Aviation biofuel investments grow in anticipation of global emissions tax

Signal of change / Aviation biofuel investments grow in anticipation of global emissions tax

By Futures Centre / 27 Jan 2015

In our topic hub on the future of shipping, we’re asking who the future captains of the sea will be, as the prospect of an emissions tax increases. 

A slew of biofuel partnerships and investments in the aviation industry in 2014 indicate biofuels may be ready to scale, moving beyond a 'chicken and egg' scenario in which industry investment awaits international legislation, and vice versa.

Cathay Pacific negotiated a long-term supply agreement with biofuel producer Fulcrum over ten years; British Airways announced a partnership with Solena Fuels, which has committed to building the world’s first facility to convert landfill waste into jet fuel. Within Europe, a consortium consisting of KLM, Amsterdam Schiphol, sustainable jet fuel producer SkyNRG, and the Dutch government, is working on a central biofuel blend for the common fuel supply system at Schiphol Airport, due to roll out in 2015.

Industry experts expect to see an international mechanism to put a tax on aviation emissions within the next two years. This would significantly alter the economics of low-carbon alternatives, and may be part of the motivation for this recent rise in investment.
Image credit: The Open University

So what?

Significant progress in biofuel investment and uptake on the part of the aviation industry will place growing pressure on the shipping industry to do the same, or find alternative means to cut emissions. 

Shipping, which accounts for similar, if not higher levels of global emissions as the aviation industry, faces similar pressures to reduce the sector’s greenhouse gas emissions. For shipping companies, switching to biofuels has the added advantage of eliminating air pollutants (SOx and NOx), which are already being enforced via environmental regulations set out in the MARPOL Convention.

The shipping sector is still in a very early stage of orientation towards biofuels. There are a growing number of research and pilot projects, but no significant consumption at the moment.



What might the implications of this be? What related signals of change have you seen?

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