The aviation industry has connected Australians to the world since the early 20th century. In many ways, however, the environment has footed the bill for the industry’s progress – although signs of change are taking off. We explore recent industry trends, challenges and opportunities available to the aviation industry to meet decarbonisation targets, plus delve into the new technologies revolutionising aviation.
Recent industry announcements
Despite the national trend towards emissions reduction, Australia’s aviation emissions continue to increase.1 Although aviation is considered a ‘hard-to-abate’ emissions sector, the Australian Government is committed to assisting the industry reach net zero. For example, the Australian Jet Zero Council (Council) was announced in June 2023. The Council brings together a cross-section of aviation industry stakeholders to:2
- lead efforts to achieve net zero aviation;
- advise the Government on sustainable aviation matters including adopting sustainable aviation fuel (SAF), measures to reduce emissions and ways of securing our supply chains; and
- support industry decarbonisation efforts.
Relatedly, in September 2023, the Government released its Aviation Green Paper (Green Paper). The Green Paper outlines the Government’s policy direction for the aviation sector up to 2050, including its focus on sustainability.3
These commitments demonstrate the increased governmental focus on decarbonising the Australian aviation industry, including supporting the Government’s wider legislated targets of Australia reaching net zero by 2050.
The Government’s Aviation White Paper (White Paper) is expected to be released in late 2024. The White Paper will complement the Green Paper and set the long-term policies to guide the next generation of growth and innovation in the aviation sector.4 The first listed priority of the White Paper is to maximise the aviation sector’s contribution to achieving net zero carbon emissions, including through SAF and emerging technologies.5 Additionally, the Government has announced the Emerging Aviation Technology Partnerships Program, which will fund and support development of innovative aviation technologies including low and zero emissions propulsion systems.6
New technologies transforming the industry
The majority of industry emissions stem from operating planes. Airlines must reduce these emissions to facilitate the industry’s net-zero transition.7
A number of solutions have been put forward to reduce emissions, as follows.
Hydrogen powered aircraft
The advantages of hydrogen as a transport fuel is well documented. Hydrogen technologies are attractive to airlines because they have the major benefit of producing only water and heat as the byproduct of energy production and so are emissions and air-pollutant free.
However, hydrogen-powered aviation depends on complex technology and associated infrastructure (as discussed in our previous article). As an example, hydrogen-powered aviation infrastructure involves establishing bespoke refuelling stations as well as deploying parking stands which can accommodate different sized aircraft.
Further, upgrading airports globally with uniform hydrogen-supporting infrastructure is a key barrier preventing hydrogen powered aircraft from becoming commonplace on long-haul routes. Unpredictability in routes, emergency landings, and changes to schedules (among other things) mean that airlines require ubiquitous infrastructure to operate and service their fleets.
By contrast, it is more probable that hydrogen planes will be deployed for short-haul applications within Australia. The domestic aviation industry has already demonstrated an interest. For example, Australian airline Regional Express recently partnered with Dovetail Electric Aviation to trial aircraft fitted with hydrogen-electric engine technology.8 Further, Stralis Aero, a Queensland-based organisation, is developing retrofitted hydrogen fuel cell engines on smaller planes.9
Government support has been encouraging. Recent initiatives including the Hydrogen Headstart Program10 may assist the Australian aviation industry to develop the supporting infrastructure required to get the hydrogen planes off the ground.
Electric powered aircraft
Electric powered aircraft are propelled by a battery system that replaces fuel-powered piston and turbine engines.11 Similarly to hydrogen-powered planes, this technology is likely to be more relevant to domestic flights than long-haul flights. Trialling battery electric planes in commuter, regional and short-range environments will be fundamental in developing more energy efficient, climate-friendly and cost-effective larger aircraft. This sentiment is supported by recent announcements in the Green Paper which indicate electric aircraft will be limited to routes less than 500km due to battery energy density limitations. However, not to diminish the importance of these aircraft, Dovetail Electric Aviation has received AUD $3 million in funding from the Australian Government to convert turbine-powered planes into electric-powered aircraft.12 This investment and others like it suggest the Government is supportive of bringing electric planes to market for short-range flights.
Sustainable aviation fuel
SAF is likely the key to unlocking the aviation industry’s net zero ambitions. SAF (which describes non-petroleum feedstock) can:
- reduce CO2 emissions by up to 80%;
- be produced from a variety of waste products;13
- integrate easily with existing aircraft engines;
- provide superior range to other technologies; and
- be easily scaled.14
These advantages make SAF a strong contender to dominate a net zero aviation industry.15
Government support for SAF
In support of SAF uptake, in 2023, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) released the Sustainable Aviation Fuel Roadmap (Roadmap). The CSIRO suggests that Australia is in a prime position to develop a domestic SAF industry, identifies opportunities to produce and scale production, and highlights the challenges this nascent industry will face.16 These findings are important, given that SAF currently accounts for just 0.2% of global jet fuel use.17 However, the proportion of SAF in global jet fuel supply is expected to increase rapidly. Already, the contribution of SAF is triple that produced in 2022, and it is expected to triple once again in 2024 to 1.875 billion litres.18
To read more on the opportunity to invest in the Australian SAF industry, see our expert insights series with John Sheehy and Rodrigo Arias of Pottinger.
Industry support of SAF
Promisingly, the industry has started to invest in the infrastructure required to support SAF in Australia. Boeing and Wagner have commenced the design and construction of Australia’s first steady supply of SAF in Queensland,19 and LanzaJet and Jet Zero have committed to a novel licence and engineering agreement to convert bioethanol into SAF.20 Further, domestic carriers including Qantas and Virgin Australia have committed to utilising more SAF in their operations. Specifically, Qantas is targeting 10% of its fleet to be powered by SAF by 2030.21
These commitments are important given the ‘green premium’ that SAF currently demands, being two to four times the cost of standard jet fuel.22 Since fuel represents 30-40% of an airline’s cost base, the green premium will heavily impact airlines’ bottom lines.23 However, economies of scale and appropriate government support are likely to reduce this cost over time. This trajectory, coupled with SAF’s ability to integrate with existing technology, is likely to make SAF the favourite of airlines and manufacturers.
The road ahead for sustainable aviation
The path to decarbonising Australia’s aviation industry is challenging but promising. Government initiatives, such as the Australian Jet Zero Council and the Aviation Green Paper, reflect a strong commitment to achieving net-zero aviation by 2050. Emerging technologies, including hydrogen and electric-powered aircraft, offer innovative solutions, particularly for short-haul flights. However, the infrastructure and technological limitations of these alternatives mean their full potential is still up in the air.
SAF stands out as the most viable near-term solution, capable of significantly reducing emissions while integrating with existing aircraft and infrastructure. Although SAF currently comes with a ‘green premium,’ increasing investments and scaling production should lower costs, making it an essential tool in reducing the aviation industry’s carbon footprint. As the industry navigates these new opportunities and challenges, ongoing government support, coupled with advancements in technology, will be crucial to realising a sustainable future for aviation.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
1Aviation Green Paper: Towards 2050 (September 2023) 75.
2Australian Jet Zero council (Web Page) <https://www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/australian-jet-zero-council>.
3Aviation Green Paper (n 1).
4Aviation White Paper <https://www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/aviation-white-paper>.
5Ibid.
6Aviation Green Paper (n 1) 89.
7Other changes which are not discussed in this article include the adoption of more advanced plane materials such as carbon fibre, on-ground operational and maintenance improvements, and carbon offsetting (Ibid 76).
8Ibid 89.
9Ibid.
10Hydrogen Headstart Program (Web Page) <https://www.dcceew.gov.au/energy/hydrogen/hydrogen-headstart-program#>.
11Aviation Green Paper (n 1) 87.
12Ibid 89.
13Net Zero 2050: Sustainable Aviation Fuels (Web Page) <https://www.iata.org/en/iata-repository/pressroom/fact-sheets/fact-sheet—alternative-fuels/> 1.
14Aviation Green Paper (n 1) 81.
15Ibid.
16Sustainable Aviation Fuel Opportunities for Australia (Web Page) <https://www.csiro.au/en/research/technology-space/energy/sustainable-aviation-fuel>.
17Net Zero 2050: Sustainable Aviation Fuels (n 12) 2.
18‘SAF Volumes Growing but Still Missing Opportunities’ (Press Release, 69, IATA, 6 December 2023).
19‘Boeing, Wagner Advance Australia’s Sustainable Aviation Fuel Industry’ (News Release, Boeing, 19 April 2024).
20Jessica Fisher ‘LanzaJet & Jet Zero Australia Sign Agreement to Advance Australia’s First Ethanol to SAF Plant’ The Fly Report (online, 13 February) <https://news.flyjets.com/article/lanzajet-and-jet-zero-australia-sign-agreement-to-advance-australias-first-ethanol-to-saf-plant>.
21Valuing Our Planet (Web Page) <https://www.qantas.com/au/en/qantas-group/sustainability/our-planet.html>.
22Sustainable Aviation Fuel Roadmap (Report, 2023) <https://www.csiro.au/en/research/technology-space/energy/sustainable-aviation-fuel> 17.
23Ibid.
