Flying greener will come at a price, industry players warn
SINGAPORE – Consumers will need to accept that there is an added cost to flying greener, as the price of less polluting jet fuel made from waste materials, such as used cooking oil, will not fall to that of regular fossil fuel any time soon.
But if investments in sustainable aviation fuel are not made today, there could be more to pay later as the planet warms.
DHL Express Singapore managing director Christopher Ong made this point during a media visit on Aug 7 to the parcel delivery giant’s facility in Changi Airfreight Centre which was jointly hosted by Finnish renewable fuel producer Neste.
The two companies inked a deal in July for DHL Express to use sustainable aviation fuel made in Neste’s refinery in Singapore on cargo flights out of Changi Airport until June 2026.
Similar moves have been made by carriers like Singapore Airlines Group and Dubai-based Emirates previously, but on a smaller scale.
In total, 7,400 tonnes of sustainable aviation fuel, or around 9.5 million litres, will be supplied to DHL Express, accounting for 35 per cent to 40 per cent of the total fuel used by its fleet of five Boeing 777 freighters here. This is the largest purchase of sustainable jet fuel in Asia by volume so far.
Mr Ong said sustainable fuels are a key lever to reduce DHL Express’ emissions, 90 per cent of which come from its aviation activities.
He believes that the price premium for greener fuels will narrow over time as production grows, but he said there are no estimates today that suggest that sustainable fuel will ever get to the same price as regular jet fuel.
“I think it is a future we need to accept – that this will be more expensive,” he said.
The cost of sustainable aviation fuel is among the major barriers that have limited its widespread adoption.
Because of limited availability and the high cost of production, such fuels are two to three times the price of normal jet fuel today.
Neste’s Asia-Pacific head of public and regulatory affairs, Mr Steven Bartholomeusz, said sustainable fuels have environmental attributes that fossil fuels do not.
For instance, apart from having a lower carbon footprint, sustainable aviation fuel has been shown to produce less soot than conventional jet fuel.
In the past couple of years, Neste has faced a more challenging market amid weak demand and increased production capacity from other firms.
This has pushed the price of renewable fuels down and raised demand for the raw materials needed to produce such fuels, squeezing earnings.
Mr Bartholomeusz called for more “demand certainty”, noting the €1.6 billion (S$2.4 billion) Neste invested into expanding its Singapore facility.
“You can’t make that kind of investment purely on the basis that you will have a company like DHL come along and (voluntarily) take our volume,” he added.
