Indian Aviation Industry Must Prioritise Decarbonisation

Civil aviation in India has taken off on the wings of growth in middle-income population and expansion of airport infrastructure. Today, India operates nearly 800 aircraft and has a delivery pipeline of over 1,000 aircraft. The writing is on the wall: India is destined to be home to some of the largest civil aviation companies in the world. This exciting scenario has a flipside to it—the aviation industry is a significant contributor to global CO2 emissions, contributing about 2.5%. The emission footprint of the aviation industry makes it highly susceptible to domestic and international policy and regulatory initiatives to curb emissions.

Recognising the need for the aviation sector to decarbonise, both the International Air Transport Association (IATA) and the International Civil Aviation Organisation (ICAO) have set net zero goals. The ICAO also has a 2% average fuel efficiency improvement per year goal for the 2020-2050 period and carbon neutral growth for the 2020-2040 period. In 2018, ICAO launched the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to support carbon neutral growth.

How do you decarbonise the sector? With fuel-related emissions accounting for 99% of the emissions, aviation emissions depend on three factors: air traffic volume, fuel efficiency, and the CO2 intensity of the fuel. Global aviation emissions have steadily grown despite a steady gain in aircraft efficiency because of the steep growth in air traffic volume while the jet fuel CO2 intensity remained unchanged.

With the sector set to grow significantly, the needle-mover clearly is the fuel, and sustainable aviation fuel (SAF) was born. SAFs are low-carbon fuels produced from renewable biomass-based sources or renewable power. There are multiple pathways to produce SAF depending on the feedstock and the process.

The net zero strategy of IATA and ICAO hinges on SAF. Policy and regulatory measures are firming up across the world, driving SAF use. The UK and the EU require 2% SAF in 2025 and further increasing it to 22% by 2040 and 70% by 2050. The EU also requires departing flights to fill SAF-blended fuel. The United States launched the SAF Grand Challenge and adopted SAF targets of 3 billion gallons per year by 2030 and 100% of aviation fuel by 2050. Japan, Norway, Canada, and Indonesia also have blending targets. Some of these countries also provide financial incentives. Despite all this, SAF volumes are still miniscule.

Global SAF production doubled to 0.5 million tonne in 2023, representing 0.1–0.15% of the total aviation fuel used, and is expected to triple that in 2024. SAF use must reach nearly 360 million tonne by 2050 to meet the net zero goal. Price varies regionally and with the pathway used to produce SAF, but prices remain high. In 2022, the average price stood at nearly 2.5 times the price of jet fuel.

Policy and regulatory actions are in the making in India as well; the government of India is looking at a 1% SAF blending from 2025 and raising it to 5% in the future. While domestic aviation needs to prepare for the India mandate, international operators from India must also prepare for the EU mandate of filling blended fuel by EU departing flights and the mandatory second phase of CORSIA from 2027. India did not participate in the voluntary early phases (2021-2026). Some of the Indian operators have taken note and have been involved in SAF initiatives.

SpiceJet and AirAsia have flown SAF demonstration flights. However, commercial production of SAF is yet to start in India, even as a 1% blending target will require over 10 million litres of SAF a year. Public initiatives in India are likely to be aligned to India's 2070 net zero goal. The Indian aviation industry may not have the luxury of time; they must target a 2050 net zero. As the aviation industry charts a path of rapid growth in India, there is no better time to make decarbonisation a priority.

Bose Varghese is senior director, environmental, social, and governance at Cyril Amarchand Mangaldas.

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