Finds "Strong Financial Incentives" For Use Of Alternative Fuel

EQ2, which describes itself as "a sustainability economics company," released a report Thursday examining the development of sustainable, carbon-neutral biofuels for aircraft, and a critical study of the economic and climate impacts of the aviation industry as it moves towards the large-scale adoption of biofuels. The report finds the industry's reliance on fossil fuels has caused it to become extremely vulnerable to changes that will go into effect in 2012, when the EU Emissions Trading Scheme applies to all flights into or out of Europe, and puts a direct cost on its carbon emissions.

With a predicted 15% and 30% consumption of biofuel in 2020 and 2030, the report predicts the EU aviation industry will be able to avoid 35 million tons of CO2 emissions in 2020 and 100 million tons in 2030. Such a reduction in emissions is equivalent to $2.01 in savings on carbon expense in 2020, and $5.84 billion in 2030. Based on the same assumption of aviation biofuel consumption, the global aviation industry could be able to avoid 129 million tons of CO2 emissions in 2020, and up to 420 million tons in 2030.

The report's findings show strong financial incentives, based on the current EU Emissions Trading Scheme price for carbon in 2012 of $20.50, and 2009 average jet fuel price of $1.69 per gallon, every gallon of jet fuel burned would incur carbon costs of an additional $0.21, which is a total cost of $1.34 billion across the industry. Projecting to 2020 and 2030, the industry will face carbon costs of $9.56 billion and $19.48 billion, respectively.  This is a premium that would not apply to carbon-neutral biofuel, which will, the report says, help make it more cost competitive.

"The aviation industry must embrace the new realities surrounding climate change," said Steve Burt, CEO of EQ2. "Our report demonstrates the clear benefits of adaptation, with renewable fuel being the current best option the industry has against future economic and regulatory pressures."

FMI: http://eq2.uk.com/pdf_resources/Aviation%20biofuel.pdf