Making Aviation More Sustainable: The Role of SAF
Flightpath host Joel Makower recently spoke with Amelia DeLuca, Vice President of Sustainability at Delta Air Lines, to discuss how to make aviation more sustainable. Part Two of their conversation discusses the role of sustainable aviation fuel (SAF) and how to scale it.
Read on for excerpts from their informative sit-down. Please note this transcript has been edited for length and clarity.
Joel Makower: Let's focus a little bit more on SAF right now. First of all, Delta has made some pretty big commitments around buying SAF. Talk a little bit about what you've done and why.
Amelia DeLuca: Just as I talked about consumers kind of waking up when it comes to sustainability, our corporate customers are having the same pressures that we're having right now as a company and as an airline. They're hearing from their investors as well, "What is your plan? What is your plan to hit net-zero? To hit your own Science Based Targets?" And so, we had corporate customers coming to us and saying, "Hey, my business travel emissions are actually a really big part of my greenhouse gas emissions." For certain companies, business travel emissions sometimes constitute majority of their greenhouse gas emissions, depending on how they operate and what type of business model they have. And so, what's really exciting about SAF is that when customers came to us and said, "Hey, what can you do?", the first thing we said is, "One, we're committed to carbon neutrality today. We are carbon neutral. So, rest assured your travelers should feel comfortable when they're traveling on Delta."
But then, the second thing is if they need to achieve their own climate goals, we have a solution with sustainable aviation fuel. And as soon as we went out there with our first deal with Deloitte, it was so inspiring to see how many corporations, between small to big, in all industries, were saying, "Hey, I want to learn more about this. I would like to talk to my senior-level leadership about this product and figure out how I can fit it into my portfolio." And it's a win-win situation because it allows the corporation to impact their Scope 3 emissions, while simultaneously we impact our Scope 1.
But more importantly, when we think about the demand signals we need to send, you have these huge corporate names and they're saying, "Yeah, I want this too. And I'm actually willing to help with that premium right now, so that we can scale it up, and get to a point where the price is more or less on par with jet fuel.” That's when the magic starts to happen.
JM: Where are we on that supply demand curve? One of the challenges, as you know well, is chicken-egg -- how much supply is there relative to demand? It seems like the demand has grown considerably over just the past year or so. How is that going?
AD: It's going well. There are a couple things that are in our court right now that are benefits. One, the Biden administration. That group came in at the beginning with a lot of support for our industry. And they asked us and they said, "What do you need?" And that's where we said, "Sustainable aviation fuel is the tool that's available today. But it's price-prohibitive not only for us as a company but for many customers who would like to purchase it." And so the blender's tax credit, which is being negotiated right now, has the ability to really kind of scale and bring that price premium down as much as possible to [parity with] jet fuel. Right now SAF is three to five times more expensive.
The other thing is we're seeing a lot of [SAF] startups getting rounds of financing complete. We've got the creditors, and the investors that are starting to see that this is something that's going to scale. From the Delta perspective, we actually have 80 million gallons (303 million litres) of SAF that we will start to take delivery of in 2024. And you contrast that with anywhere between 1 to 3 million [gallons] (3.8 to 11.4 million litres) annually that we might be at today, that's a huge jump. But those companies that are going to start delivering in 2024, they're breaking ground, they're receiving their financing, we've had tours of their facilities. We can see the product, and we're actually using and testing the product today. So, it's going quite well. But, again, I think getting some more government support and that blender's tax credit is what's going to be critical to get some additional producers to come online.
JM: When you look at what it takes to bring SAF to scale, there's really three main levers. There's the technology itself, there's the policy environment, and then there's the market -- the demand signals primarily, and the financing behind that. What's the biggest lever that needs to be pulled right now?
AD: I think technology is there. We don't run into problems with technology. There's a debate about what is the best path to SAF, [which] feedstock or technology can have the highest greenhouse gas reductions? Our approach has been, right now, let's take them all. Over time, we'll use the most efficient one, but right now we just need to be scaling solutions. If we start to box ourselves in too narrowly, we're going to end up with nothing. So I don't worry about technology. It's working today. It's blending into our infrastructure today. And next-generation technologies will just make that able to be produced either in greater quantities or more cheaply, or perhaps both.
Government policy is, to me, the one that I think is critical at this point. We are all watching what is happening right now in the negotiation of the blender's tax credit. There's been extreme support for it. We participated in the White House's SAF grand challenge event at the beginning of September (2021), where the industry actually increased its SAF goal for 2030. But with that came a very strong commitment from the government to be able to support us and acknowledging that the green premium that comes with SAF today is going to have to be reduced.
Separately on policy, I'll just mention from a consumer lens, we did a consumer insight survey essentially with our top Sky Miles members and said, "Okay, talk to us about climate transition, and what is the role for travel emissions, and who should be responsible for those emissions?" And it's not a surprise, but they really reinforced to us that the first group that they expect to do something was government. Then, the second group is the corporation. And then they will be willing to come along with us. We want to ask our customers to get involved in our journey as the sector transitions, but they're going to be expecting the government, as well as the corporation, to also be doing their part. So, I think government policies, which again have been super positive under the Biden administration, coupled with our carbon-neutral commitment, really sets us up as a company to then take that third step and say to consumers, "Here's how you can also support this journey."
JM: So, what's the ask of the business traveler in helping bring along the demand at the rate that we need?
AD: I think the first step within any corporation, at any level, from an individual traveler to an executive to the person who is working in the business-travel space, is having educational awareness for what the impact of your business travel is, as well as what the solutions are. We talk a lot about education. Just understand the basics of sustainability, understand your footprint, look at the data, let the data guide you to where your impact is. That transparency is so important. We know our impact as a company. We know other companies know their impact when they travel on us.
Then, the second thing right after that is to say, "Okay, I want to take a step now. It may not achieve my climate goals of 2030 or 2035, but there are things available today for me to take steps." And many corporations are doing that because you see corporations who are also carbon neutral, who are also using offsets. But, in the journey forward, sustainable aviation fuel is the most critical thing that we have to achieve our joint efforts between me as an airline and that corporation who's trying to reduce their business travel emissions.
The ask here, essentially, to our business travel community is to understand that there's a solution available now. There is no reason to stop flying. One, choose your brands. Just like you choose your retail brands, choose your travel brands. Delta's a carbon-neutral airline, that should be a pretty easy choice of who you fly with. And then, if you're looking further to hit those Science Based Targets, to hit your own internal emissions reductions targets, sustainable aviation fuel is there for you. Get in the game now with us because we also want our corporations to be with us to help figure out how we engage on this as we move forward. How do we form new partnerships, how do we talk to consumers about that? That's all in its infancy right now. We want our corporate customers, who are our top partners in everything we do, to be part of this journey, just like they are with everything else.
JM: I was going to ask about partnerships, not with business travelers necessarily, but what are the kinds of partnerships that are needed to help speed this along?
AD: Well, the good news is, coming out of the pandemic, we now know how to think about partnerships in a totally different light, in a good way. In the sense of when the world shut down at the beginning of the COVID-19 crisis, we were all looking across at each other saying, "We’ve got to save our industry." And we looked to government for support. We looked to new partners, like with some of the work we've done on clean side, we brought in new partners [because] we need some solutions on the clean side and we're not experts in this. We brought on our first chief health officer, that's just an example of how the pandemic has shown us how partnerships look differently when you face new challenges. And it's the same for the environment.
The partnerships you're going to see in this space are, one, an acknowledgement that the transition of this industry will not necessarily be led in a silo just by the airlines. The airlines are the ones that buy the airplanes. They buy the sustainable aviation fuel. But we don't create the airplanes, we don't create the fuel. And so, partnerships involve us looking across our supply chain and saying, okay, we want to sit with you and walk this journey together. We want to be your thought partner. We want to be your investor in some instances. We want to raise the ambition together. Because if we get out of sync, that's when I think we're going to see investors and other parts of our stakeholder group start to lose confidence in us as an industry.
I point to a couple examples that tie in really well with Delta. One is the work that's being done with the World Economic Forum through a group called Clean Skies for Tomorrow, which brings together airlines, and fuel suppliers, and governments, trying to scale and create policy for sustainable aviation fuel. Similarly, the LEAF Coalition, which is combating and fighting deforestation, is the largest private public-sector financing activity that has ever taken place in support of avoiding deforestation. That's corporates, it's governments, it's NGOs (non-governmental organizations) all coming together and saying, we have a problem, but we also have a solution, but we just got to all get together. What I love about this job is that it's allowing us to have new partnerships and work in new ways. Through those new partnerships, that's how we're going to really enact real change.
Please check back for additional excerpts from this conversation. Part One examined Delta’s sustainability strategy and vision, while Part Three will look more closely at the role of corporate travelers in helping the aviation industry meet its sustainability goals.
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