Who will pay the extra cost of biofuels?

Companies will pay a high price for switching to low-carbon fuels. An invoice to which passengers will have to contribute.

With the “Yellow Vests” crisis and the Great National Debate, the taxation of kerosene has returned to the fore in France. If they do not applaud, French airlines are nevertheless relieved. They will avoid a tax on the only French domestic network which would have posed serious questions of distortions of competition with foreign companies ensuring domestic flights like the British EasyJet, the Spanish Volotea, or the Irish Ryanair, which, between two flights in France, could have ensured a rotation towards a bordering country to fill up.

Last week, in fact, France called for “taxation of air transport on a European scale” with the study “without preconceptions” of the various possible avenues. The French government has therefore ruled out the idea of ​​taxing the only national market that would have penalized Air France, already in bad shape on the domestic network, without any real impact on CO2 emissions. EU members will therefore work on the development of a device on intra-European flights. The discussions promise to be long and uncertain. In the event that they succeed, the modalities will have to be monitored. Fearful of a tax used only to feed the coffers of the States, certain large pundits of the air transport plead so that it is intended for a research fund for biofuels.

Reverse the CO2 curve

It remains to be seen whether it will be a tax. Because whatever the means chosen, the idea is to strengthen the contribution of European air transport to the fight against global warming. It is already participating in it through the European emissions trading system, and will integrate the global Corsia carbon offset program from 2020. It will above all be necessary to clarify whether, behind the mechanism put in place, the idea is good to push the airlines to use biofuels, which remain the only way to reverse the curve of CO2 emissions. Problem: their price is two to five times higher than that of kerosene.

According to an expert, an obligation to incorporate a certain percentage of biofuels in kerosene seems a good solution. A bit like what happened in road transport. Because of the additional cost generated by biofuels, this obligation would amount to a tax and would have the merit of launching their use, which today is limited to 0.04% of the consumption of air transport.

Some observers fear that European companies are more concerned with offsetting carbon emissions through the Corsia mechanism than reducing them by buying biofuels, which are far more expensive than carbon credits, which are now very cheap.

Norway started the movement. In 2020, the tanks of all aircraft departing the country will have to contain 0.5% biofuel, with an increase target in the coming years. France is also considering such a device.

Iata, the International Air Transport Association, is counting on a share of biofuels in aeronautical consumption of 5% in 2025, before going towards massive use by 2050. If the hypothesis of a rise in power of biokerosene is confirmed, the rise in the bill will explode. Who will pay this additional cost? Passengers in the pure polluter pays principle? The States in part, via support as they always did when a new fuel arrived? Other actors? Probably all three.

As part of the European research program Horizon 2020 which will be transformed into Horizon 2021, the European Commission has proposed a number of calls for projects since 2016 to finance the first productions of aviation biofuels in Europe. As such, Total is part of a European consortium which expects to produce 5,000 to 10,000 tonnes of aviation biofuels at its La Mède site, which would be the first major industrial production in Europe of this type of fuel.

In view of the elasticity of demand for air transport linked to ticket prices, it is difficult to imagine that passengers will be able to cash in on all of the price increases, even if significant increases in the price of oil and price surcharges on the airline tickets that accompanied them have shown over the past decade that consumers can absorb them. However, a structural price increase would impact traffic, even if it is complicated to know whether or not it would decrease it. Other actors could also share this burden.

The key role of airports

In Norway, royalty reductions are planned for companies using biofuel. “We can also imagine that an airport takes its full part in the fight against global warming by deciding to use part of the revenues from car parks that generate high margins, to help finance the biofuel used by airlines . The loss of revenue would be compensated by the income earned by the shops. It is extremely virtuous, and it would serve the image of airports. They have a key role to play, ”said an expert. Aircraft manufacturers and engine manufacturers, who have an interest in seeing their products purchased, will also have to play on the price of aircraft which can be obtained by the digital transformation of production systems, ie by a complete change in their economic model.


The challenge of neutral biofuels for food crops

Even if electric planes (for regional aviation) or hybrid planes (for medium-haul, as well as regional planes) see the light of day by 2035, it would take time to replace the existing fleet of planes. Also, kerosene will still be the main fuel by 2040-2050. Hence the interest in developing aeronautical biofuels. Since Virgin Atlantic’s first flight in 2008 with an engine powered by a mixture of kerosene and biofuel, nearly 150,000 commercial flights of this type have been made. Unlike the electric plane, the technology exists, since six biofuels are today certified by the international organization ASTM. Using waste, oils (vegetable, used, animal fats), sugars from sugar plants or lignocellulosic biomass, all are mixed with jet A-1 kerosene according to incorporation rates of up to 50% maximum. Among these biofuels, the Hefa solution (lipid hydrogenation) is currently the most mature. It combines the double advantage of being the cheapest and easiest to use. Especially since Hefa fuels have started using residual oils such as those of recycled frying and animal fats while they have used vegetable oils (rapeseed, sunflower, palm, soy) from the start. Today, it is envisaged to use non-edible vegetable oils, such as camelina or carinata oil, cultivated on non-viable land for agriculture, or in intercropping between two harvests of traditional plants. The potential is enormous, especially in southern Europe. Brussels has evaluated it at 5 to 10 million hectares. It remains to convince farmers to embark on such production. The French company Global Bioenergies is working on a solution based on renewable products. Using the non-food part of the beet, its process is under certification. Its director, Marc Delcourt, plans to open a factory in France in 2022 with a capacity of 30,000 tonnes per year, a third of which will be reserved for biokerosene (the rest being intended for the cosmetic industry). If the market is buoyant, a dozen factories could see the light of day.

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