Case #2. A Future Fuel Dilemma at Airbus

  (The main body of this case is drawn from the website of Transport & Environment, a 30 year-old
    Europe-based NGO that describes itself as “Europe's leading clean transport campaign group
 whose vision is a zero-emission mobility system that is affordable and has minimal impacts on our
                                 health, climate and environment.)

      https://www.transportenvironment.org/newsroom/blog/can-airbus-deliver-guilt-free-flying

Aviation has long had a special place in the human imagination. From Daedalus and Icarus to Da
Vinci and Amelia Earhart, it has always been our dream to conquer the skies.

However, in part thanks to Greta Thunberg, Flygskam, or “flight shame”, aviation is losing its
cherished status as aviation accounts for 2.4% of global Greenhouse gas  (GHG) emissions. Could a
different type of fuel help?

Now Airbus, the world’s largest aircraft manufacturer, has given kids something fresh to dream
about: hydrogen aircraft. By 2035 the company claims it will have hydrogen aircraft in the sky,
carrying 100-200 passengers over distances of 1,000-2,000 nautical miles - think Berlin to Lisbon
or Warsaw to Madrid. As hydrogen aircraft give off no emissions, could this be the invention to
cure us of our flygskam?  (See Appendix A for details about Hydrogen fuel.)

Technically speaking, hydrogen planes could fly. There are some real challenges though. Hydrogen is
light but takes up to four times as much space as jet fuel. That makes it hard to store sufficient
energy on board to operate long distance - on transatlantic flights, for example. This matters. For
example, a small plane carrying 100 passengers with a range of 1,000 miles would eliminate just 4%
of EU aviation CO2 emissions. One capable of carrying 165 passengers a distance of 2,000 miles
would cover 20% [1].

But the real challenge, as so often for hydrogen technologies, is cost. Plane designs would need to
be adjusted; bulky hydrogen storage tanks added; and refueling and storage infrastructure created
around airports. Fuel costs, which make up around 40% of aircraft operating costs, would also be
higher. A 165 seater H2 aircraft would still cost 14% to 33% more than an aircraft running on
conventional kerosene. And that’s without counting any of the development or hydrogen supply chain
costs.

In summary, it most likely can be done, but it would be expensive and would cover only part of the
problem.

So, will Airbus hit the EU objective and have a large hydrogen aircraft in the sky by 2035?
Probably not. The main reason is that no sensible CEO or board would make the kind of investment
needed to develop a speculative new airplane for which no clear market exists. This explains why
Airbus talks mostly about what others need to do, such as converting airports and creating a green
hydrogen economy.

But that doesn’t mean we should give up. A truly zero-emission solution for aviation is worth
pursuing. And who’s to say it can’t be done? We have achieved remarkable technology breakthroughs
in the clean energy space recently. So, if this is to be a moonshot project, how do we make it a
success?

First, governments should tell the aviation industry clearly that the age of kerosene powered jets
will end. Governments are banning combustion engine car sales. They should also ban short-haul
fossil fuel powered flights by the early 2030s. This is a sure way to focus the industry’s minds.
Rail will be able to replace some flights, but in most instances the only option will be to deploy
clean technology; or fuels. At this stage regulators need to keep an open mind. So, if hydrogen
aircraft don’t take off, flights powered 100% by e-kerosene, or simply electricity, are a good
alternative.

Second, we need to put in place regulations to require and incentivise the use of hydrogen in
aviation. The Commission’s aviation fuels regulation should introduce a hydrogen fuel mandate for
aviation of 1-2% by 2030 and increasing after that, creating a market for hydrogen fuel credits in
the aviation industry. That would benefit not just Airbus but also new start-ups. Remember, Tesla’s
rise was greatly aided by sales credits provided by the California Zero Emission Vehicle programme.

Third, we need an industrial strategy to accompany these regulations. Between its Clean Skies
Undertaking with the aerospace industry and Covid recovery funds, the EU is poised to spend
billions on aviation R&D in the coming years. All of this funding should be used to promote
zero-emission technologies such as hydrogen or electric aircraft and e-kerosene. And of course, the
Commission taxonomy should only recognise zero-emission aircraft as sustainable.

The order here is important - targets, regulations and then funding. Do it backwards, and you pump
money into aircraft that no one will buy or operate. Airbus, so confident in their innovation,
should welcome such targets and regulations. After all, its motto is: “we make it fly”.

NOTE: A second alternative to Hydrogen as an aviation fuel is what is known as “Power-to-Liquid or
“PtL.”  See Appendix B for details about PtL.

 [1] In-house calculation of emissions based on ICAO emission calculator methodology, using AIS
aircraft data purchased to PlaneFinder.

[2] This calculation, adapted from the “Destination 2050” report (p43), takes into account costs
related to fuel, aircraft ownership, maintenance, flight crew and charges. It does not take into
account the following costs for an airline: sales, administration, passenger service, cabin
attendant, IT and communication. The cost of development of the aircraft is also not included.
The following costs of fuel are assumed:
- 2050 kerosene price, low estimate: 690€/t [Destination2050, 2020]
- 2050 kerosene price, high estimate: 1,000€/t [Stratas Advisors, 2020]
- 2050 H2 price: 2,200€/t [Destination2050, 2020] (See Appendix A)
- 2050 PtL price: 1,900€/t [Ricardo, 2020]  (See Appendix B)

Case Questions

1. Create a supporting argument for each of the following assertions:

a. (2) Airbus should pursue hydrogen-fueled aircraft.

b. (2) Airbus should forget hydrogen fuel for now and focus on Power-to-Liquid (PtL) fuel because
it is already approved for use in aircraft by the American Society for Testing and Materials.


                            (total maximum for two answers-- 250 words)


                      Appendix A. The Potential of Hydrogen as Aviation Fuel

                         (the following text is from the Airbus website.)

Research into hydrogen as a potential energy carrier to power future zero-emission aircraft has
been intensifying in recent years. But the road to hydrogen-powered aircraft requires significant
effort inside the aviation industry and beyond. From hydrogen storage, cost and infrastructure to
public perceptions about safety, the aviation sector is working to mature the technology while
tackling some major challenges.

Hydrogen is increasingly considered as one of the most promising zero-emission technologies for
future aircraft. However, despite the fact that hydrogen has an energy-density-per-unit mass that
is three times higher than traditional jet fuel, a variety of challenges must be addressed before
widespread adoption can happen.

From the technical side, aeronautical engineers will need to take the technologies developed in the
automotive and space industries and make the technology compatible with commercial aircraft
operations, notably by bringing the weight and cost down. One specific challenge is how to store
hydrogen on board the aircraft. Today, liquid hydrogen storage is among the most promising options,
while storing hydrogen as compressed gas poses challenges with current aircraft weight and volume
requirements.

In addition, the aviation industry will need to achieve the same or better safety targets than what
has been achieved with existing commercial aircraft. Indeed, extensive safety precautions are
currently taken into account in the design and operation of today’s kerosene-powered aircraft. This
stringent approach has ensured the industry’s consistent safety record throughout the years. Future
hydrogen-propulsion systems will thus need to achieve equivalent or better safety levels before
hydrogen-powered aircraft can take to the skies.

Cost-competitive green hydrogen and cross-industry partnerships will be mandatory to bring zero
emission flying to reality.

- Glenn Llewellyn, Airbus VP, Zero-Emission Aircraft

On the road towards green hydrogen

Another key challenge for widespread adoption is liquid hydrogen availability and cost at airports.
Hydrogen is available in vast quantities in oceans, lakes and the atmosphere, however, it must be
separated from oxygen in water in order to be used for industrial purposes.

Today, more than 70 million tonnes of hydrogen are produced every year, the primary extraction
source of which is natural gas (i.e. grey hydrogen). When extracted via fossil fuels, hydrogen
production is energy-intensive, responsible for around 830 million tonnes of CO2 emissions per
year. However, electrolysers, powered by electricity generated from renewables, offer a
low-emission alternative. This process, resulting in “green hydrogen,” involves water electrolysis
to extract hydrogen.

Less than 0.1% of global dedicated hydrogen production today is considered green hydrogen but that
could change. Between 2014 and 2019, global wind electricity production doubled while global solar
electricity production quadrupled. The International Energy Agency (IEA) predicts the rapid market
growth of renewables, particularly solar and wind, over the next decade will exponentially increase
the availability of renewable electricity, thereby driving down its cost. And demand for
electrolysers capable of producing green hydrogen is already growing rapidly with an expected
electrolyser capacity of 40 GW in the EU by 2030. The increased availability of green hydrogen will
thus help to decrease its cost by as much as 30% by 2030 and 50% by 2050.

This 2030 timeline is in line with Airbus’ anticipated delivery of its ZEROe programme. Indeed,
according to Glenn Llewellyn, VP of Zero-Emission Aircraft, Airbus is targeting the use of green
hydrogen to fuel its future zero-emission aircraft. He believes declining costs for renewable
energy and the scaling up of hydrogen production could make green hydrogen increasingly
cost-competitive with existing options, such as jet fuel and sustainable aviation fuels.

“Cost-competitive green hydrogen and cross-industry partnerships will be mandatory to bring
zero-emission flying to reality,” he says.

Ensuring hydrogen availability at airports worldwide

But for hydrogen to really achieve widespread adoption across the aviation industry, it must be
made available at airports worldwide.

And advancement in this area is in its infancy. One main challenge is developing the large-scale
transport and infrastructure solutions required to supply airports with the necessary quantities of
hydrogen needed to fuel aircraft.

A recent IEA study suggests that repurposing existing infrastructure, including the millions of
kilometers of pipelines used today to transport natural gas, could be a cost-effective solution.
Larger quantities of hydrogen could thus be transported via pipeline from production sites, while
smaller quantities could be transported by truck. In addition, some airport locations could develop
the necessary infrastructure to support on-site hydrogen production, particularly if a renewable
energy supply is within close proximity.

Airbus is currently collaborating with both airports and airlines to ensure the necessary hydrogen
infrastructure is in place. This includes research into how all airport-associated ground transport
(i.e. cargo trucks, passenger buses, aircraft tugs, etc.) could be decarbonised throughout the
2020s timeframe using a stepped approach, which is expected to pave the way to hydrogen
availability for aircraft over the 2030s timeframe.

Changing public perceptions about hydrogen

For over 40 years, hydrogen has been safely used in vast quantities as an industrial chemical and
as fuel for space exploration. In fact, several million cubic meters of hydrogen are transported
and handled every year. However, public perception on hydrogen’s safety is still mixed: only 49.5%
of respondents to a recent survey believed that hydrogen is “generally safe.” Throughout the years,
this perception has undoubtedly been negatively shaped by incidents like the 1937 Hindenburg
disaster.

However, what is interesting about the survey is that 73.2% of participants responded favourably to
the second question about “willingness to use hydrogen-powered modes of transportation.” As
hydrogen increasingly becomes a mainstay in the development of new transport solutions like cars
and buses, public perceptions on hydrogen are likely to change–which should positively influence
hydrogen adoption in aircraft.

The road to widespread hydrogen adoption in aviation is still long. But international coordination
across industries is expected to support the development of the hydrogen economy–an important
endeavour to help meet ambitious global decarbonisation targets over the next two decades.

https://www.airbus.com/newsroom/stories/hydrogen-aviation-understanding-challenges-to-widespread-ad
option.html




Appendix B. Power-to-Liquid (PtL) for Aviation

​The purpose is to provide the scientific basis on Power-to-Liquid (PtL), an alternative fuel​
production pathway. The pathway doesn´t depend on biomass, thus has no demand for arable land and
low demand for water. PtL is a drop-in replacement for conventional jet fuel.


Description

​Power-to-Liquid (PtL) is a new alternative fuel production pathway from renewable energy sources,
water and carbon dioxide:

The alternative fuel produced through this process is drop-in compatible and, if produced through
the Fischer-Tropsch conversion process, it is already approved for use in aircraft by the ASTM
(American Society for Testing and Materials, is an international standards organization that
develops and publishes voluntary consensus technical standards for a wide range of materials,
products, systems, and services.).

Compared to conventional aviation fuel, the production of PtL has a favourable GHG (Greenhouse Gas)
balance, while using water and land more efficiently than the production of aviation alternative
fuels made from biomass. The main outstanding challenge for commercial scale PtL production is the
production cost compared to that of conventional aviation fuel.


Appendix C. Public-Private Organizations Working in the Area of Reducing the Climate Change Impact
                                            of Aviation

The World Economic Forum

The World Economic Forum is a leading International Organization for Public-Private Cooperation.

The Forum engages the foremost political, business, cultural and other leaders of society to shape
global, regional and industry agendas.

It was established in 1971 as a not-for-profit foundation and is headquartered in Geneva,
Switzerland. It is independent, impartial and not tied to any special interests. The Forum strives
in all its efforts to demonstrate entrepreneurship in the global public interest while upholding
the highest standards of governance. Moral and intellectual integrity is at the heart of everything
it does.

Our activities are shaped by a unique institutional culture founded on the stakeholder theory,
which asserts that an organization is accountable to all parts of society. The institution
carefully blends and balances the best of many kinds of organizations, from both the public and
private sectors, international organizations and academic institutions.

We believe that progress happens by bringing together people from all walks of life who have the
drive and the influence to make positive change.

https://www.weforum.org/about/world-economic-forum


The Clean Skies for Tomorrow Coalition provides a crucial global mechanism for top executives and
public leaders, across and beyond the aviation value chain, to align on a transition to sustainable
aviation fuels as part of a meaningful and proactive pathway for the industry to achieve
carbon-neutral flying and inform the EU’s “RefuelEU” initiative and the UK Government of what is
possible. Taken together, this industry-backed policy package provides a clearly defined strategy
to scaling sustainable aviation fuels (SAF) in Europe, focused on measures that collectively
increase both supply and demand signals for creating a balanced market.

Energy Transitions Commission (ETC)

The Energy Transitions Commission (ETC) is a global coalition of leaders from across the energy
landscape working together to accelerate the transition to a zero-emissions future.  We develop
transition roadmaps and tools building on robust analysis and extensive exchanges with experts and
practitioners across energy-intensive value chains. This work is generally undertaken with a range
of partners, industry associations, NGOs and experts. In the harder-to-abate sectors specifically,
we work under the umbrella of the Mission Possible Platform, an initiative established by the ETC
and the World Economic Forum.

https://www.energy-transitions.org/