Insights from The Financial Times, Reuters, Bloomberg and National Geographic
The news
A major German airline has announced that it will do this increase some flight prices by a maximum of €72 ($77), with part of the cost of sustainable aviation fuel passed on to passengers.
Lufthansa said it would impose the surcharge on flights departing from Europe as part of its efforts to comply with a European Union rule coming into effect in 2025 that requires at least 2% of airlines’ fuel to come from sustainable sources must be provided.
SIGNALS
Sustainable fuel is scarce and expensive
Sustainable aviation fuel, which is made from waste oil or agricultural raw materials, is the primary strategy of the aviation industry to reach its 2050 net-zero target, Bloomberg wrote. But fuel is scarce and current production is scarce represents a fraction of global needs. In 2023, manufacturers produced 500,000 tons of cleaner fuel, but Lufthansa alone used 8.45 million tons of fuel in the same period, according to The Financial Times. The cost of the cleaner fuel is also about double the price of traditional fossil fuels, prompting airline companies to resort to price hikes to help consumers maintain their margins.
Flying will become increasingly expensive
Decarbonizing the aviation industry is is expected to cost $5 trillionThat’s what McKinsey analysts say. And airlines have warned passengers about it will have to bear part of the burden of the green transition, Bloomberg reports. Some countries are taking a more direct approach: earlier this year, Singapore and Malaysia introduced taxes on airline tickets to help finance the purchase of sustainable fuels and offset carbon emissions. But sustainability, Bloomberg argued, may not help consumers warm up to the change: “It means little price reprieve for flyers who have been hit by rising prices since air travel resumed after the pandemic. Now they will also have to pay to neutralize aviation’s carbon footprint.”
It’s not clear whether sustainable jet fuel will even reduce emissions
While some studies show that sustainable jet fuel can help reduce an airplane’s emissions by as much as 90% compared to one that uses traditional fossil fuels, according to National Geographic, there are several types Sustainable aviation fuel can have different emission profiles depending on how they are produced. Flights cannot yet run entirely on the cleaner fuel; And because most of it is produced using commodity crops, environmental groups have argued that this perpetuates the loss of carbon sinks, such as peatlands and forests, in favor of monoculture agriculture. Other types of low-emission fuels are being developed, but may take years before they are available. “In the short term, at least, There is no way to significantly reduce aviation emissions without reducing aviation,” argued The New Yorker.
