really started to look at ensuring that we get a production of SAF in western Canada. Was my focus at the time.

Speaker 1 [00:18:37] And what along the way, Jeff, have been some of the bigger challenges and barriers to getting to more widespread adoption of SAF?

Speaker 3 [00:18:44] Yeah, well certainly cost is still a big issue and we do want to focus all our discussions on that. But it is, it is a very costly product today and that’s a factor, of course, of we don’t have a lot of it in the world. And so the hope is when we get to scale, we can reduce those costs. The other angle as well is really we’re missing a policy environment in Canada, a national strategy that will help us put in place the regulatory certainty in order to make those investments. It’s really bringing people together and figuring out which stakeholders have that magic value chain that that can bring cost efficiencies and bring production online. And that’s really why C-SAF or Canadian Council for Sustainable Aviation Fuels, is formed and has really sort of filled that gap.

Speaker 1 [00:19:36] I’m curious, Geoff, that we haven’t been more assertive on the policy front. Canada has an ambitious national climate plan that we have a well-regulated airline industry and a number of well-run airlines. One might have thought this is something we’d be at the forefront of.

Speaker 3 [00:19:53] Our C-SAF strategy, and we really highlighted this in the road map that we released in June. We’ve developed a plan to produce a billion liters, of SAF by 2030. The road map shows the pathway and the actions that we need to take in order to set in place those building blocks to ensure that we are able to secure those investments and move forward on investing. But again, it is costly. I mean, unfortunately, today the cost of SAF is 3 to 5 times more regular jet fuel. So the trick is how did the airlines work that in to their cost profile and how do we ensure that Canadians can still travel affordably? And I think you have to context how aviation works, who they’re competing against. And the U.S., unfortunately, today has a lot of policies in place that are impacting SAF production, SAF cost, and it really is causing sort of a competitive issue for for Canadian aviation.

Speaker 1 [00:20:57] What’s the risk to Canada and to Canadian travelers as well as the airline industry if we don’t get to that 1 billion litre goal that you’ve set?

Speaker 3 [00:21:06] Well, with what the U.S. has in place today, we’re worried that a lot of the innovation and production of sustainable fuels will occur in the States. And so Canada just becomes essentially we’ll send sustainable feedstock down south. Have the U.S. make the product and we buy back at a higher premium because the system that we’re in. And then, of course, you see the opportunities in the U.S. and Europe, where the aviation industry is decarbonizing as well. And does Canada get left behind? And then we’re not as competitive, if you will, in the future because we haven’t had the opportunity to decarbonize in a cost affordable way.

Speaker 1 [00:21:42] What do you think government can and should do in the near term to up our game?

Speaker 3 [00:21:47] Well, certainly we need some form of incentives to ensure that sustainable aviation fuel is produced affordably. The investment climate is not competitive because of the industrial policy that the U.S. has put in place. We need all the different types of feedstocks. We need all the different types of technologies to convert those feedstocks into fuels. Some technologies are more ready than others in terms of commercialization. So when you look into the future of the renewable fuel that is actually growing in volume is SAF. And so that that should provide a great business or future fit business opportunity for suppliers of SAF. Because we know it’s growing and this is what are tentatives in the roadmap is in fact is that this is a future economic opportunity for Canada. We can use our feedstock, we can essentially make it here and then because it’s growing in volume, we should be able to have in place a policy that sort of puts those building blocks in place to be able to scale, to create that opportunity here in Canada in the future.

Speaker 1 [00:22:52] You mentioned the need for incentives. I also wonder if there are technology developments on the horizon that maybe could reduce the cost of SAF?

Speaker 3 [00:23:01] So we are seeing those come forward for sure. There’s catalysts and all the chemistry that goes behind that is getting better. And so it is getting cheaper on that end of things. Our problem, of course, is that we’re competing against renewable diesel and some of the other fuels. And then the ultimate goal for aviation is to get to these fuels called power to liquid fuels. That’s where we’re using really a renewable source of hydrogen and a renewable source of carbon. And really the process is going backwards from regular fuel. How you have your fuel, you burn it, it releases a whole bunch of energy and it turns into molecules in the air. We want to take those molecules from the air and go backwards and turn it into a fuel. And the cool thing about that is, yeah, we need to figure out hydrogen. Yeah, we need to figure out how to get the carbon from atmosphere. But if we spend some time figuring out how to advance some of those medium term technologies a little bit more quickly, it puts us in a good position to get more quickly on to power to liquids as well.

Speaker 1 [00:23:58] You mentioned hydrogen. How far off are we from hydrogen being a significant component of this?

Speaker 3 [00:24:06] So hydrogen is is an interesting component of of all fuels, but certainly SAF. So, we need it today because we are going to need more of it to help us process some of this fuels into liquid fuels. There’s just a missing component in some of these biomass type of feedstocks. So definitely we need a good source of renewable hydrogen in the mix to help us convert these fuels and into SAF from a power plant perspective. When you see some of the technology reports, I think they’re figuring near the 2050s and beyond is where you’re going to see maybe some opportunities for aviation over the long haul to use hydrogen as an actual fuel. So lots of time will need to be dedicated, lots of risk involved. So we need to figure out how to sort of put that into market as well, which is why, again, SAF is that sort of go-to solution for aviation in the long term. It fulfills the emission reduction requirement, it’s safe to use across the variety of age of aircraft that are flying today. There’s a few missing elements, if you will. So we still need to blend it with regular jet fuel to make sure that it can function in the engines. And lots of work going on to ensure that we can use 100% SAF. So so no more blending. So that’s going to take a while and we just need to produce more of it.

Speaker 1 [00:25:24] Geoff, you’ve laid out a pretty rational road map. What do you think is the barrier to executing on that?

Speaker 3 [00:25:32] I think the biggest missing piece is just how do we set up a regime that supports the production? How do we ensure that suppliers get the right signal to be able to make the investment that airlines and their consumers can still be competitive at the end of the day and have an affordable product? How do we pull private investment into the fold to help develop some of this technology? And that’s all going to have to come down to some form of federal strategy that the provinces can then build on top of with their industrial strategies or some of the manufacturing afterwards. But without that clear signal on how we’re going to do that, we’re just always in a discussion mode in terms of how we invest, right? There’s just not enough certainty going forward in order to pull that required investment to make the production of SAF happen.

Speaker 1 [00:26:25] What a great call to action that Canadians have long been innovators and leaders in the aviation space. And Geoff, you’ve laid out an opportunity here for the country to take that into a new era of sustainable flying. Thank you for being on disruptors.

Speaker 3 [00:26:40] I appreciate it. Thank you, John.

Speaker 1 [00:26:45] That was Geoff Tauvette, Executive Director of the Canadian Council for Sustainable Aviation Fuels. We all know the climate is changing and of course, the world is changing. Today, we heard how the aviation industry is also changing. The big question I take away is can Canada move fast enough to keep up? I liked Angela Avery’s description of sustainable aviation fuel as a plug and play option. It’s something airlines are already doing. It’s something that the fuels’ industry is quite good at. It’s also something Canada can be a global leader in. We’re already a producer, as both Geoff and Angela explained. A biomass, the stuff that goes into fuel blends. And we’re a world leader and innovator in the fuel space. So how do we put together the right mix of technology, of commercial ambition, of consumer awareness, and a public policy that will help transform in a positive way the climate impact of flying? There’s a role for all of us to play because on the climate journey, none of us can afford to be just passengers. Until next time. I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.

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