Aviation makes up a significant part of our carbon footprint, and biofuel plays a big role in Air New Zealand’s plan to reduce those emissions.

Over the past year-and-a-bit, New Zealand has experienced the benefits of being an isolated island nation. Our big Pacific moat proved to be a pretty effective protective barrier against the spread of Covid-19, but as the world starts to open up again, our reliance on planes and our commitment to reducing emissions will fall back into direct conflict.

Pre-Covid stats suggested the aviation industry was responsible for 2.8% of global emissions, with expectations that the number would rise. But because of remoteness and reliance on tourism, in New Zealand aviation makes up 13% of the country’s total emissions. No-one likes a hypocrite and, as Dr Paul Callister and Robert McLachlan wrote in The Guardian recently, sustainable aviation fuel (SAF) is the only way we can reach our targets under the Zero Carbon Act and Paris Accords and still keep flying.

It’s certainly not a new idea. In 2008, Air New Zealand flew the world’s first test flight powered by a 50/50 mix of jatropha biofuel and standard jet fuel, but the momentum around biofuel has increased substantially in the past few years. The IATA website says that over 300,000 flights have been taken using SAF since 2016 and Boeing recently said that its planes would be able to run on 100% SAF by 2030.

Air New Zealand has been working with a range of other organisations, including Z Energy, as part of a SAF consortium. Its goal is to create a roadmap for a domestic SAF production industry – as well as ensure the government’s policies are fair and take into account things like feedstock availability (the ingredients required to make biofuels, like waste fats and oils, forestry waste or municipal waste) and the required investment into infrastructure to ensure a reliable supply.

“SAF can help us reduce carbon emissions by up to 85% compared to traditional diesel or jet fuel so this really is a significant opportunity to decarbonise our long haul flights,” says Meagan Schloeffel, Air New Zealand’s head of sustainability.

Electric, hybrid and hydrogen planes are also real possibilities for the future, she says, and Air New Zealand believes electric planes will play a role in its domestic network (Sounds Air has already placed an order). But the rise of SAF and new aviation tech also requires the infrastructure to support those technologies, both in New Zealand and at other airports around the world, so there is still work to be done before they become viable options.

Forward progress 

Everyone knows you don’t look at the Facebook comments. But sometimes it’s hard to resist and Julian Hughes, Z Energy’s general manager of transition, sheepishly admits to stealing the occasional glance.

“Some of them are quite astute, but I read one that said something like the combination of biofuels and future fuels in the same sentence is an oxymoron,” he says. 

He respectfully disagrees. Z Energy and its competitors have been criticised by some for using biofuels as a way to delay the inevitable and keep their main revenue stream flowing for as long as possible. And given the big profits these companies still make from their fossil fuel-based business model it’s not surprising that there are suspicions of their motives and questions about their willingness to change.

But Hughes says the belief in biofuels – both in the air and on the ground – is based on speeding things up, not slowing things down.

“I believe we have been very open about this. Biofuels are not the answer. They’re a transitional product. They’ll have a lifetime. It might be 30 years, it might be five years, depending on what they’re used for.” 

He says the electrification of the transport network will play a major role in our transition, as will green hydrogen that is able to be created by our renewable electricity sources. And Z sees itself being part of the network that distributes those fuels. 

“But we can reduce our carbon emissions now. Biofuels are readily available, and they’re a proven technology.” 

Hughes says that what Z is trying to do is take earnings and profits from carbon and use those to help its customers and the country transition away from carbon. It seems slightly counterintuitive, but for a large example of that plan in action, look at Norway, which has put its ‘bad’ money to good use. Its vast oil wealth and its massive sovereign wealth fund are being used to fund things like tax subsidies on electric cars and EV infrastructure and it’s now one of the world’s biggest Tesla markets. 

Hughes says Z has already proven its willingness to transition to a low-carbon economy with the launch of Z Electric and by investing over $40 million to build a biodiesel plant in South Auckland. That proved difficult for a number of reasons, he says, from what people were prepared to pay for it, to what happened to the price of its main ingredient tallow, to Covid-related demand carnage, so the factory was forced to go into hibernation last year because the numbers just didn’t stack up. 

But earlier this year, at that same factory, the government announced it had agreed to mandate the use of a lower-emitting biofuel blend across the transport sector to reduce emissions. And it was welcomed by Hughes as a way to re-grease the wheels of transition. 

“Under a mandate your whole mindset changes. It’s not about profit. It’s ‘what is the cost?’ and ‘how do we make it happen?’ because everyone’s going to have to do it.” 

The big picture

Covid has unintentionally reduced the aviation industry’s emissions and walloped the global travel and tourism sectors. And while Schloeffel says the past 12 months have been very difficult for the airline and its people, it has also shown how vital it is for New Zealand to keep air transport links open. 

“They’ve played a crucial role in connecting people but also from a cargo perspective, transporting medicine, PPE and other things,” she says. 

Despite the financial turmoil, Schoeffel says the airline’s commitment to sustainability has strengthened. 

“We want to communicate the value of New Zealand establishing a SAF industry here,” she says. “There’s a positive impact around reducing carbon emissions. And it will create skilled jobs and other jobs, many of which are in the regions.”

The consortium believes a domestic SAF industry could kick off by 2025 and provide 50% of the biofuel the aviation sector needs by 2050, with the right policies and investment. Its roadmap suggested that a 2.5% biofuel supply mandate would be appropriate, and that was based on what the technology could feasibly produce, “but it would increase over time”. 

Pay the real price

A familiar challenge – much like the one faced by Z Energy and its biodiesel plant – is that there is still a fairly large “commercial gap” between fuels. And, like ground transport, a mandate such as the one the New Zealand government committed to in principle in January would make a big difference, says Schloeffel.

 “SAF commands a price premium compared with traditional jet fuel, so it will require some significant public and private investment, but also policies to help close that gap.”

Behavioural scientists understand the power of the default setting. For example, organ donation rates typically exceed 90% in opt-out countries but fail to reach 15% in opt-in countries. And when it comes to biofuel mandates, more than 60 countries have implemented a default setting to lower emissions.

We can all currently minimise the impact of our flying through voluntary carbon offsetting. And while Schloeffel says Covid did not slow the uptake of this scheme, only a small percentage of passengers do it. 

Hughes says the mandate moves action on emissions reductions away from being a consumer choice and it becomes automatic. Like folic acid that’s added to our bread or insulation that needs to be added to rental houses, governments make these calls because it’s deemed to be for the greater good and the players in that market either adapt to those rules or leave. 

Price can also influence behaviour. Cheap flights led to the modern-day aviation boom and the Climate Change Commission has also proposed raising the carbon price. But, as pointed out in The Guardian, the proposed increase would equate to just a $6 rise in the cost of a flight from Wellington to Auckland, so at that level it’s very unlikely to dampen demand enough to reach our lofty carbon reduction targets. 

Interestingly, SAF does very little for our carbon budgets because aviation is not part of the Paris Accord. So, given the prevalence of Goodhart’s Law, which suggests that when a measure becomes a target humans will do what they can to influence that particular measurement and then game the system, what’s to stop it from being ignored? 

“Z knows it’s important to do it and there’s also a commercial incentive for us to continue to be a jet fuel supplier; Air NZ is committed to it, with the Sustainability Council that advises it pushing it hard on this,”says Hughes.

“And there’s an emerging consensus that we need to do something really tangible in terms of sustainability for our tourism reset.”

New Zealand – and its national carrier – is particularly vulnerable to environmental criticism and the growing no-flying, flight-shaming movement, particularly in Europe, is a trend Air New Zealand is well aware of. Part of that is because there are other options for public transport in Europe, Schloeffel says, but she believes that investment in sustainability and decarbonisation could actually turn into a competitive advantage for Air New Zealand.

“We want to demonstrate our commitment to our customers and stakeholders that when they do fly here, they’re flying on one of the most fuel efficient airlines in the world.” 

Hughes says you could feasibly stretch that sentiment out and “create a nice tie-in to our low-carbon tourism industry”. 

In what seems like a major win-win, the parliamentary commissioner for the environment Simon Upton has suggested that any additional visitor charges be put into an innovation fund that would look at producing a low-carbon aviation fuel, as well as funding climate change work in the Pacific. 

Gathering speed

“The government has clearly indicated it wants to create a domestic biofuels industry in New Zealand, and that lines up well with the desire to transition to a lower-carbon economy,” says Hughes. 

But alongside the optimism, there is also a dose of realism. There were discussions about ramping up our biofuel use towards the end of Helen Clark’s prime ministership in 2008, and, as a result of that enthusiasm a market started to spring up around it. That’s also happening now after the government’s announcement earlier this year, as evidenced by Z’s plan to get its own biodiesel plant back up and running and, ideally, build a much bigger plant to cope with the expected demand (a separate plant would be required to produce SAF). A decision on what levels of biofuel will be mandated is due in November. 

“It’s close, but to me it feels like it’s too far away because we’ve been down this track before.” 

The Climate Change Commission draft report talked about creating a biofuels market of 140 million litres by 2035. “This would equate to roughly 3% of total domestic liquid fuel demand in 2035, or 1.5% of total fuel demand including international transport,” it said. 

“That’s not much in quite a long time,” says Hughes. “I’d like to be able to do that in 15 months, not 15 years.” 

Like a true petrolhead – or, perhaps more accurately, a biofuelhead – he just wants things to go faster. 

This content was created in paid partnership with Z Energy. Learn more about our partnerships here.