Aviation’s energy transition will rely on a collective global approach

WASHINGTON, DC, 11 April 2023 – Experts from the aviation sector briefed international financial institutions today at a meeting held on the sidelines of the World Bank and IMF Spring Meetings in Washington, DC. As part of its commitment to reach net-zero carbon by 2050, the air transport sector will require a rapid shift to new types of energy including sustainable aviation fuel which can reduce emissions from the sector whilst using existing aircraft and fuelling systems.

Executive Director of the cross-industry Air Transport Action Group, Haldane Dodd said that the session was part of a concerted effort to inform the financial sector of the need for substantial investment in sustainable aviation fuels (SAF). “The civil aviation sector has set a goal of net-zero carbon emissions by 2050 and analysis shows that one of the key levers for decarbonisation in the sector is the switch to SAF and away from fossil fuels. This will require a significant effort to scale-up production facilities in countries all over the world.

“SAF presents an opportunity for most countries to foster new, green, energy sectors. Supporting economic development, climate action and a just transition for millions of energy workers. The investment will be significant. Our estimation is capital expenditure of some $1.45 trillion is required over the coming 30 years. Annualised, this is around 6% of typical oil and gas capital expenditure in a given year. Much of it will be in developing nations where sustainable feedstock opportunities exist. Analysis shows that the transition could create or sustain up to 14 million jobs worldwide.

“Aside from governments putting in place supportive policy environments, much support will be needed from the finance sector. Private capital and institutional investors such as pension funds are expected to provide much of the investment, but catalytic funding will be needed from public sources such as the international financial institutions to incentivise the growth in SAF, particularly in developing economies.”

Today’s briefing to a group of multilateral development banks is part of a wider outreach to engage the finance sector in the aviation energy transition and in the lead-up to negotiations on global SAF deployment at the International Civil Aviation Organization this year.