As the world tackles the pressing challenge of climate change, the aviation industry finds itself at a crossroads. Responsible for approximately 2 to 3% of global CO₂ emissions, aviation's contribution to climate change is significant and projected to increase in the coming years.
Indeed, we are not witnessing a slowdown in flight demand; in fact, the opposite is true – and as such, there is an urgent need to decarbonize air travel.
One of the most promising solutions emerging in this context is Sustainable Aviation Fuel (SAF). According to projections, if we are to achieve carbon neutrality by 2050, more than 60% of the reductions in aviation sector emissions will need to come from SAF. This statistic clearly underscores the critical importance of accelerating both the production and adoption of this innovative fuel.
To achieve carbon neutrality by 2050, more than 60% of the reductions in aviation sector emissions will need to come from SAF.
Facilitating its adoption, perhaps the key advantage of SAF is its "drop-in" capability, meaning it can be used in existing aircraft without requiring any modifications. This positions SAF not merely as a potential future solution but as a viable option available to the industry today. Airlines can begin integrating SAF into their operations now, making strides toward sustainability without the need for costly overhauls of their current fleets.
The transition to SAF is further bolstered by a supportive regulatory environment and favorable market dynamics. Initiatives such as the European “Refuel EU” program and the “SAF Grand Challenge” in the United States, backed by the Inflation Reduction Act, have established a robust regulatory framework to encourage investment and innovation in SAF production. Countries like the United Kingdom, Japan, and Singapore are also taking proactive steps to develop strategies that will accelerate the growth of SAF, ensuring that the aviation sector can meet its environmental goals.
Moreover, there is a growing commitment from major airlines to incorporate SAF into their operations. Companies are responding to increasing pressure from customers, investors, and NGOs to decarbonize their activities. By signing long-term purchase agreements for SAF, these airlines are not only committing to a greener future but also facilitating the financing and industrialization of the necessary infrastructure for SAF production.
But development of SAF requires a broader effort than that of just the aviation industry. It requires collaboration among a range of stakeholders: fuel producers, airlines, regulators, and financiers, to note a few.
SAF requires a broader effort than that of just the aviation industry. It requires collaboration among a range of stakeholders.
As such, Natixis CIB is committed to working closely with its clients, partners, and regulatory authorities to accelerate the adoption of SAF. We believe that with the right partnerships, investments, and regulatory framework, SAF can become the cornerstone of a carbon-neutral aviation sector.
Natixis CIB is also proud to be part of several industry initiatives driving the development of SAF, including the European Low Carbon Fuel Alliance, Project SkyPower and Impact on Sustainable Aviation.
