Airline ticket prices will need to be 18% higher in 2050 if the aviation industry is to afford the trillions of dollars it will cost to meet sustainable aviation fuel (SAF) targets and meet decarbonisation goals, according to a new report.
Published by LEK Consulting, the research paper – Fuelling the Future of Aviation: Making Sustainable Aviation Fuel a Reality – identifies SAF as the “critical lever” for decarbonising aviation in the period to 2050 and beyond.
However, for the sector to achieve its SAF penetration target of 65% by 2050 it will require global production capacity of more than 400 million tonnes per annum, a huge increase on the sub-1 million tonnes available today.
That will only be enabled though the use of more expensive production solutions such as power-to-liquid fuel, the report argues, contributing to SAF remaining around twice the price of standard jet fuel, despite cost decreases associated with volumes of scale.
As a result, hitting the 65% target will cost “$3.5-5.5 trillion in excess of a kerosene-only future”, the study suggests. Total spend on kerosene in that scenario would be $8-9 trillion to 2050, it says.
If these costs are passed through to customers, ticket prices will need to rise by 18% by 2050, against a jet fuel-only baseline, it adds.
“Whilst this is a significant quantum, this cost must be seen in the context of the overall cost of delivering a net-zero future, which has been variously estimated as c.$130-140 trillion over the period 2022 to 2050.”
In fact, the SAF cost is just 2-4% of the estimated cumulative investment required to achieve net-zero, the report notes.
Provided there is a willingness by customers to pay “and if competitors can operate on a level playing field”, passenger demand in volume terms will only be around 7% lower by 2050. That implies a growth rate of 3-4% per annum – “only c.0.3% p.a. lower than in a no-SAF world.”
While that represents a potential “profit challenge” of around $1 trillion in the 2023-2050 period, the report suggests that could be partially offset through improvements to fuel consumption and operating efficiency, or even a steeper increase in ticket prices.
But to secure the necessary production ramp-up, action is required now from government and industry.
Key steps over the next decade include: agreeing consistent standards for SAF; scaling supply; growing SAF acceptance for industry and consumers; reducing fuel consumption; building a delivery infrastructure; and identifying and supporting “SAF pathfinders”.
“For the sector to meet its environmental goals, it is critical that stakeholders across both industry and government collaborate to accelerate the acceptance and adoption of SAF,” says John Goddard, senior partner and vice-chair, sustainability at LEK Consulting.
“Time is of the essence: without action now, the decarbonisation goal will not be achieved.”
Philip Meier, a partner at LEK Consulting, argues that mechanisms need to be found to give the investment community “sufficient confidence to back novel production pathways, and to finance the scale and capacity that is needed to materially decarbonise the sector.”
The report came as the UK government announced a commitment to introduce a “revenue support mechanism” to stimulate the country’s fledgling SAF industry.
To be introduced as part of a wider energy bill, the legislation will see the government launch a consultation by the second quarter of 2025 on options for designing and implementing the scheme.
The government has previously set a target of having five commercial SAF plants up and running in the UK by 2025. It has also pledged to introduce a SAF mandate for airlines that year.
But a draft timeline published by the Department for Transport suggests the scheme may not be in place much before 2026.
