1 00:00:00,280 --> 00:00:02,480 Speaker 1: This is Tom ronnins Reese and you're listening to Switched 2 00:00:02,520 --> 00:00:05,600 Speaker 1: on the podcast brought to you by bn EF. Despite 3 00:00:05,640 --> 00:00:08,520 Speaker 1: an increase in the use of sustainable Aviation fuel or 4 00:00:08,560 --> 00:00:11,720 Speaker 1: SAF for short, the carbon footprint of the aviation sector 5 00:00:11,800 --> 00:00:14,280 Speaker 1: is still on the rise. A lack of policy support 6 00:00:14,320 --> 00:00:16,400 Speaker 1: and high costs means the use of SAF has been 7 00:00:16,480 --> 00:00:19,160 Speaker 1: very limited for passenger airlines, who are unwilling to pass 8 00:00:19,160 --> 00:00:22,480 Speaker 1: additional costs onto their customers owing to tight profit margines 9 00:00:22,520 --> 00:00:25,640 Speaker 1: in what is an ultra competitive sector. We do, however, 10 00:00:25,680 --> 00:00:29,120 Speaker 1: see a different pattern emerging for logistics companies, with dhl's 11 00:00:29,160 --> 00:00:31,680 Speaker 1: usage rate of for SAF being a standout, having increased 12 00:00:31,680 --> 00:00:33,880 Speaker 1: to reach three point five percent for its air fleet's 13 00:00:33,920 --> 00:00:38,440 Speaker 1: fuel consumption. More efficient planes, hydrogen propulsion engines, and electric 14 00:00:38,560 --> 00:00:41,400 Speaker 1: vertical takeoff and landing aircraft are all being explored as 15 00:00:41,440 --> 00:00:45,239 Speaker 1: alternative means of decarbonization, but questions remain about just how 16 00:00:45,320 --> 00:00:47,680 Speaker 1: large an impact they can have and whether consumers are 17 00:00:47,680 --> 00:00:49,960 Speaker 1: prepared to take the hit when it comes to higher costs. 18 00:00:50,360 --> 00:00:53,440 Speaker 1: To discuss the decarbonization of the aviation sector today, i'm 19 00:00:53,520 --> 00:00:57,040 Speaker 1: joined by bnif's head of Commercial Transport, Nicolas Sulopolas, and 20 00:00:57,160 --> 00:01:00,960 Speaker 1: aviation specialist Takahiro Kawahara and were view findings from the 21 00:01:01,000 --> 00:01:05,120 Speaker 1: note Aviation Decarbonization Outlook one h twenty twenty five, which 22 00:01:05,160 --> 00:01:07,080 Speaker 1: B and F clients can find at BNF go on 23 00:01:07,120 --> 00:01:10,399 Speaker 1: the Bloomberg Terminal or on BNF dot com. All right, 24 00:01:10,520 --> 00:01:13,360 Speaker 1: let's get to talking about the outlook for aviation decarbonization 25 00:01:13,480 --> 00:01:24,679 Speaker 1: with Nico and Take, Nico and Take. 26 00:01:24,920 --> 00:01:26,120 Speaker 2: Welcome to the podcast. 27 00:01:26,400 --> 00:01:27,959 Speaker 3: Hi, Tom, it's great to be here. 28 00:01:28,080 --> 00:01:30,039 Speaker 4: Hello Tom, It's great to be here as well. 29 00:01:30,240 --> 00:01:33,760 Speaker 1: So we're talking about decarbonization of aviation, which is a 30 00:01:33,800 --> 00:01:38,160 Speaker 1: topic that I, as a BNF analyst, have sometimes run 31 00:01:38,720 --> 00:01:43,199 Speaker 1: scared from because it is very much one of the 32 00:01:43,240 --> 00:01:46,000 Speaker 1: areas that I think we classify as hard to abate, 33 00:01:46,400 --> 00:01:49,480 Speaker 1: and from where I'm sitting, there's not any easy options. 34 00:01:49,520 --> 00:01:51,520 Speaker 1: And I'm actually I mean, obviously I'm going to learn 35 00:01:51,520 --> 00:01:53,720 Speaker 1: maybe you'll tell me that I'm wrong about that. And 36 00:01:53,760 --> 00:01:57,080 Speaker 1: it accounts for what percentage of emissions does aviation account for? 37 00:01:57,280 --> 00:01:58,760 Speaker 2: Sorry to put you on the spot here. 38 00:01:58,960 --> 00:02:03,000 Speaker 4: It's about two to three percent of the global emissions. 39 00:02:03,320 --> 00:02:05,720 Speaker 1: That's really interesting because I mean two to three percent 40 00:02:05,720 --> 00:02:08,480 Speaker 1: of global emissions. Obviously a lot of emissions it's not 41 00:02:08,560 --> 00:02:12,960 Speaker 1: necessarily as much as you might think, given how much 42 00:02:13,040 --> 00:02:16,440 Speaker 1: emphasis maybe we put in the Western world about our 43 00:02:16,440 --> 00:02:20,200 Speaker 1: own carbon footprints and how much taking a flight impacts that. 44 00:02:20,520 --> 00:02:23,680 Speaker 1: So I think that it's also as much as its volume. 45 00:02:23,960 --> 00:02:28,680 Speaker 1: Maybe there's a symbolic importance of decarbonizing aviation because it 46 00:02:28,880 --> 00:02:32,120 Speaker 1: flying is a privilege, and it's maybe the people with 47 00:02:32,200 --> 00:02:34,680 Speaker 1: the highest carbon footprints in the world they are getting 48 00:02:34,720 --> 00:02:36,280 Speaker 1: to fly the most. Is that part of the reason 49 00:02:36,320 --> 00:02:37,799 Speaker 1: why you think this is an important topic. 50 00:02:38,120 --> 00:02:40,399 Speaker 4: Well, I think the one reason is, of course, it's 51 00:02:40,840 --> 00:02:44,680 Speaker 4: you're right there, it's very difficult to reduce emission technically. 52 00:02:44,919 --> 00:02:48,000 Speaker 4: The other is right now aviation comes for ready be 53 00:02:48,080 --> 00:02:52,000 Speaker 4: small portion of the global SITTY emissions. However, highly likely 54 00:02:52,320 --> 00:02:56,400 Speaker 4: this share of emissions will increase. It's actually the aviation 55 00:02:56,480 --> 00:03:01,240 Speaker 4: is the only transport sector that will keep increasing COOTWO emissions, 56 00:03:01,280 --> 00:03:04,880 Speaker 4: mainly because that increase of of your demand. 57 00:03:05,080 --> 00:03:05,560 Speaker 2: Got it. 58 00:03:05,639 --> 00:03:08,680 Speaker 1: That's a really interesting point that I hadn't really thought about. 59 00:03:08,880 --> 00:03:11,160 Speaker 1: I think it's because we talk so much about the 60 00:03:11,200 --> 00:03:14,200 Speaker 1: carbon emissions associated with flying, it seems like it's the 61 00:03:14,240 --> 00:03:15,160 Speaker 1: big problem today. 62 00:03:15,280 --> 00:03:16,359 Speaker 2: What you're actually saying. 63 00:03:16,200 --> 00:03:19,840 Speaker 1: Is is that these efforts to decarbonize aviation are as 64 00:03:19,960 --> 00:03:22,919 Speaker 1: much about preventing it from being a really big problem 65 00:03:22,960 --> 00:03:23,560 Speaker 1: in the future. 66 00:03:23,840 --> 00:03:24,280 Speaker 2: M hmm. 67 00:03:24,440 --> 00:03:24,840 Speaker 4: Correct. 68 00:03:25,120 --> 00:03:28,600 Speaker 3: And you also have some impacts from aviation that may 69 00:03:28,639 --> 00:03:32,240 Speaker 3: not be entirely se too related. I mean, they do 70 00:03:32,360 --> 00:03:35,400 Speaker 3: have some climate impacts if you're looking at the contrails, 71 00:03:35,400 --> 00:03:39,200 Speaker 3: for example, or emissions of further pollutants high up in 72 00:03:39,200 --> 00:03:43,040 Speaker 3: the atmosphere. So these do tend to have some impact 73 00:03:43,040 --> 00:03:46,400 Speaker 3: that is not directly related to CO two. It's a 74 00:03:46,440 --> 00:03:48,280 Speaker 3: broader climate effects there. 75 00:03:48,560 --> 00:03:51,960 Speaker 4: Yeah, you're right. I think there are still scientific works 76 00:03:52,240 --> 00:03:56,120 Speaker 4: are ongoing to measure the impact of non cootwo emissions. 77 00:03:56,200 --> 00:03:59,400 Speaker 4: But then some scientists actually argue that we should pay 78 00:03:59,400 --> 00:04:03,240 Speaker 4: more attention to non CEO two emissions in press contrails 79 00:04:03,360 --> 00:04:06,040 Speaker 4: in terms of how they are affecting the climate change. 80 00:04:06,160 --> 00:04:08,760 Speaker 1: That's really interesting, and maybe we can return to that 81 00:04:08,800 --> 00:04:11,400 Speaker 1: little bit more, because actually my first question was actually 82 00:04:11,480 --> 00:04:14,120 Speaker 1: going to be around decarbonization, and I hope we're going 83 00:04:14,160 --> 00:04:16,440 Speaker 1: to get time to talk about different technologies and angles 84 00:04:16,440 --> 00:04:19,120 Speaker 1: and maybe we can talk about how they impact some 85 00:04:19,160 --> 00:04:22,920 Speaker 1: of those other environmental impacts associated with flying. But let's 86 00:04:22,920 --> 00:04:28,680 Speaker 1: talk about decarbonization, because nevertheless, that is still important so yeah, 87 00:04:28,720 --> 00:04:31,880 Speaker 1: what is happening in efforts to decarbonize aviation. 88 00:04:32,520 --> 00:04:37,480 Speaker 4: So airlines they are working on the various aspects to 89 00:04:37,560 --> 00:04:40,279 Speaker 4: reduce their C two emissions. As I mentioned earlier, the 90 00:04:40,279 --> 00:04:45,480 Speaker 4: aviation is very difficult to reduce your emissions. Traditionally, airlines 91 00:04:45,520 --> 00:04:50,600 Speaker 4: have worked on a reducing emissions by replacing their old 92 00:04:50,640 --> 00:04:55,120 Speaker 4: aircraft with more few efficient aircraft or purchasing carbon assets. 93 00:04:55,400 --> 00:05:00,279 Speaker 4: Sometimes they try to improve operational improvement either on the 94 00:05:00,320 --> 00:05:04,120 Speaker 4: ground and also in the sky. What they're doing in 95 00:05:04,160 --> 00:05:08,599 Speaker 4: the recent years is that in addition to those conventional efforts, 96 00:05:08,920 --> 00:05:14,360 Speaker 4: they are trying to maximize emissions reductions impact by using 97 00:05:14,920 --> 00:05:20,040 Speaker 4: so called sustainable aviation fuel, which is the low carb 98 00:05:20,040 --> 00:05:24,000 Speaker 4: and alternative instead of the fossil jet fuel. The other 99 00:05:24,040 --> 00:05:27,680 Speaker 4: activities they do is to invest in new technologies. One 100 00:05:27,760 --> 00:05:31,839 Speaker 4: is the carbon removal technologies. It's still audio stage, but 101 00:05:32,040 --> 00:05:33,800 Speaker 4: they are some of the airlines that are aiming to 102 00:05:33,839 --> 00:05:37,560 Speaker 4: purchase credits based on the carbon removal projects. The other 103 00:05:37,720 --> 00:05:42,800 Speaker 4: efforts are investing in new aerospace technologies such as electric 104 00:05:43,040 --> 00:05:44,720 Speaker 4: or hydrogen aircraft propulsion. 105 00:05:45,040 --> 00:05:45,359 Speaker 2: Got it. 106 00:05:45,440 --> 00:05:48,080 Speaker 1: So there's it seems like there's three main buckets here. 107 00:05:48,360 --> 00:05:49,640 Speaker 1: Like if I'm just going to read back to it. 108 00:05:49,760 --> 00:05:53,280 Speaker 1: There's these changes that I would say are incrementally chipping 109 00:05:53,279 --> 00:05:56,640 Speaker 1: away emissions, but they're never going to be something that 110 00:05:56,680 --> 00:06:00,920 Speaker 1: solves the problem completely, like these operational efficiency things like that. 111 00:06:01,040 --> 00:06:04,880 Speaker 1: Then there's sustainable aviation fuel. Well as what you called 112 00:06:04,920 --> 00:06:08,680 Speaker 1: it was so called sustainable aviation fuel, so I want 113 00:06:08,720 --> 00:06:12,240 Speaker 1: to unpack maybe why you said so called in a moment. 114 00:06:12,480 --> 00:06:15,799 Speaker 1: Then there's investing in technologies, and what was really interesting 115 00:06:16,080 --> 00:06:17,880 Speaker 1: is this point is that some of the technologies are 116 00:06:17,880 --> 00:06:20,400 Speaker 1: to reduce the emissions of flying, and some of them 117 00:06:20,400 --> 00:06:23,400 Speaker 1: are it's almost like an acknowledgment that that's going to 118 00:06:23,480 --> 00:06:27,200 Speaker 1: be really hard, and that carbon removal technologies are a 119 00:06:27,279 --> 00:06:31,039 Speaker 1: more realistic way of dealing with the emissions associated flying. 120 00:06:31,080 --> 00:06:33,320 Speaker 2: So hopefully we'll get through all of that. 121 00:06:33,720 --> 00:06:37,000 Speaker 1: Maybe we should start by talking about sustainable aviation fuel though, 122 00:06:37,040 --> 00:06:40,440 Speaker 1: because that is something that is happening. It's growing right 123 00:06:40,440 --> 00:06:43,440 Speaker 1: now from what I understand from the research you've been publishing. 124 00:06:43,480 --> 00:06:44,760 Speaker 2: Maybe we start with why. 125 00:06:44,720 --> 00:06:47,919 Speaker 1: You did you say it was so called sustainable aviation fuel? 126 00:06:48,000 --> 00:06:50,760 Speaker 1: Was that just a was that a conscious choice of words, 127 00:06:50,880 --> 00:06:53,400 Speaker 1: or was there actually that was just a slip of 128 00:06:53,400 --> 00:06:53,919 Speaker 1: the tongue. 129 00:06:54,080 --> 00:06:56,840 Speaker 4: I think it's not the word, because that's the word 130 00:06:56,880 --> 00:07:00,680 Speaker 4: genery being used in the public and also if industry. 131 00:07:00,800 --> 00:07:04,520 Speaker 4: But I think in order to understand what the sustain 132 00:07:04,640 --> 00:07:07,920 Speaker 4: vivis fuel means exactly, is that I think we should 133 00:07:08,120 --> 00:07:13,640 Speaker 4: probably classify this type of fuel into two different types. 134 00:07:14,040 --> 00:07:18,320 Speaker 4: One is the biogenic low carbon aviation fuel, which uses 135 00:07:18,400 --> 00:07:22,880 Speaker 4: biomas feederstock to reduce recycle emissions. The other is synthetic 136 00:07:23,280 --> 00:07:27,840 Speaker 4: aviation FIEL, which uses clean hydrogen and alsocio too adds 137 00:07:28,360 --> 00:07:30,960 Speaker 4: jet fuel because sustain abavition fuel if you use that, 138 00:07:31,200 --> 00:07:35,400 Speaker 4: just sustain abas fuel that actually has various types. So 139 00:07:35,640 --> 00:07:38,000 Speaker 4: as a general term, I use so called. 140 00:07:38,440 --> 00:07:41,920 Speaker 1: I guess maybe whether or not it's sustainable truly is 141 00:07:42,280 --> 00:07:45,400 Speaker 1: dependent on if it's the biomass field, is how sustainable 142 00:07:45,560 --> 00:07:48,880 Speaker 1: was the farming methods because you could have two identical 143 00:07:48,960 --> 00:07:51,960 Speaker 1: barrels that have had very different degrees of sustainability. And 144 00:07:52,040 --> 00:07:56,400 Speaker 1: then for the synthetic ones, how sustainable was the hydrogen actually, 145 00:07:56,480 --> 00:07:59,160 Speaker 1: So the sort of what I'm hearing to say is 146 00:07:59,200 --> 00:08:01,720 Speaker 1: when you say so called sustainable, your so called it's 147 00:08:01,720 --> 00:08:03,280 Speaker 1: not saying that it isn't sustainable. 148 00:08:03,400 --> 00:08:06,360 Speaker 2: It can't be, but we shouldn't just assume it is. 149 00:08:07,120 --> 00:08:11,320 Speaker 3: So formally there are the ICA has some definition of 150 00:08:11,440 --> 00:08:16,040 Speaker 3: what sustainable aviation fuel means, and it is as Taki said, 151 00:08:16,080 --> 00:08:18,160 Speaker 3: I mean depends on how you make it, where the 152 00:08:18,160 --> 00:08:21,320 Speaker 3: feed still comes from and everything. So we use sustainable 153 00:08:21,400 --> 00:08:24,680 Speaker 3: aviation fuel. It's a formal term by now and everyone 154 00:08:24,680 --> 00:08:26,880 Speaker 3: in the industries indeed following. 155 00:08:26,520 --> 00:08:27,440 Speaker 2: That got it. 156 00:08:27,520 --> 00:08:31,160 Speaker 1: So how much is sustainable aviation fuel currently having an 157 00:08:31,200 --> 00:08:32,079 Speaker 1: impact and. 158 00:08:32,120 --> 00:08:33,680 Speaker 2: Who is it having an impact with? 159 00:08:34,400 --> 00:08:38,960 Speaker 4: So right now there's a very limited impact on division decoboniddition. 160 00:08:39,160 --> 00:08:41,640 Speaker 4: There are a lot of activities, so we are tracking 161 00:08:41,920 --> 00:08:47,959 Speaker 4: airlines sustainable aviation Fuel PROCAREM and signed with fuel providers. 162 00:08:48,160 --> 00:08:50,360 Speaker 4: There are one hundred and seventy four records so far. 163 00:08:50,600 --> 00:08:55,080 Speaker 4: But then when it comes to actual usage of sustainable 164 00:08:55,080 --> 00:09:00,040 Speaker 4: aviation fuel, it's still very limited. Globally speaking. According to 165 00:09:00,160 --> 00:09:04,760 Speaker 4: the International Air Transport Association or AYATA SASSINO, division fuel 166 00:09:04,840 --> 00:09:08,480 Speaker 4: accounted for just zero point three percent of the global 167 00:09:08,559 --> 00:09:11,640 Speaker 4: jet fuel production last year. If you look at the 168 00:09:11,679 --> 00:09:17,320 Speaker 4: individual airlines there is a different level of achievement. For example, 169 00:09:17,760 --> 00:09:21,720 Speaker 4: International Airlines Group, which is a parent company of British Airways, 170 00:09:21,960 --> 00:09:26,280 Speaker 4: also Air France CAREM. They have rendered more than between 171 00:09:26,320 --> 00:09:30,160 Speaker 4: one percent and two percent of Sasana vivision field with 172 00:09:30,679 --> 00:09:33,960 Speaker 4: jet fuel in twenty twenty four, which are these numbers 173 00:09:33,960 --> 00:09:36,720 Speaker 4: are ready to be higher compared to other airlines. However, 174 00:09:37,559 --> 00:09:42,400 Speaker 4: some of the Asian airlines, let's say any Holdings Singapore 175 00:09:42,440 --> 00:09:46,360 Speaker 4: Airlines or KSAs specific they are aiming to blend Saseno 176 00:09:46,400 --> 00:09:51,040 Speaker 4: division fuel. They have targets. However, the usage rate has 177 00:09:51,120 --> 00:09:55,000 Speaker 4: been very low compared to those European airlines I mentioned 178 00:09:55,000 --> 00:09:55,360 Speaker 4: out here. 179 00:09:55,679 --> 00:10:00,640 Speaker 1: So obviously three percent of global aviation fuel being sustainable 180 00:10:00,679 --> 00:10:04,280 Speaker 1: aviation fuel, presumably for people in the industry, that's not 181 00:10:04,360 --> 00:10:06,559 Speaker 1: the end goal. And we have to remember that there 182 00:10:06,600 --> 00:10:09,160 Speaker 1: was once a time where solar was just three percent 183 00:10:09,200 --> 00:10:11,520 Speaker 1: of global power generation. I don't know what it is today, 184 00:10:11,559 --> 00:10:14,400 Speaker 1: but it's definitely more than three percent, and that was 185 00:10:14,440 --> 00:10:17,280 Speaker 1: achieved by you know, the cost of the technology coming down. 186 00:10:17,679 --> 00:10:19,400 Speaker 2: But we also know that you know, there's a limit 187 00:10:19,480 --> 00:10:20,679 Speaker 2: to how much solar. 188 00:10:20,400 --> 00:10:23,520 Speaker 1: Can decarbonize the electricity sector because you know it had 189 00:10:23,640 --> 00:10:26,680 Speaker 1: you know, the various parameters of both the needs of 190 00:10:26,679 --> 00:10:28,520 Speaker 1: the power system and what it can deliver. So I 191 00:10:28,520 --> 00:10:33,480 Speaker 1: suppose similarly with sustainable aviation fuel, is there a pathway 192 00:10:33,520 --> 00:10:35,600 Speaker 1: for the costs to come down in the same way. 193 00:10:35,720 --> 00:10:37,760 Speaker 1: I guess that's the first question. And the second question 194 00:10:37,880 --> 00:10:40,320 Speaker 1: is is is there a limit to how far it 195 00:10:40,360 --> 00:10:43,040 Speaker 1: can go? I mean, could you see a world where 196 00:10:43,480 --> 00:10:47,760 Speaker 1: one hundred percent of aviation fuel is is sustainable aviation 197 00:10:47,880 --> 00:10:50,680 Speaker 1: fuel or is it impossible to deliver that sustainably? 198 00:10:51,360 --> 00:10:53,040 Speaker 2: So, by the way, it is zero. 199 00:10:52,920 --> 00:10:56,440 Speaker 3: Point three percent. It was not three percent. Okay, the 200 00:10:56,480 --> 00:10:59,079 Speaker 3: blending rate last year, so it was it was really 201 00:10:59,200 --> 00:11:01,680 Speaker 3: really tiny on the on that front. So on the 202 00:11:01,760 --> 00:11:06,000 Speaker 3: second question on whether one hundred percent is possible, I 203 00:11:06,000 --> 00:11:09,439 Speaker 3: mean it's I guess, technically possible. The question here is 204 00:11:09,559 --> 00:11:14,480 Speaker 3: how likely it is, and we think that it's at 205 00:11:14,559 --> 00:11:17,640 Speaker 3: least with what we know right now, with the combination 206 00:11:17,760 --> 00:11:20,840 Speaker 3: of the cost of that fuel and the availability of 207 00:11:20,880 --> 00:11:23,680 Speaker 3: some of the feedstocks. We're far far from that. We 208 00:11:23,720 --> 00:11:25,480 Speaker 3: can discuss, I mean, how far we are from that, 209 00:11:25,600 --> 00:11:28,400 Speaker 3: But perhaps we can start with the cost trajectory. And 210 00:11:28,840 --> 00:11:31,880 Speaker 3: it was interesting to relate it to other technologies, like 211 00:11:32,040 --> 00:11:34,679 Speaker 3: what we've seen in solar, what we're see in batteries 212 00:11:34,720 --> 00:11:37,880 Speaker 3: in road transport. As far as we can tell, there 213 00:11:37,960 --> 00:11:42,240 Speaker 3: isn't a reasonable pathway under which any sort of fuel 214 00:11:42,240 --> 00:11:45,280 Speaker 3: that is not fossil based becomes us cheap or even 215 00:11:45,360 --> 00:11:49,360 Speaker 3: cheaper than fossil based kerosine. So we're looking at a permanent, 216 00:11:49,480 --> 00:11:52,880 Speaker 3: so to speak, a premium of that fuel over what 217 00:11:53,000 --> 00:11:56,920 Speaker 3: we're using right now. Hence my comment about I mean 218 00:11:57,080 --> 00:12:01,280 Speaker 3: technically possible, yes, to have one hundred percent, but art proposition. 219 00:12:01,280 --> 00:12:04,200 Speaker 1: Right, and I mean, and I suppose that's when you know, 220 00:12:04,200 --> 00:12:06,360 Speaker 1: if you're trying to get to one hundred percent reducing 221 00:12:06,400 --> 00:12:09,880 Speaker 1: the emissions from aviation, some of these other technologies, either 222 00:12:09,960 --> 00:12:13,800 Speaker 1: something that completely different type of aircraft or carbon removals 223 00:12:14,040 --> 00:12:17,200 Speaker 1: starts to become the question because of just this question 224 00:12:17,280 --> 00:12:19,880 Speaker 1: of it, it's never going to be cheaper than the 225 00:12:19,920 --> 00:12:21,160 Speaker 1: fossil fuel alternative. 226 00:12:21,440 --> 00:12:23,480 Speaker 3: I think that's a good comment in the sense that 227 00:12:23,800 --> 00:12:28,360 Speaker 3: perhaps no technology, again with what we're currently seeing, what 228 00:12:28,400 --> 00:12:31,920 Speaker 3: we currently know is has the possibility to become as 229 00:12:32,080 --> 00:12:34,840 Speaker 3: cheap as what we currently use in terms of aviation 230 00:12:35,000 --> 00:12:39,520 Speaker 3: fuel or aircraft or other like propulsion technologies. So that's 231 00:12:39,559 --> 00:12:42,920 Speaker 3: where I think that makes sense your comment. And aviation 232 00:12:42,960 --> 00:12:45,760 Speaker 3: indust has started to look at other areas and beat 233 00:12:45,840 --> 00:12:49,520 Speaker 3: carbon offsets or carbon removals and the rest, trying to 234 00:12:49,520 --> 00:12:53,240 Speaker 3: find the most cost efficient way to achieve emissions reductions. 235 00:12:54,120 --> 00:12:56,880 Speaker 1: It's interesting because if we're looking at a choice between 236 00:12:56,880 --> 00:13:01,520 Speaker 1: sustainable aviation fuels and carbon removal, and let me just say, 237 00:13:01,600 --> 00:13:04,480 Speaker 1: we haven't got talking about the other technologies, but let's 238 00:13:04,480 --> 00:13:07,000 Speaker 1: just for argument's sake, these are the only real options 239 00:13:07,040 --> 00:13:10,280 Speaker 1: on the table for like decarbonizing long haul flights. You know, 240 00:13:10,320 --> 00:13:14,320 Speaker 1: however cheap you can make carbon removals. However much technology advances, 241 00:13:14,400 --> 00:13:16,880 Speaker 1: it's always going to be more expensive than the fossil 242 00:13:16,920 --> 00:13:21,319 Speaker 1: fuel alternative because you have to do something extra versus 243 00:13:21,320 --> 00:13:23,960 Speaker 1: doing nothing extra in this scenario where you just burn 244 00:13:24,000 --> 00:13:26,920 Speaker 1: fossil fuels and don't do anything. So then this means 245 00:13:26,960 --> 00:13:30,520 Speaker 1: that to have a carbon free aviation industry, someone is 246 00:13:30,559 --> 00:13:33,040 Speaker 1: going to have to pay more. And I suppose a 247 00:13:33,120 --> 00:13:37,439 Speaker 1: question I have is do the end consumers, whether it's 248 00:13:37,600 --> 00:13:42,320 Speaker 1: you know, consumers for passenger flights or if it's the 249 00:13:42,440 --> 00:13:45,400 Speaker 1: kind of corporate's paying for freight, is there the appetite 250 00:13:45,720 --> 00:13:48,360 Speaker 1: a willingness to pay for this, So the ring. 251 00:13:48,280 --> 00:13:51,080 Speaker 4: Has to pay. It's a really to be higher in 252 00:13:51,120 --> 00:13:56,240 Speaker 4: the freight industries. I think a good example is Deity Express. 253 00:13:56,480 --> 00:14:00,880 Speaker 4: So dear branding self branding rate word three point five 254 00:14:00,920 --> 00:14:04,320 Speaker 4: percent in twenty twenty four, which is higher than passage 255 00:14:04,400 --> 00:14:09,000 Speaker 4: airlines even International Airlines Group. The reason is that the 256 00:14:09,280 --> 00:14:13,400 Speaker 4: freight companies are in a good position in terms of 257 00:14:13,760 --> 00:14:18,040 Speaker 4: distributing the cost to their customers. So Detail, for example, 258 00:14:18,160 --> 00:14:22,960 Speaker 4: has a program called Gogreen prats which allows their Details 259 00:14:22,960 --> 00:14:27,720 Speaker 4: customers to pay extra for the Detail to use stuff. 260 00:14:28,080 --> 00:14:33,000 Speaker 4: In exchange, those companies can reduce their scope three emissions. 261 00:14:33,200 --> 00:14:37,080 Speaker 4: So which is driving the interest of those customers of 262 00:14:37,360 --> 00:14:41,440 Speaker 4: cargo companies. I think there are other followers in different regions. 263 00:14:41,800 --> 00:14:45,840 Speaker 4: One example is FedEx in the US, which have signed 264 00:14:45,920 --> 00:14:50,960 Speaker 4: for sustainables feel of take agreement with finished company called NESTE. 265 00:14:51,640 --> 00:14:54,640 Speaker 3: And sometimes in freight you have some parts of that 266 00:14:54,840 --> 00:14:58,480 Speaker 3: industry that by definition less price sensitive. I in some 267 00:14:58,560 --> 00:15:01,720 Speaker 3: higher value products I mean fashionige one example where we 268 00:15:01,800 --> 00:15:06,120 Speaker 3: see some activity in terms of the carbonization from you know, 269 00:15:06,280 --> 00:15:10,000 Speaker 3: from transporting freight with cargon with airplanes. And so there 270 00:15:10,000 --> 00:15:13,680 Speaker 3: are some niche areas where you can certainly find the 271 00:15:14,240 --> 00:15:17,840 Speaker 3: higher like a willingness to pay or lower sensitivity to price. 272 00:15:18,360 --> 00:15:23,160 Speaker 4: Yeah, especially like the sectors such as technology companies pharmaceutical companies, 273 00:15:23,280 --> 00:15:25,040 Speaker 4: do you tend to have a higher inting nest to 274 00:15:25,120 --> 00:15:28,440 Speaker 4: pay for using SAFF to reduce SCULP three emissions, So 275 00:15:28,480 --> 00:15:30,400 Speaker 4: there's a difference bisectors. 276 00:15:31,600 --> 00:15:34,240 Speaker 1: So we think this is going to be led. The 277 00:15:34,320 --> 00:15:37,480 Speaker 1: development of the SAFF industry is currently being led by 278 00:15:37,880 --> 00:15:42,360 Speaker 1: these logistics companies, but you know, by freight transport, because 279 00:15:42,440 --> 00:15:46,560 Speaker 1: there are buyers willing to pay for passenger airlines. I 280 00:15:46,600 --> 00:15:49,360 Speaker 1: also remember, and I don't know if this is still true, 281 00:15:49,640 --> 00:15:52,120 Speaker 1: but I remember, like this is maybe ten years ago, 282 00:15:52,240 --> 00:15:55,280 Speaker 1: someone telling me that being an airline is one of 283 00:15:55,320 --> 00:15:58,680 Speaker 1: the hardest industries in the world to make a profit 284 00:15:58,720 --> 00:16:01,320 Speaker 1: if you look at the history of airlines. I can't 285 00:16:01,360 --> 00:16:03,120 Speaker 1: remember who told me that, and I don't know if 286 00:16:03,160 --> 00:16:04,880 Speaker 1: it was true to last year. 287 00:16:05,000 --> 00:16:08,160 Speaker 3: And last year was a good year for the airline industry. 288 00:16:08,440 --> 00:16:13,480 Speaker 3: Global revenue was about one trillion dollars and global profit 289 00:16:13,920 --> 00:16:17,480 Speaker 3: was about just over thirty thirty five billion dollars. So 290 00:16:17,680 --> 00:16:20,040 Speaker 3: it's a large number, or it sounds like a large number, 291 00:16:20,080 --> 00:16:22,400 Speaker 3: but it is about three three and a half percent 292 00:16:22,760 --> 00:16:23,480 Speaker 3: of revenue. 293 00:16:23,680 --> 00:16:24,760 Speaker 2: And that was a good year. 294 00:16:24,960 --> 00:16:27,920 Speaker 3: And that was a good year. Yeah, So the fluctuations 295 00:16:28,440 --> 00:16:32,040 Speaker 3: across a business cycle can be sort of brutal, you know, 296 00:16:32,040 --> 00:16:33,520 Speaker 3: in the industry. 297 00:16:33,120 --> 00:16:34,840 Speaker 1: It reminds me of a couple of months ago. We 298 00:16:34,880 --> 00:16:37,600 Speaker 1: had Jenny Chase on the podcast talking about solar and 299 00:16:37,640 --> 00:16:41,040 Speaker 1: I was saying, why does anyone manufacture solar panels? 300 00:16:41,080 --> 00:16:43,560 Speaker 2: Because it doesn't look like it's a profitable business to 301 00:16:43,640 --> 00:16:46,240 Speaker 2: be in. So, I, you know, there's a whole separate question. 302 00:16:46,120 --> 00:16:49,080 Speaker 1: Why the airlines airline, But in the context of what 303 00:16:49,120 --> 00:16:51,720 Speaker 1: you're saying, are they really in a position to be 304 00:16:51,760 --> 00:16:54,600 Speaker 1: able to take this on because I assume the reason, 305 00:16:54,680 --> 00:16:56,360 Speaker 1: one of the reasons it's so hard to make a 306 00:16:56,400 --> 00:17:00,520 Speaker 1: profit is they're always undercutting each other on price, and 307 00:17:01,320 --> 00:17:03,920 Speaker 1: so I would assume then if you're having to introduce 308 00:17:03,960 --> 00:17:08,679 Speaker 1: a premium, unless there's real willingness among consumers, it's going 309 00:17:08,760 --> 00:17:10,240 Speaker 1: to be really difficult for them. 310 00:17:10,160 --> 00:17:13,200 Speaker 2: To stay afloat and adapt this stuff. 311 00:17:13,440 --> 00:17:16,840 Speaker 4: Correct. So this is the one of the biggest challenges 312 00:17:17,000 --> 00:17:23,640 Speaker 4: for accelerating self adaption. It's unlikely that many individual passengers, 313 00:17:23,760 --> 00:17:27,120 Speaker 4: I like to pay additional cost for suff Of course, 314 00:17:27,160 --> 00:17:30,720 Speaker 4: many passengers are conscious about the impact on climate change, 315 00:17:30,800 --> 00:17:34,360 Speaker 4: but when it comes to the increase of airfares, that's 316 00:17:34,400 --> 00:17:35,240 Speaker 4: a different story. 317 00:17:35,600 --> 00:17:37,119 Speaker 2: Yeah, so they're not that concerned. 318 00:17:38,600 --> 00:17:42,080 Speaker 1: I feel like I feel like consumers get let off 319 00:17:42,119 --> 00:17:45,200 Speaker 1: the hook way too easily. Honestly, everyone blames their own corporations, 320 00:17:45,520 --> 00:17:47,920 Speaker 1: like we got it here. People aren't willing to pay 321 00:17:48,119 --> 00:17:50,400 Speaker 1: for a greener flight. Let's just call it how it. 322 00:17:50,359 --> 00:17:54,240 Speaker 4: Is exactly so interesting. There's a country that is trying 323 00:17:54,280 --> 00:17:57,880 Speaker 4: to tackle this challenge. So Singapore is the first government 324 00:17:57,960 --> 00:18:01,080 Speaker 4: in the world that has decided to inter use passenger 325 00:18:01,240 --> 00:18:05,040 Speaker 4: levy for staff from twenty twenty six, meaning that all 326 00:18:05,080 --> 00:18:09,600 Speaker 4: the passengers to take flights departing from Singapore, we have 327 00:18:09,680 --> 00:18:14,400 Speaker 4: to pay some portions of money to contribute the premium 328 00:18:14,440 --> 00:18:15,520 Speaker 4: cost of stuff. 329 00:18:15,960 --> 00:18:17,600 Speaker 2: Got it, And you're right, Tommy. 330 00:18:18,000 --> 00:18:22,040 Speaker 3: The competition is very strong in the industry, so it's 331 00:18:22,040 --> 00:18:24,400 Speaker 3: hard to see what's going to give there. I mean, 332 00:18:24,440 --> 00:18:26,960 Speaker 3: I think a stack you said. We see some of 333 00:18:27,000 --> 00:18:29,920 Speaker 3: the some early kind of attempts from the industry to 334 00:18:30,200 --> 00:18:33,560 Speaker 3: try and understand what that sensitivity to price is, because 335 00:18:33,600 --> 00:18:36,119 Speaker 3: it's we know historically and you can go back and 336 00:18:36,359 --> 00:18:39,760 Speaker 3: check what that coefficient for example, is, and how demand 337 00:18:39,840 --> 00:18:42,359 Speaker 3: changes according to the increase in price and everything. But 338 00:18:42,480 --> 00:18:45,760 Speaker 3: here we're talking about, you know, like a structural shift 339 00:18:46,160 --> 00:18:49,240 Speaker 3: in the cost base, so it becomes higher permanently and 340 00:18:49,320 --> 00:18:51,520 Speaker 3: will become higher more and more and more and more. 341 00:18:51,720 --> 00:18:55,119 Speaker 3: What the backstop tool of that an extent is in 342 00:18:55,200 --> 00:18:58,520 Speaker 3: all that competitive environment is regulation of course that we 343 00:18:58,600 --> 00:19:01,560 Speaker 3: have seen coming online in in different places, and that 344 00:19:01,680 --> 00:19:04,280 Speaker 3: creates some sort of AI you know, like the boundary 345 00:19:04,280 --> 00:19:05,960 Speaker 3: conditions under which summer line. 346 00:19:05,880 --> 00:19:06,920 Speaker 2: Yeah, have to compete. 347 00:19:07,160 --> 00:19:09,800 Speaker 1: There's a big difference between There's kind of two kinds 348 00:19:09,840 --> 00:19:13,120 Speaker 1: of price sensitivity. There's the price sensitivity of you, as 349 00:19:13,160 --> 00:19:17,639 Speaker 1: one airline, changes your prices to increase the uptake of staff, 350 00:19:17,840 --> 00:19:21,040 Speaker 1: but nobody else does. And then there's the price sensitivity 351 00:19:21,119 --> 00:19:24,480 Speaker 1: of if all airlines are adopting this, how much do 352 00:19:24,560 --> 00:19:26,040 Speaker 1: people reduce flying. 353 00:19:25,840 --> 00:19:28,359 Speaker 3: To an extent We don't know. I mean, we haven't 354 00:19:28,359 --> 00:19:31,760 Speaker 3: seen that situation before. And we have seen cost fluctuations, 355 00:19:31,760 --> 00:19:34,120 Speaker 3: you know, after two thousand and eight, two thousand and nine, 356 00:19:34,320 --> 00:19:37,639 Speaker 3: oil prices went up and like I'll buy a lot, 357 00:19:38,000 --> 00:19:41,399 Speaker 3: and that affected airlines. We show the other side of 358 00:19:41,440 --> 00:19:43,560 Speaker 3: that cycle, you know, like in the later years of 359 00:19:43,560 --> 00:19:48,520 Speaker 3: the twenty tens and all that. But those constant additional costs, 360 00:19:48,600 --> 00:19:51,520 Speaker 3: I mean still is still very early to know about those. 361 00:19:51,840 --> 00:19:55,080 Speaker 3: No airline would I think, in my opinion, would voluntarily 362 00:19:55,160 --> 00:19:58,520 Speaker 3: go and do that increase prices to go one hundred 363 00:19:58,560 --> 00:20:02,199 Speaker 3: percent staff the good trying to reduce their emissions in general, 364 00:20:02,280 --> 00:20:04,920 Speaker 3: beat with SAFF or with anything else that they may 365 00:20:04,960 --> 00:20:07,119 Speaker 3: come up with. They do it because they have to 366 00:20:07,560 --> 00:20:11,119 Speaker 3: in some jurisdictions, and that creates like a very strong 367 00:20:11,160 --> 00:20:12,520 Speaker 3: incentives for them to go and do it. 368 00:20:12,600 --> 00:20:14,760 Speaker 4: Yeah, so some sort of rootmaking is important. 369 00:20:14,880 --> 00:20:18,080 Speaker 1: Yeah, let's move on from saf because, as I said, 370 00:20:18,119 --> 00:20:20,280 Speaker 1: this is a tough nut to crack, doesn't mean it 371 00:20:20,280 --> 00:20:20,920 Speaker 1: can't be cracked. 372 00:20:20,920 --> 00:20:22,440 Speaker 2: But then that's also when it comes. 373 00:20:22,280 --> 00:20:26,480 Speaker 1: To decarbonizing and generally reducing the environmental footprint of aviation. 374 00:20:26,760 --> 00:20:30,280 Speaker 1: There are other things going on. So we mentioned briefly 375 00:20:30,640 --> 00:20:36,240 Speaker 1: electrification of aviation. That sounds pretty ambitious and potentially quite cool. 376 00:20:36,400 --> 00:20:39,000 Speaker 1: Can you tell me a bit more about what's going 377 00:20:39,000 --> 00:20:39,520 Speaker 1: on with that? 378 00:20:40,160 --> 00:20:44,800 Speaker 4: Sure? So they are broader speaking. There are two ways 379 00:20:44,840 --> 00:20:48,080 Speaker 4: of electrification of aircraft. So one is the fixing aircraft, 380 00:20:48,240 --> 00:20:53,720 Speaker 4: meaning that replacing conventional propasian system with battery electric propaging 381 00:20:53,800 --> 00:20:57,840 Speaker 4: systems or sometimes hybrid electric proposing systems or hydrogen fuel 382 00:20:57,880 --> 00:21:02,760 Speaker 4: celle proposing system to use for some small fixed wing 383 00:21:02,800 --> 00:21:09,080 Speaker 4: aircraft that are flying regional roots. The other is electric 384 00:21:09,240 --> 00:21:12,600 Speaker 4: vertical takeoff and landing aircraft. I know this is too long, 385 00:21:12,640 --> 00:21:16,280 Speaker 4: so let's coded air taxis because many people say air taxis. 386 00:21:16,359 --> 00:21:20,000 Speaker 4: So in terms of the fast point. Still, the technology 387 00:21:20,080 --> 00:21:23,320 Speaker 4: ropment is happening, but some there are some startups. For example, 388 00:21:23,400 --> 00:21:27,159 Speaker 4: the company like hot Aerospace in Sweden, they are aiming 389 00:21:27,200 --> 00:21:33,160 Speaker 4: to introduce the hybrid electric aircraft into the market, which 390 00:21:33,280 --> 00:21:37,840 Speaker 4: potentially could replace some of the existing tupleproper aircraft that 391 00:21:37,880 --> 00:21:41,960 Speaker 4: are flying regional roots. The benefit is, of course, one 392 00:21:42,000 --> 00:21:46,400 Speaker 4: is reducing cilty emissions. The other is potentially this type 393 00:21:46,400 --> 00:21:49,960 Speaker 4: of aircraft could reduce the operating costs that it uses 394 00:21:50,040 --> 00:21:51,040 Speaker 4: ecosidy animotives. 395 00:21:51,600 --> 00:21:54,320 Speaker 1: So now we're talking about a technology that could be 396 00:21:54,400 --> 00:21:58,520 Speaker 1: greener and cheaper than the current alternative. So this is 397 00:21:58,640 --> 00:22:02,440 Speaker 1: sort of interesting really. I remember actually our San Francisco 398 00:22:02,480 --> 00:22:05,880 Speaker 1: summit a few years ago, we had someone talking about 399 00:22:05,920 --> 00:22:10,320 Speaker 1: their company with a sort of an electric aircraft design 400 00:22:10,400 --> 00:22:12,639 Speaker 1: and their vision, and they were talking about how in 401 00:22:12,680 --> 00:22:15,960 Speaker 1: the future electrified regional air flights could be a really 402 00:22:15,960 --> 00:22:16,760 Speaker 1: commonplace thing. 403 00:22:16,800 --> 00:22:17,600 Speaker 2: And I was thinking, you. 404 00:22:17,640 --> 00:22:20,520 Speaker 1: Know, this isn't just an electric alternative to your fossil 405 00:22:20,520 --> 00:22:23,760 Speaker 1: fuel plane, but could this be an alternative to trains? 406 00:22:24,160 --> 00:22:26,240 Speaker 1: You know, if that's the sort of distance we're talking about, 407 00:22:26,440 --> 00:22:29,640 Speaker 1: or long car journeys. And I got quite excited, as 408 00:22:29,760 --> 00:22:32,400 Speaker 1: this is something that is potentially not just a new 409 00:22:32,440 --> 00:22:35,800 Speaker 1: technology that replaces another one, but actually something that changes 410 00:22:35,960 --> 00:22:38,639 Speaker 1: the way we do things. Is that sort of the 411 00:22:38,720 --> 00:22:41,440 Speaker 1: vision for some of some of these companies for a. 412 00:22:41,440 --> 00:22:46,160 Speaker 4: Regional flight, yes, But then for larger aircraft let's say 413 00:22:46,160 --> 00:22:50,600 Speaker 4: Boring two seven or about three twenty new carrying one 414 00:22:50,680 --> 00:22:56,120 Speaker 4: hundred passengers and flying thousand one caimeters, that's not be impossible. 415 00:22:56,320 --> 00:22:59,280 Speaker 1: Right, So we're just talking regional flights here, and particularly 416 00:22:59,320 --> 00:23:02,639 Speaker 1: those are route where we're not likely to have transport 417 00:23:02,720 --> 00:23:06,840 Speaker 1: infrastructure like rails. I mean I say this, I'm based 418 00:23:07,000 --> 00:23:10,840 Speaker 1: in the US, and I'm just really struck by how 419 00:23:11,240 --> 00:23:15,239 Speaker 1: little you can do on a train in America, and 420 00:23:15,440 --> 00:23:18,240 Speaker 1: it's such a big country. And I guess if they 421 00:23:18,240 --> 00:23:20,639 Speaker 1: were going to build those train lines across the country, 422 00:23:20,680 --> 00:23:23,399 Speaker 1: they would have done it already. And so I'm thinking, 423 00:23:23,800 --> 00:23:25,719 Speaker 1: is there going to be a leap frog for some companies? 424 00:23:25,760 --> 00:23:27,600 Speaker 1: But they're going to And I keep main a point 425 00:23:27,600 --> 00:23:29,320 Speaker 1: about trains. I don't just mean trains, I mean all 426 00:23:29,440 --> 00:23:33,560 Speaker 1: kind of transport along in a certain distance does electrified 427 00:23:33,800 --> 00:23:37,639 Speaker 1: aviation have the potential to leap frog certain forms of 428 00:23:37,640 --> 00:23:40,720 Speaker 1: transport that we currently rely on for this kind of 429 00:23:40,920 --> 00:23:43,359 Speaker 1: medium term, medium range trip. 430 00:23:43,440 --> 00:23:44,720 Speaker 2: I guess i'd call it no. 431 00:23:44,720 --> 00:23:47,040 Speaker 3: No, for sure there and there are two in fact, 432 00:23:47,040 --> 00:23:50,000 Speaker 3: as you point out, Tom, there are those two aspects 433 00:23:50,000 --> 00:23:54,920 Speaker 3: of electrifying aviation. One is replacing some of the existing 434 00:23:55,320 --> 00:23:58,640 Speaker 3: short haul or medium range route and the other one 435 00:23:58,720 --> 00:24:03,679 Speaker 3: is having some expanding let's say, the transport infrastructure option, 436 00:24:04,040 --> 00:24:07,680 Speaker 3: the transport options for different consumers, and potentially pushing some 437 00:24:07,880 --> 00:24:11,119 Speaker 3: mode switching, you know, from either train or car to 438 00:24:10,760 --> 00:24:12,679 Speaker 3: these to these aircraft, and that can. 439 00:24:12,640 --> 00:24:14,119 Speaker 2: Love in the different switching. 440 00:24:14,359 --> 00:24:16,680 Speaker 1: I wish I had said mode switching when I asked 441 00:24:16,760 --> 00:24:18,480 Speaker 1: my question. We could have saved so much time. 442 00:24:19,200 --> 00:24:20,840 Speaker 2: I think. 443 00:24:21,040 --> 00:24:24,119 Speaker 3: I think that's that's also a bit of a term, 444 00:24:24,240 --> 00:24:26,760 Speaker 3: so it's better to describe it rather than to throw 445 00:24:26,800 --> 00:24:27,320 Speaker 3: it out there. 446 00:24:27,359 --> 00:24:30,240 Speaker 1: So I think listening, if you've listened to the end 447 00:24:30,240 --> 00:24:34,560 Speaker 1: of podcast, you've learned a new word, mode switching. I'm 448 00:24:34,560 --> 00:24:36,120 Speaker 1: gonna use I'm going to try and find a way 449 00:24:36,119 --> 00:24:40,560 Speaker 1: to use that today in conversation. Carry on, sorry, And. 450 00:24:40,480 --> 00:24:42,480 Speaker 3: Then you have that, and then you have all these 451 00:24:42,800 --> 00:24:46,040 Speaker 3: potentially new use cases a stuck and mentioned in remote 452 00:24:46,040 --> 00:24:48,840 Speaker 3: islands or in places you have a lot where you 453 00:24:48,920 --> 00:24:51,600 Speaker 3: have a lot of airports for example, as in the US, 454 00:24:51,760 --> 00:24:54,479 Speaker 3: in places where you have airports but you don't have roads, 455 00:24:54,520 --> 00:24:57,600 Speaker 3: for example. I mean if you we've heard of people 456 00:24:57,680 --> 00:25:01,280 Speaker 3: and regulators looking at Alaska even because that is where 457 00:25:01,440 --> 00:25:04,199 Speaker 3: you know you need these connections and you don't have that. 458 00:25:04,280 --> 00:25:06,199 Speaker 3: So that's the one part of it, I mean, the 459 00:25:06,240 --> 00:25:11,040 Speaker 3: carbonizing some part of the aviation industry, and then you know, 460 00:25:11,680 --> 00:25:16,680 Speaker 3: introducing some more travel options we need to put into context. 461 00:25:16,760 --> 00:25:19,800 Speaker 3: Of course. Then the context is that these flights that 462 00:25:19,880 --> 00:25:24,239 Speaker 3: you can potentially replace with electric aircraft contribute to how 463 00:25:24,320 --> 00:25:29,080 Speaker 3: much tarkey that's perhaps a few percent of total aviation emissions. 464 00:25:28,800 --> 00:25:32,280 Speaker 4: Right, very small percenter is I think're roughly actually for 465 00:25:32,359 --> 00:25:34,359 Speaker 4: a regional tap props just one percent. 466 00:25:34,640 --> 00:25:37,560 Speaker 3: So yeah, we're talking about addressing a relatively small part 467 00:25:37,640 --> 00:25:39,120 Speaker 3: of total aviation emissions. 468 00:25:39,119 --> 00:25:44,879 Speaker 1: So electrified transport can do three things. It can decarbonize aviation, 469 00:25:45,280 --> 00:25:48,720 Speaker 1: it can provide mode switching options, and it can also 470 00:25:48,880 --> 00:25:53,159 Speaker 1: allow transport options when none existed before. But the first 471 00:25:53,160 --> 00:25:57,280 Speaker 1: of those, that emissions reduction aspect is actually a fairly 472 00:25:57,400 --> 00:25:58,960 Speaker 1: minor part of its proposition. 473 00:25:59,240 --> 00:26:01,119 Speaker 2: What it's really brings to the table. 474 00:26:01,160 --> 00:26:04,399 Speaker 1: There's a bunch of cool new possibilities and options for transport, 475 00:26:04,560 --> 00:26:08,760 Speaker 1: So it's not really a decarbonization play in a meaningful way. 476 00:26:09,160 --> 00:26:11,480 Speaker 3: Yeah, I think that's correct. Yeah, I think that's our 477 00:26:11,560 --> 00:26:14,520 Speaker 3: view as well, that it opens up opportunities, and some 478 00:26:14,560 --> 00:26:16,639 Speaker 3: of the opportunities are really exciting. As you said, I 479 00:26:16,680 --> 00:26:19,199 Speaker 3: mean on these short and medium hall of flights, but 480 00:26:19,280 --> 00:26:23,359 Speaker 3: also on even shorter flights like with the nor around cities. 481 00:26:23,400 --> 00:26:25,840 Speaker 3: I mean, different type of aircraft and different type of 482 00:26:25,880 --> 00:26:28,760 Speaker 3: operating models. But you do have quite a few options, 483 00:26:28,800 --> 00:26:31,280 Speaker 3: and we have looked at some of those relatively recently 484 00:26:31,320 --> 00:26:34,840 Speaker 3: in great detail, and there are some exciting stuff happening there. 485 00:26:35,160 --> 00:26:38,760 Speaker 1: And I suppose if you're taking an electric air taxi 486 00:26:38,880 --> 00:26:41,040 Speaker 1: from one side of a city to another where you 487 00:26:41,080 --> 00:26:44,400 Speaker 1: might have driven a car, there is also an emissions 488 00:26:44,440 --> 00:26:48,120 Speaker 1: and air quality proposition with that as well. We talked 489 00:26:48,119 --> 00:26:52,959 Speaker 1: about SAFF and it's potential to decarbonize sort of mainstream 490 00:26:53,040 --> 00:26:56,520 Speaker 1: aviation and the bulk of emissions, but there's a cost question. 491 00:26:56,680 --> 00:26:58,600 Speaker 2: Who's willing to pay for it? How we get there. 492 00:26:58,680 --> 00:26:59,400 Speaker 2: We've talked very. 493 00:26:59,320 --> 00:27:03,600 Speaker 1: Briefly about the electric aviation, and it's not really a 494 00:27:03,760 --> 00:27:06,919 Speaker 1: decarbonization play. It's more of an exciting new technology with 495 00:27:07,000 --> 00:27:11,520 Speaker 1: new possibilities that also happens to be green. Then finally, hydrogen, 496 00:27:11,880 --> 00:27:14,560 Speaker 1: Where does hydrogen fit into all of this? I've heard 497 00:27:14,640 --> 00:27:17,600 Speaker 1: hydrogen spoken of as a potential fuel. It's also a 498 00:27:17,600 --> 00:27:21,200 Speaker 1: potential feedstock for synthetic aviation fuel as well. So yeah, 499 00:27:21,200 --> 00:27:23,800 Speaker 1: why would you have hydrogen powered aircraft rather than just 500 00:27:23,960 --> 00:27:26,600 Speaker 1: synthetic aviation fuel based on green hydrogen. 501 00:27:27,040 --> 00:27:32,439 Speaker 4: So yes, hydrogen has a hig potential to make aircraft 502 00:27:32,520 --> 00:27:36,400 Speaker 4: emission zero if you can replace fossaget field with hydrogen 503 00:27:36,560 --> 00:27:39,840 Speaker 4: of course, the green hydrogen. But then there's a huge, 504 00:27:39,880 --> 00:27:44,800 Speaker 4: huge technical challenges and also infrastructug challenges. The technical challenge 505 00:27:44,880 --> 00:27:47,520 Speaker 4: is that if you want to have dark use of 506 00:27:47,680 --> 00:27:52,880 Speaker 4: hydrogen for propugen, because of the lower borometric energy density 507 00:27:52,920 --> 00:27:57,200 Speaker 4: of hydrogen niquid hydrogen, you need to have more spaces 508 00:27:57,400 --> 00:28:02,520 Speaker 4: to store hydrogen tanks, which requires aircraft design changes. That's 509 00:28:02,560 --> 00:28:06,920 Speaker 4: one challenge. The other is infrastructure. Flying with hydrogen aircraft 510 00:28:07,080 --> 00:28:11,600 Speaker 4: means that each airport where hydrogen powered aircraft frinds to 511 00:28:12,119 --> 00:28:17,439 Speaker 4: or fryings from needs hydrogen supply infrastructure, which is not 512 00:28:17,680 --> 00:28:22,840 Speaker 4: there yet. So Airbus was originally planning to introduce commercial 513 00:28:23,080 --> 00:28:27,800 Speaker 4: hydrogen powered aircraft by mid twenty thirties. However, it is 514 00:28:27,840 --> 00:28:31,040 Speaker 4: postponing the research and deverronment project. It doesn't state they 515 00:28:31,040 --> 00:28:33,760 Speaker 4: will not do that, but it takes longer time than 516 00:28:33,880 --> 00:28:35,879 Speaker 4: we originally anticipated. 517 00:28:35,200 --> 00:28:35,960 Speaker 2: It got it. 518 00:28:36,119 --> 00:28:39,720 Speaker 1: So the success of hydrogen as an aviation fuel is 519 00:28:39,760 --> 00:28:44,840 Speaker 1: also partially dependent on the success of hydrogen as an 520 00:28:45,120 --> 00:28:48,440 Speaker 1: energy vector as a whole, and including the infrastructure and 521 00:28:48,680 --> 00:28:51,120 Speaker 1: the provision of it. So there's various pieces of the 522 00:28:51,200 --> 00:28:51,720 Speaker 1: jigsaw that. 523 00:28:51,720 --> 00:28:53,160 Speaker 2: Would have to fall into place. 524 00:28:53,680 --> 00:28:58,080 Speaker 1: That's right, And I suppose in that regard SAFF including 525 00:28:58,600 --> 00:29:02,120 Speaker 1: synthetic aviation fuel, using hydrogen has a bit of an 526 00:29:02,200 --> 00:29:04,920 Speaker 1: advantage because it's more of a drop in fuel. 527 00:29:05,160 --> 00:29:07,080 Speaker 2: Is that Is that a fair assessment. 528 00:29:06,920 --> 00:29:10,560 Speaker 4: That's correct, you directly replaced with fossil fuel. Of course, 529 00:29:10,560 --> 00:29:11,760 Speaker 4: the cost challenge is another thing. 530 00:29:11,840 --> 00:29:14,719 Speaker 2: But so just quickly one last question on this. 531 00:29:15,040 --> 00:29:18,480 Speaker 1: Given that there's this inherent head start, you could say 532 00:29:18,480 --> 00:29:22,520 Speaker 1: that synthetic aviation fuel has and hydrogen could be used 533 00:29:22,560 --> 00:29:26,120 Speaker 1: to create that, What is the reason why anyone would 534 00:29:26,320 --> 00:29:28,960 Speaker 1: try and make a hydrogen powered aircraft? Because there must 535 00:29:29,040 --> 00:29:32,640 Speaker 1: be you know, some advantage to that that offsets all 536 00:29:32,680 --> 00:29:36,560 Speaker 1: the sort of the disadvantages that it currently faces, so you. 537 00:29:36,560 --> 00:29:40,040 Speaker 3: Don't get some of the other pollutant emissions that you 538 00:29:40,120 --> 00:29:43,760 Speaker 3: get with hydrocarbon. That's that's one of the that's one 539 00:29:43,760 --> 00:29:46,520 Speaker 3: of the ways, even though you get NOx into you know, 540 00:29:46,600 --> 00:29:49,600 Speaker 3: like called all those based on nitrogen, which which do 541 00:29:49,720 --> 00:29:53,120 Speaker 3: have some environmentally booked as well. So that's that's the one. 542 00:29:53,200 --> 00:29:55,760 Speaker 3: The other one is, of course, I mean the economics 543 00:29:55,760 --> 00:29:58,840 Speaker 3: there and the all the cost advantage and disadvantage are 544 00:29:58,920 --> 00:30:03,080 Speaker 3: yet to be full understood. But making a hydrogen and 545 00:30:03,160 --> 00:30:07,520 Speaker 3: then converting it into a hydrocarbon fuel means that you 546 00:30:07,600 --> 00:30:10,920 Speaker 3: have a higher cost which you have to compare with 547 00:30:11,080 --> 00:30:13,760 Speaker 3: all the other costs that have to go into introducing 548 00:30:13,760 --> 00:30:16,920 Speaker 3: a hydrogen aircraft. So there are some cost balances there, 549 00:30:16,960 --> 00:30:19,800 Speaker 3: I mean, largely unknown, I would say. But the main 550 00:30:19,880 --> 00:30:22,600 Speaker 3: challenge I think is what Tugy was describing. It's the 551 00:30:22,640 --> 00:30:27,040 Speaker 3: infrastructure and getting actually the hydrogen supply to an airport, 552 00:30:27,360 --> 00:30:31,120 Speaker 3: sometimes a space constrained airport that would need a huge 553 00:30:31,160 --> 00:30:35,520 Speaker 3: amounts of storage facilities and literally very large quantities of 554 00:30:36,640 --> 00:30:40,000 Speaker 3: a fuel of a molecule that doesn't really yet exist, 555 00:30:40,200 --> 00:30:43,520 Speaker 3: so that does create real hurdles for the adoption of 556 00:30:43,560 --> 00:30:45,680 Speaker 3: hydrogen as a fuel in itself. 557 00:30:46,200 --> 00:30:49,000 Speaker 1: This has been such a fascinating conversation. What I'm really 558 00:30:49,000 --> 00:30:51,760 Speaker 1: struck by is I said, this is a tough nut 559 00:30:51,760 --> 00:30:55,480 Speaker 1: to crack, but there are options. And like all of 560 00:30:55,520 --> 00:31:00,560 Speaker 1: the best BNF sectors, there's this fascinating combination of the 561 00:31:00,640 --> 00:31:04,560 Speaker 1: willingness of policymakers to come together and make rules because 562 00:31:04,600 --> 00:31:06,800 Speaker 1: that is going to be necessary for if we want 563 00:31:06,840 --> 00:31:10,160 Speaker 1: to see the widespread use of SAFF. There's also exciting 564 00:31:10,200 --> 00:31:14,000 Speaker 1: technologies that don't just replace what is already there, but 565 00:31:14,120 --> 00:31:17,760 Speaker 1: create new possibilities instead. And there's various sort of I 566 00:31:17,800 --> 00:31:22,520 Speaker 1: would almost say technology pathways that are almost like scenarios, 567 00:31:22,600 --> 00:31:25,120 Speaker 1: you know, do we see more adaptation of hydrogen generally 568 00:31:25,200 --> 00:31:28,160 Speaker 1: that would maybe swing the balance one way or the other. 569 00:31:28,280 --> 00:31:31,080 Speaker 1: So there's this really interesting array of questions, not least 570 00:31:31,120 --> 00:31:33,880 Speaker 1: I should add the kind of consumer aspects and what 571 00:31:33,920 --> 00:31:35,800 Speaker 1: people are willing to pay for. So it kind of 572 00:31:35,880 --> 00:31:40,600 Speaker 1: this is little microcosm of almost every climate related sector 573 00:31:40,800 --> 00:31:43,920 Speaker 1: at some point in time, and it's been really fascinating. 574 00:31:44,080 --> 00:31:46,480 Speaker 1: So I just want to say thank you, Take and 575 00:31:46,560 --> 00:31:46,920 Speaker 1: thank you. 576 00:31:47,000 --> 00:31:58,960 Speaker 5: Nico, Thank you very much, Tom, Thanks very much, Tom. 577 00:31:59,160 --> 00:32:02,560 Speaker 6: Today's episode Switched On was produced by Cam Gray with 578 00:32:02,680 --> 00:32:06,560 Speaker 6: production assistance from Kamala Shelling. Bloomberg NEIF is a service 579 00:32:06,600 --> 00:32:09,880 Speaker 6: provided by Bloomberg Finance LP and its affiliates. This recording 580 00:32:09,880 --> 00:32:12,640 Speaker 6: does not constitute, nor should it be construed, as investment 581 00:32:12,680 --> 00:32:16,120 Speaker 6: a vice, investment recommendations, or a recommendation as to an 582 00:32:16,120 --> 00:32:17,480 Speaker 6: investment or other strategy. 583 00:32:17,480 --> 00:32:17,880 Speaker 5: Bloomberg. 584 00:32:17,880 --> 00:32:20,880 Speaker 6: A NEIF should not be considered as information sufficient upon 585 00:32:20,960 --> 00:32:24,080 Speaker 6: which to base an investment decision. Neither Bloomberg Finance LP 586 00:32:24,320 --> 00:32:27,520 Speaker 6: Nor any of its affiliates makes any representation or warranty 587 00:32:27,640 --> 00:32:30,680 Speaker 6: as to the accuracy or completeness of the information contained 588 00:32:30,680 --> 00:32:33,240 Speaker 6: in this recording, and any liability as a result of 589 00:32:33,240 --> 00:32:35,240 Speaker 6: this recording is expressly disclaimed.