Air NZ calls for Govt mandates to help drive sustainable aviation fuel use (2024)

New Zealand’s national carrier has taken a leap towards its net zero 2050 goal, with its biggest ever purchase of sustainable aviation fuel.

But Air NZ chair Dame Therese Walsh said it was now time for the Government to step in with policies that would help level the playing field for airlines, as airlines faced the high cost and low supply of sustainable aviation fuel.

Air New Zealand has secured nine million litres of neat sustainable aviation fuel (SAF) from the world’s largest producer, Neste.

The Finnish company’s fuel was made from used cooking oil, and could reduce carbon emissions by up to 80 percent over the fuel’s lifecycle. Air NZ would blend up to 40 percent SAF with fossil fuel, achieving proportionate emissions reductions.

And while there was some concern over the use of palm oil to create bio fuel, Neste’s renewable aviation vice president Alexander Kueper said the company did not use palm oil and had robust supply chain checks to ensure the SAF was genuinely sustainable, rather than a “tick box” exercise.

This marked the largest purchase from Neste made by an airline outside of North America and Europe, and would be delivered to the Kiwi airline by the end of the year. It was nine times the size of Air New Zealand’s last purchase from Neste in 2022.

Air New Zealand has committed to reaching net zero by 2050, making this one of the key things it can do to reduce emissions – as opposed to offsetting emissions.

“Sustainable aviation fuel is currently the only solution to significantly reduce emissions from long haul flight, but it currently makes up less than 1 percent of the global fuel supply,” Walsh said.

“For aviation to reach its net zero carbon emissions goals by 2050, the SAF industry will need to scale significantly.”

Ultimately, it was the right thing to do, she said. But there were barriers to airlines, and fuel suppliers, investing in SAF.

The biggest problem was the lack of global supply.

While production was ramping up – Neste would produce 1.5 million tonnes of SAF this year, compared with 100,000 tonnes last year – the fuel was expensive. There was also limited refining capacity, and airlines were not incentivised or mandated to purchase the fuel.

To put things in perspective, Air NZ would buy 9 million litres, refined at Neste’s Singapore refinery. While the airline’s total fuel uptake from April 1 to November 30 this year would be 850 million litres.

“The fact there is so little available in the world, is why we are leaning into this deal,” Walsh said.

“The more deals that are done and the more countries that put mandates in place mean that the more people will adopt it. And organisations like Neste will produce more and that’s the only way we’re going to get momentum and get to the place where we want to around net zero 2050.”

In February, Singapore said it would require all flights departing the country to use SAF, starting in 2026. And from 2025, planes taking off at any EU airport would have to use a minimum of 2 percent SAF. That percentage would increase each year, with mandates moving to 6 percent by 2030, 20 percent by 2035, and eventually 70 percent by 2050.

Walsh said as behaviour changed, the mandates might change into incentives. But this was the right place to start.

Neste’s Alexander said he believed it was important for governments to step in with policies – either mandates or incentives – to help drive the market.

While the previous Labour government tasked officials with investigating a mandate and funded two studies into the viability of producing sustainable fuel in New Zealand, the new Government cancelled that work when it came to power.

Robert McLachlan, a mathematician at Massey University who specialises in climate change, said SAF was important as some sectors, especially aviation and shipping, had no other realistic options available to them in time.

For example all airlines had pledged net zero by 2050 and alternative fuels were the only technical option that was (nearly) ready, he said.

Like Walsh, McLachlan said the Government needed to intervene, to support the growth of the industry.

He would support a mandate, or the Clean Skies for Tomorrow pledge signed onto by many in the aviation industry (including New Zealand). It promised to meet 10 percent of global aviation fuel demand by 2030 and a net-zero goal by 2050.

Aviation accounts for up to 3 percent of global emissions, but international aviation was not included in New Zealand’s commitment to become carbon neutral by 2050.

The Climate Change Commission recently produced a discussion document, discussing whether international aviation and shipping should be added – noting that New Zealand’s international aviation footprint was high by international standards.

“I would also like to see international aviation and shipping brought into the 2050 target and into the carbon budgets,” McLachlan said.

“Aviation is vital to New Zealand, but if we continue to allow it a free ride to pollute and to grow without limit, we risk just becoming more reliant on an unsustainable industry.”

The Commission would come back to the Government with advice by the end of the year.

While New Zealand did not have the refinery infrastructure or technology, it did have the biomass.

Using things like forestry waste to make SAF could help increase New Zealand’s energy independence, he said.

However, there were few refining plants, and it was unlikely to change without some kind of Government intervention.

New Zealand also had the potential to make e-fuel from renewable electricity. A study, backed by $575,000 in public money, was underway at Marsden Point.

While Air NZ looked to avert climate change through emissions reductions, another Kiwi aviation company was fighting the symptoms.

NZ Aero (formerly Pacific Aerospace) manufactured small planes, and its SuperPac XSTOL (Extremely Short Take-Off and Landing) aircraft had the ability to be used in rain-making operations and to address air pollution.

Stephen Burrows, NZ Aero chief executive, said the new planes had the ability to fly in extremely hot and humid conditions, to carry out operations like rain-making – where salt crystals or dry ice were dispensed into clouds, causing rain.

Other uses for the new aircraft were pollution control, which could include settling the dust in an area, and firefighting – problems that are expected to become more prevalent as the world heats.

Burrows’ sights were set on Thailand. The Thai military had bought 52 of NZ Aero’s aircraft in 50 years, and he hoped the country – or others in the Southeast Asia region – would buy a further $37 million of its new planes.

Air NZ’s SAF announcement was made during the Prime Minister’s trip to Singapore.

Christopher Luxon’s connections and profile as former chief executive of Air NZ would likely have held some sway in the in-demand company Neste choosing to deliver a large shipment to the national carrier.

It was fitting the announcement was made in Singapore, as the shipment would come from Neste’s Singapore refinery, and be delivered to Los Angeles, at LAX.

Two years ago, former PM Jacinda Ardern made a commitment to work collaboratively with Singapore on SAF alternatives when she visited the Southeast Asian nation.

As well as Air NZ and NZ Aero, other aviation and tourism businesses joined Luxon as part of his business delegation. They included Hamilton Jet, Auckland Airport and Christchurch Airport.