BOSTON—December 12, 2022— There is clear consensus that reducing emissions is critical, and the aviation industry pledged to significantly invest in the effort to reach the goal of net-zero emissions by 2050. Bain & Company’s new report, Will Plans to Decarbonize the Aviation Industry Fly?, released today shows that improving fuel-burn efficiency is the most effective approach to reduce emissions, but there will be significant challenges that will make it unlikely to meet the aviation industry’s goals. In fact, Bain research shows that a cumulative investment of $1.3 trillion in sustainable fuel production would satisfy only about 20% of forecast 2050 aviation fuel demand.

While there will likely be technological advances, without major scientific breakthroughs, the aviation industry will need to make trade-offs and extend their timeline for reaching net-zero emissions, especially if air traffic continues to grow.  Additionally, the quest to meet this goal will also likely impact the cost of aviation. Currently, each of the three main technologies to lower emissions—sustainable aviation fuel (SAF), hydrogen and full-electric propulsion all have obstacles. For example, SAF is promising, but is limited in quantity and expected to remain expensive. Green hydrogen and electric propulsion may become viable alternatives to Jet A fuel for smaller aircraft by 2050 but not for the bulk of commercial flights.

“All three fuel alternatives will require trillions of dollars in coordinated investments in R&D and renewable energy sources,” said Jim Harris, co-leader of the Bain's Global Aerospace, Defense & Government Services practice. “Unless there are unprecedented government subsidies, there won’t be the supply of alternative fuels and investment will increase the cost of flying and reduce air travel. Additionally, exploring all three alternatives will also dilute investment and slow progress.”

There continues to be growing pressure to reach net-zero aviation emissions by 2050 but making the shift will be complex for commercial aviation companies that don’t plan for uncertainties. Companies that focus on the right pragmatic steps forward, will emerge as being well-positioned for success in a new era.

"The aviation industry is not only facing its own challenges, but is also competing with other industries for renewable energy sources that are limited,” said Jeremie Danicourt, Bain and Company partner. “As the world looks to reduce emissions, there will be significant infrastructure required and consistent issues with supply and demand. This competition will also likely impact the cost of air travel, therefore companies will need to be strategic if they want to win the race.”

Similar to the competition for resources, there is also collaboration and benefits where aviation can leverage advances in other sectors, especially auto. This is the case with battery advances from electric vehicles. Battery-electric propulsion is the clear winner in system efficiency, making it an optimal solution to decarbonize aviation in the long run, well after 2050. However, it’s not without its own challenges. Refueling will require significant investment in new airport infrastructure and affect aircraft turnaround times. All electric flights will be possible, but likely not in the current 2050 timeline.

Additionally, hydrogen is unlikely to offset a large portion of aviation emissions by 2050 given the high cost of production, supply challenges and operator economics. Hydrogen requires a new aircraft architecture to accommodate larger tanks, because its low volumetric energy density. Airlines would therefore have to choose between losing flight range or passenger capacity, which would largely limit the use of hydrogen to regional aircraft. Bain’s research shows that generating 9 million metric tons of green hydrogen by 2050 would cost between $250 billion to $400 billion, and that volume would cover a maximum of only 5% of the projected revenue passenger kilometers (RPKs).

The strategy that will decarbonize aviation the most by 2050 combines faster improvements in fuel efficiency with accelerated fleet renewal, maximum use of SAF—as much as the industry can get—and hybrid-electric aircraft. In the 2030s, we expect to see the introduction of a new generation of single-aisle aircraft designed for greater efficiency with evolutionary engine advances. With the ability to recharge during flight, ground charging infrastructure would no longer be immediately needed.

Way Forward Across the Aviation Industry

Aviation leadership will need to embrace a strategy of uncertainty. This approach is critical to continue to assess the evolving landscape and successfully make progress in reducing emissions. Here are what the initial elements of those strategies look like across key industry subsectors:

Commercial aviation manufacturers

• It will be critical to pursue disruptive advances in aircraft and engine technologies, including hybrid-electric architectures.
• There will be trade-offs, and commercial aviation will likely need to select which technologies to invest in to make progress.
• Having the cash to invest will require trade-offs and collaboration in other parts of the business. This includes realigning operating models to foster innovation; improving talent productivity; and developing new capabilities in-house, through M&As and partnerships.

Airlines

• Airlines are going to have to change the makeup of their fleets. It will be critical to accelerate fleet renewal, aiming to introduce at least two generations of more efficient aircraft into service by the 2050s.
• Customers will need to be a part of the solution. While the costs of alternative fuels are more expensive, airlines can give customers the option to choose SAF and offer incentives.
• Decarbonization will need to extend beyond the air and be a factor in airport operations.

Governments and industry associations

• Governments continue to be a critical component of the process with the ability to expand incentives such as green bonds and subsidies to scale up renewable energy infrastructure. Encourage investment in second-generation SAFs, beyond HEFA, and e-fuels.
• Governments can also ensure that renewables reach aviation in addition to other competing industries.

• Additionally, governments can help with realistic expectations for achieving net-zero emissions as well as consequences. A zero-emission target for 2050 should incorporate the likely consequences of higher ticket prices and lower air traffic growth.

Fuel providers

• There is an opportunity on the fuel side for collaboration and industry coordination to incentivize large-scale SAF development.

While the goals are set and the pledges across aviation made, it will be critical for progress for the industry to be united in evolving targets and timelines based on continued investment in new technologies, innovations and alternative fuel resources.

Editor's Note: For more information or interview requests please contact: Dan Pinkney, Bain & Company, tel. +1 646 562 8102, email: dan.pinkney@bain.com