top of page

Transport's Green Transition

The Inflation Reduction Act (August 2022) has significantly improved the viability of investment in green energy and transport in the United States. Containing over $350 billion dollars of climate spending and tax break pledges, the bill is intended to slash the nation's emissions by 40% by 2030. Goldman Sachs has described the legislation as “transformative” for battery technology and hydrogen power development. With this in mind, USTN considers the future of transport’s green transition and the major steps being taken by the industry leaders.


President Biden signs the Inflation Reduction Act. Image via AFP


Aviation is a major polluter worldwide and compared to other forms of transport, such as cars, the challenges for a green transition are enormous. Airlines are responsible for 2% of CO2 emissions worldwide and for 80% of flights (those over 1,000 miles) there is no viable alternative to a jet’s Kerosene guzzling habits. Unlike electric cars, boats, and trains the additional weight of going electric is a presently insurmountable engineering problem on anything other than short-haul flights.


Yet, there is a surprising amount of optimism from industry leaders, with many making ambitious pledges. Perhaps this is driven by the impressive fact that fuel efficiency (on a revenue ton-mile basis) has increased by 135% on commercial planes since 1978. That’s the equivalent of taking 28 million cars off the road every year for 40 years.


Concurrent with this optimism, American Airlines and Delta Air Lines have both pledged to achieve net-zero emissions by 2050. As part of this ambition, Delta has said it will replace 10% of its fuel with Sustainable Airline Fuel (SAF) by 2030. Airlines see the use of alternative fuels as a fundamental step in achieving a green transition. To support this process, the US government is now offering $1 dollar of tax credit per gallon of biofuel used. This is significant. ICF Consulting estimates that approximately 70% of cuts in airline emissions, should the industry meet its net zero pledges, will have to come from the increased use of alternative fuels.


American Airlines has recently purchased 500 million gallons of alternative fuel from biofuel company Gevo. Gevo uses feedstock, typically field corn, a

nd converts it into ethanol and then processes it into a substance chemically identical to aviation fuel without requiring fossil fuels to be used at any point within the process. Any required energy input is procured from renewable sources in order to produce what John Richardson, director of Gevo’s investor relations, argues can be a net negative process.


Delta, similarly, has recently signed the largest US aviation deal in history to provide green hydrogen fuels for their fleet. DG Fuels, now in partnership with Delta, use waste CO2 as a feedstock to begin the process of making synthetic and renewable fuels.


In 2021 United flew the first passenger flight using 100% sustainable aviation fuel


Producers of green hydrogen – in contrast to gray hydrogen which is a net emitter – now qualify for two different sets of federal tax credits. On average, these tax credits can reduce the cost of green hydrogen production by almost half – falling to nearly $3 per kilo.


But the challenges facing airlines remain significant. For Gevo, at present, the quantity of feedstock required is simply not yet available and activists are concerned about the increased use of agricultural land for such purposes in the face of global food insecurity. Global sustainable alternative fuel supplies presently could operate a fleet of Delta’s size for just a single day, and it presently costs 3-to-5 times more than Kerosene.


Microsoft founder Bill Gates has spoken of the need for a “Swiss army knife of energy tools”. If the green transition is to be made, it will not be through a silver bullet. The industry must enact a plethora of changes to transition into a cleaner future.


United Airlines is trying to do just that. As Mike Leskinen, Vice President of Corporate Development and President of Investment at United, emphasises: “we cannot continue doing and operating our business the way we do. It is imperative that we change it and the way we’re going to change it [is] through investing in technology.” Specifically, United are gambling on electric planes. United acknowledges the difficulty of long-haul electric flights and so is targeting cities and hoping to change the way Americans travel on a more day-to-day basis.


Image via Heart Aerospace


At present, fewer than 1% of Americans travelling less than 250 miles choose to fly. However, United want to use electric planes, powered renewable energy sources, to increase direct transport links between small cities and those areas that have seen a decline in typical flight operation in recent decades. Vertical take-off and landing aircraft (eVTOL) would cut travel times, enabling swift point-to-point transport within metropolitan areas not typically serviced by the aviation industry, while electric planes more broadly are hoped to reinvigorate lost short-haul transport links.


United has a contract to purchase 100 30-seater electric planes from start-up Heart Aerospace to operate regional services outside of metropolitan areas. “It used to be different,” said Anders Forslund, CEO of Heart Aerospace. “Go back to the 1990s, there were hundreds of small aircraft serving a lot of communities that have now lost service.” Gregory Davis, CEO of Eviation Aircraft, has described electric plane technology as a “market maker” and believes the reintroduction of regional services via electric planes can make a huge difference in how Americans travel. The ambition is for eVTOL services to be comparable to services such as Uber, whilst regional electric flights are expected to cost less than a typical flight.


Mike Leskinen has praised the impact the Inflation Reduction Act has had on innovative technologies. Speaking recently he commented, “we have a portfolio pipeline of sustainable aviation projects at United that’s 177 companies deep, and were we pencils down on a number of those because without this legislation the hurdles were just too [high] to develop this technology.” Continuing on, he noted: “there are literally dozens of companies that wouldn’t have worked that are now viable startups.”


Some analysts believe that eVTOL can be a $12 billion dollar market by 2030. Although significant infrastructural challenges remain.


The legislation is also expected to catalyse the trucking industry.


From January 1 strong incentives have been introduced for the purchase of electric vehicles. Tax credits of between $7,500 and $40,000 are being offered depending on the size of the vehicle. Amazon and FedEx trucking vehicles, for example, are eligible for $7,500 of tax credits. In an email to Reuters, Amazon has said they expect the legislation to “transform our collective approach to reducing carbon emissions”. Amazon has already invested $1 billion to electrify its European transport network and this legislation is expected to have a similar impact in the US.


Josh Green, Founder and CEO of Inspiration Mobility, is confident that 2023 is the year that commercial electric vehicle fleets become the norm. With “tailwinds from federal and state policies”, he sees 2023 as a “tipping point.”


The major obstacles to widespread commercial EV usage are cost and range. Federal tax credits should drive those costs down significantly and with Ford’s newest electric truck having a range of over 300 miles there is renewed optimism usage will become widespread.


The US Department of energy is also seeking transformative technologies to prepare American infrastructure for a green future. The new $2.1 billion Carbon Dioxide Transportation Infrastructure Finance and Innovation program offers to fund for large-capacity transportation projects designed to include rail and shipping in order to allow the transportation of vast quantities of carbon in order to facilitate further carbon storage. Transporting sequestered carbon is a challenge but its widespread implementation is vital to the achievement of the country’s net zero goals.


The Biden administration is pushing hard for a green transition and transport is a crucial part of that program. Global spending on energy transformation has risen to $1.2 trillion since the start of the pandemic and is expected to rise to 2 trillion by 2030. Transport presently accounts for one-third of US emissions, and the country is the world’s second-largest emitter. The transport sector must take advantage of this investment and commit wholeheartedly to the clean energy future.

14 views0 comments

Yorumlar


bottom of page