Net Zero Industry Tracker 2024

PolicyAVIATION The EU, US and several other high-aviation countries have led the world in both mandate and incentive policies encouraging the adoption of low- carbon technologies, especially SAF. For example, the European aviation ecosystem has come together to develop an action plan to unlock final investment decisions (FIDs) for e-SAF projects in Europe.140 Nevertheless, aviation is inherently a cross- border activity and will require harmonization and mutual recognition of carbon accounting frameworks and sustainability standards to ensure transparency and accountability for low-carbon technology deployment. States will need to work with sustainability verification organizations to strengthen the accuracy of emissions reporting and ensure that ecosystem actors adhere to clear, consistent guidelines. The IATA’s TrackZero141 initiative underscores the industry’s commitment to promoting standardization and transparency in emissions tracking, facilitating collaboration among airlines and stakeholders to share best practices, and supporting the development and adoption of SAF to reduce reliance on fossil fuels. Book and claim systems, which decouple physical SAF from its environmental attributes, allow buyers to pay for SAF while avoiding the extra cost and inefficiency of transporting SAF to areas that lack the infrastructure to receive it. The proper implementation of book and claim systems will require coherent and reliable policy frameworks across borders. Improved carbon accounting will also ensure policy compliance and provide essential clarity to both consumers and industry stakeholders, promoting accountability across the sector. Aviation industry policy summary TABLE 5 Policy type Policy instruments Key examples Impact Market-basedCarbon price EU Emissions Trading System (ETS)142Sets a cap on carbon emissions that tightens over time. Obligated industries are required to buy allowances for each ton of carbon emitted above this cap and are thus incentivized to reduce emissions due to the cost of purchasing carbon credits or allowances. A total of 20 million “free” allowances are reserved for airlines that use SAF, serving as a quasi-incentive. Product standard ASTM standards for SAF pathways143ASTM is of crucial importance for the aviation fuel industry as it is the basis of the international standard for jet fuel quality, and SAF in particular. It defines which feedstocks must be used, the processes that act on those inputs and the properties of the outputs for each pathway. Mandate-basedDirect regulationsICAO CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation)144CORSIA obligates certain airlines to offset all international aviation emissions above a baseline from 2019, and thus creates demand for certified carbon offset projects outside the aviation sector. Low-carbon technologies reduce emissions outright and thus lower the amount needed to be offset through CORSIA. FAA Aircraft CO2 standards145These standards mandate fuel efficiency improvements, which reduces emissions per flight, leading to cumulative reductions in CO2 emissions over the life of an aircraft. Government targets ReFuelEU Aviation mandate146Mandates that from 2025 onwards, a proportion of the fuel supplied at EU airports must be SAF. Starting with a 2% share of SAF from 2025, this proportion is set to gradually increase to 70% from 2050. Incentive-basedSubsidies US Inflation Reduction Act 45Z tax credit147Lowers the cost of SAF production, making it more competitive with conventional jet fuel, driving greater adoption by airlines. Incentives UK revenue certainty mechanism for SAF148As uncertainty over future revenues remains a barrier to investment, a revenue certainty mechanism will provide greater certainty to investors for a defined period of time, driving investment in SAF production in the UK. Direct R&D funds/grantsEU’s Clean Sky Initiative149This initiative funds projects on SAF, electric aircraft and advanced aerodynamics to cut carbon footprints. Net-Zero Industry Tracker: 2024 Edition 50