According to IATA, there is an excess of “green” taxation on aviation that is not contributing to the decarbonization of the sector but rather to reducing the public debt of various countries.
The production of sustainable fuels and the need to make the aviation industry more efficient were other topics discussed at the Sustainable Aviation Talks, on the second day of the 11th edition of the AEDDays, held at the Temple of Poetry in Oeiras.
“Without a planet, what are we going to defend?” – in the opening of the Sustainable Aviation Talks, the president of AED Cluster Portugal, José Neves, took the words of the vice-president, José Rui Marcelino, mentioned the previous day, to add that, in his opinion, “both the environment and defence are important” and that, regarding sustainability, “Portugal can also have a more significant role in this new ecosystem.”
For Ana Vieira Mata, president of the National Civil Aviation Authority (ANAC), sustainable aviation “is an imperative” and will only be possible with “open dialogue” and “collective effort.” In her presentation, addressing the challenges of sustainable aviation and the role of regulators, Ana Vieira Mata argued that the “use of sustainable fuels is crucial to reduce carbon emissions” and that the main issue is “scaling up and reducing cost.” The president of ANAC referred that all regulators are “facilitators” and their role is to “provide support, training, and resources” so that various EU countries can “develop their own sustainable aviation strategies.”
Ana Vieira Mata also highlighted the importance of AEDDays for allowing ANAC to engage with various stakeholders and thus create “more efficient and inclusive policies”: “The presentations scheduled for this day are very important, and ‘green’ taxes are a subject to be addressed with special care,” she warned.
This was the theme of the intervention by Lígia da Fonseca, Head of Tax Policy at IATA, who began by questioning “who pays the ‘green’ taxes, whether they contribute to aviation, and whether they are truly ‘green'”: “If you can’t stay until the end of the presentation, I can already tell you that the answer is no,” said Lígia da Fonseca, with a sense of humor.
For the Head of Tax Policy at IATA, the future of aviation depends on a combination of three factors: technological evolution, environmental sustainability, and financial sustainability. And what these three factors have in common is that “they all require money”: “Who is going to pay?” asks Lígia da Fonseca. Usually, the Government’s answer is to “create taxes or increase existing ones,” which, in her opinion, is “concerning” because there is already “a proliferation of taxes, fees, and other costs” that even led IATA to create “a specialized group” to monitor all tax changes in the more than 6,900 airports and 249 jurisdictions it oversees.
For Lígia da Fonseca, taxing “aviation is an easy way to tax people and airlines.” On one hand, Governments are “motivated” to create these taxes due to the “enormous” increase in public debt: “In 2001, the public debt of the most advanced economies was around 7% of GDP, and now it is 114% of GDP.” On the other hand, “they tax a very resilient industry” and have “good public acceptance,” says the Head of Tax Policy at IATA.
Despite ‘green’ taxes being “a trend,” Lígia da Fonseca demonstrated in her presentation that there is not a single country in the world that uses tax revenue “to finance sustainability projects in aviation.” On the contrary, they are used to “finance other types of transport” and “as an instrument for climate action.”
Only in Portugal, the Head of Tax Policy at IATA estimates that tax revenue from the carbon tax will reach “1.4 to 2 billion euros between 2024 and 2050,” an amount that “will not be used for sustainability but is greatly needed by aviation to undertake the decarbonization process.”
During her presentation at the Sustainable Aviation Talks, Lígia da Fonseca also reminded that “aviation suffered great losses in 2019, 2020, and 2021” and only “returned to profit in 2022/2023,” being “one of the sectors with the lowest margins”: “In 2023, airline profit is equivalent to 5.44 dollars per passenger. In Geneva, Switzerland, where I work, I can’t even buy a coffee with 5.44 dollars.”
The financing of decarbonisation was also one of the topics addressed by Nikhil Sachdeva. The Global Lead for Aerospace & Aviation Sustainability at Roland Berger, in his presentation “Making aviation sustainable,” mentioned that currently, “aviation accounts for ‘only’ 2.6% of global carbon emissions, which is easy to say:‘it’s not that much’.” However, he reminds us that “the sector is growing rapidly”: “Many parts of the world are now learning to fly. In India, every day, about 100,000 people fly for the first time.” According to Nikhil Sachdeva, this means that the aviation sector will be responsible “for 12 to 18% of global carbon emissions by 2050 if practices do not change.”
The Global Lead for Aerospace & Aviation Sustainability at Roland Berger reminds us that the goal of the Green Deal is to achieve zero emissions by 2050, which is “an incredible challenge.” To reach this goal, “it will be necessary to use 100% SAF and even then, it is not enough”: “We also need a revolutionary aircraft,” he asserts. And he reiterates: “Even that is not enough.”
As he explained throughout his presentation, it will be necessary “to start using these aircraft faster than anticipated, without compromising safety” – which will be “difficult,” as “we don’t know how to certify them yet,” as well as “reconfiguring air traffic control,” “producing sustainable fuels,” and “adopting new business models” compatible with the new technology: “IATA has estimated that 4 trillion dollars are needed to produce SAF by 2050. The industry does not have that money. Unless we want to charge airline passengers or taxpayers through taxes – which doesn’t seem like a good idea to me,” he argued.
“e-SAF “is scalable,” but “a problem for regulators”
The switch from fossil fuels to low-carbon fuels “will take time” – this is the certainty given by Manuel Costeira da Rocha, director of Strategic Technology at Smartenergy, which currently has four renewable energy projects underway: three in Portugal and one in Spain. Although he believes that “in the future, there will be various solutions,” what can be used today is sustainable fuel (SAF). However, he warns, “the price is very high compared to fossil fuels.”
Alexander Kueper, vice president of Renewable Aviation at Neste, also believes that “sustainable fuels will play the main role” in decarbonization, and therefore it is necessary to “accelerate production.”
In the panel “Powering the Future of Flight,” Francisco José Lucas Ochoa, Head of Sustainable Aviation and Technical Assistance at Repsol, mentioned that the company has “five refineries in Spain and one in Portugal,” and “in three of them,” they produce sustainable fuel. According to the Head of Sustainable Aviation and Technical Assistance at Repsol, the company recently opened another plant in Cartagena, where they intend to produce “more than 200,000 tonnes of sustainable fuel with used cooking oil,” and by 2025 will open another “in northern Spain” to produce “eSAF”: “In 3 years, we plan to produce more than 400,000 tonnes,” he stated.
The main focus of Smartenergy is also eSAF. According to Manuel Costeira da Rocha, “developing sustainable fuel based on electricity is scalable,” but it is “a problem for regulators.” For the director of Strategic Technology at Smartenergy, it is necessary to “work together” with Governments “to find solutions” because “the most important thing is to save the planet.”
Besides fuels, electric aviation was another topic addressed during the Sustainable Aviation Talks. Heart Aerospace, a Swedish company founded in 2018, is developing an aircraft “similar to a plug-in hybrid car,” exemplifies Claudio Camelier, Head of Marketing, Product Strategy, and Market Analysis at Heart Aerospace. This aircraft will be able to “make short distances using only stored battery power.” For now, he says, “it is being designed to have a range of 200 kilometers,” but “with the evolution of batteries,” perhaps “by 2025, the aircraft could have a range of 400 kilometers.”
Sustainability also involves initiatives taken by companies to make processes and the use of products more efficient: “We are reviewing all the items we put on board and trying to replace disposable items with others we can reuse,” says Maria João Calha, director of sustainability at TAP. Additionally, “business class customers can also choose their meals in advance, which significantly reduces waste.”
Andreia Ramos, director of Sustainability and Environment at ANA – Aeroportos de Portugal, mentioned that they are “replacing lighting” and “investing in renewable energies”: “In 2022, we created the first photovoltaic center at Faro airport,” she says.
Additionally, they have implemented a project that, although it seems minor, has allowed them to “save a lot of water per day”: “At Porto airport, we have a place where passengers can fill their water bottles.” According to Andreia Ramos, ANA is also “testing the use of biofuels.”
Meanwhile, Boeing is developing “a sustainability project in collaboration with NASA,” which, according to Martin Gorricho Genua, EU Sustainability Policy & Partnership Lead at Boeing, allows for “fuel savings of around 30%.”
Luciana Ribeiro Monteiro, Sustainability Product Strategy Lead at EmbraerX, mentions that the company is looking for “disruptive” opportunities and argues that “sustainability doesn’t have to be expensive”: “We need to find a way to incentivize passengers to embrace the cause, even if they have to pay more, we need to be creative in the types of products and services we can offer them in return.”
The Sustainable Aviation Talks also saw participation from other organisations and companies in the AED sector such as ASD Europe, the Polymer Engineering Innovation Centre (PIEP), Galp, among others.