Incentives for deployment of biojet fuels

The use of sustainable biojet fuels in the aviation sector has large potential to reduce its emissions. Current high prices for biojet fuels causes however that airlines cannot afford to buy large quantities of biojet fuels. This results in companies (mainly oil companies) having little incentive to invest, and consequently the cost reduction from learning effects and from scaling up production does not take place. Policy instruments are required to bridge current limitations. A recent study conducted by SQ Consult and eRisk Group for IATA, the International Air Transport Association, benchmarks several combination of policy instruments that may help to bridge current limitations and narrow the price gap with conventional jet fuels. This newsletter discusses some of the study’s findings and their impacts to airlines in an international context.