Aviation expert Robin Riedel from McKinsey & Company talks about decarbonizing aviation, including upgrading aircraft, improving operational efficiency, sustainable aviation fuel, novel fuels and aircraft configurations, and carbon credits. They also discuss McKinsey's engagements in aviation decarbonization and share career advice for aspiring professionals.
Aviation's contribution to global carbon emissions is significant due to the industry's potential for growth and non-carbon effects on climate.
Factors driving aviation decarbonization include customer demand, government regulations, financial considerations, and societal pressure, with sustainable aviation fuel costs being a major challenge.
Deep dives
Decarbonizing the aviation industry through various levers
The aviation industry is focusing on decarbonization through a combination of different levers. One major approach is the development of more fuel-efficient aircraft designs, with engines being the primary driver of efficiency improvements. Operational efficiency, including improved routing and higher seat density, is another important lever. The use of sustainable aviation fuel (SAF) is considered the largest lever towards decarbonization. This involves creating liquid hydrocarbons from biomaterials or carbon capture. The industry is also exploring novel aircraft designs, such as blended wing bodies, as well as offsets to achieve carbon neutrality.
The carbon footprint of the aviation industry
The aviation industry is responsible for approximately 2 to 3% of global carbon emissions. While this may seem small, it is significant considering the sector's potential for growth and the need for other industries to reduce their emissions. Fuel combustion, primarily in jet engines, is the largest contributor to emissions in the industry. Additionally, aviation's high-altitude operations have other non-carbon effects on climate, such as contrails and emissions from salt, which can have amplifying impacts on warming.
Drivers and concerns behind decarbonizing aviation
The aviation industry is motivated to decarbonize due to several factors. Customers are increasingly concerned about the environmental impact of air travel. Government regulations and policies are also pushing for reduced carbon emissions. Financial considerations, such as the cost of capital and investor demands for greener options, are influencing the industry. Lastly, employee and societal pressures for companies to align with decarbonization goals are a driving force. Carbon offset programs and the purchase of carbon credits are being explored as means to offset emissions and offer customers the opportunity to contribute to carbon reduction efforts.
The Higher Cost of Sustainable Aviation Fuel
Sustainable aviation fuels are currently significantly more expensive than traditional fossil fuels, making it economically challenging for airlines and industry players to use them at scale. The cost of sustainable aviation fuel is around two to three times higher than fossil fuel, equating to roughly $500 per ton of carbon abated. This creates a barrier to widespread adoption and necessitates finding solutions to reduce costs while meeting sustainability goals by 2050.
Impact on Ticket Prices and Global Harmonization
Implementing a mandate to switch to sustainable aviation fuel would result in increased costs for airlines, impacting ticket prices. While the cost of fuel represents approximately 30% of an airline's overall cost, a requirement to use 5% sustainable aviation fuel by 2030 would lead to a 1-2% increase in ticket prices. However, achieving 100% usage could lead to a 20% rise in ticket prices. Furthermore, global harmonization of regulations is essential to create a level playing field, as local regulations introduce discrepancies between airlines and impact competition.
This episode in our hard-to-abate series features aviation expert Robin Riedel, a Partner at McKinsey & Company who co-leads the McKinsey Center for Future Mobility. Robin describes five approaches to decarbonize aviation: upgrading aircraft, improving operational efficiency, sustainable aviation fuel, other novel fuels and aircraft configurations, and carbon credits. We also learn about some McKinsey engagements on aviation decarbonization, and conclude with Robin’s career advice.