News / Investment from oil and gas majors needed for aviation to hit green goals

© Andrew Angelov

Investments from oil and gas majors are “needed big time” in order to reach the aviation industry’s 2030 carbon reduction goal of 5%, but the “untrodden ground” makes the investment unattractive.  

Julie Kitcher, chief sustainability officer at Airbus, said that when it came to SAF production, “the industry is not moving fast enough”, and argued that it shouldn’t be left up to aviation alone to finance this shift. 

 “I think we do need the big oil majors to come to the table, big time,” she said.  

“When you look at their balance sheets and the relative financing to overhaul or refurbish a refinery today compared to the margins of an airline, you’re talking about a relatively low amount of CapEx for an oil major to refurbish a refinery for biomass. 

“If they don’t step up, then nobody’s going to meet the net zero target,” she warned. 

Indeed, The Loadstar has previously reported that SAF production was no longer an engineering problem, but a financial one. 

Chief strategy officer and MD of United Airlines Lauren Riley added: “We’re a 4% margin business, probably everyone in this room knows that. Commercial airlines don’t make a ton of money.  

“If we’re talking about replacing a commodity product with a sustainable alternative that’s four times the cost, what does that do to our balance sheet? Will we have an airline in two years? No.” 

And CSO of Boeing Brian Moran agreed it would take only some 10% of oil and gas companies’ CapEx to transition to and scale SAF, adding: “We need them at the table to have the infrastructure advantage.”

Jan Toschka, CEO of SAF production company Zaffra, explained that because SAF was a “very new” concept, it presented as high-risk to oil and gas companies.

He said: “If you are a large oil and gas company you ask ‘where do I get the best returns with the lowest risk and the most predictable forward cash flows?’ So therefore, not surprisingly, we will see only some investments from large oil and gas. 

“Who ultimately has the highest interest in this industry to become greener? In all honesty, I don’t think it’s the oil and gas companies. It is the aviation industry. So therefore, no surprise that we see this,” he added. 

According to Mr Moran, “the bigger energy companies say we have a demand problem. There’s demand scarcity. And they say ‘well, demand at what price?’ And so, we have to bring the green premium down, especially as the cost of carbon is rising.”  

Ms Riley concluded: “We need to figure out a different way of purchasing that’s risk-sharing across the value chain. We need to find a different way to finance that premium.”