Air travel has been a hot topic for climate change investors recently and decarbonising aviation will be crucial to the global effort to curb climate change. To date it has looked a daunting task. Existing jet fuel - kerosene - is 60 times more energy-dense than even the latest generation of batteries. The leaps and bounds made in electrified cars in recent years means electrified flight does look plausible, but hybridisation rather than fully electric planes is more likely at this stage, with a small initial impact.
In order to meet industry carbon targets therefore, a dramatic acceleration in fuel efficiency savings is required for the industry to avoid a large carbon bill. The disruption this may cause to short-haul air transport infrastructure within the next decade could be sizeable. Companies at the forefront of the industry’s use of light weight materials and those that can potentially improve propulsion fuel efficiency savings should benefit.
How bad is aviation in terms of carbon emissions?
The aviation industry currently contributes 2.4% of total CO2 emissions globally. This doesn’t sound like much, but the emissions’ impacts are increased by altitude, while contrails and resultant cloud formations trap radiation escaping from the earth. When we consider these factors, aviation’s impact on climate change is higher. We have also seen huge growth in air travel in recent decades, especially in new markets. Passenger kilometres are up 41% in the last 10 years.
The aviation sector isn’t currently subject to carbon emission regulations but the industry has for many years voluntarily committed to meet emissions targets. The International Air Transport Authority (IATA) has targeted a 50% cut in CO2 emissions by 2050 relative to 2005 levels. The Advisory Council for Aeronautics Research in Europe has set a target for a 75% cut in C02 emissions by 2050, compared to 2000 levels. Even these targets pale when compared with the United Nations’ (UN) goal to eliminate net carbon emissions by 2050.
Can we get there, and if so, how?
Better engines and lightweight materials
In recent years the industry has been investing heavily in two main areas. Next generation engines focus on turbofans, and incorporate advanced materials for engine parts (like carbon fibre blades). Composite materials also now comprise more than 50% of the weight of many new planes. This compares with 10% in the 1970s.
Overall, the last three decades have seen fuel efficiency savings of 2.3% per annum. Recently introduced new engines are generally delivering a very respectable fuel efficiency saving of 15-16% compared to the prior models, and new materials like composites have generated 25% CO2 savings compared to previous generation aircraft. There is therefore some evidence that the aviation fuel savings rate has started to accelerate in the last two to three years over this 2.3% rate, as these new planes get delivered.
The future of flight propulsion – is it electric?
We have seen steady improvements in battery technology in recent years, with electric vehicles (EVs) finding ways to generate more power from smaller cells. Consumers are likely to want electric planes as they would be cheaper, cleaner, operate more efficiently at higher altitudes, and quieter.
The natural consequence of these attractions has been a rise in start-ups for small electric airplanes and air taxis. Smaller prototype 5-10 seater propeller planes are currently being researched that could be purely electric. A nine person plane could theoretically travel 1,000km with three electric engines on specifically designed airframes. This is encouraging, but fully electrified commercial airliners is clearly still some way off.
Hybridisation in smaller planes under way
We think the airline industry stands on the cusp of hybridisation just like the auto industry did 10 years ago. The industry has already started investing in small 3-5 seater, fully electric propeller based aircraft, and engineers have even started to consider hybrids for the larger 40-50 seater regional jet market. UBS recently hypothesised a new vision of jet and electric propulsion during a typical flight.
Representative power mix of a hybridised flight
Source: UBS estimates
These small regional hybrid 40-seater planes are expected to yield 30% average fuel savings over ranges of 600 nautical miles, thus challenging regional bus routes. Although the first test flights for these new hybrids still remain two to three years away, the pathway looks clear.
Very slow progress in planes larger than 100 seats
At the moment, larger jets aren’t generally being considered for hybrids. We expect only a gradual transition in the larger commercial segment to hybrids for a number of reasons.
- Assuming a 5-8% per year rise in energy density, it’s unlikely we will have powerful enough batteries until the late 2030s.
- Regulation is also an issue. A clear regulatory framework for electric planes doesn’t exist. This will need to be addressed, but it involves international cooperation.
- Safety and testing standards mean aviation has long research and development times. It took nearly a decade to launch the recent next-gen turbofan engines, and innovation is likely to focus on improving emissions on existing engines (such as through biofuels or synthetic fuels – see below) initially. Longer-term, we are going to need to accelerate this development.
- There are also additional CO2 savings to go for in the traditional turbo fan engine. A redesigned turbofan combined with more advanced materials, should deliver fuel efficiencies. Even so, these savings will only become apparent in the coming 3-5 years when the gearboxes and new materials are tested rigorously.
In the next five years, we shall see electric and hybrid-electric propulsion being much more prevalent in small and regional aircraft. For larger than 100 seater planes, however, we think hybridisation is a realistic goal within 10 years, but fully electric planes, and hybridisation of larger than 100 seat commercial jets both remain a very distant technological solution for now.
The main technological break through that could change this is solid state batteries, which could radically accelerate the uptake and capabilities of electric planes.
Other ways to improve CO2 emissions
Apart from encouraging more rail travel and discouraging air travel, there are other ways of cutting carbon emissions on flight beyond propulsion. Using 3D printed materials, lighter metallic materials like aluminium lithium, and a further rise in composite penetration from 50% would all help drive further fuel savings.
One of the most interesting (and achievable) gains could be in better air traffic control systems. Air traffic controllers remain responsible for controlling national airspace, despite attempts to merge European airspace that date back to the 1960s. Studies show better air traffic control could generate fuel savings of 5-10% per flight.
Using new “carbon neutral” bio liquid fuels – plant oil based and chemically synthesised fuels – could notionally generate 70-90% CO2 emission savings and look increasingly viable. Technologically, we are not that far from being ready to use these fuels. As many as 185,000 commercial flights are estimated to be able to use these fuels already. However, infrastructure and indirect impacts on land use are important considerations. Hydrogen is also being considered as a jet fuel alternative, but although it has a much higher energy density per unit mass than kerosene, it takes up more space and requires a heavy container.
Efficiencies from existing technologies still key, for now
The IATA, the industry trade body, sees the switch to low carbon fuels as the biggest driver to meeting its 50% carbon reduction goal for now. We agree that electric and hybrid propulsion will remain small contributors to cutting carbon emissions in the short-term, but see more potential further out. For now, major improvements in fuel efficiency are required for the industry to meet aggressive carbon reduction targets and dodge a large carbon bill, and these can be found from existing, albeit cutting edge, technology.
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