The path to net zero in aviation

Last fall, the International Air Transport Association (IATA) approved a resolution stating that the global air transport industry would achieve carbon-neutral status by 2050. It’s an important signal that even aviation—one of the hardest industries to decarbonize—is moving toward that target.

The aviation industry has steadily improved its fuel efficiency over time. Future gains, however, will be much harder to achieve. And, in addition, we need to move beyond just getting more efficient and also find ways to decarbonize any remaining fuel use. This will require ambition, innovation, and investment—not just among airlines and their original equipment manufacturers (OEMs), but within the larger ecosystem of air mobility start-ups and investors.

Getting to net zero won’t be easy, says Robin Riedel, a McKinsey partner and global leader in the firm’s Disruptive Aerospace sector, but it is possible. A former aerospace engineer and commercial jet pilot, Riedel recently sat down to discuss the prospects of net-zero aviation with Ron Levin, a partner at the investment firm Alumni Ventures and a former McKinsey consultant. The two airline industry veterans talked in detail about sustainable aviation fuels, operational improvements, and electrification.

Ron Levin: What are the main levers the aviation industry can use to achieve carbon-neutrality?

Robin Riedel: There is a whole portfolio of approaches to deploy, but it can be helpful to think about them as bigger categories of tools for getting to net zero.

First, there are incremental technology improvements. This would include things like upgrading fleets to new models of aircraft (with each generation you get a 15 to 20 percent boost in fuel efficiency), deploying winglets, and using lighter materials on existing aircraft. Second, there are operational efficiencies, which would include flying more direct routes, cruising at optimal altitude and speed, and decreasing traffic delays.

Third, there are disruptive technologies—truly sustainable propulsion alternatives such as hydrogen and electric.

Fourth, more sustainable aviation fuels. These are fuels that can be used with our existing storage infrastructure but are made from renewable sources such as biomass.

Ron Levin: We see a lot of airlines setting very ambitious sustainability goals, with a few aiming for net zero by 2030. Do you think an airline could become carbon-neutral within this decade?

Robin Riedel: We see many airlines working on this, but solutions for full decarbonization are hard to find today.

Most sustainable aviation fuels available today offer only a 70 to 80 percent reduction in carbon. Hydrogen and battery aircraft are in their infancy. We’re seeing test flights today, but it’s probably going to take a decade to get any to market. Incremental technology improvements and operational changes have a limited impact, increasing fuel efficiency by only about 2 percent a year. These are all important steps, and we must continue to pursue these improvements. But it’s going to take a lot more. I think we’ll see some real progress over the next decade, but we won’t get to net zero. If we get there by 2050—which is what the IATA has targeted—we can call that a success.

Ron Levin: How do you see the sustainable-fuel space evolving in the near term? Are there certain fuel sources that you think will be more successful than others?

Robin Riedel: Sustainable aviation fuel is a broad term, so I split it into two types of fuels. One is derived from biomass we can grow or harvest from other processes. The other is starting with hydrogen and combing it with carbon—for example, from direct air carbon capture—to synthesize fuel.

Within each category, there are different paths to jet fuel. A whole range of companies are working on a whole range of processes, seven of which have been approved for use. And I think we’ll see a bunch of new technologies emerge as interest in the space intensifies.

There is no silver bullet, no one right way to make sustainable aviation fuel today. And that’s okay. Taking a portfolio approach will limit risk.

Ron Levin: How about hydrogen specifically? It has gotten a lot of attention.

Robin Riedel: There are three ways you could use hydrogen in aviation.

You could use it directly as fuel, combusting it in much the same way we combust jet fuel today in turbine engines. That would require the industry to update some engines and integrate hydrogen tanks on board aircraft.

Second, you could use hydrogen and mix it with oxygen to create electricity through hydrogen fuel cells to power electric aircraft. There are a few such initiatives underway, but hydrogen fuel cells are early in terms of technology maturity.

Finally, you could also use hydrogen to make sustainable aviation fuel by mixing it with carbon—for example, from direct air capture or from industry off-gasses; this is the power-to-liquid process. Direct air capture of carbon is far from industrial scale at this point, and there’s some question as to how green this approach is from an accounting perspective.

These are all promising solutions that need additional work in terms of technology and infrastructure.

Ron Levin: You talked about the relatively incremental impact of operational improvements. Is there anything else the industry can do to make a more meaningful mark on how airlines, airports, and traffic control work together?

Robin Riedel: The challenge moving forward is that the easy gains have already been captured and airlines are bumping up against the natural limit of some improvement levers they used to achieve those gains. But there are additional things the industry could be doing. There’s still a lot of inefficiency in the system.

There’s a lot of congestion at airports. Artificial intelligence could help us identify opportunities to reduce that congestion, bypassing areas that cause additional fuel burn. That could deliver meaningful cost savings—which airlines appreciate—in addition to the environmental benefit.

An airplane is designed to fly at a certain altitude and a certain speed to achieve optimal fuel consumption. Today, we’re not always flying at that altitude and speed. There are other things like how pilots approach the airport—how much flap do they use, how long is the approach, is it continuous or does it have step-downs—that affect fuel burn. We could optimize those things.

Ron Levin: When do you think we’ll get to electric aircraft?

Robin Riedel: I think we’ll see small, regional, and urban aircraft that run on battery-electric systems in the second half of this decade. Battery density is getting to a point where we can fly 100, 200, maybe 300 miles with an electric aircraft.

On the hydrogen fuel cell side, we’ll see slightly bigger aircraft emerge. The focus there has been on retrofitting because building a brand-new airframe at that scale is extremely expensive. I’m talking about multiple billion-dollar projects. Some of the major OEMs have announced that by 2035 they want to build an even bigger hydrogen-electric or hydrogen combustion aircraft—say, a 70- or 90-seater or bigger.

Ron Levin: All of this—sustainable fuels, new types of aircraft, improved operational efficiency—comes at a significant cost. To what extent are airlines willing to foot the bill to transport us to this more sustainable future?

Robin Riedel: It’s an interesting question: How do we create the right incentives and other measures to make this happen while ensuring that air transport remains affordable and accessible to everyone? There is a role for industry leaders and policymakers in finding the right balance.

Ron Levin: What advice would you offer an investor evaluating opportunities among the technologies emerging in this space? What should they look for in terms of a return on their investment and helping the industry get to net zero?

Robin Riedel: The same investing rules apply to sustainable aviation as to any other investment areas. Focus on finding a great team, a good product-market fit, and real traction in the industry. The other important thing to consider is what your own thesis is regarding the role of aviation in the future of society. Take time to think about your convictions and the outcomes you expect to see, and align your investments accordingly.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

Robin Riedel is a partner in McKinsey’s Bay Area office and Ron Levin is a partner at Alumni Ventures.

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